Monthly Archives: August 2011

Rent Reviews (Pubs, Restaurants and other Commercial Property)

Rent Reviews, Pubs and Restaurants.

If you are due for a rent review at any time in the coming year, please contact us at info@buyingapub.com,  you need expert and knowledgeable advice since the RICS Valuation Guide Lines have changed for the better.

Certain companies are still trying to enforce many of the aspects of the old Guide Lines where they can and many tenants and lessees without having an in depth knowledge on the new Guide Lines are being caught out or will be caught out, having another five years of an unsustainable rent is not the answer.

Many recent settlements have resulted in realistic viable rents at long last.

We have several surveyors who will talk to you and explain your options and possibilities, we would like to stress that they have not worked for Pub Co’s who have used the now discredited Pub Co Model.

We would also like to point out that it is vital to act early and ensure that you meet all of your lease rent review requirements, we have too many calls from people that have left it too late.

Barfly

BRULINES BULLY BOY TACTICS, Barrel-Dregs (199)

BRULINES BULLY BOY TACTICS

Pot Boy North was visiting an old chum in Leeds last month and was supping his favourite Timmy Taylors in deference to that reet head banging stuff Jaipur IPA from Thornbridge, a glorious drop but at 5.9 ABV, hold them horses. Well anyroad, my chum and I  were having a contemplative sup over a quiet lunchtime, and these days weekday lunchtimes are very quiet, when unannounced in toddles his BRM with a stranger in tow. The BRM goes straight to mi chum, brushes past yours truly and ignores me, butts into our chat and announces ” my associate here from Brulines,” gesturing to ‘tother bloke,” is here to inspect the bars and the cellar NOW”.

“Hold up a chuffing minute” says my chum “you can’t just barge in here like that wi sod all notice…access refused, but you can come in any time you want if you give me a bit of prior”. With that the Brulines chappie pushes the BRM out of his way “I can go anywhere I like at any time and you nor anyone else can’t stop me” and with that made to go behind the bar. Big mistake ! Mi chum was in years gone by a Door Security Executive (club bouncer) and still carries too much beef but he’s nimble on his feet for such a big bloke. He quick a lightening put his arm across the bar flap stopping the Brulines rep in his tracks.

“You’re hiding something I can tell” says Brulines ” I can smell a hefty fine coming out of this just you see, maybe even the huge costs of a lease forfeit”. Now my chum had been careful not to grab Brulines by the throat, which was what he felt like doing. Oh no, he had carefully barred his way and not laid a finger on Brulines bod.” The only thing that might smell around here is your adrenalin matey, which is brown and runny and I suggest bike clips to preserve your dignity. Now sit down , don’t move an inch and I’ll fetch mi lease right now”. I was told to keep an eye on the pair as he went and got the lease. They sat down.

“Right you pair of chuffing simpletons, which bit of this don’t you quite comprehend !”.He turns to the Lease and quotes “Under Rights Reserved, that’s what you can do to me, it blethers on about putting right breaches in the Tenants obligations, installing and maintaining flow monitoring stuff and then at the very end says, such entry…and(except where the need arises due to an emergency or the Tenant’s default)” and at this point mi Chum raised his voice and spoke very slowly-the few people in the bar went dead quiet…”to be at reasonable times on reasonable notice. Now what bit of that last sentence did either of you dimwits not understand”. Silence.

Then mi chum leafed on through the lease, “Ah here it is in black and chuffing white, it says…If the Tenant is in breach of obligations…he will on demand let the Company and others authorized by the Company enter the property to remedy that breach”. More silence. “Now miladdoes, I am not in breach of anything and you t’prat from Brulines know that reet full well, that is unless you can prove otherwise”. More embarassed silence. I took mi chum to one side while the now pink round gills BRM fiddled wi his comforter, sorry laptop. Brulines was a picture of pure bile, not a nice sight. I reminded mi chum about his Brulines access code and his absolute right to have access to his stored Brulines data for what it was worth seeing as how its basically inaccurate, but that another long story linked to Trading Standards (Ed..see many Pot Boy reports passim).

