Monthly Archives: June 2012

Poppleston Allen, Is your Late Night Licence worth the possible cost?

Greedy Licensing Authorities.

Northampton Borough Council have issued a Committee Report which was considered on 19th June, providing the Licensing Committee with an estimate of how much money would be collected by the Council, should a Late Night Levy be introduced applying to all premises permitted to sell alcohol beyond midnight on their premises licence.
The report estimated that the total income would be £164,511.00, but if those premises permitted to sell alcohol on their premises licence between midnight and 01:00 decided to vary their premises licence to permit the sale of alcohol until midnight, this would be reduced to £75,503.00, a significant reduction.
Of that money collected of course the Council could only retain 30% as a maximum.
It doesn’t take much to realise that the costs of implementing the scheme and the amount of money that will be realised by the Police and the Council is fairly small in terms of the administration that will be involved in the scheme.
The Council could be accused of jumping the gun in terms of using set fees, that had merely been proposed by the Home Office, as opposed to being ratified and the figures themselves also ignore any potential exemptions or reductions in the Levy (which again have not been finalised) some of which may be enforced on the Licensing Authority by secondary legislation. The Council rightly points out in the report that in addition to only realising a small amount of money from the Late Night Levy, it would also face a number of premises seeking to vary their premises licence to reduce the hours during which alcohol can be sold, for which the Licensing Authority can make no charge.

For more information please contact Jonathan Smith

Morgan & Clarke, Monthly Newsletter (Read about non payment of Rent)

MORGAN & CLARKE  JUNE 2012 NEWSLETTER NO. 7

Pigeon House, The Broadway,

Oakridge Lynch, Stroud, Glos. GL6 7NU

Email: info@morganandclarke.co.uk   Phone:  01285 719292

www.morganandclarke.co.uk

(Also at:  London, Cardiff, Matlock, Braunton, Lewes)

 

The unseasonable bad weather is having a knock-on effect, both short and long term, on the resort destinations within the UK with growing numbers of Brits booking holidays both over the Jubilee weekend and for the forthcoming main holiday period.   To quote Gillian Edwards of ABTA

“We do seem to have seen a significant rise in demand for overseas holidays.  People have been reminded at the end of April and early May that you can’t really rely on the British weather”.  

 

Aside from the weather, we have a strong pound at a 22 month high against the Euro and looking to get stronger.

 

Visitor numbers to the Thomas Cook website, which is one of the prime sources of overseas package tours, has increased by 20% over the same period last year.  In direct contrast, Hoseasons, which specialises in British holidays, has seen a fall of 38% over the same period according to the web information company Alexa.

 

We have a large number of seasonably based clients who are constantly being told, both that the recession has ended and that the so-called stacation will save their financial bacon.   Both factors are included in pub rent review assessments and both should be treated with equal caution.

 

Long or Short Leases

The pub and restaurant industry has a large number of 20 year leases and some even longer as a bi-product of the leasehold culture in the early 1990’s.   Lease renewals are regularly for the maximum permitted under the Landlord & Tenant Act 1954, which is 15 years.   Contrast our industry with the commercial market in general and you are in for quite a surprise.

 

According to the British Property Federation and the Independent Property Data Index in their just published Annual Lease Review, the average length of a commercial lease last year was just 4.8 years.   Three quarters of all leases are now for five years or less compared with only 63% in 2010.   Taking breaks into account, leases have shortened by three years since 2002.   Long leases in the pub and restaurant industry were always justified in the ability to onwards sell attendant goodwill.   However, with a vast number of supply tied lessees earning less than £15,000 p.a., there is now virtually no goodwill factor as an asset in an onwards sale of a supply tied lease.   Indeed, often the asset is only that of the value of the inventory.

 

Food for thought on whether or not a responding Section 26 Notice in lease renewal, should now be considering say a 5 or 10 year term rather than the accepted 15 year maximum.

 

Offers of Assistance

There seems to be a misconception amongst publicans and politicians that the tied model offers some sort of guaranteed assistance to licensees should they run into difficult times.

 

Tenant help is not enshrined in to the BBPA’s Framework Code codes of practice or even individual company codes.

