Fair Deal for Your Local: Enterprise and Punch disposed of a third of pubs

By Gurjit Degun

- Last updated on GMT

Related tags: Market rent, Punch taverns, Public house, Inn, Enterprise inns

Fair Deal for Your Local: it says that pubco closures expose the “catastrophic reality” of the pubco tied business model
Fair Deal for Your Local: it says that pubco closures expose the “catastrophic reality” of the pubco tied business model
Enterprise Inns and Punch Taverns collectively disposed of more than 5,000 (33.24%) pubs between 2008 and 2012 – that’s the figures from the Fair Deal for Your Local (FDFYL) campaign.

In 2008, Enterprise owned 7,763 pubs and by 2012 this figure had dropped to 5,720. Similarly, Punch owned 4,529 pubs in 2012 (excluding the Spirit managed estate), having previously owned 7,560 in 2008.

FDFYL said the statistics expose the “catastrophic reality” of the pubco tied business model, and “clearly demonstrates” the effect the business model has on the viability of pub businesses.

It added: “No other part of the pub sector has seen disposal levels of anything like this, showing that it is the large, leased pubcos and their restrictive tied model, that are failing on a unparalleled scale.

“This is also in stark contrast to the many smaller pub companies who are succeeding, increasing their figures and taking on pubs – notably they operate completely different business models.”

Asset stripping

The FDFYL campaign is calling for an end to this “asset stripping” through reform of the pubco model.

“The only solution to this problem is to give pubco tenants the right to a ‘market rent only’ option, which would mean that they can opt to pay an independently assessed market rent and be able to buy product direct,” it added.

The FDFYL campaign launched in May and is an industry coalition of 10 organisations.

Greg Mulholland MP, chair of the All Party Parliamentary Save the Pub Group and coordinator of FDFYL, said: “The Department for Business, Innovation & Skills has asked for evidence of the effect of the pubco tied model on pubs and their viability.

“There is no clearer evidence than the pubcos own disposal rates which show the extraordinary fact that together the two big pubcos, Enterprise Inns and Punch Taverns have got rid of a third of their pub estate in just four years.”

Market rent only

Simon Clarke, of the Fair Pint Campaign, said: "The pubcos disposal program of pubs has been in full swing for the last four years. These pubs have not found their way into the managed or free of tie sectors so it seems quite clear that quietly the pubcos are selling off for redevelopment to alternative use.

“It is the tied lease terms that enable pubcos to sell easily to developers as these terms offer an opportunity to evict the tenant by restraint of trade. A market rent only option for tied tenants would help curb this behaviour hence the pubcos aversion to it.

“A market rent only option not only gives a tenant a fairer share of pub profits, it also makes it much harder for pubcos to force out their tenants which will lead to fewer closures and a more sustainable pub sector.”

Punch strategy

A Punch Taverns spokesperson said: “It has been published Punch strategy for the last three years to focus on our 3,000 strong core estate, whilst disposing of the remainder at circa 400 per year.

“We are committed to our core estate having invested £48m in the last financial year with plans for the same level of investment this year.

“The claim that most of our pub disposals are sold for alternative use is factually incorrect with nine out of every 10 disposals over recent years being sold as pubs.

“It is puzzling that on the one hand Fair Deal for Your Local criticise Punch for owning pubs and operating the tie, but also criticise us for selling them as pubs into the freehold market."

Enterprise did not comment.

Related topics: Ei Group, Punch Pubs & Co

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