Marston's launches new Pegasus tenancy agreement which caps rent

Under the new agreement being trialled by Marston's, rent is matched against sales volumes and will be capped if growth exceeds expectations.

The Pegasus Agreement also sees Marston’s guarantee gross profits for the licensee, with the company having some say over the retail offer.

Pegasus, currently on trial in a small number of pubs, incorporates some of the lessons from Marstons’ franchise-style Retail Agreement, with assistance available for drinks marketing, digital promotions, general marketing, and menus. It promises “a draught offer that will be competitive in the local area, with a guaranteed gross profit”.

But while the Retail Agreement sees licensees take a proportion of the turnover, those on a Pegasus Agreement pay a rent. This would go up and down in line with volumes and will be capped if the business grows further than expectations.

Under the new deal, Marston’s provides a profit and loss account to show how the pub is performing in the initial stages of the agreement. The company will pay for and  conduct mystery shopper visits every quarter and stock takes.

Iain Jackson, Marston’s estates director, said: “The Pegasus Agreement is very much in its infancy and currently being trialled in a small number of pubs. In essence it is a tenancy tracker agreement, where in exchange for running some centrally set elements, such as a wet and dry consumer offer, the tenant receives greater cost support.”

Marston’s aims to have 600 sites converted to its Retail Agreement by the end of 2013. More than 400 are understood to have been converted to date.