Pub companies ‘may’ offer assistance if they deem the circumstances appropriate.  Contrary to the propaganda, this is not unique to pub companies and brewers operating a tied tenanted estate. They, like any other landlord, commercial or residential, are not obliged to give help – it is a voluntary concession.   It follows that this purported offer of help and indeed the level of assistance supposedly already being undertaken, is not some kind of special commercial or financial advantage that should be valued as individually identifiable to the tied tenanted model.   No landlord, pub company or brewer, commercial or residential, is required to give help but it would seem to be a sensible business decision to do so rather than end up with a bust tenant and an empty property.

 

The problem we still face is that the operation of the tied tenanted model has relied on inflating rents by denying the licensee access to the information that they need to enable them to make sound commercial decisions.  All too often, at rent review, a rent is simply proposed and then a horse trade of rent proposals results in a settled rent that bears no resemblance to open market rental value, truly compensating the licensee for the disadvantage of being tied.   Instead, the rent is a level which the publican thinks they can just scrape by on and is as much as the pub company can feasibly squeeze out of the licensee.

 

Only when run right to the wire is a true idea of the correct approach seen and comparable evidence submitted to justify a rent proposal. The rent paid for a pub by an ill advised operator is not indicative of open market rental value.  The profit and loss valuation method relies on a hypothetical Fair Maintainable Trade (FMT), the comparable evidence required is a level of turnover from other pubs, be that from detailed accounts, made available on assignments, or an estimate based on barrelage figures, not rents of other pubs with differing lease terms and discount levels.

 

There would be fewer necessities for help if rents reflected genuine open market levels and tied licensees were able to maintain a decent income allowing for reinvestment, maintenance, repairs, staff training and promotions.   Appropriate rents should be achievable but the BBPA and company codes only require the pub companies and brewers to follow Royal Institution of Chartered Surveyors (RICS) guidelines which it transpires are unenforceable.

 

To accept the BBPA and company codes and not to have them enforceable is to authorize the very thing we seek to prohibit and as such the epidemic of over inflated tied rents continues.

What is needed here is a re-balance of risk and reward, not for a few tied licensees here and there, close to business failure, but for all tied licensees.  Re-balancing risk and reward should not rely on seeking a concessionary arrangement in troubled times, it is ensuring a fair and reasonable rent that reflects the circumstances of an average tenant in the particular pub in question.   The rent level must be seen as being affordable until the next big rent review, usually in five years’ time.

For every tenant receiving some concessionary assistance there are hundreds of others contributing to it – it is those tied licensees on over-inflated rents with little if any discounts from false inflated tied product prices who are paying for the concessions of the few.  Pubcos like Enterprise Inns aren’t paying, they are simply redistributing a tiny portion of the income they receive from the suppressed masses to keep those pubs open that they can find no other sucker to run.

By all means we should highlight that codes have no ‘guarantee’ of assistance but the admission that none in London are under concessionary treatment is rubbish – we have two choices on that, prove its wrong or use this statement to demonstrate that Enterprise Inns have admitted in reality concessions are non existent.  I think the latter is more useful.  They cannot claim that London pubs have not suffered – otherwise there would be no closures. What it demonstrates is that where they cannot sell a pub for alternative use (I would think most in London could and have been sold), they have to offer a few crumbs from the table to avoid an empty pub and them paying for upkeep, security, utilities and rates.

 

Rent Payment

However much you feel aggrieved at the treatment that you receive from your Pubco or Brewer, the temptation to withhold rent as a gesture of discontent, should at all costs be avoided.   In simple terms, the payment of rent is SACROSANCT.   There is a specific and totally binding obligation contained in every single lease that has ever been issued, that you have to pay rent.   The non payment of rent can swiftly lead to forfeiture proceedings which in themselves are almost impossible to defend, specifically because you either have or have not, paid rent.   It’s the same as being “well, sort of pregnant”.   You either are or your aren’t!

 

The Courts have little if any flexibility in this respect.   If you have not being paying rent, there is an automatic route to forfeiture.

 

An exact example of this has happened to Kirsty Valentine of the Alma, Newington Green Road, London N1.   She has a justifiable list of issues with Enterprise Inns and in our considered view, every justification for the strongest possible complaint.   However, as a method of fighting back so-to-speak, she then paid only part rent.   Enterprise Inns have, not surprisingly, taken forfeiture proceedings on the simple premise that they can prove that the full rent has not been paid.

