Punch: 'Mr Garrood needs to walk 100 miles in the shoes of one of his tied tenants'

By Simon Clarke

- Last updated on GMT

Related tags Public house Investment Punch

Tenants have campaigned hard for MRO
Tenants have campaigned hard for MRO
Leading pubco reform campaigner Simon Clarke responds to recent comments made by Punch Taverns' chief executive Duncan Garrood in the PMA about the pubs code and market-rent only option.

Duncan Garrood's latest piece in PMA​ could be a perspective from a fresh pair of eyes but with so little time in the saddle it would be easy to conclude the statements are simply sowing the seeds for a longer MRO waiver period in exchange for investment.

It will be interesting to read the reactions of Punch's so-called 'partners'.

Whilst, I share Mr Garrood's view that pubs have a bright future it is probably for different reasons. The prospect of MRO sees tied tenants being offered an opportunity to eat a decent meal, they have toiled for and deserve, rather than be told to be content with the morsels flicked off the pubco banqueting table, ladened with goodies that the tied tenants themselves supplied.

The warning shots about investment are laughable to the majority of tied tenants who have not seen a recognisable bean of investment from their pubco in the entire lifetime of their agreement. What Punch appear to be saying is that they are reluctant to invest in a pub where the tenant has gone into liquidation, and vacated, if they can not continue to reap the rewards beyond five years. Solutions include offering the pub on a free-of-tie basis and let the tenant undertake the investment, no different to the tied model, or agree a rent that reflects the pubco investment.

The tied sector is suffering an entrepreneurial vacuum as most prospective tenants recognise that there simply is too little profit to be made from the model. Investment from tenants will not be forthcoming while operation of the tied model remains unchanged.

Benefits

Most tied tenants probably take the view that nothing much has changed in behavioural terms. However Mr Garrood's aspirations, if genuine, are precisely what campaigners have been asking for, a situation where the benefits of being tied to a company, such as Punch, are difficult to turn away from if given the choice to simply be free of tie.

The tied sector is suffering an entrepreneurial vacuum as most prospective tenants recognise that there simply is too little profit to be made from the model

Perversely, Mr Garrood's very ambitions, and the absence of MRO implementation before Government intervention takes effect, rather implies what campaigners have fought for, and Mr Garrood's aspirations, have not yet been met.

Mr Garrood's frustration indicates he is perplexed by the criticism Punch continue to receive but this is contrary to the implied admission that Punch's support and service are still not enough to outweigh the benefits of being free of tie.

If Mr Garrood were confident this is not the case he could put his money where his mouth is and implement a voluntary company-wide MRO offer now, to all Punch partners, before the pubs code comes into effect.

As for being 'furious', such terminology, for one so new, undermines what was otherwise a good effort at positive spin. All I can say is Mr Garrood needs to walk 100 miles in the shoes of one of his tied tenants. Fury is the sentiment of past, and many present, tied tenants who have lost savings, seen dissolved marriages, homelessness and bankruptcy.

Simon Clarke is licensee at the Eagle, Battersea, south London and Fair Deal for Your Local campaigner.

The debate over the future for tenanted pubs post-legislation will be continued at this year’s Tenanted Pub Company Summit on 10 November at London’s Mayfair Hotel. A panel will discuss the headline topic of the day – MRO: Meltdown or Real Opportunity​.

Giving their views will be Andy Slee​, who represents Punch Taverns in its discussions with the Government on legislating the sector; Brigid Simmonds​, chief executive of the British Beer & Pub Association; James Staughton​, chairman of the Independent Family Brewers of Britain; Greg Mulholland​, chair of the All Party Parliamentary Save the Pub Group and Chris Wright​, co-founder, Pubs Advisory Service.

For more information or to book your ticket please contact Hannah Fluker on 01293 610343 or unaanu.syhxre@zpnyyrten-sf.pbz

Reaction to Duncan Garrood's comments

The following comments are from Punch licensees sent to the PMA via the Pubs Advisory Service

Garrood mentions "a really powerful partnership". Does he really think this term was ever anything but an insulting smokescreen designed to publicly misrepresent the relationship between Punch and their virtually powerless tenants? A partnership implies some kind of equality between the parties, and equality is something conspicuously lacking in a situation where, for example, one party has such an unequal share of power as to be able to rigidly enforce tied beer prices hugely over market rate.

Garrood resorts to the overplayed argument that MRO will "discourage investment". This erroneously implies that Punch is engaged in the practice of investing in any of those pubs which have the prospect of MRO. The truth is that they only invest in pubs which become vacant in order to bring them back up to a tradeworthy level, and invest not one penny in pubs where a lessee has made a go of their business for any length of time. The latter are the only pubs with any prospect of a shot at MRO, and they already receive zero investment except that which is made by the lessees. The former will continue to receive investment as, since they have now been relived of their substantive leased status, Punch will now be looking to operate them in some new way which circumvents the forthcoming legislation.

Even if it is true that each closed pub costs him £50,000, which is extremely unlikely, the churn continues to make perfect business sense when one considers the excessive profits available to Punch in the time it takes the average lessee to finally fail. MRO will put a stop to this, which is why so many tenants have been active in the campaign to secure it.

Tenants have far more justification when it comes to being furious, as the only reward for their continuing efforts has been relentless above inflation drinks price increases, consistent attempts to increase their dry rents, disingenuous attempts to persuade them to accept new, even less favourable terms and, when all else fails, furtive disposal to property developers and specialists in retail conversion, with not a single word of explanation or reassurance to those remaining under Punch's control and facing a completely uncertain future.

Related topics Legislation Punch Pubs & Co

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