Monthly Archives: January 2016

Have you implemented the correct employee monitoring measures in your organisation?

Avensure Layer

Have you implemented the correct employee monitoring measures in your organisation?

Employee surveillance: right or wrong?

The European Court of Human Rights’ (ECHR) recent decision on accessing employees’ private messages has been all over the news, causing a mix of opinions.

On one hand, employees might feel that by being monitored their privacy is being diminished, whereas, employers might consider employee monitoring as a good way of tracking performance and protecting private company information.

In a time when strengthening workplace relationships is key for business development, it is important for employers to assess if employee monitoring is really necessary and what level of monitoring should be implemented in order to achieve their business aims whilst keeping good employer – employee relationships.

Have you implemented the correct employee monitoring measures in your organisation?

Employee surveillance:
how far
can you go?
Read more >

The right to
read employee emails at
work
Read more >

Does an
employee have the right to record a meeting?
Read more >

Check List, Takeover Day and Before you buy a Business, (Barrel-Dregs 275)

Barrel-dregs 3

Check List, Takeover Day and Before you buy a Business, (Barrel-Dregs 275)

Now you would think buying a business would have every bit of essential information available to all from the most gullible to the most knowledgeable, either on line or in a hand out from every step in the chain, not on your life.

It might be available, but at the key stages nothing happens, so the gullible struggle, every specialist gives them a snippet, none give them the whole picture, so we have an endless stream of keen enthusiastic buyers of any new business, without exception, struggling for months to tie all the loose ends together.

If you search the Internet you will eventually come up with an amazing array of “Buying a Business Check Lists”, they are all relevant and in reality most are useless, because they cover the specialists key topics, who in reality has drummed all these points into the buyers confused brain, none tell you the really practical information to make a business work.

Some of my learned colleagues in the South who looked after membership, are and were senior members of the BII all had CBII after their names, all complain that this information should be given to anyone buying a business and made available at every specialist stage, not a Cat in Hell’s chance.

The first port of call for these unwary business buyers are the Commercial Business Agents, without exception every person selling the businesses face to face, said great idea, it would enhance their standing and get rid of time wasters and if successful get a good business to sell in due time. Selling a successful business is a lot easier than selling one that has no business and you can’t get funding for, your selling market is restricted to cash buyers.

The moment that the idea is put to the Bosses of these Agents, the substantial majority don’t want anything that may put people off buying and restrict the speedy turn round on commercial property, so how trustworthy is your Commercial Business Agent, an interesting question.

My view, having dealt with many, is that any Agent that does not give you decent essential advice and information should be treated with great care.

Lawyers should be a total source of information, not on your life, they might give you a list of say ten items, but nothing to ease your way into the realities of business.

Trainers, these people must be the answer, a few thinking ones, the rest do not want to know because it involves information outside their schedules.

Having spoken to many trainers for brewers and independents, with a couple of exceptions, none had any idea which time of the month was the best to takeover a business, it’s actually common sense and to do with Cash Flow.

The Institute of Licensed Trade Stock Auditors have a very comprehensive list, but it does deal with stocktaking and is very useful.

Accountants, should be another source, sadly not.

Banks with a New Business Mentoring Scheme, had no idea what they were.

How do we get these Key Specialists to help people buying a business is another problem, it is also a key factor in contributing to the failure rate, most people struggle in the first six months through lack of good advice, many get out.

One major companies failure rate some years ago were 5,800 enforced changeovers in two and a quarter years, the majority listed as Retailer Failure, this is mostly down to lack of knowledge of what they are buying, adequate training and unsuitability of the business to their talents that they bought.

Appendix

Check List    More

FAQ’s  on running a Business More

Potboy South

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.

copyright (©)

The joys of some Recruitment Staff (Not all), (Barrel-Dregs 272)

The joys of some Recruitment Staff (Not all), Barrel-Dregs

“Ever the fact that it is difficult to get skilled pub chefs. What with all the TV gubbins of Masterchef, Ready Steady Cook and the like, the world of cheffery has decided inflated thoughts over moving ever upwards within the industry, sort of polishing their CVs.

 

One nasty little scam came to light the other day with a past girlfriend’s gastro pub with rooms in a big Midlands town.

