Monthly Archives: April 2018

New report reveals momentum brands in out of home food and drink

New report reveals momentum brands in out of home food and drink

Costa, Wetherspoon, Greggs and Mitchells & Butlers among the operators in favour, analysis from CGA and Stone & River shows

NEWS FROM: CGA

FOR RELEASE ON: Friday, 20 April 2018

Costa, JD Wetherspoon, Stonehouse Pizza & Carvery, Miller & Carter and Greggs are among the businesses with the most momentum in the out of home eating and drinking sectors at the moment, a new report reveals.

The CGA EI | Stone & River Brand Momentum Report dissects a wealth of CGA data to produce rankings of operators in five key parts of the industry, and adds expert insight from hospitality and retail consultancy Stone & River. The result is an authoritative analysis of which brands are rising and falling in the eyes of British consumers.

The report concludes that Costa is the company with the most momentum in the coffee and food to go sector, followed by Patisserie Valerie. With more than 2,300 coffee shops and 7,000 Costa Express self-service units, Costa is now one of the most visible consumer brands around.

In the high street drinks-led sector, JD Wetherspoon emerges as the leading operator, followed by All Bar One. CGA’s data shows it has a very wide appeal across demographics, and has sustained momentum through the convenience and value of its offer.

Mitchells & Butlers’ Stonehouse Pizza & Carvery tops the report’s list of leading pub restaurant names, ahead of Greene King’s Farmhouse Inns. Stonehouse has rolled out rapidly since launching, and has successfully tapped into two of the most popular areas of eating out in pizzas and carveries.

M&B scores a second top spot in the restaurants category, with its steakhouse brand Miller & Carter leading narrowly from fast-growing brasserie concept Côte. Miller & Carter has replaced other M&B concepts in many locations lately, and has built loyalty among older diners in particular.

In the QSR category, Greggs continues its dominance by leading the list ahead of McDonald’s, thanks in part to efforts to evolve its formula with more healthy options and sit-in service lately.

The report from CGA and Stone & River contains analysis of many more pub, bar, restaurant, coffee and on the go operators, plus insights into the key triggers of brand momentum. It concludes that a straightforward offer, convenience and value are vital elements of success, and emphasises the importance of constant evolution and flexibility in business propositions. CGA has a wealth of further research into momentum to support operators’ ongoing marketing strategies.

Karl Chessell, business unit director for retail and food at CGA, said: “Our fascinating snapshot of out of home eating and drinking brands reveals the names that are increasing awareness and generating loyalty and word of mouth—as well as the ones that are slipping behind in public opinion. It shows the simplicity of some of the elements of successful branding—but also how challenging it can be to achieve them on the frontline. Staying on top of consumer habits and opinions is going to be crucial if brands are to generate momentum in this ultra-competitive market, and CGA’s data can help them do so.”

Alex Doman, engagement manager at Stone & River, said: “Our momentum index is reflective of an industry in flux, with some sectors experiencing something of a paradigm shift. It points to some key learnings about what it takes to build momentum: having an easy to understand and simple to deliver brand proposition, a focus on creating long term value for the customer and targeting the older generation can all often be beneficial. The index asks a fundamental question: with the industry experiencing mass change, are you set up to compete and win? To answer this there are five key questions that this index throws up: do you understand why your business exists and why the customer should choose you; are you set up to understand what the customer needs and to create value long-term for those needs; is your business model fit for purpose given all the change; do you understand your brand’s maturity; and do you think of innovation in a new-age agile way or an old-school waterfall way. Stone & River works with organisations to help them find these answers.”

Category: CGA

Essential Questions and Answers before you take a Commercial Lease

 Barrel-dregs 3
Essential Questions and Answers before you take a Commercial Lease

All these questions you need positive answers to, in writing, from your Landlord before  you consult a Solicitor/Commercial Lawyer or consider taking a Commercial Lease.

These questions are based on a standard Commercial Lease, they do not represent or replace using a Commercial Lawyer or legal advice, they are all issues that people failed to understand or caused, in many cases serious problems for people taking Tied Leases.