“Eh up, I want mi Brulines access code like right now” says mi chum. Brulies looks away and BRM says “I can’t give it out just like that, I have to have authorization, there are procedures”. Standoff. Nobody says anything. Brulines mutters darkly, “I’ll be back and go through every last ******* inch of your cellar, it definitely won’t be pleasant”. “Well you might think of starting with calibration” says mi chum just as darkly,” as it hasn’t been looked at since it was installed over six years ago. Aren’t your troops supposed to recalibrate every six months”. BRM and Brulines left without even a by you leave. The few regulars in the bar started clapping “That showed them idiots” and “well done Nobby, stick it up ’em” echoed round the place.

Outcome, well the Brulines access code was provided the next day, and Brulines bully, not another word, and that’s been more than seven weeks.

Goes to show how practiced bully boy tactics can work if you don’t get a bit savvy as to the rights you have hidden in the lease.

Back to the cellar !

Pot Boy North

Note from the Editor

Rent Reviews,

If you have a rent review due within the next year, please email us at info@buyingapub.com, two of our colleagues who were instrumental in the discussions with the RICS to rectify the anomalies in the RICS  Valuation Guidelines are joining together to form a new business, be assured neither have worked for any of the offending Pub Co’s using the now discredited Pub Co model.

Rental settlements are now being aligned to realistic and existing business levels, which they always used to be, it is worth an email to discuss your situation with them.

 

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees made fully aware of many hidden pitfalls.

 

 

 

 

 

 

 

Apple Brandy and Chicken

Apple Brandy and Chicken

Are you thinking about chicken recipes?

Example:   Apple brandy chicken, made with chicken breast halves, apple brandy, cream, onions, and butter, along with mushrooms.

4 chicken breast halves

salt and pepper

8 ounces sliced mushrooms

2 teaspoons olive oil

2 teaspoons butter

1/3 cup apple brandy, such as Apple Jack or Calvados

4 green onions, chopped

1/2 cup whipping cream or heavy cream

1 teaspoon fresh thyme leaves or 1/4 teaspoon dried leaf thyme

Preparation:

Flatten chicken; place chicken breast halves between pieces of plastic wrap and gently pound until thinned out and uniform in size.

Sprinkle with salt and pepper.

In a large heavy skillet, heat olive oil and butter over medium heat.

Add chicken breasts. Cook for about 5 minutes, until browned, then turn.

Add mushrooms and cook for about 5 minutes longer.

Add green onions and apple brandy and cook for another minute, until chicken is cooked through and mushrooms are tender.

Add cream and thyme; simmer until thickened.

Taste and add salt and pepper if needed.

Have you any other ideas?

Please send them to us.

recipes for chicken

A call for an Independent Government Commission into the Pub Industry

BISC’s e-petition.

This is a petition for an Independent Investigation of the Pub Industry by Paul Nuttall MEP.

If you agree with the content of the petition please follow the link and sign the petition, if you do not please ignore this issue.

But the BISC Inquiries have exposed a considerable amount of serious of faults and abuses by a number of companies and our own opinion is that there is a need for legislation, enforceable by law, that is fair to both sides without fear or favour, in order for everyone to have a long term career for life, should they wish to.

The Industry has failed to self regulate, the old voluntary standards are followed by a considerable number of companies, but a very large number of pubs are controlled by companies that do not have these standards, hence the BISC intervention and the need for an Independent Commission, your vote would be appreciated if you agree.

http://epetitions.direct.gov.uk/petitions/6844

Barfly

Graham Allman Associates get their knuckles rapped, Barrel-Dregs

Pub Commercial Agents get their knuckles rapped

ASA Adjudication on Graham Allman Associates

 

Graham Allman Associates t/a GA-Select

Select Suite
17 The Green
Ashby-De-La-Zouch
Leicestershire
LE65 1JU

Date:

17 August 2011

Media:

Internet (on own site)

Sector:

Business

Number of complaints:

1

Complaint Ref:

A11-156376

Ad

Claims on GA Select’s website included “GA Select uniquely operates under license from the DTI – OFFICE of FAIR TRADING (OFT) and is a practicing style of Graham Allman Associates Limited. The company was formed by Graham Allman in 1983 on the back of Graham’s experience within two of the most successful breweries of the time, BASS PLC and WHITBREAD where Graham held board responsibility for operational and property development. Today the firm operates very much as a user friendly family business with strong ethics and customer service focus with ongoing professional training for everyone within the organization. We have a well proven track record of success within our trade sector and are ‘ranked’ within the top four National agencies within the licensed trade by an independent survey, something that Graham and his team are very proud of however Graham believes ‘that no man is an island’ and that the team are his real strength”.