 

She went to a recruitment agency to urgently find a chef as hers had upped and grabbed his knifebox and gone on to better things. Eventually she got hold of a replacement on the basis of a fee of six week’s salary payable after the chef had been in employment for more than two months. The chef was top order and fitted in very well until it was realised that he had more than a little liking for the cooking brandy that was being used up at alarming rates. After one heavyweight session on the booze, there was a showdown meeting of sorts. Still drunk the chef said that he was going to go in just over three weeks in any rate. Why three weeks she asks. Because that is one week  after my two months are up that’s why he replies.

 

Then he breaks down and says he can’t take the pressure of constant moves every nine weeks and he has had enough. The recruitment agency splits the fee 30/70 with our chef every time and moved him automatically to a fresh position every nine weeks. Our chef knew that he was not the only one in on the scam with the agency concerned.

 

Do the sums and all of a sudden the money gets serious. Annual gross salary for the chef is £30,000, eight weeks ’fee’ £4616 which is payable to the agency. The chef is paid £5193 salary for his nine weeks in any event. Add 30% of the fee, so our chef now cops for £6577 gross for his nine weeks which makes his annual gross is in excess £35K.The agency gets a  70% fee (after paying our chef) which  multiplies into a yearly in excess of £25K allowing for holidays if, as they do, they keep moving him around the country every nine weeks. There was no proof, as the chef upped sticks the next day and the agency threatened legal action when their fee was slow in being paid. The whole sorry affair was written off as experience. The numbers get much bigger as the salary rises as the agency fee is higher. You have been warned !!”
Potboy Midlands.

This is allegedly true from our sources and it is highly feasible after further inquiries, a reasonably proficient chef and an unscrupulous recruitment agency, though not necessarily the agency, one well situated individual, could run this scam for a long time without being exposed and all busy caterers would do is put it down to experience.
The views expressed are not necessarily the editors and www.usenumberone.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 Leases or Tenancies, Serious thoughts (Barrel-Dregs 277)

BD less Savoury 2.eps

Pub Leases or Tenancies, Serious thoughts (Barrel-Dregs)

Thinking outside the Box (Updated)

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.

It is not a straightforward business any longer, it is now highly complex and a hot bed of legislation, far in excess of running a conventional retail business, where training, moral responsibility and professionalism are vital to the survival of the British pub and the whole licensed industry as we know it.

The old Family Brewers had a voluntary system that worked and was successful, many insisted that would be tenants did a course at Donhead in Dorset run by the old Brewers society, it was a tough, thorough two week course, if you passed.

The Brewers then put all newcomers in a training pub for at least a year and if suitable, progressed to a pub to suit their talents and after due period, if they showed flair a promotion pub and were defined as a Competent Operator or Reasonably Efficient Operator.

The in house Estate Surveyor, by the use of Comparables, looking at similar pubs within the immediate area, having an intimate knowledge of the Fair Maintainable Trade available for a Competent Operator, could assess a fair rent, though in reality they knew exactly how much rent was appropriate to each Pub within the Estate.

The system worked and was fair, the Brewers were in business to sell beer, not property speculation, if their pubs were over rented and the tenant was struggling, beer sales dropped, which defeated the reasons for brewing beer and other products.

Comparables was an acceptable term and adopted by the RICS, with the creation of Pub Co’s and leases it has been totally abused.

With the advent of leases on a large scale, the new Pub Co’s capital growth was peddled as the main incentive for taking a lease and it was low cost entry into the licensed industry, both are totally misleading.

Capital growth is minimal because of the rent levels, low cost is highly questionable, you need at least £60K to operate effectively with deposits and other commitments, most of which you will not see back unless you are extremely fortunate.

One major Pub Co stated publicly some time ago, that the lease value is of no interest to them, it should be because it is the measure of viability and profitability of their pubs.

Before the recession really got a bite on the industry, the failure records of one Pub Co were sent to me anonymously, showing 5,800 pubs changed over in two and a quarter years, the majority listed as Retailer Failure, this is a bad indictment of their recruiting and training system, also their long term treatment of their lessees.

The details were checked and confirmed correct, I sent them to the BISC at that time and said since it came to me from an unknown source it could not be used as evidence, but could raise some embarrassing questions, which it did, fortunately the BISC was not under oath otherwise certain prominent executives would have been jailed.

