Monthly Archives: April 2010

ALMR, calls for Pubs to be free to operate responsibly and profitably

ALMR calls for “Pubs to be free to operate responsibly and profitably”

The ALMR held its 19th annual meeting and Business Day at the Stationers Hall in the City today.

At a packed meeting of leading operators, the key suppliers and their guests heard from Tim Sykes, Chairman who said,

 “The Association will continue to work with whichever party gets into government next week. We must ensure that the pub trade is allowed to get on with what it does best – looking after our customers in a controlled and safe environment”, and he continued

“We will always support responsible alcohol consumption but will resolutely campaign for the freedom for business to operate responsibly and profitably.”

At the same meeting the Association was delighted to announce that:

Brian Whiting –  MD of Whiting & Hammond

Toby Smith – MD of Town & City Pub Company

Kevin Sammons – Chief Exec of The Pub People Company

Garry Mallen – Partner in GC Mallen

have been elected to represent their colleagues on the ALMR’s Council.

Brian Whiting says; “It’s a privilege to be elected to ALMR’s Council and I really look forward to being part of the effort we make together to champion our industry, and to doing what I can to help us all boost our business, our profits and our enjoyment in doing so.”

Notes for Editors

  1. Speakers at Business Day also included:
  • Peter Martin – Peach Factory
  • Ian Edward – Ian Edward Associates
  • Kate Nicholls – ALMR Benchmarking Report
  • John D’ell Ross – The Unusual Coffee Company
  • Martin Sampson – Coca-Cola Enterprises
  • Nick Pring – Real Pubs
  • Gavin George – InnBrighton
  • Ian Collinson – Oak Taverns
  • and Lord Tim Bell – Chime Communications
  1. The Association of Licensed Multiple Retailers (ALMR) is the only national trade body dedicated to representing the interests of pub and bar operators and providing their companies with business support and advice. There are currently 80 companies in membership, between them operating 15,000 outlets.  The bulk of ALMR membership is drawn from small independent companies operating 50 outlets or fewer under their own branding

 

 

For Further information please contact

Kate Nicholls on 07958 796238

Nick Bish on 020 8579 2080  or 07831 778993  

Barrel Dregs, Beer Discounts and the Tie, a possible solution (43)

Beer Discounts and the Tie

When I first bought a freehouse, discounts were never more than 5% to a sole operator.

In fact discounts had very little financial relevance to your business, they were a perk, your greatest perks were non financial benefits from the brewer i.e. glasses, garden furniture etc.

All pubs were competitive, freehouses having a slight financial advantage and the advantage of stocking a range of different brewer’s beers.

The tied trade did not object and had no reason to object to the prices being charged and the system worked.

The system started falling apart when rents were pushed up to enhance estate values, rapidly followed by discounts above the norm being demanded from the brewers by these Pub Co’s.

The wholesale prices initially remained the same to the freetrade, but to the tied leased trade were way above the percentage Norm that had existed for years.

It was straight money manipulation by people who understood money but failed to understand licensees, similar people became involved with the regional brewers and the major brewers and the stability that had been in the industry for several centuries fell by the wayside.

Companies were not interested in pubs and people only revenue, most companies weren’t even interested in selling beer it was a by product of the system of grabbing more financial returns without considering the consequences.

By borrowing more and the use of extended credit, expansion was guaranteed, I did suggest to one company that the assets should be consolidated and was laughed at, most companies were expanding beyond their true profitability, which put many into the category of a pyramid scheme, the recession confirmed this.

To my mind a very simple solution to the tie and discounts would be for the Government to impose a discount limit of 10% from all brewers to multiple retailers and wholesalers and 5% to sole retailers, tenants and lessees.

The wine and spirit industry are stuck within tight discount parameters.

If a strict limit, as suggested, were imposed on the beer and drinks industry, the tie would become irrelevant, supermarkets would be unable to undersell consistently.

Every drinks manufacturer supplies a wholesale price list every year, if these were registered with a controlling body and any breaches notified for action to be taken by the body.

Is this too simple, it worked for years very effectively without regulation?

The leading players in the industry have proved from the various reports that their actions are considered unfair in terms of trading, the RICS are addressing the rental issues, this would resolve the discount issues, which are grossly unfair at the moment.

Barfly

Short Term Opportunist Vs Long Term Strategist?

Short Term Opportunist Vs Long Term Strategist?

Is This Another Case of History Repeating Itself?