Issue

A retired consultant to the industry challenged whether the claims:

1. “GA Select uniquely operates under license from the DTI – OFFICE of FAIR TRADING (OFT) and is a practicing style of Graham Allman Associates Limited” misleadingly implied that the advertiser had been accredited in some way, when they understood that the license referred to was a consumer credit license, which were issued in the tens of thousands;

2. “The company was formed by Graham Allman in 1983” was misleading and could be substantiated

3. “… on the back of Graham’s experience within two of the most successful breweries of the time, BASS PLC and WHITBREAD where Graham held board responsibility for operational and property development” misleadingly implied that Mr Allman had sat on the board of those companies; and

4. “We have a well proven track record of success within our trade sector and are ‘ranked’ within the top four National agencies within the licensed trade by an independent survey” was misleading and could be substantiated.

CAP Code (Edition 12)

Response

1. Graham Allman Associates (GAA) said there was no implication that the firm was accredited in any way by the Department of Trade and Industry (DTI), but that as they operated under licence this was itself accreditation as the firm had to undergo checking and verification of its conditions, which were monitored. They said there was also a complaints procedure in place which also implied accreditation in some form. They said the fact that consumer credit licences were issued in the tens of thousands had no bearing on the matter. They said they needed the licence to provide the services they offered and therefore it was only reasonable that the fact they held one was stated on their website.

2. GAA said that GA Select was a trading/practicing style of Graham Allman Associates Ltd, which was incorporated in 2004. They said they had been trading as GA Select since 1983, initially as a partnership and at different times as an incorporated limited company. They said they could provide evidence that GA Select had been trading since 1983.

3. GAA said that Graham Allman had worked for Bass plc between 1975 and 1983, and had sat on the board for operational and property development. They said that, alongside running GA Select, he was an employee of Whitbread plc between 1985 and 2001, where he sat on several boards with operational and property development responsibility. They said this had been checked by way of references on many occasions, including by the DTI. They said they could not, however, provide evidence with regard to the positions other than providing information on pensions relating to Mr Allman’s employment at the companies.

4. GAA said the independent survey was undertaken by the Publican Magazine and Morning Advertiser in 2010. They said that the Publican Magazine had nowclosed down and the journalist responsible for the survey had moved on, so theywere unable to provide a copy of the survey.

Assessment

1. Upheld

The ASA considered the claim “GA Select uniquely operates under license from   the DTI – OFFICE of FAIR TRADING (OFT)” implied that GAA was the only company which held a licence from the former DTI and/or the Office of Fair Trading (OFT), that that licence was specific and unique to GAA, and that therefore GAA was specially endorsed by the former DTI and/or OFT. We noted the licence to which GAA referred was a consumer credit licence, which was issued by the OFT, and that companies were required to have that licence to carry out a number of different business activities, including if they sold goods or services on credit or arranged credit for others. We noted there were therefore many companies that held the licence and it was not unique to GAA and did not equate to a special endorsement from the OFT. Furthermore, we considered that consumers would be likely to recognise the DTI acronym and even if they were aware that the department had been replaced with two separate departments in 2007, they would infer from the claim that GAA was endorsed by a government department concerned with trade and industry, which was not the case. We therefore concluded the claim was misleading.

On this point, the ad breached CAP Code rules 3.1 (Misleading advertising), 3.7 (Substantiation) and 3.50 (Endorsements and Testimonials).

2. Upheld

We noted the claim in its entirety stated “The company was formed by Graham Allman in 1983 on the back of Graham’s experience within two of the most successful breweries of the time, BASS PLC and WHITBREAD.” We noted that GAA had informed us that Mr Allman did not begin working at Whitbread until 1985, which was, according to GAA, two years after he had begun trading under the name GA Select. We considered the claim therefore implied that Mr Allman had a greater range of experience before setting up GA Select than was the case, and it was therefore misleading in that regard.