Having owned and run a number of pubs and aligned businesses, including leasing out pubs, I speak with a degree of first hand knowledge.

My initial reasons for becoming involved in these issues were the definition of Competent Operator or Reasonably Efficient Operator, as defined in the RICS Guidelines.

Competent Operator/Reasonably Efficient Operator CO/REO

The rental levels set by the RICS are for a Competent Operator.

The RICS do not, nor ever have run pubs the very few Chartered Surveyors who have taken this step now realize that the field of pub valuation is far wider than that perceived as a Surveyor with all the trading issues that affect the market.

The RICS Valuation Committee would appear to consist of a number of members whose main income is derived from perpetuating these rental levels and supposed high and all too frequently unattainable standards of a Competent Operator.

A body like the BII should have been consulted as to the qualifications and professional experience required to meet the standard required for a CO/REO which they were not, because of historical reasons.

Sadly the BII is no longer a body that I would turn to for advice on this subject, having just resigned as a long standing CBII.

It is now common knowledge that rents have been escalated without consideration of viability, to enhance freehold values for a number of Pub Co’s to fund further expansion.

The companies involved have a debt mountain of billions, making their survival very questionable, should interest rates rise, or an even bigger drop in business than that caused by the smoking ban and the present recession.

Previously there were two valuations for freehold pubs, one was bricks and mortar, the other turnover, both fluctuated according to the buoyancy of the market.

For tied pubs, in the main it was “In Goings”, based on Fixtures and Fittings and Stock at Valuation, possibly a degree of Goodwill in special circumstances.

Fixtures and Fittings on changeover, most tenants showed a loss on the price that they had originally paid, but the tenant made a good living and in some cases an exceptional living.

Commercial property freehold values are based on rents as an investment value or Bricks and Mortar in difficult times.

The Pub Co’s and their supportive surveyors have ignored the previous established methods of valuation and applied commercial property valuations based on rents, which would be perfectly acceptable if the rents were based on viability and there was no supply tie.

But the methods used involving Comparables is totally flawed, as explained to me by the Chairman of a national firm of Chartered Surveyors.

To assess a rent for any pub, he would take a number of similar pubs within a ten mile radius.

He already knew what their rents were and their supposed FMT for those pubs, so apart from a cursory inspection and based on previous figures from records, he can put whatever value he chooses, that has the vaguest similarity to the pub in question.

What he failed to grasp was that by Cherry Picking pubs outside the pubs normal catchment area he is effectively ratcheting rents higher and higher.

This caused me considerable concern, since he had absolutely no idea about the pubs existing business which is, its market share at that moment of time.

Unlike the old Brewers Estate Surveyors, who knew very precisely how much available business there was in an area, Comparables ignores the fact that there may be five pubs in the catchment area, one may be closed with Nil business, three may be doing a limited business, otherwise the closed pub would be operating.

All these factors have to be taken into consideration as they used to be, to arrive at a realistic overall available business to establish the rent and a profitable FMT for the licensee.

Any growth above 5% is taken from another pub, are they going to reduce the rent on that pub, not on your life, consequently the rents are ratcheted higher and higher at every review, unless you go to arbitration or similar system, where common sense may prevail and occasionally does not.

The major problem with Surveyors is, since they have never run pubs, every pub is different, every licensee is different, with different skills.

Pubs have evolved from village or town boozers, very few were built to sell food, with the present legislation, the majority have endless problems without spending thousands of pounds on making the pub, staff or customer friendly and I speak from experience, having rebuilt a number of pubs.

This is one of the appeals about British Pubs, some need excessive staff, others the kitchen is too small, the dining room is in the wrong position, the bar can only operate with two bar staff, the problems are endless, but it all adds up to the quirkiness of the British pub.

These Surveyors cannot apply a set of numbers based on a different catchment area, for ease of convenience, every factor has to be calculated and brought into the equation and it is not.

Drive by valuations should be illegal.

They also fail to understand that business is finite and not infinite, growth is minimal and the market is falling, if one Pub Co added up their total predicted FMT against their actual sales, they would probably find that an over estimation of at least 50% existed.