There are two copies of the Q.A’s, the first you need to ask any Landlord or Pub Co whose property you may be considering, for written answers, do not accept blanks or verbal answers under any circumstances.

See Note Below Click on the link  for the second set of Questions with our thoughts on the Answers.

Pub Co/Landlords Copy to view and complete, if they refuse or leave blanks, don’t have anything to do with that company.

The Lease.

1. What happens if I fail to pay the rent?

Landlords Answer:-

2. What happens if I fail to pay the Business Rates?

Landlords Answer:-

3. Why do I need a Survey?

Landlords Answer:-

4. Why do I need dated photographic evidence of any survey faults?

Landlords Answer:-

5. Why do I need approval to carry out improvements to the property?

Landlords Answer:-

6. Can I sell or change the Fixtures and Fittings (F&F), assuming that there are F&F?

Landlords Answer:-

7. Why do I have to pay a deposit to the Landlord and how much?

Landlords Answer:-

8. What is the Authorised Guarantee Agreement (AGA) and the implications for me?

Landlords Answer:-

9. Do I have to use the Landlords Insurers?

Landlords Answer:-

10. Does the Landlord have right of entry to the premises at any time?

Landlords Answer:-

Rent Reviews

11. Do I need professional Advice on a Rent Review?

Landlords Answer:-

We will add more Questions to the list as further problems are reported.

Click on this LINK for our thoughts on Answers to the Questions above, so that you may be able ask suitably direct questions and get answers that you understand. 

Please note, access to this site is totally free if you would like to subscribe (No Charge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

Restaurants hold up on high streets from CGA

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Restaurants hold up on high streets

New Market Growth Monitor from CGA and AlixPartners indicates only a small decline in licensed premises in 2017—but tough challenges are likely to follow

NEWS FROM: CGA

FOR RELEASE ON: Wednesday, 18 April 2018

Many casual dining brands continued to expand on British high streets over the last year, despite the host of challenges facing the eating and drinking out sector – fuelling concerns about market saturation.

That is among the key findings from the latest edition of the Market Growth Monitor from CGA and AlixPartners. It reveals that Britain had 122,221 licensed premises at December 2017—a drop of just 0.3% on 12 months earlier, despite mounting cost pressures, weak market confidence and uncertainty over Brexit.

The bulk of closures of licensed premises in 2017 were of drink-led pubs and bars, the Monitor shows. But Britain’s casual dining brands remained in growth last year, with overall restaurant numbers rising by 0.6% in the year to December. The country now has 16.7% more restaurants than it did in December 2012, underlining the growth of the sector.

The Monitor also pinpoints high streets as the leading source of this growth for restaurant operators. The number of licensed premises on high streets increased by 0.6% in the year to December 2017—compared to declines of 0.8% and 0.2% in suburban and rural areas respectively.

CGA’s recently-published 2018 Business Leaders’ Survey suggests that many operators will now be scaling back their new opening plans over this year. Concerns about market saturation and rising property costs, especially among food-led operations, as well as people and food costs are likely to dent the number of licensed premises in 2018. But while several high-profile casual dining brands have announced closures recently, the Market Growth Monitor provides a reminder that not all are turning off the tap – as the long-term picture has been of steady growth.

Other trends identified by the new report include:

Growth in the North West, with the Granada region increasing its number of food-led licensed premises by 2.9% in the year to December 2017

Tough trading conditions in outer London, where total licensed premises fell 1.9% in the year—compared to 0.6% growth in inner London

Consistent growth in food-led pubs and bars, whose numbers have increased by 4.7% since December 2012.

AlixPartners managing director Graeme Smith said: “With some casual dining operators announcing restaurant closures at the start of 2018, there has been much talk of over-supply in many of Britain’s cities and towns. But where exactly is supply exceeding demand? With consumer habits changing so fast, it can be hard to tell—but Market Growth Monitor tables show some of the places that have been particular targets for new openings in the last five years.