Marston’s, S&

NPC, Punch & Greene King, please stand up and be applaudedIt’s a

bit of a shame that some of the previously opportunistic national pub companies have buried their heads in the sand and continue to rely on the outdated strategy of squeezing tenant margin to extract maximum profitability at the expense of all others. They are clearly sacrificing long term gain for short term share value but I guess that’s the boom and bust society spawned over the last decade! “Here today gone tomorrow but who cares did you see my bonus last year?They will go the same way as the dinosaurs they emulate.The regional’s battle on and

History continually tells us that businesses that continue to invest wisely in an economic downturn are the ones that prosper and outperform the market in the longer-term.

These forward thinking strategists have put their money where their mouth is and are in the process of assisting the beleaguered trade by investing in the essential ingredients to bake a bigger cake thereby providing a bigger slice for all.

That sort of forward thinking needs to be congratulated in the current economic climate and time will prove these brave investment decisions to have been justified with yet another example of history repeating itself.

are genuinely admired by all for the sheer effort they put into the landlord tenant relationship. Added to this there is another bright and very positive light at the end of the tunnel.Marston’s, Scottish & Newcastle Pub Company, Punch and Greene King are four such long sighted companies spending significant amounts of money in upgrading their facilities.HERE ARE SOME GREAT DEVELOPMENTS RECENTLY COMPETED BY CROWN AND WE ARE HAPPY TO DO THE SAME FOR YOU. REAL AND COST EFFECTIVE YEAR ROUND SHADING SOLUTIONS YOU CAN DEPEND ON

www.crown-outdoor.co.uk

   

Maitland Walker a further article to confuse

The Guidance on the new mandatory licensing conditions issued by the  Home Office  just days before the new conditions came into force, has disappeared from its website.

A couple of weeks ago, we provided some  commentary on the Guidance, pointing out some of the inconsistencies with the Guidance issued by the  Department of Culture, Media & Sport (DCMS) at the same time.

Shortly after our article was published, the  Morning Advertiser was  reporting that the Guidance had been removed from the Home Office website. The Home Office claims the Guidance was removed because we are now in what is known as the  General Election “purdah”. A spokesman is quoted in the article as saying:

“It’s unfortunately due to the very strict rules of purdah that it’s not on our website”.

The reason is apparently, that during Purdah, the Government cannot be seen to be doing anything that might influence the way people vote.

However, the removal of the document from the Home Office website is unlikely to make any material difference to the trade. The document is likely to be available to Licensing Authorities and the Police, for example, through bodies such as  LACORS and  ACPO. It will therefore continue to be used by enforcement authorities to guide them in any action they intend to take in respect of the new mandatory conditions, even if the most likely source for Licensees to view the Guidance is no longer available to them.

You can view, download and print a copy of the Guidance here:

The DCMS Guidance is still, bafflingly, on its website,  here. Perhaps Purdah doesn’t apply to DCMS?

Rob Westwood-Payne

Associate Solicitor

Maitland Walker, over zealous Police interpretation of supplying free water

Maitland Walker, over zealous Police interpretation of supplying free water

Just two weeks after the  three new mandatory codes were added to all on-licensed Premises Licences in England and Wales, word reaches us of some strange, and some might argue, over-zealous interpretations of the new conditions.

In particular, the new mandatory condition requiring licensees to:

“ensure that free tap water is provided on request to customers where it is reasonably available”

seems to be exercising the minds of more than one Police Licensing Officer.

It appears that some Police Officers are suggesting the condition means that a notice stating that free tap water is available should be displayed in every on-licensed premises in their area, and that failure to do so is a breach of the mandatory condition. In fact, we have heard rumours that premises in Lincoln have been shut by the Police for not displaying such a notice, although we have not seen any evidence which bears this out.

The condition, it appears to us, is quite clear. Tap water, where it is readily available, must be provided on request to customers, free-of-charge. Whilst we can envisage discussions (and possibly even case law) surrounding the concepts of “readily available” and “customers”, we do find it baffling that Police Officers should somehow read into this wording the necessity for a notice.

If this is suggested to you as a Licensee, it should be resisted, and Police and other enforcement agencies should be referred back to the wording of the new mandatory condition.

Have you received this advice from your local Police? If so, please get in touch with us.

Rob Westwood-Payne

Associate Solicitor

Poppleston Allen, will the ash cloud cause an eruption of employment claims?

Will the ash cloud result in an eruption of employment tribunal claims?


With thousands of people having been stranded in foreign lands due to the Icelandic volcano, unable to return to work from their holidays. I have been asked where both employers and employees stand in relation to these absences from their place of work. Issues that arise when employees cannot resume work after an authorised break include:

As an employer do you have to pay them?

Employers are not obliged to pay for days of absence. Where the employee is perhaps one of two or three employed, such as in a small licensed premises, other part time staff may have to be engaged to fulfil the shortfall generated by the absence of the employee.

A reasonable employee would consider offering the employee the choice of either taking further holiday to cover the period of absence or taking unpaid leave.