 

We have had four other cases this month where clients have said “I’m thinking of withholding my rent”.   In every single instance our firm advice was – always pay rent and ensure that it’s paid on time.   There are other ways that you can fight back against perceived injustice.

 

PICAS Complaints

The PICA–System has yet to get into full swing.   We do, however, know of several complaints that have now been lodged within the system and of a number of others that are pending.   The M & C Chartered Surveyors’ take is that the Board of PICA-System chaired by Rodger Vickers of Brownill Vickers, will we hope be squeaky clean and factually specific.   We sincerely hope that they will look at the cold hard facts of a case of Code of Practice breach and make a judgement accordingly.

 

We are, however, deeply worried over not giving PICAS specific facts to chew on.   Our concern is centred upon discretionary product discounting and advice that is being handed out by Phil Dixon of the BII who understandably wants PICAS to be seen to be working properly.

 

To be specific, discretionary discounting is anything that is not confirmed either by Deed or by “binding commercial side letter”.   A discretionary discount can melt away upon the sale of either the freehold interest or the supply tie leasehold.   The successors in title to either would never be bound by the current discretionary discounting.

 

The case of Lorraine Wager at the Hart of Duston, Northampton is of concern.   The rent review which we undertook on behalf of Lorraine included a gross profit margin that was substantially dependant upon continuing discounting.   Spirit, who own the freehold, have now decided that they will withdraw all of that discounting.   Phil Dixon advised that a formal complaint could be made to PICAS on the basis of the “spirit of the agreement had been broken”.

 

Our concern is, in the absence of any documentation proving the point, how do you prove or pin down what the spirit of the agreement actually was and how it affected either party?   Our further concern is that it would appear that the same advice is being spread far and wide in that a complaint in similar circumstance can be made against “the spirit of an agreement”.

 

The team at M & C have always been very factually specific.   We track and follow relevant case law and we follow to the letter, the RICS Valuation Guidelines.   We don’t, however, subscribe to a vague general understanding or ‘spirit of an agreement’.   Why?  The issue is so vague that you cannot expect any logically thinking Tribunal to speculate on what the spirit of an agreement actually means or what should then be enforced.

 

If complaints of this nature are made, it would seem to us inevitable that the Pubco or Brewer will be vindicated in justifying their interpretation of the “spirit”.   That would then send a message that further actions of that nature would be seen as being quite acceptable.   Worrying!

 

Market Value

The most accurate method of judging or analysing market value is comparing what effectively is adjusted net profit or EBITDA, with the amount paid.   EBITDA is earnings before interest, taxes, depreciation and amortisation.   Generally as a rough yardstick, freehold public houses in the current economic climate sell for between x8 – x10 EBITDA.   So why then are the likes of Fullers paying as high as x13 EBITDA and a whole horde of other regional breweries paying in excess of x12?

 

Wind the clock back a little and a quote from Ted Tuppen after Enterprise Inns had sold some 36 exceptional and highly desirable pubs for £49m, or an average multiple of x14.   These pubs were not necessarily in central London and took in cities such as Bath.

 

Regional Brewers are canny people and not necessarily the lessee-loving stalwarts that the BBPA would like you to think.   There are a large number of 20 year leases entered into in the early 1990’s.   It makes perfect sense for a Regional Brewery Company to buy the freehold of such a property, given that the EBITDA excludes the tenantable income.   What Enterprise Inns are selling is the rent and wholesale contribution.   If you then subsequently add in the tenant’s income if you refuse the grant of a new lease because you want the place back as a managed house, the EBITDA multiple then often comes back under x10.       This echoes our “cuddly family brewers” piece in the May newsletter.

 

Beware of any of the bullying tactics that might be employed emphasising that at the end of the lease “you are out, we will have it for a managed house”.   Under the Landlord & Tenant Act 1954, Section 30 (2), in order for the landlord / freeholder to stand against the application for a new business lease where they intend to occupy the premises themselves, they have to have owned the freehold interest for at least five years and one day prior to the expiration of the current lease.   So if your lease has under five years to run and you have had your freehold interest purchased by a family brewer, you have the opportunity for the creation of a maximum further 15 year term if you hold, say, either a 15 or 20 year lease – forewarned is also forearmed!