The other key factor is that the business that a licensed property has is its market share at that moment of time, the pub market is actually falling for a number of reasons well documented elsewhere, any growth come from an adjoining business, are the rent and rating assessors going to reduce the rent and rates on the properties that have lost that business, not a cat in hells chance, this flawed and misused system ratchets rents and rates higher at every assessment.

We need a body to define the available business in an area, the definition of Competent Operator and a fair assessment of FMT.

It should not be left to the RICS, they have never run pubs and have absolutely no idea how different one pub is from another, likewise trading areas, staff availability and so on, as any good licensee knows.

If you agree with my views, please pass this on to anyone that it may help and email info@usenumberone.com, the tree needs a massive shake to get leased and tenanted pubs back to profitability and a career for life.

The Market Rent Option, should be an opportunity to unite the Industry, sadly too many Pub Co’s are fighting it without considering the real benefits.

Potboy South West

Please view our other web site for Information, Help and Advice www.usenumberone.com

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.

 

 

Alcohol guidance must be clear and concise. ALMR

ALMR

Alcohol guidance must be clear and concise.

Following the publication of new alcohol guidelines, the ALMR has warned that the Government runs the risk of confusing consumers regarding safe drinking practices.

ALMR Chief Executive Kate Nicholls said: “The guidelines draw a link between alcohol intake and associated health risks, but go on to say that regular drinking levels increase the chance of dying from an alcohol-related condition by just 1%. By the Government’s own admission, drinking at regular levels is no more dangerous than a host of everyday activities. What is being lost here is the fact that low levels of drinking remain very low risk.

“What consumers need is clear, practical advice based on undisputed evidence to allow customers to make informed choices. There seems to be little agreement, even among health experts, about the evidence to back up the latest proposals.

“It is worth remembering that levels of alcohol consumption have been falling steadily and are at their lowest this century. Much of the work of the licensed hospitality sector in recent years has been focused on providing consumers with greater choice and our venues remain committed to promoting healthy, responsible drinking practices in a supervised environment.

“The ALMR will be responding to the Government’s consultation to push for clear and concise, information that is practical, evidence-based and which we feel is robust and reliable.”

 

M&C Newsletter, the Vagaries of Pub Rent Negotiation

Morgan  Clarke Logos copy

MORGAN & CLARKE DECEMBER 2015 NEWSLETTER NO. 49

Pigeon House, The Broadway,

Oakridge Lynch, Stroud, Glos. GL6 7NU

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

www.morganandclarke.co.uk

The Vagaries of Rent Negotiation

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

Fully back in harness, the New Year beckons with great anticipation, not least in respect of the establishment of the Statutory Pubs Code, technically no later than the end of May. The consultation document “Pubs Code and Pubs Code Adjudicator – a Government Consultation – Part 2” was issued in December. The deadline for responses is 18th January 2016 with the 23 questions contained in a 95 page document. However, the Department of Business Innovation & Skills has been very helpful in the summarising of the questions from page 93 onwards which hopefully should reduce the volume of the paperwork that they will receive from interested parties.

  1. The ‘B’ Word (Episode 2)

Rent review of a West of England Pubco tied lease due in the autumn of 2016. Detailed negotiations have been underway between the tenant and the Pubco retail field staff which were described as ‘being an effort to settle matters amicably well in advance of the review date’. There was obviously considerable concern over the tenant’s ability to actively consider Market Rent Only – Option (MRO) at the autumn 2016 rent review date. The incentive for an early rent settlement went something like this:

Pubco: “Do you think you will be taking up MRO as in all probability, should you decide on that course of action, it would not be worth us keeping the pub.”

Tenant: “Well, I might not take up MRO if there was enough incentive for me to stick around with you guys.”

Pubco: “Well, we have a firm option that we could put the freehold on the open market with a number of other similar pubs and sell the freehold off to a brewer or such like with less than 500 pubs. That would be attractive for them as they would then keep the supply-tie.”

Tenant: “That’s pretty serious stuff. What are you proposing?”

Pubco: “If you sign a new lease well before any MRO decision then there would be no need for us to sell the freehold as we would have a solid investment with rent reflecting our current position”.

