Licensees despair over ‘no communication from billionaire pubco owners’

Prime Minister Boris Johnson told pubs to close​ on Friday 20 March, after he called on the public to avoid visiting them​ earlier on that week (Tuesday 17 March).

Wellington Pub Company, which has more than 700 pubs, is owned by the Reuben Brothers and managed by Criterion Asset Management. In May 2019, the Sunday Times Rich List ​estimated the family had a net worth of £18.66bn.

Rob Okeefe runs the Romany pub in Northampton and has had the lease from Wellington Pub Company for a decade.

He voiced his criticism of the lack of communication from the pub group and called for a rent-free period.

Okeefe said: “The part of that really gets to me is the fact we could all be suffering from Covid-19 or dead and they wouldn't know. They haven’t corresponded, they haven’t got in touch.

“The pub trade and hospitality industry live hand to mouth and have for many years, since the last crisis. It’s day-to-day living, there can be no cash flow if you’re not open.

“You’re looking at a minimum of three months’ rent free and then you’ve got to trade out of the crisis. Nobody knows what that is going to bring upon reopening. You’re probably going to need six months rent-free but certainly three months.

“We are 100% wet-led, there’s no food, so we are closed. I have got a couple of grands’ worth of dead stock in the cellar that I can’t move worth about £5,000, which I am going to lose.”

Okeefe outlined how is eligible for a Government grant but this would not cover all the bills he still has to pay.

He added: “My rateable value enables me to get the lowest grant, which is £10,000. That would just about cover the rent only in a three-month closure so then you’re left with all the other problems, which have already started.

“It’s obvious to anyone who has been in the trade for a year, let alone 10, that kind of grant will not cover all costs. There’s no cash flow so no sales, no rent, no bills because you can’t pay anything.

“We are all living in overdrafts, the extensions of overdrafts. All these other bills that have got to be paid on top of the rent and, of course, the lack of clarity and correspondence from Wellington has got everyone in a tizz.”

Nick Holden and his partner have run the Geese & Fountain in Croxton Kerrial, Leicestershire, for almost five years, and pay £15,000 a quarter in rent.

He said they have always known Wellington Pub Company had a “hands-off” approach, which is normally welcome as it enables them to operate the business without restrictions and limitations tenants of tied pub companies often face.

He added: “However, to have received no pro-active communication from them during the coronavirus shutdown leaves us feeling let down. When we have asked for clarity about the situation, all we have been told so far is that they have received no instructions and that, therefore, the rent invoices are being sent out as normal.

“We are still waiting for the Government grant, although our local council – Melton Borough Council – tells us the money is on its way.

“We are also still waiting for details on the Government’s job retention scheme, and we have furloughed all of our staff, with every hope that we will be able to bring them back to work as soon as the shutdown is over. But that depends on us being in a viable state to trade at that point.

“We are currently providing a ‘skeleton’ service to our local community. Like many village pubs, we’re the only amenity in our village (our village shop closed last year) so, since we closed the doors, we have converted into a takeaway/off-licence/village store, with deliveries being done by our daughter in the family car.

“We’re delivering pizzas and takeaway food through the week, traditional roast dinners on Sundays, fresh vegetables and household essentials (sourcing flour, veg and much more through the local businesses that we normally work with for our own use). We’ve had lots of warm feedback for this, with many local residents considering it a lifeline for them – helping them to keep safe by avoiding the supermarkets and town centres.

“In this situation, it is simply impossible for us to wait until the crisis is over before working out whether or not we have a viable business going forwards. We need to know now that we will not be accruing rent debt.

“We will have no chance of obtaining any Coronavirus Business Interruption Loans if the banks perceive us to be a bad risk, and carrying tens of thousands of pounds of rent debt would make us a very bad risk. We, therefore, need business certainty, and that means we need to know that we will not be charged rent for the duration of the closedown of our pub.”

Alison Ward-Baptiste, licensee of the George pub in Bradford-on-Avon, Wiltshire, opened the pub – which was derelict – in 2015 on a lease from Wellington Pub Company.

No support

She said she received an email from her property manager from Criterion Asset Management, sayings it had not been given any instructions from its client (Wellington Pub Company).

She added: “We need the Government’s help in instructing those property businesses that own large quantities of commercial property, like Wellington, they should be cancelling rents and seeking financial support from (a) their own insurances against tenant failure to pay, (b) asking their own banks for business interruption loans, and (c) securing Government financial aid on their own terms rather than expecting the small businesses that rent individual property from them to pass upwards the majority of the grant funding, which has been announced for small business support.

“We have many other calls on that grant money besides rent, and we are also in a much worse position to seek bank loans, etc. than Wellington would be, since they own the property and can, therefore, take secured loans, where we cannot do so.”

Sharon Marriott-Lodge has leased the Longs Inn, Woburn in Bedfordshire from Wellington Pub Company for the past eight years.

She said: “The only contact we have had is when we contacted our property manager in March, and we actually contacted him before the full lockdown because we noticed when the Government told people to stay away from pubs, bars, restaurants, our sales dropped dramatically.

“We asked ‘can you please tell us what Criterion or Wellington Pub Company is going to do to support its tenants because our sales are falling through the floor?’

