Monthly Archives: May 2014

Latest Legislation Guidance for Businesses

Latest Legislation Guidance for Businesses

Allergy and Intolerance: Guidance for Businesses

Posted: 29 May 2014 05:00 PM PDT

The Food Standards Agency has issued Guidance designed to help food businesses including pubs, bars, hotels and restaurants to provide information to customers who need to avoid certain ingredients because of an allergy.

The Guidance includes general advice and information on allergy and intolerance, the food labelling rules and specific voluntary best practice guidance on cross-contamination controls for pre-packed foods and loose foods.

In December, new legislation (the EU Food Information for Consumers Regulation 1169/2011) will be introduced that will require food businesses to provide allergy information on food sold unpackaged in, for example, catering outlets, deli counters, bakeries and sandwich bars. There will also be changes to existing legislation on labelling allergenic ingredients in pre-packed foods.

Mandatory obligations for foodservice businesses include:

  • Allergen information should be easily accessible, visible and clearly legible;
  • Where it is not practical for this information to be in a written format, businesses should use clear signposting to direct the customer to where this information can be found, such as asking members of staff;
  • Allergen information should be made available for the entire dish served, and where food is provided in a buffet format, it should be provided for each item separately; and
  • Businesses providing allergen information orally from a member of staff must ensure it is consistent, accurate and verifiable upon challenge. Verification of this information should be provided in written form.

The Guidance also includes details on the scope of each of the 14 allergenic ingredients covered by the new legislation: gluten, crustaceans, eggs, fish, peanuts, soybeans, milk, nuts, celery, mustard, sesame, sulphur dioxide and sulphite, lupin and molluscs.

The Guidance can be found here: ‘Food allergen labeling and information (EU Regulation 1169/2011): Technical Guidance

NUS launch new Responsible Drinking Accreditation

Posted: 28 May 2014 05:00 PM PDT

The NUS has launched a new pilot programme that seeks to create a social norm of responsible alcohol consumption by students.

With funding from the Home Office, and working with seven pilot universities and one control, the NUS aim to develop a new accreditation mark for responsible consumption, underpinned by social change theory.

During the pilot year we will be working with the following eight institutions:

  1. Swansea University
  2. Manchester Metropolitan University
  3. University of Brighton
  4. Royal Holloway, University of London
  5. Loughborough University
  6. University of Nottingham
  7. Liverpool John Moores University
  8. University of Central Lancashire (control)

 

The draft criteria is available which is being adopted by the pilot Universities is available on the NUS website a link to which can be found here. Although the scheme is currently limited to the pilot institutions the criteria gives a clear picture of the strategy being employed. Using a system awarding points for prescribed behaviour the criteria requires a score of 90/177 to qualify for accreditation. 54/177 points arise from Mandatory baseline criteria which all participants must achieve. There for a qualifying score is obtained by complying with the 54 mandatory criteria and minimum of a further 36 optional points (as specified in the published spread sheet).

Commenting upon the launch of the new scheme

Crime Prevention Minister Norman Baker said:

“The NUS Alcohol Impact project, backed by the Home Office, will help participating universities to encourage responsible drinking leading to safer and more productive places to study and live.” “Accreditation should become a badge of honour for universities, and another factor which helps promote their world class teaching and research to prospective domestic and international students.”

NUS Vice-President (Welfare) Colum McGuire said:

“The project is an extremely positive one that has the welfare of students at its core, with a range of benefits from reducing crime and disorder, to improving student health and academic outcomes, and enhancing partnerships within local communities.”
“We will also aim to encourage responsible retailing and the provision of a broader range of activities as well as effective support services on campus, and by doing so make universities more welcoming for those who do not drink.”

Government Relents To Allow Wales to Benefit From World Cup – but must still apply

Posted: 29 May 2014 05:00 PM PDT

The Home Office has altered its stance to allow Welsh pubs to open later to screen England’s World Cup matches. Initially The Government had refused to extend the blanket policy which applied in England. This always seemed to us an odd policy. The Government has now relented and confirmed that pubs in Wales can extend their licences by four hours, to a maximum of 1am. The changes take the form of scrapping the fees for Temporary Event Notices and producing a bespoke form designed to speed up the process.