Tenant: “Does that mean that the free-of-tie lease – as I have been told by other people – would have upwards-only rent reviews and be index linked? That would mean that the rent would constantly be going up even if the market turned downwards.”

Pubco: “Well the devil is always in the detail and all I was trying to achieve was your willingness to accept a completely new lease rather than a rent review.”

Tenant: “Is that it then? Is that the only option?”

Pubco: You are not that far from the end of your lease and our other option would be to take the place back as a managed house. Things are picking up in that direction and it is a distinct possibility, despite the fact of being a few years away.”

Tenant: “You must be joking!”

Pubco: “We do have a number of other options I suppose, one of which is a turnover-related lease or you could have a franchise, but we really do need to make some early decisions.”

Tenant: “I think I will wait until after June when we will all know what’s in the statutory Pubs Code.”

Pubco: “Would you mind signing the attendance notes record to record that the subject’s been raised.”

Tenant: “My writing hand seems to have gone to sleep.”

  1. Progress of Rent Reviews

We are constantly being told that the green shoots of recovery are evidenced right across the pub trade. Not so! The area that is concentrated on genuine small increases in trade is, without doubt, the branded, high street, food-led establishments that are certainly recording minor but real rates of growth generally less than 4% year-on-year. Despite the fact that there has been no comment on whether or not their overhead costs have increased more than their growth rate, this feel-good factor has not percolated into suburban or rural outlets on a general, nationwide basis.

As recorded in the November Newsletter, paragraph 3, the BBPA national statistics are still recording decreases in the On-licensed trade on a volume basis. This has seen a consistent reduction in rents at rent review which is reflective of either a three or five year cycle that has still not bottomed-out from the previous years of solid recession.

It is always comforting to receive commendations from Clients for whom we have been successful and a couple are set out below:

  • North West of England supply-tied, stand-alone unit in a small village with wet and dry trade being split 50/50 on a £700,000 turnover. Rent proposal was £61,000 which was reduced by negotiation rather than third party referral, to £51,000. Tenant comment: “Once again, thanks for your help and support. You richly deserve the reputation you have for representing publicans’ rights”.
  • Home Counties supply-tied pub, again with the rent review settled by negotiation rather than third party referral. Pubco rent assessment on total trade of approximately £300,000 being £34,000 with only 10% food content. Rent settlement £19,500 on a five year rent review cycle. Tenant comment: “Thank you for making our Christmas special. Hopefully we can find further leaseholders and tenants that we can forward on to you. The bullying culture at …………. cannot prevail”.
  1. PIRRS’ Abortive Costs

We had a case recently where, rather than going the distance to a full PIRRS’ referral, the matter was settled by negotiation. Both sides, however, had paid the PIRRS’ Expert fees which is normal practice as the full fees have to be paid in advance of starting the process of direct involvement with the PIRRS’ expert.

This was a rare occasion where genuine negotiations proceeded between parties rather than the standard mantra for some of the Pubcos who flatly refuse to negotiate at all. A request was made to the Independent Expert for some consideration of a fee refund, considering all that effectively happened was email correspondence and the issuance of standard format directions which are commonplace to experts being involved in the PIRRS process. However, all was not quite that simple with the PIRRS’ Expert citing rule 14 of the PIRRS’ engagement regulations which we quote as follows:

“The obtaining of all necessary documentation and payments by PIRRS at an early juncture is intended to allow the Independent Expert to supply the parties with procedural directions as to how the PIRRS process will operate without delay…………………… It is important to understand that if the parties agree the rental between them, or they request that the Independent Expert does not proceed for any reason no refund of the charges paid to him will be made subsequent to the procedural directions having been submitted to the parties.”

So there you have it – even if you want to negotiate further – you will not have any refund from the PIRRS’ Expert if he moves with reasonable speed and immediately issues out the directions letter upon payment of his fees. Then his fees are guaranteed and non-refundable, even in part.

Rules are rules!

  1. The Comparables Conundrum

The rent review and lease renewal market is populated by a very large number of influential people, be they Pubco and Brewery retail field staff, valuers, Chartered Surveyors and others, the majority of whom have never actually run a public house or restaurant. As sure as night follows day, the opinions of rental value will be backed up by “comparables”.

