Multiple operators spill the beans on tenancies

By Nicholas Robinson contact

- Last updated on GMT

Right or wrong: three operators talk pros and cons of tenanted and leased pubs
Right or wrong: three operators talk pros and cons of tenanted and leased pubs
His first experience of a pub tenancy left Mark Robson, co-founder of Red Mist Leisure, “feeling scarred”, having been advised to remain guarded and to keep any sniff of financial success from reaching the site's landlord.

Such thinking, however, has already dissipated or is certainly not as prevalent as it was 10 years ago, Robson told delegates at MCA’s Tenanted Pub Company Summit in London earlier this month.

Speaking on a panel with fellow multiple operators Ed Martin, co-founder of ETM Group; and Hamish Stoddart, managing director of Peach Pubs; which was hosted by The Morning Advertiser​’s editor Ed Bedington. Robson said his confidence in the leased sector has now been restored but he was aware of remaining issues in the segment.

His first foray into the pub sector was with a lease, but he felt burnt after receiving little support from his pubco, yet Robson also admits he was perhaps not ready to take on his own site at that point in his life.

“It scarred me and I was left with a view of tenanted and leased pubs. But there’s been a change in view, which has moved on to the customer,” he said.  

“Fifteen years ago it was a bit cloak and dagger and there wasn’t a lot of success and the support wasn’t brilliant back then.”

No to sharing

Robson added: “I was encouraged not to share trading information [with my landlord] by others in the trade, but that’s daft. Partnerships work.”

“It was only in 2014 that we took on another lease – we’ve now got 10 pubs and three leases, two of which are with private landlords. My confidence in the leased sector has been restored.

“Standing on the side lines, I think [leases] changed for the better and there’s a real focus [from pubcos] towards the consumer and an acknowledgement that they needed to be modernised, but that wasn’t the way 15 years ago.”

Peach Pubs’ Stoddart agreed there were some “scarring” moments in the past for him, but he also claimed to have seen some extraordinary returns from his leased ventures in a relatively short space of time.

“Pubcos can be positive about making turnover happen and sharing it in an appropriate way,” he said, adding that Peach is a wholly shared ownership operation.

ETM’s Martin, meanwhile, had no option other than to run a business of fully leased and tenanted properties, and wouldn’t be able to grow without such models because of high London property prices.

“The majority of our sites are with Punch and they’ve helped us to grow. I would not say ‘no’ to a leased business as long as it was right and fair,” he said.

There is no future without cash and a leased model offers start-ups a relatively safe bet when it comes to getting a business up and running, he added.

The investment is low

Having an estate consisting entirely of tenanted and leased sites was not, however, something Robson would consider. “It’s about a blend and the great thing about having a tied pub is the barrier to entry is low and the investment is low, depending on the company you’re with,” he said. “But would I want 10 tied pubs? Probably not.”

That could be due to Robson’s claim that he had never, in the past, made much money from a tied pub. “I do know there are some in the sector who have, but the tenant needs to make money out of it and, if the pubco is too greedy and the tenant ends up working a 100-hour week, it’s not sustainable.”  

Yet, all three of the pub bosses agreed that having better access to support from pubcos would be beneficial to those who needed it.

There was also consensus among the group of a fear that their successful brands and empires could be taken away by their landlords once their leases were up.

“We’re all 10 to 15 years in and it could be done [business taken away],” said Stoddart. “They will have it if they want it in eight to 10 years and you’ve just got to deal with it.”

While Martin said: “You can’t complain when you signed the deal to begin with.”

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