So there is still a difference between England and Wales but the change of policy must be a welcome one even if it is late in the day. The indication is also that the last date to take advantage (presumably for the first match) is 6th June, this would tie in with the deadline for late TEN’S.

 

Those premises that have already paid the council fee for a Temporary Event Notice will get a refund, presumably as long as it is in line with the hours referred to above.

The form can be found here. (link)

Needless to say Scotland has not followed suit!

 

The Double Standard of the Pub Co, Barrel-Dregs (268)

Bad Beer For Export

The Double Standard of the Pub Co, Barrel-Dregs (268)

Publican demands debt waiver for Punch tenants

For those that do not read the Morning Advertiser.

By James Wallin, 29-May-2014

A publican facing eviction has asked Punch Taverns to offer him and other struggling licensees the same debt waiver the company requested from noteholders.

 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.

 

 

Pub Co Intransigence and Stupidity, Barrel-Dregs (267)

Pub Co Intransigence and Stupidity, Barrel-Dregs (267)Bad Beer For Export

An interesting tale, though all too common with Companies that have adopted the Pub Co Model. One of the National Pub Co’s owned a small town centre pub, it had never been known for excessive business and as a result became a haven for the less desirable town drunks.

One of Potboys locals said he was taking the lease, a quick look into his left ear to see whether there was a hole running straight through where his brain  should be, revealed nothing.

A serious bit of ear bending by Potboy on the follies of taking any Pub Lease, especially with this particular company and even more with this particular pub, fell distinctly on deaf ears, he was adamant that he could make a serious go of it.

This was some years ago and true to his word, he turned an Arm Pit into a very successful business with a turnover approaching £800K, with a lot of reinvestment on his part, to be fair he wasn’t making money for himself but constantly upgrading the premises and the business.

The Pub Co decided at five years that there should be a substantial rent review and chaos prevailed, the result being that the case logically went to Arbitration, a fair and reasonable process, one would have thought, not so.

This became a very drawn out process and duly came before the Arbitrator a so called unbiased Chartered Surveyor, for unbiased, substitute uninformed, who deliberated, having no knowledge of pub rents resorted to a standard format raising the rent to over £75K, a complete disaster. Sadly none of these high profile Chartered Surveyors have ever run pubs and would never get their hands dirty in the nasty vagaries of running a pub anywhere near the Coal Face.

Any serious Licensee will always tell you the costs of running a pub cannot be pinned down to one set of figures, the difference between one pub and another is enormous, most pubs were built to sell beer, not a diverse range of food products, some are very labour intensive, requiring far more staff behind the bar or in the kitchen, the list is endless.

You may be able to come down to a standard format for a purpose made pub, selling a standard clone packaged array of products, as with a chain of branded managed houses, but you can’t, with totally non standardised pubs.

The Pub Co rubbed it’s hands with glee, the rent arrears had to be paid, the lessee was bankrupt, the whole pub had been totally transformed, fully equipped at minimal cost to themselves with a vast turnover compared to it’s previous take, all these facts were totally ignored by the Arbitrator.

Exit the Licensee, the Pub is pushed by the Pub Co as a highly successful (small) town centre pub, the local business all went walkabout and is finally let at £30K a year and the new incumbents are struggling.

The story is the same across the industry with all Pub owning companies that have adopted the Pub Co model to a greater or lesser degree, build the business up with a good operator, then screw the rent up to make the good operator leave and relet the pub at a premium.

Don’t nurture your good operators, they might be making themselves too much money, if we get them out we can make a short term gain and get some more mugs in for the next eighteen months or less and still have an asset to lease out, we still have details of the good accounts and the last lessees left because of Retailer Failure.

Certain Pub Co’s used to say that it cost them £30K at every forced changeover, it now appears that they make a minimum of £30K profit at every enforced changeover.

Good Operators are not an essential, but highly expendable, Pub Co’s are all short term, if you want a pub find a decent Family Brewer that hasn’t jumped on the Pub Co Bandwagon.