Can the employer discipline employees who have unauthorised breaks of service? Would it be reasonable for the employer to consider such action given that the absence was due to the act of God or Mother Nature?

The question is whether in these circumstances disciplinary action would be reasonable – is it within the range of reasonable responses, open to a reasonable employer, for dealing with unauthorised absence? This is the question an employment tribunal will ask if the employee takes the matter to a tribunal. It would not be a surprise, with the circumstances as they have been, that an employee would be able to challenge a decision to discipline them due to absence caused by Eyjafjallajokull erupting.

However, if the employer can establish fault on the part of the employee – if an employee has avoided potential assistance to be brought home via another route and decided to wait for the air corridor to be re-opened, thus prolonging the absence, this would be relevant to the decision by the employer to discipline, or not. Failure by the employee to communicate with the employer may also be determined to be unreasonable if telephones/internet were readily available.

Reasonableness therefore is the key word to the way you should react as an employer.

For more information please contact Nick Walton .

Pub Co Buildings Insurance

A serious warning, for all lessees in the smaller Pub Co’s, especially free of tie.

The Publican had a report that certain Pub Co’s had hiked their compulsory insurance, far beyond it’s real cost.

I had a Lessee yesterday where the Pub Co had put his Buildings Insurance up to just under £500 per month.

I have tried to ring the company without success, his solicitor has written with no reply, he has emailed and phoned and said they would send a copy of the policy this has not arrived after several weeks.

Great way to increase the rent, as usual be careful and be legal.

Barfly

Poppleston Allen, would your staff pass a Test Purchase?

 Are you confident your staff would pass a Test Purchase?

  • Date: 15/04/2010
  • Source: Poppleston Allen
  • Author/Solicitor: Nick Walton

The dog days of the current Parliament have been and gone. As expected, the Mandatory Conditions made their way onto the Statute book but continue to create confusion. The Guidance, published by the Home Office was removed from its website almost as soon as it was posted and further assistance with respect to interpretation of those Mandatory Conditions is unlikely to materialise before a new administration takes over the running of the country in mid-May.

However, just when we thought that with Parliament away for the next month, our lives would be quieter, the Police in one area of North Wales may take a different view. 11 pubs in Denbeigh in Ruthin were closed last Friday and Saturday night, in what is probably a record test purchase failure led closures at one time.

The pubs were told either to close for 48 hours, or face prosecution with the risk of up to a £20,000 fine for failing either 2 or 3 test purchases.

Remember that the rules changed from 29th January 2010. Two test purchase failures are now all that is required to be guilty of persistently selling alcohol to under 18s. Each of the premises involved in this latest operation will have to go through the ‘review’ process as well as losing the revenue for the two days the venues were forced to close.

In the North Wales operation 47 bar staff attended a training session about their responsibilities and duties during the closure period. It emerged that 35 of those 47 had not received any previous training with respect to underage sales (wow!).

My recommendation is that you shouldn’t be fooled into thinking that the next month or so is a quiet period for you, as well as your member of Parliament. If anything, you need to be more vigilant as Police operations are guaranteed to increase in the run up to, and during, the World Cup. In order not to get caught, training, training updates and records of training are essential. Ensure your staff know why the training is necessary and that checks are rigidly enforced.

Further information regarding training your bar staff can be obtained from Poppleston Allen Training.

For more information please contact Nick Walton

An Interesting Debate over Rates, essential reading. (42)

BII Rating Road Show, Yate 8th April

 

The BII had a Rating Road Show, unfortunately it had a limited attendance for such an important issue.

The show was hosted by Michael Yass, Fleuret’s leading Rating Valuer with a learned colleague from the Inland Revenue Valuation Office.

Michael Yass opened with a brief introduction to the vagaries of rating and then introduced the Valuation Officer, who proceeded to discuss the basis of rating valuation.

It all had a similar feel to the Rent Road Show presentation.

Previously various so called knowledgeable people had stressed at great length that rent had no relation to rates.

I have had three lengthy debates with Valuers who have tried to convince me that my freehouse rates were linked to Pub Co rents, I, on all three cases agreed a reduction in rates.

The Valuation Officer stated that there was a direct link between rates and rents, he then said that rents were based on a Competent Operator.

Having questioned the RICS previously on the definition of Competent Operator, I asked for an accurate definition of Competent Operator, both speakers said a Reasonably Efficient Operator and were totally unable to define anything else, in fact they were both stuck for words.

The BII definition of a Competent Operator is someone with three years profitable trading and advance qualifications or five years profitable trading with minimal qualifications, which equates to full membership of the BII.

There are very few that meet that criteria signing new leases and tenancies.

This suggestion caused a very red faced pause and a degree of agreement from the Valuation Officer.

