CAMRA’s 190,000 members were “mobilised” earlier this month to urge pubcos like Marston’s to cancel rents for venues unable to open and trade during lockdown.
However, the day before the campaign launched, The Morning Advertiser understands, CAMRA chairman Nik Antona addressed a letter to Marston’s chairman William Rucker, directly urging Marston’s to cancel rents.
Replying, Marston’s chief executive officer Ralph Findlay said he was “disappointed” CAMRA had launched such a campaign without consulting the pubco first.
Findlay also said none of the pubco’s tenants and licensees were currently paying rent and that it had made clear to tied tenants and lessees that it expected to have “constructive discussions” about future rents, including provision of rent concessions where appropriate.
Along with the Government’s financial support packages, Marston’s was also providing a range of support measures for its tenants and Findlay said there isn’t a “one-size-fits-all” approach in the current circumstances.
The full letter can be seen below
The exchange follows a wider social media push from operators across the UK who are calling for rents to be cancelled under the #nopubnorent campaign.
Several pubcos have in recent weeks cancelled rents for their tenants, others have deferred rent, some have said they are working on a “case-by-case basis” with tenants and others have maintained silence.
The British Beer and Pub Association (BBPA), on behalf of its members, wrote a letter to the UK on-trade claiming cancelling pub rents would “leave the sector in disarray”.
The letter was a response to The Morning Advertiser’s approach to leading pub companies for clarity on how they intended to support their licensees.
In response, BBPA chief executive Emma McClarkin highlighted the support packages from available from the Government in the form of grants, loans and furlough among other mechanisms.
In response to Marston's letter, CAMRA chief executive Tom Stainer said: “Following our campaign to call on pub-owning companies to cancel rent, we're encouraged to responses from pub companies that recognise the immediate financial threat to tenants.
“When pubs reopen, they need to be in as strong a financial position as possible and these businesses, already on a fine margin, will soon go under if burdened by debt or deferred rent from the months they were generating no turnover.
“Pubs need to be helped now before they close permanently, and cancelling rent is essential to their survival.″
Marston's response to CAMRA
I hope that you are well, and that you and CAMRA are managing through this difficult period.
Thank you for your letter addressed to our chairman about Marston’s tenants and lessees. I am, of course, fully aware that this is a very stressful and worrying period for them, as it is for most businesses, and you can be sure that we are doing our level best to support them, as we are for all of our stakeholders. We have around 1,500 pubs, of which around 340 are tenanted and leased, a brewing business, with six operating breweries, and around 13,500 employees. I am very conscious that our stakeholders include employees, tenants and lessees, suppliers and communities.
While I am disappointed that you decided to launch your campaign without talking to us to find out what we are doing, I believe very strongly that we are all in this together. Tenants and lessees need help to survive, and so do we: there will be few who make it through on their own. Many of our tenants are still suffering from the impact of flooding just a few short weeks ago, and this latest crisis could not have come at a worse time. This (recent flooding) is not something you raised in your letter, but it is still important to me: we have been supporting tenants and lessees through that, and as with this crisis, we have been doing doing so on a case-by-case basis and understanding of specific situations. We are not always able to resolve every issue, but if we possibly can, we try to help our tenants and lessees to survive crises like these. It’s in our DNA.
On the subject of rent, the UK Government has issued a wide range of support measures that tenants and lessees are entitled to, including rates holidays, grants, support with employment cost and a self-employment support scheme. Those reliefs are very significant, and are intended to help people to pay bills and for businesses to survive. More may yet be required.
In announcing these support measures on 17 March 2020, the Chancellor of The Exchequer Rishi Sunak stated, in response to a direct question about the hospitality industry:
“Businesses have fixed costs that which we will target support at – most of these have two major fixed costs, rent and staff. On rent, the various cash grants, which are not repayable, those are direct cash grants… the grants we have given actually provide a lot of cover to cover those fixed rental payments that you mentioned… this will address the two largest fixed costs that most businesses will have.”
Marston’s has gone further than the intent signalled by the Chancellor. None of our tenants or lessees are currently paying rent and we have made it clear to our tied tenants and lessees that we expect to be having constructive discussions about rent in future, including the provision of rent concessions where appropriate. In contrast, the Financial Times has reported UK property landlords are threatening legal action against hospitality businesses after many have deferred rent to save cash during the lockdown. Our approach to pub tenants and lessees is significantly more constructive, flexible and helpful than most current market practice. As a brewer, we see evidence of a wide range of market practices among customers of Marston’s Free Trade in Marston’s Beer Company, where Marston’s is not the landlord.
We are providing a range of support measures to our tenants and lessees. Ultimately, the delivery of that support will be via business development managers (BDMs) who are closest to those businesses. There is not a ‘one-size-fits-all’ approach that governs all situations: many have access to Government support, while others will have partial access depending on whether they trade as limited companies or as sole traders. Some of our leases are commercial leases, where there is no beer tie; the large majority are tied pubs. This is why, for us, a case-by-case approach has to be adopted.
In addition to the issue you raise, there are two further points that will require consideration. At present, the Government is not providing grant relief for pubs with a rateable value of over £51,000 and, in relation to turnover share agreements, where Marston’s bear the majority of the costs, including rent, we are not able to claim grant relief because of state aid restrictions, and licensees are prevented from accessing grants because they are not the rates payer. In my view, these omissions are very unfair and anomalous, and deprive licensees of necessary funding. We are aiming to assist these licensees where necessary, and continue to put the case to Government for more support for these groups of people.
Unfortunately, we are not able to meet to discuss all this at present, but when we are able to do so, Ed Hancock (MD Venture Pubs, the trading division of Marston’s responsible for tenanted and leased pubs) will welcome the opportunity to do so. In the meantime, with respect, I ask you to judge us on what we did for our tenants and lessees at the end of this crisis rather than assuming that we are not doing our best with the resources available to us, which I strongly refute.
It is a difficult, fast moving and fluid environment for most at present. There is real hardship among pub operators and many other businesses with few easy solutions, but we are working very hard to ensure that we have a fair approach to all of our stakeholders. We may not be able to satisfy all of them in a way that meets everyone’s hopes and expectations, but we are trying. Nobody has infinite resources.
Our own experiences, and the contributions made by licensees and pub companies to communities and in support of the NHS in recent weeks have been hugely uplifting, providing real examples of the good that this industry brings to society. I am sure we all want more of that in future.
Chief executive officer