Ian Cass, the Managing Director of the Forum of Private Business, an active member of the Rural Services Partnership has written an article about the threat that local pubs face which also highlights the ‘Protecting your pub’ guide which is due out soon.
The Threat to Rural Local Pubs
The Forum of Private Business has many pub businesses as its members, both free trade and tenant pub operators and many of these are based in rural locations. Since the inception of the Beer orders in 1989, limiting the size of a brewer’s estate and the rise of pub owning retail groups which did not brew their own beer, the shape of the UK’s hospitality industry completely changed.
We still had the smaller brewing companies with their own pub estates, who still viewed their pubs as the shop windows for their products, but we also had these huge property businesses, who’s properties happened to sell beer. In recent years these big, property owning pub companies, poor business behaviour, led to the introduction of the Pubs Code and the appointment of a pubs code adjudicator to protect the pub tenants and give them some support in dealing with their big pub owners.
4 years of inertia around the code have given these companies, which were built based on huge debts, time to restructure for sale and in the last few months the shape of the pub business has changed again, with 3 of the biggest pub owning property companies being sold off. Punch were bought by Heineken, Ei Group is being sold to the Stonegate Pub Co with roughly 2 billion pounds of debt and Greene King is being sold to the Li Ka-Shing, CKA group but again this deal carries 1.9 billion of debt along with it.
The Forum of Private businesses main concern is that the pubs are their main and only assets, so with the high debt load that the businesses carry and the difficult trading situation for many pub tenants who are forced to work on far tighter margins that their free trade counterparts, there will be a pressure to cash in on some of these assets. We feel many of these small businesses will be under threat, even if they are a perfectly viable business and we are seeing good pubs going to the wall already.
The Forum works to protect small businesses and a pub is usually a husband and wife team employing kitchen and bar staff, probably a cleaner and a few casual part time staff as well. They are also in many rural locations the centre of social activity and the key hub for these local communities.
A typical rural or semi-rural pub is not worth much as a pub, but is worth a lot more for other use, so a pub with a beer garden, bowling green and car park is a lot of land which can accommodate multiple houses, or a retirement or pre-retirement home. So, the decision to sell may not be based on commercial viability but on its location or the land it occupies, our question is how do we protect perfectly viable businesses from unscrupulous landlords?
First of all we have been working with CAMRA to produce better Information for communities, it tells them how to spot if their local pub is under threat and what they can do about it, this guide called “Protecting your pub” will be available in the New year.
We are also looking at providing better information for new and existing pub tenants, as well as seeing if we can offer these communities better protection for their local pub through changes to the planning laws.
We need to ensure that local pub businesses that are viable and a key part of the local community are protected, because once they are gone, this local resource is lost forever!
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