 

Mystery Drinkers

Kevin Roberts, late of the Old White Horse, Bingley, finally threw in the towel at the beginning of May in the face of a continuing and crippling level of rent.   Enterprise Inns are now re-offering the shut pub at £18,000 rent set against the previous £35,000 rent and with discounts of £83 per barrel.  No, you really couldn’t make it up!!

 

Kevin logged into his Brulines on line account on the 21st May and despite the pub being closed and abandoned for over 14 days, his Brulines account showed that he had dispensed 60 gallons of beer.   (Kevin reported the matter to Trading Standards with no response).

 

Say It Like It Is

Noticed on the back label of a New Zealand Waipara 2010 Riesling penned by the winemaker Matt Dicey:

“Juicy tangerine flavours intermingled with stone fruit while the residual sugar and vibrant acidity skip hand in hand down the path of vinous amicability”.

 

Could it be that Matt had been sampling too much of his product at the time?

 

And Finally

Noel Coward:              I am not a heavy drinker – I can sometimes go for hours without touching a drop”.

Frank Sinatra :            “Alcohol may be man’s worst enemy but the Bible says love your enemy”.

 

Best Wishes

The Team at M & C

Email:  info@morganandclarke.co.uk

Phone: 01285 719292

A Tale of two BDM’s, BRM’s, whatever, from the Pen of Bob Sayles

It’s tough being a BDM/BRM

I found myself in an isolated corner of a bar last weekend enjoying an early evening pint when a couple of gentleman in suits wandered in and purchased some drinks. They then proceeded to sit in a booth directly behind me.

It turned out they were a couple of pubco BDMs; one an old hand, the other newly appointed, working his first full week of employment in the field.

What follows is a reasonably accurate transcript of their conversation. It offers a fascinating insight into the mindset of a BDM.

“So, how do you think your first couple of days on the job went?”

“Well frankly I’m a bit confused.”

“In what way?”

“Well yesterday we informed a tenant close to going under that we intend to increase her rent; tomorrow we’re going to evict somebody for falling behind with his rent.”

“Yes. And?”

“Well, I know I’m new to the job but I was under the impression that my primary responsibility was to try and support our tenants. Is this your idea of support? ”

“Look, disregard everything you read on the website and the glossy brochures; it’s nothing more than corporate bollocks. Let me explain how things work.

The fact of the matter is that you’re here to make money for your employer.”

 “OK.”

“Now then, who pays your salary?”

“The pubco.”

“Who funds your bonuses and share options?”

“The pubco.’

“You’re wrong on both counts. The fact of the matter is that your employer doesn’t pay you anything.”

“How do you work that out?”

“You’re classed as a countervailing benefit.”

“I’m sorry?”

“You see, the pubcos came up with a great idea. Employ people to generate as much income for them as possible and ask tenants to pick up the tab.”  

“I don’t follow.”

“The tenant pays your wage. Your basic salary is rentalised as a countervailing benefit!”

“Now, if we want all the extra perks and bonuses that go with the job then we’ve got to find additional ways to generate revenue.

Invariably we do. That way all costs associated with your employment are picked up by the tenants. You don’t actually cost your pubco a penny! You’ve got to hand it to them; it’s a brilliant concept.”

“Err…yes.”

“Now there are two primary ways in which you can substantially increase your bonus. Help the tenant generate additional footfall; fat chance of that given the current market!

Alternatively, focus on squeezing as much out of your portfolio of pubs as humanly possible.”

“But these tenants, aren’t they our err…..retail partners?”

“Look, how do you possibly think we can serve the interests of both our employer and the tenants? There’s a massive conflict of interest here. The pubco insists we keep taking more and more when there’s less and less to go round. 

Inevitably someone is going to lose out. Our job is to make sure it isn’t us or our employer.”

 “But what about the tenant we’re going to kick out tomorrow? Doesn’t he have a family?” 

“Not our problem. You can’t afford to invest emotionally in this. He’s due to leave tomorrow. We’ll retain the deposit, his f and f and probably have to inflate the dilaps bill. If need be, we’ll take the matter further should we need to recover additional costs.”  