The major problem is that if the other rental transactions are not supported by detailed financial information or barrelage statistics, reliance on physical aspects alone can be hugely misleading and misguided. More than likely, the detailed financial information will be held private to the lessee concerned and that information is heavily protected by the Data Protection Act. This, however, does not stop the wide and varied use of virtually useless other rental transactions in support of the general concept of rental value. Our start-point in setting REO status is to analyse what has happened on-site first – however good or bad. Whatever they may say to the contrary, the Pubco leases in modern times all have the right to obtain tenants’ accounts and VAT records. This also enables them to undertake the same process as us. Strange how Pubco FMT is almost always higher than the tenant’s recorded total sales!

But we digress. We have just concluded a six month market survey which involved a substantial number of our rent review and lease renewal clients as to what form of reliance they place upon the so-called comparable evidence. The results were almost uniform in that particular regard was placed on the style and level of trade competition, special offers, 2-for-1 discounted food, etc. with the main focus point being the ability to stay competitive. Nobody was the least bit interested in the amount of rent that was being paid, fundamentally because of the wide disparity of discounting which made comparison difficult – if not impossible.

There was a general level of price-consistency in a given area for drinks products that meant that free houses were earning a far superior level of profitability by charging the same general price level as the supply-tied pubs. Generally the gross profit margin was a variable of 10% between supply-tied and supply-free. The only great exception in central urban locations was the likes of Wetherspoon who deliberately caught market share by being considerably cheaper than supply-tied opposition.

So where does this leave the thorny issue of comparables? We have always worked on the basis that if you can prove financial viability, then that goes a long way towards attempting to interpret levels of rent in other public houses in the general vicinity. However, if you do not have that vital financial data to underscore financial viability relating to rent, we still have the considered view that other rental transactions are right at the bottom of the scale of usefulness in trying to prove a case for rental valuation.

  1. And Finally

We thought that you would like a laugh with the following quotation that was contained within a supplementary report at third party referral by the Enterprise expert in support of the landlord’s contention of what we considered was an eye-wateringly high rent proposal. No names of course, due to the confidentiality which is standard in third party referrals / arbitrations.

“The Arbitrator will be fully aware of the impending Market Rent Option (MRO) that will be introduced into the UK pub market in the near future. Enterprise Inns as one of the UK’s largest Pubcos will be directly impacted by this as will their tenants. If anything, having a lease from Enterprise Inns with the potential to become completely free-of-tie in the future, will be an added attraction to the hypothetical tenant. This is an improved position since the original Expert Reports were issued. As with the economy, the general circumstances surrounding this review have, if anything, improved in the intervening period.”

So that’s why after five years of recession the rent should go up substantially!

Very best wishes for a thoroughly successful and enjoyable 2016 from the Team at Morgan & Clarke

Best Wishes from the Team at M & C

Email: info@morganandclarke.co.uk

Phone: 01285 719292

 

Is this a Pub Co mistake or how many genuinely know? (Barrel-Dregs 276)

Bad-Beer-For-Export-e1279475728328[1]Barrel-dregs 2

Is this a Pub Co mistake or how many genuinely know? (Barrel-Dregs)

The Old Chestnut, how much Real Ale can you sell in a barrel?

In pre history, before the advent of the Pub Co’s. the old Family Brewers were in business to sell beer.

They were considered to be honest pillars of the community, their sons and daughters went to the top Public Schools, on the surface and in the main squeaky clean.

Then the Pub Co’s arrived on the scene, you could say a bit like modern day pirates in an industry largely unregulated, except for duty and revenue influence, backed by the money manipulators and top lawyers.

Very little idea how to run pubs, but had a nasty grasp of rents and inflating company assets.

Right down at the bottom of this industry is ullage, the waste in the bottom of the real ale cask, in fact the barrel-dregs.

The Family brewers in the main, didn’t have a problem with this, you put all your ullage in a barrel and sent it back to be given a credit for, they claimed the duty back or allowed a certain amount as ullage, not a problem.

The Pub Co’s, the majority of them, don’t brew beer, therefore if it says 72 pints on a cask, their tenant/lessees have to sell 72 pints or pay for 72 pints.

Anybody that has set up a cask of real ale knows that your first pint or two can be thrown away and at least the bottom two pints or more are undrinkable.