Potboy Midlands

Additional Note:-An alleged statement made by a Chartered Surveyor to a colleague sitting next to him at a BII meeting a few years ago ”All our lessees are the same, on the make, on the take, and robbing us blind”,   with that attitude towards honest people trying to run a business, they have no chance with this particular company. 

Links to other articles on the same subject  

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. MORE

Rent and Rating Tips   I have just had a lengthy meeting with a lessee who wants to take his rent review to the Pubs Independent Rent Review Scheme (PIRRS) which came into force in October 09. It is well worth referring to this article for guidance if you are considering taking your review to PIRRS   The basis of licensed property rent review is the profits test. MORE Serious thoughts for anyone with a Pub Lease or Tenancy, (Barrel-Dregs 266)

UK Leased and Tenanted  Pubs

Thinking outside the Box

The misconception by the majority of people not involved in the licensed industry is that it is a pretty straightforward business with cash flow, profitability and capital growth. The old brewery tenancies were just that, you had a trip round the brewery, someone gave you instruction on keeping beer, the area manager came round once a month and gave you ideas and you were the village or community hub, that is no more. MORE

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.

Prohibiting the sale of alcohol at a price below the total of duty paid plus VAT

Prohibiting the sale of alcohol at a price below the total of duty paid plus VAT – Live from 28 May 2014

Posted: 20 May 2014 05:00 PM PDT

As you will probably be now aware, this new Mandatory Condition goes live on 28 May and already we are seeing councils writing to individual premises alerting them to the changes.

We have previously updated on the detail for which see here – LINK  and the Guidance which can be found here – LINK

The headline is much clearer than the detail of the condition but for many operators the floor level of a ‘price below the total of duty paid plus VAT’ should not be a material concern.

However you should be alert to some possible unanticipated consequences, highlighted in the Guidance.  We will not list them all here but by way of example (as set out in the Guidance):

  • Multi-buy promotions – Businesses can continue to sell alcohol as part of buy one get one free promotions. However, businesses will need to ensure that the total purchase price for the package of products is not below the aggregate of the duty plus VAT permitted price for each product comprised in the package. To achieve this, businesses will need to calculate the total of the combined permitted price of each alcoholic product in the promotion.
  • Multi-buy promotions on non-alcoholic products – In instances where businesses run a promotion for the sale of an alcoholic product and a free non-alcoholic product (such as chocolates, flowers etc.) and vice-versa, businesses will need to ensure that the total purchase price of the promotion is not below the permitted price of the alcohol product comprised in it (or aggregate of the permitted prices if there is more than one alcohol product). The Guidance gives the example of if a retailer runs a promotion for a meal deal that includes a free bottle of wine then the retailer will need to ensure that the selling price of the meal deal is not below the permitted price of the wine – we do not foresee this as a likely problem – but be aware.
  • Inclusive drinks – Many businesses run promotions in hotels and restaurants, for example, a free bottle of champagne with a hotel room or a drink included in the price of a table meal. Businesses can continue to run these types of special promotions but will need to ensure that the permitted price of the alcoholic product in question is included in the overall price of the promotion. The Guidance gives the example of where a pub offers a table meal with a pint of 4% beer included in the price, the total cost of the table meal must be at or above the permitted price of the beer (i.e. 52p!) Again we do not foresee this as a likely problem – but be aware.
  • Complimentary drinks – The Guidance states that free drinks provided an ad hoc basis, for instance those offered as compensation for late food service, do not count as sales because the customer has not paid anything for the drink.
  • Discount coupons – Businesses may continue to offer discount coupons for alcoholic drinks, but must ensure that the price of the product after all applicable discounts are applied is above the permitted price of the product.
  • Reward cards – Reward points and vouchers can continue to be used to buy alcohol, either in the store where they were earned, or at partner retailers, on the condition that the points redeemed (and additional money paid, where applicable) have an equivalent cash value that is not below the permitted price of the product. Where retailers offer a promotion on reward points or vouchers, the original value of the voucher shall be taken into account. The Guidance gives the example of where a retailer sells a bottle of wine for £3.99, it is permitted for a customer to pay for that wine either using points with a value of £3.99, or points with a value of up to £3.99 with the balance paid in cash. The price of an alcoholic product is considered to be the amount of money paid by the purchaser at the time of sale. Proxy benefits to the customer from the sale, for instance in the form of reward points, should not be considered as a part of the purchase price, as they have a cash value only in respect of subsequent sales, and not the present one.
  • Staff discounts – Companies can offer staff discount, as long as the price after all discounts are applied is above the permitted price.
  •  Online internet sales – The ban will apply to all sales of alcohol that take place (i.e. the alcohol is despatched) within England and Wales. Businesses will need to ensure that the online price of all alcohol products are sold above the duty plus VAT permitted prices.