Don’t look so shocked. I’m merely doing what I’m employed to do; generate revenue for the pubco.”

“So what you’re saying is that my basic salary is paid for by the tenant. But if I want additional perks and bonuses then I have to squeeze more money out of them; even if it means them going under. Isn’t it a case of killing the goose that lays the golden egg?”

“There are plenty of geese out there. Look, let me give you some advice. You’ll be asked to do things which, on the face of it, appear somewhat unpalatable.

You will, on occasion, be required to make decisions that will result in families being literally kicked out onto the streets.

You’ll see the lives of good, honest, decent hard working people destroyed; dreams and aspirations trodden on through a combination of naivety, poor judgment and a lack of business acumen. Are you ready for that?”

“In all honesty, I don’t really know.”

“Let me ask you this. Are we to blame if people sign up to agreements that are clearly unsustainable from the outset?

Is it our fault that people were wearing rose tinted spectacles when lured in by one of the supposed fantastic opportunities on our website? You have to put all human emotion to one side and focus on doing your job.  

Don’t forget, beer volumes are going through the floor. Added to that, we’ve got the medical lobby on our back as well as a government who, when they’re not taxing the s*** out of us, liken our establishments to crack houses.

Just to make matters worse; our company’s got debts that make the Greek deficit look like small change.

And let’s be brutally honest about it. Things aren’t going to get better any time soon. In fact it’s almost inevitable the downward spiral will gather momentum. It’s a case of dog eat dog.  

The question is have you got the stomach for this? If not, I suggest you get out now, while you still can.”

“It’s probably a bit late for that. I’ve just bought a new BMW and booked a family trip to Florida in the summer.”

The senior BDM picked up the mobile phone and handed it his colleague.

“Then make the call to the bailiffs. Tell them we’re going in tomorrow

evening at 5:30.”

Robert Sayles

 

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 are made fully aware of many hidden pitfalls.

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

 

What do your washrooms & floors say about your business?

Hygeine from Cannon

What do your washrooms & floors say about you?

First impressions go a very long way – especially in the hospitality sector.  Washrooms and floors are an integral part of a company’s image as well as the ability to demonstrate you are doing all you can to reduce your carbon footprint.  Here we examine some initiatives from the leading provider – Cannon Hygiene – to help companies succeed in both. No-one likes a smell.

Male washrooms are notorious for pungent smells and over-flushing of cisterns.  The smell comes from a build up of uric salts in the pipework and no amount of little yellow blocks can mask it.  So many companies try to flush away the smell but this only wastes water and leads to expensive water charges.

 

The Cannon Hygiene Actiflow system when fitted into the urinal eliminates odours with the unique odour trap system.  This allows you to regulate the number of flushes by having a Water Management System (WMS) fitted. You can save up to 90% of your water bill by having something simple like the Actiflow fitted.

 

Now wash your hands…

We are all repeatedly told this but not many people stop to realise the effect drying your hands has on the environment. Paper towels are not environmentally friendly and roller-towels laundered regularly are not much better. 

 

If you have an old hand-dryer it is likely to waste a lot of energy and with costs escalating it is important to consider this.  Cannon Hygiene’s latest hand-dryers are extremely energy efficient.  The Airjet has a 10 second drying time to help reduce energy consumption.  They also look beautiful on your washroom wall enhancing the customer experience.

 

…and wipe your feet.

Have you ever wondered how much money you spend on flooring plus the ongoing investment to keep it clean? 80% of the dirt is walked in from outside and 1 sqm of carpet collects 2Kg’s of dirt per week. Only 10% of dirt is removed from carpets by vacuuming!

This is why many organisations are investing in a professional lift & lay mat service.  Whether it’s a standard scraper mat or a stunning logo mat you will always have a fresh clean mat ready to collect the dirt as it comes in.  Cannon Hygiene’s laundry process ensures all the dirt is removed and your floors remain clean and hazard free.  What’s more, all Cannon Hygiene’s old mats are 100% recycled as part of the concrete making process so you can be sure you are minimising waste to landfill and reducing your carbon footprint.

Customers are much more demanding and reviews are readily available.  By giving some thought to how you approach a couple of key areas like your washrooms and floors, you can be sure that what they say about you in this area will be positive.