“Top of the list is Solihull, where the Touchwood retail centre has been a magnet for casual dining brands. Second and third are Milton Keynes and Chelmsford—both towns in which closures have announced recently. Milton Keynes has around 28% more food-led licensed premises than it did a year ago, and may well be at risk of saturation—though its popularity as a place to live among professionals and young families continues to increase. Darlington, Shrewsbury and Loughborough have also seen a steep rise in new restaurants—although it could be argued that these towns were previously badly under-served by operators.

“At the other end of the spectrum, Oldham, Wrexham, Rotherham and St Helens have all seen a double-digit fall in licensed premises in the last five years. In all cases, most closures have been pubs rather than restaurants. For all brands, selecting the right towns for openings will be more important than ever.”

CGA vice president Peter Martin added: “2018 is shaping up into a tough year for pub, bar and restaurant operators, and CGA’s Business Leaders’ Survey suggests we may not have seen the last of closures from some of our biggest casual dining brands. Operators are reining in expansion plans and are predicting an increase in business failures. But our latest Market Growth Monitor is a reminder of the underlying strength of the sector despite the perfect storm of challenges that has been whipped up. People are still going out to eat and drink, and operators who can deliver value for experience and select the right locations for their new openings can still thrive.

Minimum unit pricing for alcohol in Scotland from May 1st 2018

Minimum unit pricing for alcohol in Scotland from May 1st 2018

The Scottish Government has confirmed that there will be no ‘grace period’.

“From 1st May 2018 there will be a minimum unit price for alcohol in Scotland which will become a mandatory condition of all premises and occasional licences. The Scottish Government has proposed a price per unit of 50p. The unit price still has to be ratified by the Scottish Parliament.

The Scottish Government has confirmed that there will be no ‘grace period’. Thus anyone in Scotland holding a premises licence or occasional licence for the sale or dispatch of alcoholic products within Scotland with an ABV of over 0.5%, either on or off the premises, will have to comply as of 1st May.

The final draft guidance details how to calculate the minimum pricing as follows:

“The price per unit (£0.50) x the strength of alcohol (ABV) x the volume in litres.”

Note that prices must always be rounded up to the nearest pence.

You can find a link to a calculator for the minimum price here.

The draft guidance also provides useful information in respect of promotions, reward cards, multipack products and complimentary drinks.

More to follow.”

For further information on this or any other legal related licensing issues contact solicitor Jonathan Smith 0115 953 8500 or email j.smith@popall.co.uk.

“My Local’s Ripping Me Off…” from Steve at the Kings Head (Barrel-Dregs 2002)

“My Local’s Ripping Me Off…” 

(One from the archives, but still relevant)

 

How many times have you looked at pub prices these days and thought to yourself “bloody hell, I’m off to Tesco”?

It’s a fair reaction, so what I’d like to do is first explain why it’s a false comparison and then lay bare the typical costs that any pub must face, in an effort to convince you that most pubs are not ripping you off!

It’s not a rant, I firmly believe all businesses (and business people) must continuously adapt and change to maintain their competitive edge and give customers what they want, or at least what they think they want, but there’s only so much a business person can do within a restricted and heavily skewed marketplace. I apologise for the length of this post but if you have any interest at all in your own local pub(s), you’ll hopefully enjoy the read…

A False Comparison

Cast your minds back (if you’re old enough) to a time before we had a massive supermarket on the edge of every town. Can you remember where you bought your alcohol? Does anyone remember the old “off-licence“? That curious shop that was so ordinary and seemingly none-retail focused that it couldn’t even be bothered to give itself a proper name? To sell alcohol for consumption off the premises we need an off-licence, so let’s call ourselves off-licences … inspired. It would be like popping down to the pub and saying “I’m just going to the on-licence”. Of course, we still refer to shops selling alcohol as “off-licences” but the sale of alcohol has become so widespread it has removed the uniqueness from the name.

