Dealing with Enterprise Inns: A cautionary tale

By A licensee

- Last updated on GMT

Related tags: Area manager, Enterprise inns, Public house

Pub closure: 'Why would they not want us to stay?'
Pub closure: 'Why would they not want us to stay?'
I’ve always wanted to run my own pub! “Can we? Can we? Can we?” I excitedly asked the other-half. There are lots of pubs available in our area! Really cheap(ish) too! Enterprise Inns seem like a well respected company, let’s have a look……

This was how it all began, as it does for many a potential pub landlord. Bitter? Yes. Twisted? Probably. Escaped unscathed? Only just.

Before that there was a community local, owned by Enterprise Inns. Let me tell you a story.

A run down, once much loved back street pub. Lots of potential. Big Old Boozer, we can fill this place! We can make a decent living. So, we had a meeting with The Enterprise Inns Area Manager. Yes! It’s available. Leave it with me.

Two weeks later. Someone else is looking. Another week later. Yes, it’s yours! Let’s see your accountant and we can come up with an amazing deal that will put you in good stead to earn some good money. The pub was very neglected. So, we were offered stepped rent. This meant their target rent of £450 per week was 2 years away and it started very low. Every three months it went up. Tied* on all products, other than food.

We were told it is normally either cheap rent or good ‘discount’ on beer but we’re getting both! It cost approx £20,000 up front in various in-going costs. We borrowed from family. We spent about £7,500 on re-decorating and a massive clean up. The turnover on entry was about £2k a week.

Moving in

So, we left our homes and moved in. Sales and cellar trained? Yes. An abundance of ideas and energy? Yes! Naïve? In hindsight – definitely. There were all sorts of events already happening in the pub. So, we tried to improve on them. I DJ’d at the twice weekly karaoke nights to save costs. Food? We launched a small menu. Failed. Carling & crisps was the usual order. Stoke football on the telly? Sky quoted £1,500 per month! Ouch, there’s no way we could afford that! We ‘needed’ the Stoke games on. So, we followed suit with many other pubs and installed foreign satellite. Not cheap and very unreliable. Not to mention illegal…

A year went by. Turnover was up to £4.5k/ £5k per week. The rent and other costs were also increasing by the same rate as the turnover. We paid ourselves £150 per week. That never changed. On paper we were doing all right, not great, but not bad either.

By the end of the second year the turnover had stabilized at around £4.5/ £5k per week and the rent was about to jump to the full amount. We were concerned that with sales no longer increasing but rent going up we would soon be in debt. We were on a three year lease. So our accountant arranged a meeting with our area manager and ourselves and put forward the case for a rent freeze, and the area manager said he would put our case to the powers that be.

We didn’t hear back from him and the rent went up. When we phoned to ask what was happening, stupidly thinking it was still being looked at, we were informed they could do nothing for us because our accounts show a profit for the last two years. While we were looking forward and trying to plan for the future, they would only base decisions on previous trading history.

We could look forward to a helping hand when we were in debt already. We were now heading into our third winter season and looking forward to two things: the expected start of negotiations for renewing the tenancy as per the pubco code of practice; and, with any luck, better living conditions in our flat above the pub.

Repair

We had spent the first winter with windows in such a bad state of repair that whatever the weather outside it was going on inside the windows too! We wore scarves and gloves indoors as the pubs boiler struggled to heat the whole building.

The pubco were eventually prevailed upon to make improvements, but that’s a whole other story: suffice to say brand new windows were installed only for the old boiler to get condemned the second winter. Unfortunately the new boiler wasn’t up to the job and failed during the third winter. The customers keep telling us that not one manager/ landlord has tried as hard to ‘fix’ their local for decades.

We are now getting very tired and the light at the end of the tunnel seems to be the front of an incoming train.

Let me give you some more facts: *Full Tie: This means that all ‘wet’ products must be purchased from the pub company. At full discount that means approximately a minimum of 30% above market value. Some tenants can pay as much as 60% over the going rates. All pumps are measured and monitored so as to make sure you are keeping in line with your ‘tie’. Large fines are there to discourage you. Spirits, cordials, soft drinks and bottles are included. Cask ales on the SIBA scheme are bought through the pubco and the local brewery delivers. We were paying an extra £40 per cask than the local brewery would supply direct. Enterprise kept the difference.

The brewer was no better off and although we could stock local ale we couldn’t compete with price. We had to use an accountant from their list at the cost of £250 per month. The area manager received our profit & loss account figures before we did. We had to pay into a decorating fund every month to fund décor upkeep. Though assuming the previous tenant also paid into the same fund, we didn’t see any evidence to support it!

Rates

On entrance you are pushed towards a company called ‘Power For Pubs’ which is a broker for Enterprise to get the ‘best’ deal on your utility rates. Luckily, I managed to go direct and save an extra 20%. No “Meerkat” was offered either! I’ve already mentioned the accountant.