Contact Cannon Hygiene for more information: Telephone: 0800 328 3695 email: sales@cannonhygiene.com or visit our website: www.cannonhygiene.com Cannon Hygiene, Northgate House, White Lund Ind. Estate, Morecambe, Lancashire. LA3 3BJ

Npower at it’s glorious worst, Barrel-Dregs (253)

Npower beyond belief.

This company is unbelieveable, I would never recommend any business or domestic user to have them supply anything, least of all gas or electricity.

My first encounter was around was around eleven years ago, I had just bought another freehouse, carried out a stage 1 refurbishment, recruited some staff including a would be chef, who had been working at a food pub some five miles away and had changed hands recently.

The chef lasted a fortnight before going off on long term sick leave, much to my relief.

About four months later I had a Debt Collection Agency chasing me for around £6k’s worth of energy bills from Npower for the Lamb and Flag where this would be chef had worked, the Debt Collection Agency had the bills in my name.

I had never dealt with Npower and I had absolutely nothing to do with the Lamb and Flag.

I phoned the Debt Collectors saying that I had never dealt with Npower or the Lamb and Flag and they referred me to Npower who were suitably hard nosed and disbelieving, eventually I had to send an Accountants letter stating that I had nothing to do with this debt, matter closed.

Four years later, I had the same Debt Collectors chasing me for around £10k from NPower and the Lamb and Flag again.

This time they said I was a liar and that they had documentary proof that I had been the tenant at the Lamb and Flag and they were going to sue me for the money, again I had to get my accountant to write to them, enclosing a suitable size bill for his costs and mine, they paid his costs and only paid £50 for my costs.

At this point I had sold the pub that they originally contacted me in and I was now living sixty miles away, so they had to do a considerable amount of research to find me.

The Lamb and Flag had changed hands, so I called on the new owner to try and find out what was going on, he was delighted to talk to me and the old staff filled me in on the gaps.

It appears that the last owner was furious that his chef had left and come to my pub, for some obscure reason had used my name claiming that I was the tenant and he was the landlord in his dealings with Npower, which sounds completely bizarre and even more so that Npower had allowed a bill to rise to around £6k in the first place without some sort of check.

I then phoned Npower giving them the name and address of the previous owner, provided by the staff at the Lamb and Flag, they said he didn’t exist as far as they were concerned and would not pursue the debt, it sounds unbelieveable, but this guy got away with it.

My next confrontation with NPower was on switching my domestic energy supplies for the last year, the usual nonsense it all has to be on line etc., except that over the year I received two emails one for football and the other a brief comment on the account.

As the year end approached, I switched energy suppliers, since NPower were way over the top on the information provided, I then received numerous letters asking why I was leaving and several phone calls saying they could offer better deals.

I offered them the final meter readings which they refused and stopped the DD on the change over date as instructed, I asked them about my account and was told that I was around £400 in credit, I asked about the £100 loyalty bonus due six weeks before, which was not on the acount, this gave me a credit of around £500, to my amazement I got two bills saying that I collectively owe them £190, no details at all.

I then phone them again asking for a detailed break down, since I was under the impression that they owed me money, fat chance, they agreed to send detailed acounts within a fortnight, which I said I would pay if satisfied.

A week later I start getting calls from a Debt collection agency, which I ignored, since my accounts are all up to scratch.

The detailed bills appeared with the £100 credit, it seems that NPower collect your monthly DD which goes into your account and gets credited, but they only sort out your bill every six months, regardless of their regular meter readings, so business wise you could be thousands of pounds adrift and suddenly be faced with an enormous bill far in excess of your monthly DD or have a massive surplus over payment that you cannot touch.

I paid the two outstanding bills by credit card immediately, in case their crazy system went wrong and I could claim against the credit card if there was a mistake.

After paying I then received further calls from the Debt Collection Agency, which I duly returned to be told by a fairly disbelieving debt collector that they had no record of my payment, followed by two separate demand letters from the Debt Collectors.

It would appear that NPower, put the debt collectors in as soon as you transfer your account, you try and get your money back if you have overpaid, strangely as soon as the agreed contract period expires you get put on a deemed rate, this may or may not have accounted for my credit becoming a deficit, sadly I have no real way of knowing, without getting an expert in.