So what’s the relevance of this you ask? Well, the very name was endemic of the way alcohol was treated back then. It was sold by retailers who sold nothing else. If you wanted to drink in public, you went to the only place you could; a pub. If you wanted to drink in private then you headed, with a slightly shameful admittance that you were going to drink at home, to the off-licence. Okay, I’m being overly-dramatic for effect but there was a difference in the way that alcohol was treated; it was something you consumed as an aside to doing something else? Anyone who drank alcohol just for its own sake was, well, bordering on alcoholism! I remember my mum sipping the occasional Carlsberg Special Brew at home in front of her favourite TV programmes. It wasn’t a lot, it was the sort of quantities that wouldn’t even raise the Chief Medical Officer’s sober eyebrow nowadays, but she’d always feel the need to explain and justify every can as if it were filled with illegal drugs, because there was a sense that drinking at home was somehow naughty or only for special occasions.

That was almost 40 years ago. Fast forward to today and you can buy alcohol pretty much anywhere, in any store that can be bothered to apply for the relatively easy-to-get licence. As supermarkets were growing they obviously wanted to offer their customers a broad range of products, so they put up with the hassle of having separate, supervised alcohol aisles, with restricted opening times to fit in with the licensing laws of the day. In other words, it was an ‘off-licence’ within a store. That was the moment that alcohol ceased to be a special, restricted product and instead started its journey on the long trek to become just another commodity in people’s minds and in their shopping baskets. Sure, supermarkets stuck to the law, it was still a restricted sale, but the very fact you could now buy alcohol as part of the weekly shop caused a massive step-change in consumer perception and behaviour. Slowly but surely, alcohol’s uniqueness was chipped away. It’s now a FMCG that’s no more unique in the consumer’s mind than Kellogg’s cornflakes or orange juice.

But another thing happened during this time. As alcohol shifted from being a recognisably controlled drug to just another FMCG, it was treated as such by the retailers; in fact they were obviously driving this. We now see stacks of alcohol piled up at shop doorways as if it were bags of crisps. But, most importantly, it has now become a key player in supermarket FMCG pricing strategy. The old-skool-sales cliché of “pile ‘em high, sell ‘em cheap” has never been applied so vigorously and there’s a very good reason; because supermarkets know that alcohol is a desirable product with a high perceived value; the perfect combination for a promotable product. In alcohol, supermarkets have the perfect loss-leader with which to tempt people into their stores. This has catapulted the perception of alcohol way past the position of just another FMCG and into the realms of marketing fantasy. Unlike all other FMCG brands, alcohol is now pretty much on permanent promotion in most supermarkets, to the point where the promotional price is now viewed as the normal price by consumers. I challenge anyone to find a supermarket anywhere in Britain that does not have an alcohol promotion running?

This behaviour in itself is hard to turn around but what makes it even worse is that a loss-leader is exactly that, they’re selling it at a loss. So we find ourselves in a situation where the consumer now expects (even demands) to get alcohol at a below-cost price, everywhere, all the time and they feel cheated if they don’t! And we wonder why there’s a perception of “Binge-Britain” (although I also have much criticism on the scaremongering surrounding that phrase, when per-capita alcohol consumption has been falling for some time, but that’s a whole different blog subject)! I’m not making a personal, moral judgement on this, if we decide cheap alcohol is the way to go as a society then so be it, but you can’t have a society that complains about alcohol abuse on one hand yet allows such practises to exist on the other?

Throughout this period of transformation, we have seen all kinds of knee-jerk reactions in an attempt to counteract alcohol’s slide towards FMCG status and the corresponding change in the consumer’s relationship with it. But, ironically, many of these reactions have served only to bolster this relationship, not counteract it. For example:

    • Action has been heavily skewed towards the segment of the market where alcohol consumption, and its effect, is visible (the On-Trade, or Pubs), rather than the segment that has been reinforcing this slide towards FMCG status (the Off-Trade, or supermarkets). It’s a perfect example of a “seen to be doing something” strategy rather than an effective strategy. There are many reasons this is so but the summary is that pubs are a much easier and more visible target.