 

Breach of the ban on the sale of alcohol at a price below the total of duty paid plus VAT – Failure to comply with the permitted price condition may be an offence under section 136 of the Licensing Act 2003 and this may also trigger a review of the licence, or the service on the premises of a closure notice under section 19 of the Criminal Justice and Police Act 2001.

MORGAN & CLARKE MAY 2014 NEWSLETTER

MORGAN & CLARKE  MAY 2014 NEWSLETTER NO. 32

It is a pleasant change to report positive news concerning the overall economy.   Beyond any doubt, the detail of the fall in both inflation and the annual rate of consumer price inflation – albeit marginally – must be good news in the long term.   As the General Election is now looming as a certainty on the political radar, great capital is, of course, being made out of the recently published statistics.   If only the weather would be just as positive.   Bring on the sunshine!

 

1.  Inflation and Interest Figures

It is acknowledged that the licensed trade has experienced a difficult trading period in recent years, but there are now significant signs of improvement in the market with many Pubcos, be they managed or leased operators, reporting improved trading conditions over the last 12 months.   Companies that have reported increased retail sales include Fuller Smith & Turner, Shepherd Neame, Mitchells & Butler, Marston’s, Greene King, JD Wetherspoon and Hall & Woodhouse.

 

2.  Commercial Rent Arrears Recovery

The Tribunals, Courts and Enforcement Act of 2007 has been largely activated with the exception of the change in rules of the Ancient Remedy of Distress.   From 6th April 2014, the full weight of the Tribunals, Court and Enforcement Act is now in being.

 

Commercial Rent Arrears Recovery (CRAR), unlike Distress, now requires that a tenant must be given seven clear days’ notice before the remedy is exercised.   This would usually be the removal of goods, chattels and effects to satisfy the outstanding debt.   Several commentators looking in on the pub world, have suggested that Pubcos and Brewers seeking to minimise the risks of the notice requirement involved and effectively tipping-off the lessee as to their intended actions, might arrange for Enforcement Notices and the giving of seven days’ warning, to be served whenever a lessee falls into rent arrears.  Having served the Notice, a view can be taken as to whether or not to remove goods.

 

The process of CRAR also brings into question what exactly is determined by ‘net unpaid rent’ which means that the Pubco or Brewer will have to give very careful thought as to the calculations, which should not include any insurance or service charges from the arrears as calculated.   Neither of these items can be recovered using CRAR.   There is also a specific requirement that the landlord is compelled to take account of the value of any right of set-off or counter claim, such as statutory compliance deposits, decorating funds and general security deposit.

 

However, there is a sting in the tail in that CRAR is unavailable where premises include a residential element which, of course, is the majority of public houses.   CRAR does, however, apply to all lock-up licensed premises which means that it still has a considerable effect and in all probability will be written into new leases concerning just such property.

 

3.  Zero Hour Contracts

Figures recently released by the Office of National Statistics (ONS), is the first comprehensive analysis of the extent of zero hour contracts in the labour market.   There are a surprisingly large number of licensed / leisure property operators who have zero hour contracts as standard employment policy.   People on such contracts have no minimum set hours.   It is estimated that 13% of all companies use such contracts, rising to nearly half in the tourism, catering and food sectors.