We were also tied to their building maintenance, cellar cooling and heating companies. Not to mention all insurance went through Enterprise Inns as well! Basically shopping around to lower your costs was impossible on some of the major costs of the business. Some costs that I can’t blame the PubCo for: £1,100 per month business rates; £600+ utility bills per month; Music Licenses. PRS & PPL combined were approx: £2,500 per annum. We did have some great times there.

Christmas Eve, New Year’s Eve and Halloween were awesome nights! We became Cask Marque accredited. CAMRA Potteries awarded us Pub Of The Month, which was one of our proudest moments. A pool team that got promoted, a league winning ladies darts team and the best pub garden in the area! By now we had just 6 months left on the tenancy. We were at the top rent. Starting to lose money on a week-to-week basis.

Success?

Despite sell-out crowds on Christmas Eve & New Years’ Eve. January. Surely we must hear from our area manager soon? Sent an email. three months left. Back up plan is in full swing. Maybe if the pubco really care they will make us a deal we can’t refuse and the work of the last three years will not go to waste? We can maybe do both? I mean, we haven’t broken our tie. We’ve paid every bill on time and in full.

Why would they not want us to stay? Six weeks left. We’re suddenly interesting! What do you mean you’re going? We haven’t spoken about the kind of deal we can do for you? We would like a fixture & fittings valuation please…… We’re moving out. Two weeks left. Why have you sent three different inspectors to see that we have adhered to the tie? We’ve played the game and we’re off. You have two weeks to sort out your end. We are moving out in two weeks.

The area manager then offers us half rent. Free tie from cask and accountants. You see, the pub is still doing quite well. It shouldn’t be losing money. Enterprise Inns are squeezing us too hard. When we asked for help a year ago you ignored us. If you offered us half of what you’re offering now we would probably have signed up for a longer term! We were charged £850 for someone to value the fixture & fittings. We were sent a dilapidation report of things to decorate or be charged for. The things we hadn’t already decorated that were last painted in the 1960s. We did this so we could get out with our deposit intact.

The end...

Our last day and we hand the keys over – or at least we tried to. He said it would take a while for our deposit and the moneys for the fixtures and fittings to be refunded as they weren’t used to owing money to outgoing tenants. Funny that! The area manager didn’t have a replacement. Option 1 didn’t show up. At this stage we were offered to stay there rent free to keep the pub open. Nope. Option 2 did show. Then backed out. Option 3 didn’t answer the phone.

We were then informed that the pub was on the ‘Disposal List’ before we took it on (meaning that the pub was going to be sold off) and it would be a shame if it had to close for even a few days.

Nice, didn’t tell us that three years before! With no-one to take over the pub, we left with the keys; our stock was still on site. The pub closed. Empty of all personal belongings. Sad that with all our efforts we couldn’t win with the ties applied.

We had a phone call that evening. Option 4 called him back and took it on at a £1 (as I believe) rent a week and put a manager in charge. I took the key to the pub and let him in. Gave him the keys and left for something that was far more shiny. Maybe if Area Managers were targeted on retention and support whilst not trying to catch out hard working folk then there would be a chance for tenants.

Tied

Maybe the “tied” model works for some, but having been at the sharp end I feel it’s outdated and flawed.

We met some fantastic people and had some great times that we shall never forget. But, 80+ hours a week for £150? For the love of it? Nope. I’m sure there are some pubco tenants reading this are nodding and some who have had a different experience. This is/was our tale.

And I’ll be more than happy to answer any questions. Especially Enterprise Inns Directors! And if you email the editor of this fine publication, I’m sure he’ll forward them to me.

By An Older & Wiser Survivor​.

Related topics: Ei Group

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Mrs

Posted by Jackie james,

Have just had an awful experience with Enterprise Inns. I would like to warn anyone looking to purchase an existing assignable lease held by Enterprise Inns that they need to be very aware of the strong possibility that they will take back the lease for themselves if they realise the pub in question has potential. In the meantime they will put you through months and months waiting and the expense of business plans , accountants and solicitors fees for the assignment to go through and then at the last minute drop you and buy the lease back from the current lessee. I have proof of all of this.

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Lucky escape

Posted by Luke,

Just been for a meeting on a EI pub. They don't understand gross net. They said the pub makes 50k net. Then we have divisive profit. I ask what is that. They say that's what we base the rent on. And we want half of it. So they want half of the net. Which is gross. I point this out as I have had many businesses. They say that's the EI way. So the pub makes 25k a year. And you want 30k from me. So you want me to work for free? Pretty much. Anyway, I'm smarter than the average bear so bye bye EI.

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Enterprise Inn dishonest!!!

Posted by Dom,

I lost 48 thousand pounds in 3 months!!! They had no license and security camera in place... So police shut us down...

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