 

    • Related charities such as Alcohol Concern scream publicly for much tighter restrictions and controls on alcohol (and alcohol retailers, although they’ve only recently started targeting supermarkets); this bolsters the perception of alcohol being different, which is good, but unfortunately it does it at a time when there are fewer restrictions than at any point in alcohol’s history; a time when people have enjoyed almost unfettered access to cheap alcohol and have grown up treating it with little respect. So this simply feeds the perception that all of the responsibility is the product’s rather than the consumer’s. In simplistic terms, the vested groups don’t ask people to change, they ask for products to be made more expensive, or weaker, or for many more laws to be placed on the retailer, not the consumer. Catch an under-age drinker but don’t fine the kid, fine the publican. A drunk gets leary in the high street, let him sleep it off but restrict the pub’s license. All are credible strategies but not without targeting individual responsibility first and foremost. It’s akin to wagging your finger at a speeding driver and then fining the car salesman for not predicting that that driver might speed.

 

  • The government has placed successive duty rises on alcohol, moreso since 1997 and much more than any other product, in an attempt to make it less affordable. Incredibly, it has increased by more than a third in the last 3 years alone! But what happens when you raise the general price on a FMCG that is used heavily in loss-leading? You increase the effectiveness of the loss-leading campaign! All you’re doing is pushing up the perceived value of the brand because supermarkets can, and do, hold the price and absorb the loss (or force suppliers to absorb the loss) while the price rises elsewhere.

So we finally get to why the opening line of this blog is a false comparison; alcohol sales used to be balanced but now they are heavily polarised. At one end, we have the on-trade (pubs), who still, on the whole, treat alcohol as the restricted drug that it is. Much more importantly, they are still forced to do so by legislation. A publican is legally obliged (and usually morally driven) to monitor your drinking level and restrict your purchases. At the other end, we have the off-trade (supermarkets) who treat it no differently to Cadbury’s Cream Eggs and have very little legislation placed on them? They can sell you enough alcohol to poison your whole family without as much as a thought. In the middle we have you, the consumer, who has been conditioned to view alcohol as a means unto itself; it’s just another commodity in your shopping basket, so much so that there’s a good chance you’re reading this and thinking “what’s the issue, lower prices are good for everyone aren’t they”? So it’s hard to understand why the pub is ‘ripping you off’ with its £4.50 pint when you can buy it for the equivalent of £1.00p a pint in Tesco? The pub must be making £3.50 extra profit?

If I’ve explained myself correctly so far you’ll now understand why comparing prices between supermarkets and pubs is like comparing the proverbial apples and pears? The two sectors are so polarised in the way they treat alcohol that they’re incomparable. Much more importantly, it is not possible for pubs to move in the direction of supermarkets, neither legally nor morally, which is where the crux of the problem lies. So let’s move on to the other main issue…

Why IS a pub so much more expensive?

 

This first thing to say, if you haven’t already grasped it from what you’ve read so far, is that the real gap between pubs and supermarkets is much smaller than you think. If supermarkets sold alcohol at its real price (as they used to when they first started selling it), I wouldn’t be writing this blog! So let me list 10 reasons your local pub is most definitely not ripping you off. Some of these refer to supermarkets but only because that offers a good comparison:

    1. Taxation
      The duty and VAT alone on a pub pint, just those two taxes, are around £1 of the total price you’re paying. So the next time you’re buying that 24 pack of bottles for £10, don’t ask yourself why it’s not the same price at the pub; instead ask yourself why a supermarket is willing to lose so much money?

 

    1. Legislation
      Remember the “seen to be doing something” comment above in relation to on-trade legislation? Leaving aside the fact that most pubs do not make enough profit to offer heavy discounting, did you know that I, as a publican, cannot legally discount a drink in an effort to get you to buy more. I cannot legally do anything that may promote the consumption of my products. I can’t give-away free alcohol (in most circumstances). I can’t legally do anything that puts a time restriction on consumption (Eg. the old ‘happy hour’). The only way I can sell more is to sell to more people. What about a supermarket? Well, leaving aside practicalities, legally you could pull a 7-tonne truck into Tesco’s car park and buy every single bottle of spirit they possess. There is no restriction whatsoever. They can discount, offer Bogoff deals, and generally promote excessive drinking in any form they wish. How is that balanced legislation? Consider this as an example of the skewed legislation that now exists: a pub must legally offer FREE water to all customers, it’s written in law. Supermarkets regularly sell water at a higher price than they sell beer…

 

    1. The Experience
      Let’s be realistic here, it’s always going to be cheaper in the off-trade because of the way it’s sold, they’re offering nothing except the product itself, in bulk, whereas in a pub you’re not really buying the alcohol, you’re buying the whole experience. You’re paying for the chance to sit and chat, stay warm, meet people, possibly listen to the free entertainment, etc. etc. Most of these things are a cost that is not borne by a supermarket. If you done a true comparison and compared the experience between spending an hour in a busy pub and spending an hour in a busy alcohol aisle in Tesco, you might start to understand where I’m coming from!