“He wrote back to say he was getting a number of the same responses from other tenants but they had no guidance from Wellington Pub Company so couldn’t tell us anything specific.

“We have written to him subsequently on two other occasions, asking for advice and a rent-free period and he has just come back said the same thing, they haven’t got any guidance from Wellington Pub Company, and as soon as they hear anything, they will let us know.

“So we haven’t had anything really, no support at all from them. Part of our communication was as soon as the Government said we had to close, we cancelled our direct debits, I told him we couldn’t pay the rent that is due in the subsequent months until we know we can open up again and start having some sales and, therefore, some income to pay the debts or the bills.

“I asked him [property manager] to ask Criterion or Wellington Pub Company to make sure the finance department were made aware and they didn’t try to take the money, causing us more charges with the bank or with themselves.

“Until further notice, I have told them we won’t be paying and he said he had passed that on.”

She went on to call for Wellington Pub Company to charge its tenants no rent for the period pubs were closed.

Marriott-Lodge added: “If we can’t open up, we have no business and, therefore, how can we pay rent when we have no income? From my point of view, the pub companies – the commercial landlords – should be giving us a rent-free period. 

“We can’t run a business, we have been told by the Government, we can't open. We also had a rent review late last year. During this rent review, the Wellington Pub Company and Criterion calculate rent based on trade. What they consider to be fair, maintainable trade. If you have got zero trade then it means zero rent, surely?”

The Longs Inn is eligible for a Government grant, however, Marriott-Lodge said this would not cover the rent.

She added: “We are eligible for the grant and it certainly won’t cover the rent. We have to still pay council tax, and utilities such as gas and electricity.

“I know we aren’t using as much because we aren’t open but we still have to find this money. The insurance has to be paid, the landline. There are a number of bills that we still have to pay.

“We pay [rent] monthly because we were already struggling. We are already to the bone on the money we bring in and what we pay out so it’s difficult to be able to carry on paying rent when we have got nothing coming in.”

Steven Sanderson has run the Chequers in Burcott, Oxfordshire, for the past 14 years, leasing the pub from Wellington Pub Company.

He pays £16,000 a quarter for rent and is eligible for a £25,000 grant, however, he outlined the grant funding would be needed to pay food suppliers and furloughed workers’ wages until he can claim that back. Sanderson emphasised the lack of communication from Wellington Pub Company.

Rent-free period

He said: “There’s no communication at all. I have called them twice and they’ve told me ‘we don’t know anything yet’.

“I sort of understand from a business point of view because they are waiting for the Government to tell them what to do but it’s the unknown. I invested thousands of pounds in building nine boutique hotel rooms, which opened four months ago.

“In fairness, for the period we have been told to shut down by the Government should be rent-free. I pay three months in advance so, by 1 June, they are going to be asking for money again, what they should do is work out the period we have been closed for and work out what we should pay from there.”

Sanderson went on to say the biggest concern is the licensees who won’t want to reopen their pubs and give up their leases.

He added: “I'm lucky I've been running 14 years and am well-established and have money tied up in the pub.

“I have got to reopen but there will be a lot of people who will think ‘what’s the point?’ and post the keys back and then we will have loads of closed pubs again. That’s the biggest worry.

“It’s the ‘not knowing’, the quietness and the zero understanding of the fact we have leased a business that is now not functional and they are still asking for money.

“It’s not right, we can’t be paying rent on something that is not open – end of story in my book.”

Piers Baker of the Sun Inn, Dedham, Essex, urged the Government to call for a ‘national time out’ on rent and said tenants should not be made to take on rent debt on top of VAT debt and supplier debt.

He said it left nothing to live on and doesn’t make the business viable for support from the Coronavirus Business Interruption Loan Scheme.

The Morning Advertiser​ has made numerous attempts to contact the Wellington Pub Company but has not received a response at the time of publication.

However, the company has posted a statement on its website, which said: “Wellington Pub Company can confirm that during these difficult times for pub and restaurant businesses across Britain, we are working to support our tenants and will continue to do so through both lockdown and beyond, as tenants look to re-establish their trade.

“As a free-of-tie estate, our business is markedly different to that of a tied estate and our interactions are limited to that of a landlord and tenant relationship.

“As such, we can confirm we will not be taking any action with regard to rent arrears that may have arisen since the start of the Covid-19 crisis and the shutdown of businesses across the UK.

“While we welcome the Government’s announcement regarding rates holidays and the grants available to assist some businesses with their fixed costs, the broad tenant mix across our estate (with the majority of tenants being individuals) inevitably means there will be a range of differing circumstances.

“At the point the Government announces its intention to lift the lockdown, and there is a clearer understanding on the timing for pubs to reopen, Criterion Asset Management (on behalf of Wellington Pub Company) will contact all tenants individually to fully understand their situation and work with them to reach a mutually agreeable and sustainable way forward for their business.

“We are hopeful for further clarity on the position of the Government in early May and look forward to engaging with tenants once we have received this news.

“This uncertainty over the duration of the lockdown, however, remains at this current time and, as such, establishing these agreements with tenants before further Government updates would be premature.

“Equally, given the broad range of tenants across our estate, a ‘one-size-fits-all’ solution simply would not be workable.

“We wish all our tenants the best at this difficult time and remind everyone to follow the official healthcare guidance to keep themselves, and their families, safe.”