Coronavirus: a year of closures

How has Covid-19 impacted tenant relationships with their pub company?

By Stuart Stone contact

- Last updated on GMT

Tenant satisfaction: More than half of tenants responding to The MA’s survey revealed that their pubco point of contact – such as their business development manager – has changed during the past year
Tenant satisfaction: More than half of tenants responding to The MA’s survey revealed that their pubco point of contact – such as their business development manager – has changed during the past year

Related tags: Pubco + head office, Tenanted + leased, Finance, Coronavirus

With 20 March marking a year-to-the-day since last orders were called in pubs just days before a first national lockdown, The Morning Advertiser (MA) quizzed its readers on how their working relationships have changed in the past 12 months.

When The MA​ asked what impact the pandemic has had on the working relationship between operators and their pub company or commercial landlord, more than one-in-ten (12%) of respondents stated “very good”, while a quarter (25%) described any change as “good”.

However, 20% of those quizzed stated that the pandemic has, so far, had a “bad” impact on their relationship with their pub company or commercial landlord, with a further 4% claiming the pandemic's effects have been “very bad”.  

Pubco point of contact 

More than half of tenants responding to The MA’s​ survey revealed that their point of contact at their pub company – such as their business development manager – has changed during the past year. 

While 46% of those said their contact changed only once, one-in-five (21%) said that their point person changed twice, with one-in-ten working with three new pubco representatives.

What’s more, 14% of those quizzed revealed that their pub company point of contact changed “five or more” times over the past year as a result of the pandemic.

These figures come after the drop in hospitality sector staff headcount as a result of the pandemic was revealed to be in the region of 660,000 people, according to analysis by Fourth.  

Recent data has also revealed that pub companies were active users of the Government’s furlough scheme, with JD Wetherspoon and Mitchells & Butlers each claiming between £25,000,001 to £50,000,000 through the scheme.

Rent concessions

The survey also found that, roughly one-year-on from the Prime Minister’s enforced closure of pubs for the first time on 20 March, more than one-in-three (36%) pub operators are currently paying less than 10% of their rent. 

This comes after a number of pub companies outlined sizeable rent concessions over the course of the past year, with Heineken’s pub arm, Star Pubs & Bars, pledging £62m since March 2020​, for example.

Around one-in-five (21%) licensees were also found to be paying between 11% and 25% of their rent at present, while 14% fell into each of the 26% to 50% and 51% to 75% brackets.

What's more, roughly 2% of those asked revealed that they were paying above 75% of their usual rent at present.

Support for free-of-tie operators

Additionally, a number of respondents told The MA​ that they were aware of instances in which operators who have completed the Market Rent Only (MRO) process had been afforded a lower level of pandemic support than tied tenants with the same pub company. 

While one-in-ten respondents (10%) said that they were aware of a disparity, close to a third said they hadn’t noticed different treatment (28%), while 60% said they “don’t know”.

Those who had noticed different levels of support explained that they’d witnessed little or no rent concessions from pub companies towards free-of-tie leaseholders – with a number telling The MA​ that they were expected to pay “full rent” throughout the pandemic.  

Speaking to The MA​ in January – shortly after a third raft of national lockdown measures were imposed – pub trade adviser Phil Dixon acknowledged that while one of the negatives of exercising MRO is that publicans cannot expect support if your trade suffers through no fault of their own, he believed a global pandemic offers somewhat extenuating circumstances. 

“What is fair is that at the time when I would warn about potential lack of support if you go free-of-tie I would be contemplating road works, floods, possibly foot and mouth – but not a worldwide pandemic,” he said.

Related topics: Other operators

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