 

    1. Use of Space
      Pubs make much less-productive use of floor area because of the nature of the business. Hence the building is much less profitable than a similar sized building housing another business, so it’s much harder to get a profit from the asset. Not impossible, of course, there are many very profitable pubs, but remember we’re only talking about why they’re more expensive. We have relatively low spend per head coupled with a relatively low customer turnover. In most other businesses you have either lower spend but a higher customer turnover (Eg. coffee shops, newsagents, etc) or higher spend and lower turnover (Eg. Spas, dentists, hairdressers, etc). I struggle to think of another use for a commercial building that would be less profitable per square foot? Any ideas? Of course, the obvious response would be to say “well don’t do it, become something else”, which is a fair comment in principle but in practice it’s a nonsense. If we all thought like that then we’d all be investment bankers!

 

    1. You’re Deluding Yourself!
      Yes, you! Your perception of pubs being expensive is a false one. How can I say this? Well, let’s use the prices I’ve already mentioned and assume that it costs you £3.50 for a pint in a pub and 50p for an equivalent measure in a supermarket. Disgraceful, right? Now let us apply the same thinking to coffee. You’ll pay around £3.00 for a large coffee in most coffee shops. A pub selling a pint at £4.50 makes a Gross Profit (GP) of around £1.90. A coffee shop selling a coffee for £3.00 will make a GP of around £2.10. IE. they make a higher GP on a lower selling price. This also works through to a much higher Net Profit, for various reasons which I won’t go into here.Now compare that to what it costs in the supermarket? You can buy a bag of premium coffee beans that would make approximately 50 cups (IE. £150 worth of coffee-shop coffee) for around £3.50. So the price differential on alcohol between pubs and supermarkets is around 7:1 but the price differential on coffee between coffee shops and supermarkets is around 40:1? Why isn’t everyone rioting in the streets at this anomaly? I’ll tell you why, and it leads nicely onto my next point…

 

    1. You’re being deluded by the market!
      Coffee is an excellent example, because it has evolved the other way. Coffee has always been a commodity (if we ignore the relatively short period in history when it was a precious trading item enjoyed only by the rich). It was something to be consumed at home without even thinking about it. It has been cleverly marketed to turn a banal commodity into an occasion. That’s why you don’t (usually) consciously think about the coffee itself or its price when you visit a coffee shop; you’re there “for a break” or “to put your feet up”. Most people are motivated by the coffee shop itself and the occasion rather than the coffee. Alcohol, for reasons already explained, has gone the other way and has been commoditised to the point that many people will see the price as the main stumbling block, even though you’re actually getting much more for your money!

 

    1. UK Pub Market
      Because of the structure of the UK pub market, primarily a result of flawed legislation called The Beer Orders in 1989, most of the prime pub sites in the UK are owned by large Pub Co’s/Property Companies. These companies then either put managers into the best sites (or only operate managed sites; Wetherspoons being the biggest example) or they lease the buildings to independent lessees (like me)! The discussion about the merits and flaws of this business model would fill many websites on its own but it can be summarised as thus: the costs of the leased business are far above the costs of the managed operation. The effect of this is twofold: Firstly, it obviously results in higher costs which are inevitably passed on to the consumer and for other reasons that are too complicated to list here, the costs for many lessees have reached the point where they’re ruining the business. The level of rent alone, and the way it is calculated, is a shock to anyone not familiar with the industry. Secondly, it creates another major polarisation in the market; not only do consumers compare pubs to supermarkets on pricing, they also compare pubs to each other! So, just when you’re convinced on the whole FMCG argument, you then say “hang on, Wetherspoons are much cheaper, so you must be ripping me off”? On the whole, it is impossible for a leased pub to match the pricing of a managed pub, because the managed pub enjoys many benefits of scale. That’s business of course, and that’s why many pubs are either diversifying to the point of being unrecognisable as a pub, such as gastropubs, or are simply closing down. The Pub Co’s screw enormous discounts from the brewers, which are not passed on to their tenants, whereas Wetherspoons are always known to supply cheaper beer and products.

