More licensees have contacted the Publican’s Morning Advertiser with complaints that competition from within their pubcos is giving them no chance to compete.
A Marston’s lessee in Shropshire, who wished to remain anonymous, says that since the pubco opened three new ‘retail pubs’ nearby under its quasi-franchise agreement, his takings have been down by 70%. Retail pubs allow licensees to earn 20% of turnover to pay themselves and staff, with Marston’s buying everything else and footing bills.
The lessee blamed the pub’s decline on the retail pubs’ pricing strategy — serving pints for as cheap as £1.75, when he can only afford to drop down to £2.70.
“I can’t afford to put mine any lower, I wouldn’t make a profit. There are three pubs on my doorstop undercutting me by £1. It should be illegal,” he told the PMA.
“People tell me to put my prices down. I don’t have a choice and would go out of business. I’m surviving by the skin of my teeth.”
Fellow Marston’s lessees Trudy Thomas of the Rifleman’s Arms, Stuart Wilcox of the Cock Inn and Ray Hannon of the Red Lion, all in Droitwich, Worcestershire, face competition from their pubco after it opened a further two retail sites nearby.
'A real struggle'
Thomas admitted it had been a “real struggle” since the new sites arrived, with trade down and criticised Marston’s for a lack of support. Wilcox said the nearby pubs sell alcohol at prices he is not able to compete with.
A spokesman for Marston’s said the pubco was liaising with each licensee independently on the issue.
Earlier this month, the licensee of Enterprise Inns pub the Rising Sun, Plymouth, said he was struggling against another Enterprise pub that was selling beer cheaper due to discounted prices from the pubco. Enterprise explained its pubs are operated on different contracts and trading ties.
Head of the Pubs Advisory Service, Chris Wright, said “favouritism” within pubcos is a common problem.
“Pubcos may give full discount to one tenant when they open for the first six months, and it gives existing pubs no chance to compete,” he said. “Each area has a finite amount of how much people drink. If you open a certain amount of pubs then it’s going to take trade away from existing pubs.
“The pubcos don’t care who is paying them the wet rent, as long as someone is. If they don’t open a new site, another pubco will.”
He explained that new sites can often perform well at first due to rent reduction and lower beer prices for new licensees.
“Customers are looking for a deal, and the new sites have all the deals. It’s got to be to the detriment of the older pub,” he added.