 

On one side, the employers say that the contracts offer flexibility for both staff and firms.   However, economists argue that the price of this flexibility is lower productivity, given the ONS statistics that more than a third of zero hour employees say that they would like to work more.   The general view is that zero hour contracts and their associated flexibility, is a hindrance to productivity growth.   It is allowing far too many employers to operate a low-skill business model.

 

The ONS, having surveyed employers (rather than a previous estimate based on a survey of staff), have concluded that almost 1.4 million people are on zero hour contracts which indicates that the pace of hiring by firms, is not as super-strong as the figures indicate.   The ONS confirm that employment has risen by 239,000 over the past quarter and 691,000 over the full year, to stand at 30.4 million.   However, self-employment – according to the ONS – accounted for over 60% of the rise in the last quarter.

 

4.  The Right to Make a Noise

A recent case has passed through the Supreme Court which puts a veritable ‘cat among the pigeons’ on issues concerning noise from licensed / leisure premises.   The case in point is Lawrence v Coventry (trading as RDC Promotions) [2014] UKSC13;[2014] PLSCS65.   However, before describing the details of this intriguing case, it is appropriate to backtrack to the guidance issued under Section 182 of the Licensing Act 2003 as issued by the Department of Culture, Media & Sport on 7th September 2009.

 

Section 11.28 of the 2003 Act, concerns public nuisance caused by noise coming from the premises.   The Act does not define the term ‘public nuisance’ which has always been left to be determined upon the circumstances of a particular case.   The judgement is subjective and senior police officers are required to judge reasonably whether the noise is causing a nuisance.   A Closure Order can be invoked if it is considered that the noise coming from the licensed premises is such that specific individuals in the vicinity are being annoyed by the noise and that enforcement powers are warranted.   The ultimate power is to review the Premises Licence with the possibility that the Licensing Authority could determine that it is necessary for the promotion of its licensing objectives, to take steps in relation to the licence, either curtailing hours of operation, or restricting the use of the areas from which the purported nuisance emanates.   This would include trade gardens, courtyards, patios, and even smoking shelters.

 

The original thinking was that an objector to a continuing licenseable activity, had to be within what was known as ‘very close proximity’.   This, however, has now been relaxed considerably with far great scope being allowed to the objectors.

 

Returning to the Lawrence case, this concerned the owners of a house who brought proceedings against the operators of a motor sports stadium.   They claimed an injunction and damages on the ground that the noise generated by the motor sports stadium, was causing a nuisance.

 

The Supreme Court found that a land owner can acquire the right to emit noise that would otherwise create a nuisance, either by agreement or prescription, which would create a new easement in the form of a right to transmit sound waves over land.   The precise extent of the easement will be highly fact-sensitive, with the difficulty of allowing the perpetrator of the nuisance to have the same leeway that is available by easement in the use of say, for example, rights of way or drainage.   Basically, if a prescriptive right has been established (over 20 years), then there are strong grounds for the creation of the easement.

 

The question that particularly taxed the Supreme Court was when will the prescriptive right clock start ticking?   The Supreme Court categorised the right as a positive easement as it enabled the dominant land owner to emit noise over or into the servient land (as opposed to a negative easement which limits the use that can be made of the servient land).

 

Lord Neuberger did suggest that the acquisition of the prescriptive right, or when the clock starts ticking, will not begin to run until the noise being emitted actually constitutes a nuisance.

 

Our understanding of the situation is that if, for example, you held a three day music festival in a field behind your pub for over 20 years and you have been belting out the noise – which some could certainly describe as being a considerable nuisance – you would then have acquired prescriptive rights to form an easement in the transmission of sound waves over the adjoining land.

 

Lord Neuberger further opened up the can of worms by rejecting the argument put forward by the stadium operators, that the home owners had only recently ‘come to the nuisance’.   The defence for the perpetrator of a nuisance to say that the claimant purchased the property after the nuisance started, was not accepted.   Lord Neuberger did, however, clarify the position slightly by saying that it could be a defence if a claimant had changed the use or built on the servient land, only then did a pre-existing activity become a nuisance.   For example, we could envisage that if, say, a large wall or particularly thick hedge had been removed between a trade garden and a house next door, the argument could run that only then would the trade garden be deemed as causing a nuisance, notwithstanding that its use or activity had not been complained about prior to the physical change in circumstance.