Whether you have vertical stillage or a tap at the bottom, both are designed to avoid the ullage at the bottom, unless of course you want to lose your dedicated real ale drinkers.

The major brewers are laughing all the way to the bank, the ullage problem is no longer a problem, you might get the odd squeak from an experienced licensee about throwing four pints away, on average, they are happily claiming the duty back, since they are now run by accountants.

The big loser is the Pub Co licensee, he is being ripped off for at least three and a half pints on every 72 pint cask.

With the Pub Co’s he gets minimal or no discount and in many cases is paying way over the top for his real ale compared with Managed Houses and Genuine Free Houses.

If we didn’t have Pub Co’s controlling so many pubs, these issues could be aired successfully, as they used to be, direct with the brewers, the only slight saving is if you don’t sell it you can’t pay VAT on it.

But you’re wasting your breath with the majority of Pub Co’s, Potboy South tells me that even Pub Co Trainers are reputed to be telling their new intakes that there are 72 pints in a cask of real ale and no mention of ullage.

They naively assuming like canned beer (lager etc.), that every drop is saleable, sadly it is not.

The Schrodinger Report points out that only 68/69 pints in a 72 pint cask are normally useable, which all experienced licensees and brewers know, but the Pub Co’s influence has removed the direct complaint availability with the brewers.

Legally, it could be assumed that the Pub Co’s would appear to be guilty of miss selling, certainly they should be responsible, as the suppliers, though I doubt whether any of their licensees have managed to beard the Dragon in his Den, under the Trade Descriptions Act.

Knowing the Pub Co’s well, the price will not go down from the Pub Co’s or the Brewers, but a court case could or may produce an interesting result for those that have been sold 72 pints of useable real ale per keg for many years as tied licensees.

The Court of Public Opinion would be the cheapest starting point for hard pressed tenants and lessees.

There are a number of situations that can cause the waste to exceed 68/69 pints per 72 pint keg.

Firstly under filling the barrel, some brewers claim to put a handful of hops in each barrel to improve the flavour, which is more waste. At what level the barrels are filled from the brewers vats, near the top or the bottom can produce added waste, they are going to run it to the line to get the most out of each brew. Warm weather on a standing delivery dray, can cause activation and the real chestnut, how many licensees weigh the barrels on delivery, also knowing the exact weight of individual barrels, sadly very few, it also means moving a barrel once delivered.

Most licensees want the barrels set up as soon as they are delivered to ensure maximum settling time, the licensee with a Pub Co is in a “No Win” situation.

The only solution is to deal direct with the brewers, a winning court case against the Pub Co’s for miss selling and the adoption of the MRO (Market Rent Option) by all pub owning companies, would resolve this problem.

Interestingly the HMRC have a definition of what a Pub Co is under the AWR Scheme.

“Businesses who act as an agent between a supplier and another business to arrange, or offer for sale alcohol to other businesses – these agents often don’t take physical possession of the goods and are known in the industry as ‘dry brokers’.”

They have to be registered to reclaim the duty paid on unsold beer (ullage/dregs), the larger brewers would appear to do this with cask ale, if the Pub Co’s acting as Dry Brokers claim the duty back, it could massively backfire on them, if they don’t they could be assumed by all fair minded people to be knowingly miss selling.

If a good “No Win, No Fee” lawyer got hold of it, the figures could be enormous, it would certainly remove the smug smile on some Pub Co’s managements faces.

Reactions:-It would appear from our latest sources, Heineken deny changing policy but continue the slightly less half-hearted policy that they had before, brewers are well aware of it, are Pub Co’s? And will they take any action to remedy this “Old Chestnut”, which would appear to have been quietly buried from the time the Pub Co’s started.

Every Tenant/Lessee/Manager whose Pub Co does not have a specific policy on this shortfall, should start asking questions and not be fobbed off with delaying answers, there could be some embarrassing times ahead.

The other argument is that using a Stocktaker would remove this problem, in which case why has the Stocktaker not raised this point with the Pub Co when they have no specific policy, when a 72 pint barrel is clearly 68/69 pints or less.

Please click on the link below to view the report, it is an eye opener.