One thing, I will never ever use NPower again for domestic or commercial energy, sadly most of these companies have the whip hand, use a professional company to negotiate your agreements and ensure that the departing Energy Company does not get the opportunity to impose deemed rates, because your agreement period has expired, it can be very expensive.

They don’t encourage you to stay with them with good offers for loyal customers, these only appear at the last minute, usually after you’re committed.

Barfly

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 are made fully aware of many hidden pitfalls.

 

FMT and REO (Fair Maintainable Trade, Resonably Efficient Operator)

FMT and REO (Fair Maintainable Trade, Resonably Efficient Operator)

An interesting article in the Morning Advertiser from my old colleague Phil Dixon about FMT (Fair Maintainable Trade) and REO  (Reasonably Efficient Operator).

FMT that obscenely used title for making wildly speculative estimations of a businesses future business, to ensure that the rental levels confirm the freehold investment values to satisfy bank borrowings, disrearding viability.

REO another totally misinterpreted title, Phil quotes the dictionary explanation or Reasonably Efficient as a moderate operator, not a Retail Genius or 3 star Michelin Chef, which the majority of pub owning companies seem to demand these days as an REO, if they fail to meet this criteria they are listed as a Retail Failure.

It didn’t used to be like this, the old brewers knew exactly what their market share in an area was, if one pubs business went down another would go up, their FMT’s  collectively throughout their estate would possibly estimate 6-7% increase in brewed products.

Now some of my old friends breweries have been taken over by hard nosed money men, where people count for nothing, FMT’s are guessed at doubling the capacity of the brewery, a physical impossibility.

The world has gone mad, the Government has bowed to pressure to avoid bringing in compulsory legislation and the abuses of honest people and the greed for their money by these soul less people rages on, they are not interested in sales, the BDM’s, BRM’s are the hatchet men, grab the deposits and slap the dilapidations on and get them out, they pay the minimum ingoings, thinking that they have a good deal, no chance these sharks have the legal back up to win every way.

A very apt quote:-

‘To pass a law and not to have it enforced is to authorize the very thing you wish to prohibit.’  Cardinal Richelieu (1585-1642)

By failing to accept the BISC’s findings, the Government have given free licence to the unsavoury companies to do whatever they want.

The RICS are equally complicit in allowing the abuse of their Valuation Guidelines by their senior members, who are above rebuke or forfeiture of membership, the corrupt system continues.

The BII are worse than useless, having elected to align themselves with the worst Pub Co’s, members count for nothing, they are sadly expendable as I and others found to our cost.

One story on Facebook of tenant walking out ofhis pub, he had been gone for three months, the lunacy in Brulines is alleged to have sent a missive stating that he had bough 60 gallons out, during the period after he left, there must have been hundreds of drunken rats in the beer store, and so it goes on.

My comments on Phils Article

Has the worm finally turned in his hole, with a total commitment to the reality of the drum that I have been beating for years, welcome back Phil. The RICS Valuation Committee under Rob Mays Chairmanship removed the old Red Books guideline that existing business should be taken into consideration in calculating FMT, this allowed any surveyor working for a pub co and his followers to put any figure they liked on FMT without any justification, hence the massive over valuing of freeholds to raise further funding to buy more pubs, totally ignoring the pubs viability. Surveyors do not run pubs, they have little or no idea of a pubs potential or true viability, tied into local knowledge, they use Cherry Picked Comparables, ignoring the closed pubs which should be factored into their calculations, unfortunately these incompetent surveyors are in a majority and very influential in RICS decisions. In my meeting with the senior beings in RICS, I pointed out that a pubs existing business is its market share at that time in an area, any growth is at the expense of another pub or pubs and are they going to reduce the rent on the other pubs if the first pub meets the FMT decreed, not on your life, that’s retailer failure according to their paymasters, the Pub Co’s. The market is shrinking, in fact it is nudging towards freefall for many pubs, training is inadequate, the trading conditions that many naive people sign up to are pure fantasy land. I have said for many years if all the FMT’s were added together we would need treble the brewing capacity. If rents came down, rates also, discounts were sensible or even minimal or non existent as they used to be, we might bring prices down and bring customers back, smoking however distasteful it is killed many pubs core businesses, every pub needs a core business, people make people.