We noted that the company Graham Allman Associates Ltd had not been incorporated until 2004, but the claim was based on their assertion that Mr Allman had been trading under the name GA Select since 1983. We also noted that, whilst GAA had stated they had evidence to substantiate the claim, they had not provided that evidence to us, despite being given the opportunity to do so.
Because we had not seen evidence to substantiate the claim, we concluded the claim was misleading.

On this point, the ad breached CAP Code rules 3.1 (Misleading advertising) and 3.7 (Substantiation).

3. Upheld

We considered the claim implied that Mr Allman had sat on the board of Directors of both Bass and Whitbread. We noted GAA’s assertion that Mr Allman had sat on the boards for operational and property development at both companies, but considered that, because the claim implied that Mr Allman had been a Director responsible for those areas and we had not seen evidence that was the case, the claim was misleading.

On this point, the ad breached CAP Code rules 3.1 (Misleading advertising) and 3.7 (Substantiation).

4. Upheld

We noted GAA were unable to provide a copy of the independent survey. Because we had not seen any evidence to substantiate the claim, we concluded the claimn was misleading.

On this point, the ad breached CAP Code rules 3.1 (Misleading advertising)n and 3.7 (Substantiation).

Action

The ad must not appear again in its current form. We told GAA not to make claims which implied they were uniquely licensed or endorsed by the OFT or any other government department, or to make claims for which they did not hold  adequate substantiation.

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees made fully aware of many hidden pitfalls.

 

 

A cry for “Help” for people wanting to work.

Staff available

If anyone can help please email us at info@buyingapub.com and we will contact the writer.

An email from a reader. 

I have friends who are working as waiting staff in a 4 star hotel in Devon .

As there is not too much work the hotel will let them go this week.

I am writing to you to see whether you can give them a job, they are a boy and a girl , very good characters, very hard working and highly motivated , they have NI numbers, and are self employed registered.

They will work for the NMW

They can start immediately.

As they are friends of mine , and I am doing them a favor, I will NOT charge you anything for that. I would like simply to help them not to go on the street ….

PLEASE LET ME KNOW WHETHER YOU HAVE VACANCIES FOR THEM , and if not , what positions you may give them

Remaining with respect !

Best Regards

Dean Thoneff

UK JOBS LTD

BII to undergo a radical shake up. Barrel-Dregs (197)

BII Shake up or Hicc’up?

 

The BII are closing the stable door after most of the horses have bolted, wonderful, some of us have been saying for years that the movement towards Pub Co’s sponsorship and the dependence on sales of qualifications to these companies are detrimental to membership, this dependence on Pub Co finance has been wagging the tale of the dog for far too long behind the scenes.

Peter Thomas, the author of this proposed shake up,  said that the Pub Co influence was incorrect, is he another guru who has been fed the information that they wanted him to hear, rather than what he should hear?

Be assured the BII Director of Qualifications was asked to produce a qualification on rental and rating valuation about ten years ago, his answer was that it would not suit the Pub Co’s, that question was put to him at a BII Staff Seminar in Oxford.

At that stage very few lessees and tenants had any knowledge about rental and rating assessment, some of us at a Regional Meeting agreed that it was essential information the way Pub Co rents were being manipulated at that early stage.

At this rebuff by the then Director of Qualifications the Regional Committee asked a Chartered Surveyor, an ex member of the RICS and a Council Member to put a proposal with all the facts together for a qualification on this subject to make lessees aware of what they can do themselves, surprise, surprise it was blocked again as an inappropriate qualification, despite numerous requests as to why it was not being implemented.

Many members would have benefitted from an in depth understanding of a rental system that been hijacked and was severely flawed, which the RICS have now addressed.

It could have saved many members a vast amount of money, if they had been aware of the vagaries of the rental and rating system.

How many other issues have been buried rather than confront certain Pub Co’s?

Certainly colleagues have been warned off raising certain issues, because it might upset the sponsors or cause a drop in qualification sales and that goes back as far as the latter days of Mary Curnock-Cook as CEO and still persists.