Schrodinger’s Pints

Observations on this nasty business, please click on Link below.

Observations

Potboy West

The views expressed are not necessarily the editors and www.usenumberone.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.

Banks pressurising Customer

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Banks pressurising Customer

Without boring you with a long screed about my misfortunes, but very briefly I slipped on some stairs, fell on my back, got up with no visible sign of injury.

48 hours later I collapsed, have been carted into hospital twice, surgery was scheduled for September, put back to October, cancelled as being too dangerous at the time, finally being scheduled for November 30th.

For someone who avoids going near doctors, never take drugs voluntarily, spent one night in hospital at the age of four and leads a healthy active life, enjoying all the things that doctors do not recommend, this was a complete shock.

However, in between hospital incarcerations, I had a letter from my caring, sharing bank saying my overdraft was being cut to some substantially reduced level, I didn’t need the level that I had, but might if something came up to get involved in.

I phoned the bank and ended up with hard nosed lady who took no prisoners, she grudgingly agreed to leave a realistic overdraft, but owing to my love affair with the local hospital I had not earned any money to feed into that particular account, apart from the fact that most of the time I was half way out of my tree with cocktails of drugs. I did point out that I had been in and out of hospital and was due to be operated on at the end of November, which carried very little weight, possibly some concern that if I snuffed it they may have to write the overdraft off.

They hospital gave me two shots of Ribena flavoured morphine which made me hallucinate for 15 hours, how drug addicts cope is totally beyond me, apologies for the digression.

I had discovered that I had several thousand bank shares and explained to the iron lady that I would prefer to retain them for the immediate future, since there some sort of bonus due.

The alleged bonus vanished shortly afterwards and the shares started dropping, time to sell.

I spoke to my caring sharing bank, who I had bought the shares through years ago, they no longer sell shares, they gave me a number to call.

Three quarters of an hour later, I get through to another hard nosed lady, she said they could sell them but I needed an online account and could take up to ten weeks to set up, by that time the shares would be substantially lower.

I got on to a stockbroker and sold them a few days later, cleared my overdraft substantially, without losing too much on the shares, lesson learned.

My operation came and went, with serious warnings any stress or vaguely rapid movement would cause serious bleeding problems, taken which ever way you like.

8.00 am Saturday morning, having had a very bad night with a lot of pain, disturbing and worrying my wife, who at this time was dead to the world.

I hear my mobile ringing, the only people that have my mobile number are immediate family and my caring sharing bank, it must be a family emergency, it won’t be a bank, they gave up working on Saturdays years ago.

Very carefully I rushed downstairs, the phone stopped and the landline starts, I grab the phone a woman’s voice asks for me, I as usual say “Who’s calling”, my caring sharing bank, can I identify myself?

I hit the roof, scammers would not phone at 8.00 am, the last thing that I am going to do is give security information to a casual caller, she refuses to discuss anything and we get nowhere.

Unfortunately I am bleeding and tell her to write to me, slammed the phone down after giving her an earful about people recovering from serious operations and calling first thing on a Saturday morning.

I get the letter via second class post (Snail Mail), they are reducing my overdraft by £400.00.

I was not overdrawn, the previous person that I had talked to knew that I had been seriously ill and was due to be operated on, what sort of bank rings at 8.00 am on a Saturday morning.

The service from this bank has been appalling over the last few years and I have now written a strong letter to the CEO, which may well be followed by one to the Ombudsman unless I can get satisfactory answers, which may well be beyond them.

I had problems with another bank some years ago and they refunded me £1500.00 as an ex gratia settlement, which I politely questioned, they replied refunding me £13,500.00. I turned the letter over twice to ensure that I had read it correctly.

A salutary lesson, make a note of every abuse, misinformation or any unacceptable practice and write a pointed letter to the CEO, before you switch banks, but do ensure you have a second bank account in credit, if you have, do switch, with only one account they will screw you.

If I don’t get a satisfactory response, be assured the Bank will be named and shamed, which is what we all need to do.

Potboy West.

Note:- I received a letter from the bank saying very little of use except, that the writer from Customer Service is only available after 10.00 a.m. on specific days duriing the week.

The saga continues.

The views expressed are not necessarily the editors and www.usenumberone.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.