Barfly

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 are made fully aware of many hidden pitfalls.

 

 

 

Freedom 2 Choose, Monthly Newsletter, always an interesting read.

May Newsletter

Posted: 29 May 2012 03:00 PM PDT

May newsletter

FROM THE CHAIRMAN
In just over a months time we are due to ‘celebrate’ 5 years of the smoking ban.
We can also celebrate: 8,000 or 14% of our pubs closing 25% of bingo halls and Working Men’s Clubs Upwards of 150,000 full and part time jobs lost social isolation, especially of the elderly characterless pubs and a nanny state smelling blood.
And now alcohol, obesity: every fake charity wants to get its nose in the trough to tell us how to live our lives. We read that David Cameron wants to introduce ‘parenting classes.’ The nanny state in literal and metaphorical terms.
While we may be on the back foot for now, Cameron and the other political parties will no doubt feel the backlash of an electorate tired and disillusioned by governments of all persuasions who have nothing better to do than to interfere with our informed choices.
Dave Atherton
NEWS STORIES
John Lydon, aka Johnny Rotten of the Punk Rock band ‘The Sex Pistols’ fame, despises the smoking ban. In an article for NME he expresses strong views on the subject and tells it exactly how it is. He urges David Cameron to overturn the Health Act 2006 which introduced the smoking ban.


Denial of NHS treatment to smokers and the obese: a survey showing 54% of doctors answering a poll believed treatment should be restricted or refused led to controversy and questioning of the results by other doctors and the general public.


However, this was swiftly followed by letters from other doctors saying that the survey was very limited and that denying treatment goes against medical ethics:


ASH Wales has been given a £850,000 Big Lottery funding to help young people quit. The grant is over 3 years and will give them an increase of over 74% on their previous annual income of (£381,000 end March 2011).


The blogger Dick Puddlecote has commented on the story on his own blog: It might interest you to know that one of the Big Lottery Fund’s board members is a lady named Maureen McGinn. There is also a Maureen McGinn who is chair of the board of ASH Scotland, and the pictures provided on both sites strongly suggest that they are one and the same person.
Board member being from ASH and the biggest award going to its sister organisation in Wales? Isn’t that an amazing coincidence, eh?


Britons want to live near a pub, research finds, even if they seldom visit. Three in ten people find pubs more pleasant since the smoking ban. In other words, 70% do not find pubs more pleasant since the smoking ban.
A dozen pubs are still closing every week, says CAMRA. Mind you, they do not mention the elephant in the room.


A sexy photo of Madonna posing naked on a bed smoking a cigarette has sold for  £15,000. The Daily Mail says the picture is absolutely stunning. And, er, here is the link to the news story. With the picture. So you can judge for yourselves.

F2C FRONT PAGE ARTICLE ROUNDUP
F2C was accused in a report by ASH of being a stooge for Big Tobacco. Here, Dave Atherton confesses that we are in fact mouth-foaming stooges for Big Pharma.


The Dutch anti-smoking industry had their case to extend the smoking ban to smaller bars thrown out. We were pleased.


Lung cancer is caused by naturally-occurring radon gas, of which there is are high levels in parts of the UK. This is a recent report from radon tests in Scotland.

THE BLOGS
Lots of good articles on the blogs, as usual, but there is not enough space to list them all.
So here is a short selection with apologies to all superb bloggers not included here:
Frank Dais is looking for volunteers to do a survey:
Survey one Survey Two


Chris Snowdon has produced an authoritative critique of ‘sin Taxes’ for the Adam Smith Institute. Very much worth reading the full PDF document: The true cost of taxing Alcohol, tobacco and other vices. Why a fat tax would be bad idea. The full PDF can be found here:


Junican at the Bolton Smokers Club has written brief, (its still 60 pages) summary of the McTear vs ITL court case and the Doll and Hill Hospital Study (1950): Bolton Smokers Club Summary. (see also side Bar)

THE LAST WORD
Finally, an insight into the tobacco control industry from Simon Clark: In the course of the debate Chris and I discovered that anti-smoking activists like Gabriel Scally find it really, really irritating to be labelled the “tobacco control industry”. I’ll remember that in future

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