The speaker then turned to FMT (Fair Maintainable Trade) and the use of comparables.

I then pointed out that by using this method an assumption is made that business is infinite, it is not and is finite and any growth is at the cost of another business, would they therefore go to the other business and reduce their rates.

A further red faced pause as the reality struck home, the Valuation Officer conceded that I was right, Michael Yass said that they had all the records and admitted that they did not have the total available business in an area, but they did have records of the rents for comparables.

I then pointed out that in a court case in 1986 an assumption based on an assumption had no legal standing, which makes the repeated use of Comparables seriously flawed.

By now everyone was asking questions and the host suggested that they should leave any further questions until the conclusion, this did not stop the questions, the presentation concluded taking somewhat longer than scheduled.

At the conclusion I spoke to the Valuation Officer and we had a good discussion and he agreed that assuming business was infinite by the extensive use of comparables raised serious questions and the fact that business was finite needed raising and clarifying.

I did say that I had already raised these issues with the RICS and said that the rating basis was equally as flawed as the rental system.

The rating calculations are based on turnover linked to rental values, profitability is ignored, I stressed that failure to consider profitability would cause extreme hardship with lower turnover pubs since a £100K compared to £200K overheads were probably similar, yet the profitability at the lower turnover would be minimal, with higher turnover pubs the percentage net profit was very similar.

Assuming that the vagaries of the perceived ability of a Competent Operator are ignored and the realistic profitability of any operator are considered based on business being finite, we may have a better rating system.

He also said that they assume rents to be 12.5% of turnover, I said this was too high, certain brewers are now suggesting that rents should be 8% of turnover which I still consider to be too high.

If tied rents are to be linked to turnover they should be between 4-6% of turnover when pubs were viable and a career for life, I said my commitment was to try and achieve this, which may be putting the clocks back, but the system worked.

We discussed other issues which he said he would raise in the right place and in spite of putting two speakers on the spot, it was a very interesting discussion.

If anyone has an opportunity to go to a Rating Road Show please do and ask these questions and I will also be delighted to add a few more which time excluded.

The unfortunate aspect is that the rateable values have been raised and the amount payable per rating pound has been reduced and according to my calculations would involve a 1.6% overall cost, yet didn’t work out to that from the figures shown, which made me wonder.

If the Valuation Office do assume correctly that business is finite and any growth is at the cost of another business, the rating distribution would be fairer and the Rateable Values would fall across the board since the 12.5% basis would be substantially reduced.

Sadly they are unlikely to reduce the amount of money that they require from the Pub Industry, but if rents come down they may just have to do that, they cannot have a two tier rating pound, one for pubs and one for commercial property, but the rating assumptions are very much akin to the rental assumptions, which are now flawed and being investigated by the RICS.

Barrel Dregs, Pub Industry Fat Cats (41)

In my ever increasing efforts to assist struggling lessees and tenants, who in the main deserve far more than they are actually getting, whilst the fat cats get more rotund by the minute.

The glaring hypocrisy of the industry is staring us all in the face.

The BII PIRRS finally brought it home to me, several colleagues had been expressing their disgust at the choice of arbiters, since they had pretty well all worked for Pub Co’s in some capacity at one stage or another.

This would not have been a bad thing if the industry had been fair and transparent, which the Government Reports have now confirmed that it is not.

The RICS are taking major steps to rectify their Valuation Guidelines which have been allegedly misused to over rent and over value properties with no consideration or very little as to viability.

The same people that have endorsed the over renting and over valuing are still in positions of influence in the industry, still charging their extortionate fees along with many others who have enjoyed lucrative benefits from one side or another.

Why are these so called Guru’s of the industry still enjoying the benefits, when they have been in many cases the cause of many tenants downfall, if they are so knowledgeable why did they not see that the industry was heading for disaster and the terms that they all conceded were unsustainable in the main.

Some have gone very quiet, many have an air of injured innocence up to their duplicitous necks, a few are trying to distance themselves from being implicated, a few are trying to catch up realising that with the Government Reports that they are on the wrong side.

I am not some sort of financial genius and it has been patently obvious to me that the industry was heading for disaster some years ago, anyone with an iota of common sense could see that, why are the so called establishment continuing to use these people, I am sure many could be considered guilty of corporate negligence or is the industry closing ranks to protect people that I would refer to as buffoons, they all should be identified and held to account.

They might like to consider giving their unbiased services free to PIRRS or wherever it may help to make up for the misery that they have caused or get out of the industry.

Certainly I would like to see them identified on the Internet including their companies, I cannot put their names on www.buyingapub.com otherwise I would be sued, but a lot of other people could.

The Internet used the right or wrong sort of way can destroy a companies credibility, as a number of companies have realised to their cost.