 

It should be noted that in such cases, the acquisition of a prescriptive right, only falls into place if the ‘activity’ has been carried on for over 20 years.   We can think of a great many trade gardens, courtyards and patios that fall into this category.

 

In the Lawrence case, the motor sports stadium had not been in its noisy current state for over 20 years and the Supreme Court restored the injunction that was granted by the trial judge and which had been then set aside by the Court of Appeal.   Despite the fact that the Lawrence family in their house next door to the motor sports stadium won the case, Supreme Court ruling sets an interesting benchmark for the acquisition of an easement by prescription to transmit sound waves over adjoining land.   Quite how this will impact on the 2003 Licensing Act, is an entirely different matter.   The can of worms is now well and truly open and after all ‘Lawrence’ was decided in the Supreme Court!

 

5.  Alcohol Consumption

Figures recently released by the British Beer & Pub Association have highlighted what now appears to be a continuing trend of gentle year-on-year reductions in alcohol consumption.   The assumption is made that the statistics have been drawn from the On-trade rather than the Off-trade which probably means that these statistics are not entirely compelling in their accuracy.   The alcohol consumption per total population, expressed in litres per head for 2013, was 7.7.   That has consistently seen a general decline since the peak of consumption which was in 2004 at 9.5 litres per head.   Curiously the 2013 figures at 7.7, are higher than the recorded figures for 1980 which backs up our theory that the figures themselves might not be the pinnacle of accuracy.

 

The interesting general trend is that the overall levels of alcohol consumption for those under 25, would appear to be falling even faster, if you believe the popular press.   If this habit continues, spin the wheel on another 15 years and in middle age, those now under 25 year-olds, may not be using the facility of the public house at anything like the current popularity.   Similarly, if their drinking culture is significantly reducing, that habit will be passed on in turn to their children.   Long term food for thought!.

 

6.  Wine Sales

A recent published survey has confirmed that the average UK spend on a bottle of wine is just £4.84.   Currently more than 80% of all wine in this country is sold in supermarkets and a vast majority of those sales is as a result of promotions.

 

Say you spend £6 on a bottle of wine, what are you really getting for the value of the content of the bottle?   Currently duty is at 20% with VAT on top of that, so about 50% of your £6 bottle goes straight to the Government.   A further 12% goes on the cost of the bottle, labelling, the closure be it screw cap or cork, and shipping.   This leaves just 38% of your £6 represented in the cost of wine.   To save you doing the calculation, that means the wine in your £6 bottle, is actually worth £2.28.   As you trade up, only the VAT element increases.   Virtually everything else stays the same.   With a £10 plus bottle of wine, suddenly the value content of the wine itself is now the biggest component.

 

The negative attitude of spending more than £6 per bottle to a very large number of wine consumers, then carries over into the cost of wine in a pub.   Very little wine consumption in the On-trade is in the smallest glass size, i.e. 125ml. as it looks such a miserly serve.   The majority is either in 175ml. or 250ml. – the latter representing one third of a bottle.   However, the resentment factor comes in with the largest size glass, when often the retail price of that glass is over £6 and suddenly the consumer wakes up to the fact that they can buy a full bottle in the supermarket for the same or less.

 

That would seem to support a recent straw poll that we have undertaken amongst clients in the On-trade, that wine sales are either static or slightly falling, despite what is being said in the trade to ‘big up’ sales.

 

The solution?  Raise VAT on alcohol sales in the Off-trade to give pubs a change.

 

7.  And Finally

“If you drink, don’t drive, don’t even putt”.  (Dean Martin)

“I was one drink away from a tattoo”.  (Lily Savage)

“I just heard I won a competition.   The prize was a year’s supply of Marmite – 1 jar”.  (Tim Vine)

 

 

Best wishes from the Team at M & C

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, Braunton, Lewes)