The Pub Co’s need the BII more than the BII need errant Pub Co’s, the current and past CEO’s both have shown a distinct reluctance to get tough with certain offending Pub Co’s, this has been become patently obvious to many departing members who have tried to look for help from the BII.

Nothing is in writing and therefore it is all hearsay or is it?

As any licensee knows bad news travels faster than good news, disenchantment with the BII is rife, it was thought that the new CEO would change that, but his performance at the recent BISC investigation into Pub Co activity was possibly considered worse than his predecessor at the previous BISC session, who declined to comment.

There are numerous reports passed back to us of the BII’s failure to take positive action of abuses to members and others(see previous Barrel-Dregs), especially the Pub Co’s subject to the BISC’s investigation, they should be kept at arms length by a body claimimg to be the Professional Institution for the Industry.

The result is a body which should be leading the industry, which it is not, many ex members and licensees question the support level of the BII, membership is bought by a vast number of corporate members tenants and lessees, with very little in depth knowledge of the BII.

Standards are ignored in respect of corporate members tenants and lessees, is that a sign of a dash for cash?

Raising professional standards it is not.

Very few if any of the permanent BII staff have any first hand experience of running a pub in these troubled times and that runs right through to the qualifications division, they may have many successful licensees telling of the joys of being successful.

The majority of licensees are having a very tough time, the BII has very little if anything to tempt them, a few post nominals after your name and now you don’t have to qualify in many cases, it’s a sad day.

Some of us would like to see the BII as a strong members body sorting out the industry, but I fear the radical change to the BII will make it become even more of a Toothless Tiger with very few genuine members, the change to becoming a leading body may well be beyond the present managements capability without Legislation to combat the abuses of the industry and even with Legislation the real neutrality of the BII may have veered to far off a central path already.

If the BII hopes to rebuild itself, it has to be without fear or favour, it has to take on the abuses of the industry, correct them and be seen to be scrupulously fair to both sides, it needs to change now, not by 2014, the abuses of the industry by certain companies will become endemic, like the flawed valuation system which became the norm and allowed the rapid growth of the companies under investigation.

The BII has to regain it’s lost ground and gain the respect of the industry members that it had twelve years ago, buying members does not make a respected body, breaking bread with corporate heads does not get the backing of the people at the Coal Face, they want and need a body that addresses the issues  that affect their lives and businesses and as said before is totally fair to all and seen to be untouchable by supposed threats of corporate finance withdrawal or purchasing qualifications elsewhere.

To conclude the BII is a struggling members organisation and battling to maintain sales of qualifications in a market where there are more competitive options from other suppliers, but as always a market where the minimum qualification is all that is needed to buy a business and secondary training and qualifications, which are essential in my opinion, are shelved because of available time and cost in tough economic times.

It would be good to see the BII emerge as body to control the industry, but for too long they have been reactive, too late, rather than proactive which the industry needs, too many people at the top have little knowledge of what is happening to their grass roots members or choose to ignore it, investigating in depth may move them out of their comfort zone and the findings might be too unpleasant to deal with.

Cellarman

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees made fully aware of many hidden pitfalls.

 

 

Serious thoughts from Omark Strategic Hospitality Solutions

“Working at the coalface”

 

Redditch, UK. Tuesday 9th August 2011

It’s time for the pub sector operators to give landlords the appropriate
skills to manage, control and build a more profitable business.

“Things will get better”   says Lester Pyatt, Managing Director of
Omark Strategic Hospitality Solutions, “but the sector has to realign itself to
market conditions, whilst mounting a defence against supermarket pricing policy
that encourages our customers to spend their leisure time at home rather than
going out.”

An analysis of the pub sector over the past ten
years shows that small, urban, “wet led” outlets were already starting to feel
the strain through trying to compete with larger operator’s marketing
strategies, such as Wetherspoons. The decade also saw a step change in customer
lifestyles, rent issues and smoking bans all of which meant the reduction in
outlets was bound to happen.

Pyatt
continued “Maybe it’s slightly controversial but I actually think recession
assisted in speeding up the closure process. At the time the enormity of the
cull was a culture shock but it will eventually create a leaner, more
professional and appropriate business model.”

Large multiple pub operators are slowly repairing
bank balances as the “bailing out” process continues in an attempt to keep their
slowly sinking ships afloat. However, whilst this is happening some board directors
are still neglecting or failing to invest in the business development
opportunity with tenants and their customers.

Some pub operators are giving business support but
generally Business Development Managers are still engrossed in fire fighting in
order to maintain cash flows. The provision of quality business structures
would assist the development, turnover and profit of the business and alleviate
some of the pressure on the landlord.

When the fundamentals of the business process are
in place it is up to the BDM to manage the project and give support in the
following areas

  • Marketing strategy
  • Customer service & operation
    auditing
  • Financial controls: Profit & Loss
  • Quality Control:  e.g. operation handbooks, check lists,
    Customer Service Charters, complaints procedures, test and measure advertising
    procedures
  • Cost effective advertising & promotion techniques

This may require considerable investment by pub
groups as training BDMs in managing, advising, coaching and supporting the
landlord to develop a successful business is time consuming. Daily customer
calls would have to be replaced by more concentrated quality visits.

Pyatt believes there are too many independent “consultants”
knocking on doors, chasing the same business, with most being re- buffed by
operators and landlords who are either too pre-occupied or personally do not
have the incremental funds to invest in business development .

Pyatt’s business was created because he identified
the “gap” that existed between the landlord’s need for support to solve his
problems and issues and the apparent lack of support offered to help him do so.
“Double digit growth in turnover or profit can be realised if the business
process is followed and maintained stringently by focussed landlords.”

Pyatt is currently talking to a consortium of business professionals who
are experts in certain aspects of the business process such as

  • Finance
  • Specialised on trade promotions,
  • E mail marketing,
  • Sales initiatives
  • Procurement
  • Marketing strategy
  • Food presentation & promotions
  • Pubs with beds development

Discussions are taking place with legistitive and
governing bodies about the business process culminating in a month of “free” road
shows around the country to landlords and pub companies in conjunction with
British Pub Week.

Pyatt concludes: “We have got to unite to make our
sector the most efficient within the hospitality industry. Once we have a
leaner and more professional pub sector model it will have the ability to grow
and prosper. I just hope that the pub groups will come to the party and get a
bit of coal on their faces!”

Note to Editors

 

Omark Strategic Market Solutions service the licensed trade with
business development programmes. It was established in 2006 by Lester Pyatt
formerly Head of Marketing at Jersey Brewery.

 

Omark Strategic Market Solutions is a division of:

L P Marketing Ltd

11 Kingfisher Business Park

Lakeside

Redditch

Worcs

B98 8LG

 

For further information contact Lester Pyatt on 07931 238211

www.omark.co.uk

A suggested step back from the Pub Co Model, Barrel-Dregs (197)

Pub and Restaurant Rents

 

The world is facing a serious financial crisis, China could be holding the world to possible financial ransom, the US is certainly struggling with China holding trillions of it’s financial markers, if the news is to be believed, Europe and the Euro are teetering on the brink of something that a lot or most politicians fail to grasp.

They,  like a lot of politicians are looking to see how they can promote themselves rather than address and understand the situation, it all sounds very scary.

In the pub/restaurant industry across the globe, the markets are shrinking as ordinary people try to contain their expenditure, because of the uncertainty.

The industry that we are all in does not manufacture and export, drinks suppliers do, but the people that run pubs and restaurants do not in the main.

The only solution is to cut overheads, not sack good staff, because unemployment reduces the market even further and discontented ex staff do you no favours in terms of PR.

Firstly we have the extortionate rip offs by the Energy suppliers, if you fail to renew or change your Energy contract they put you on an outrageous “Deemed Rate”, far in excess of your normal rate, they have been stopped from doing this on domestic property by law, but they still have a loophole on commercial property, contact (http://utilitiesdirect.co.uk) they will always talk to you, this is not a commercial for them, but I have always found them excellent.

The point of this article is for landlords of any commercial property, pubs, restaurants etc.

We all know that freeholds have been grossly over valued without any consideration of viability, the only exceptions are the ones where their viability value was in excess of it’s perceived rental value, these issues were raised to the RICS and steps have been taken to remedy this serious flaw in the system.

The only real way to lower the overheads is for landlords to reduce rents to bring the businesses that are struggling back to viability, I can see the shrieks of horror from our readers, I would point out that I am also a landlord on various commercial properties and it is a statement that I do not make lightly.

To a number of corporate landlords they have no room to manoeuvre with their corporate borrowings, especially those that have followed the Pub Co Model, but more realistically what are the alternatives?

You have a failed tenant, who has to be removed or has gone, possibly bankrupt, an empty property with a failed business in a recession, not good, a boarded up property with a lease for sale sign, again not good for your corporate image, deteriorating property with possible vermin and even worse squatters, finally the local authority want full rates as we found out, nearly to our cost.

As soon as we realised that good long term tenants were like “Hens Teeth” we put an application in for conversion to residential, being a brown field site, needless to say after eighteen months of planning stress we got the change of use, despite the original planners enthusiastic advice that the property should never have been commercial in a close residential area.

The planning as anyone knows is good for five years, rates for being vacant were nil for some considerable time, it was costing us nothing, but no tenants on the horizon and then the bombshell we had to pay full rates from April, this left one option, to implement the planning application and start work, the roof came off and still they wanted the rates, we finally managed to convince them that work had started and rates were non payable, but the thought that we would be liable for several thousands of pounds of rates very regularly with no tenants income or a tenant to pay the rates is a very sobering thought.

A number of companies are using the ploy of telling their lessees to assign their leases if they are struggling, sounds easy, what is the value of a struggling pub/restaurant lease, barely fixtures and fittings value, the landlord wants an assignment fee and a guarantee by the lessee of the incoming tenant for the duration of their time, a kick over from Privity of Contract, banned in 1997.

It’s a mess, the unscrupulous landlords using the dilapidations con without spending the money they receive, take over the property and hope it will relet, fat chance on a boarded up business.

The Family Brewers are in the business to sell beer and any other products that they produce, if they have empty, boarded up pubs, failing tenants they lose their core sales market and there is more profit in selling beer than collecting rent from struggling tenants.

Take a hard look at your rents, some family brewers have already reduced rents to help their tenants, a tenant making money invests in his business, one that is not drives business away, very few people support a loser and listening to whinging publican is not good for business.

You need good licensees, far too many have been put on the scrap heap with companies following the Pub Co Model, if rents come down, rates will have to come down since they are linked together, rents to be viable should be between 6-8% of turnover depending on the degree of tie.

I am making this plea to the Family Brewers to set the trend because they are in it for the long term, whereas the Pub Co’s are not it is straight money manipulation, see (The Great Pub Co Con in the April 09, Archives on this site).

There are Pub Co’s who are in it for the long term and act like brewers without brewing beer, it would be good if they would consider this proposal, if they have room to be flexible.

We need good operators and viable businesses, but we need to reduce overheads without destroying the businesses, we all accept apart from a few that many rent levels are unsustainable and the related valuations far in excess of their viable worth.

Punch Taverns shares are in danger of being converted to Junk Bonds, Enterprise Inns shares are tumbling, far from their dizzy heights, there are a string of these companies that have followed the Pub Co Model very much to their cost, all under capitalised to stand even a whiff of a recession let alone a major recession.

We need to stabilise the industry by realistic, pragmatic thought, we have lost too many good people and the industry has too many newcomers that have no idea of the minefield that they are entering, experience has to be earned not bought off an inadequate three or five day course depending on who you go to or even the rediculous multi choice answer questionaire that is supposed to give you the knowledge to understand your commitments with a Pub Co lease.

This is one reason why this site was set up, to try and provide information across the board, not just the information they teach you on a course, most is common sense, but a lot of buyers of pubs and restaurants common sense vanishes as soon as they open the door to customers, years later they kick themselves for being so naive.

Don’t condemn this article for suggesting this idea as a start to a solution, it has always been the first action that I have taken with good tenants, reduced the rent and as a multiple operator I have always negotiated better terms for my tenants on supplying beer etc than they can negotiate, I in turn was paid the additional discount above their discount and everyone was happy.

Cellarman

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees made fully aware of many hidden pitfalls.