 

    1. Rates
      In my opinion, business rates as applied to pubs is one of the biggest official scams of our time but it is also the most overlooked. A full explanation of the calculations are given in the previous link but business rates are simply a business tax that all business must pay, linked to the building they occupy. It really has nothing to do with the building, it’s just a way of calculating a business’ size. Historically, a pub’s rates are calculated differently to other businesses. This was originally to balance the anomalies mentioned in point ’4′ above, to make the system fairer; so whilst most business’ rates are calculated on floor area, a pub’s rates are calculated on a formula using turnover and rent. This worked in the days when a pub’s turnover roughly equated to a similar net profit as other businesses, and its rent was calculated on market forces. However, with an incompetence bordering on criminal, this formula has never been updated to take into account the massive changes to these two measures over the years. Turnover for pubs is now much higher than it ever used to be but this is due to the much higher prices, not additional business. Net Profit as a percentage of turnover is at an all time low. And rents have not been based on comparable market rents for years. Instead, PubCos base rents on what they think a business should be doing (which itself is usually based on overly-optimistic trading projections) and the costs of doing it which, you’ve guessed it, are usually woefully underestimated.
      So, when we reached the 5-yearly rates review last year, what happened? Many pubs saw their rates bills drastically increase. My own pub’s rateable value increased from £20K to £54.5K. Yes, read that again! This has resulted in an actual increase of around £1K per month (because rateable values are then re-calculated using a multiplier percentage, for reasons only known to government). The increase is stepped over a 5-year period but it is still a very real increase.
      Now compare this to say, oh I don’t know, a local dentist? Dentists occupy much smaller buildings, typically converted houses. They operate much more profitable businesses. for example, my business employs 13 people in a large building, operating 7 days a week for a minimum of 13 hours a day and with a turnover of £650K it gives one person, me, a reasonable wage. A typical dentist I imagine would turnover a similar amount but employ a couple of receptionists and one assistant for each dentist, is open 5 and a half days a week for 8 hours a day, and gives 3 or 4 dentists a wage of +£100K? So if my rateable value (IE business tax) is £54.5k per year what do you think would be a fair rateable value for the dentist I just described in my town? £70K? £100K? How about £6K! Yes, that’s right, a business that produces around 800% more net profit than mine is taxed at only 11% of my business tax!

 

    1. Running Costs
      I’m not going to bore you with lots of detail here. Suffice to say, most pubs are in old buildings, are open to the public for at least 80 hours a week and have to accommodate a varied mix of people, often in large groups who want to enjoy themselves. We all know how much everything has risen in price over the last couple of years but even with price rises at the pumps, retail price has not kept up with costs. It’s easier if I just list a few of the main costs in my pub and let you do the math (all costs are monthly): Goods: £15K, Staff: £12K, Rent: £7K, Rates: £2K, Utilities: £2K, Maintenance & equipment: £1K. Shocked?

 

  1. The Market itself
    It’s no secret that people’s leisure time has been transformed in recent years. All businesses have had to adapt but pubs have faced an unprecedented set of hurdles that do not seem to be slowing anytime soon! The shift to off-trade consumption (now well over 70% of all alcohol sold is via the off-trade, a ratio that was reversed only 25 years ago), the smoking ban, recession, increased opening hours, tighter legislation… to name but a few. A far bigger portion of a pub’s profit must now be spent on trying to capture a much smaller piece of the consumer’s leisure pound, and it’s not going to get any easier…

Well, if you made it this far then you’re a person who has far too much time on their hands personal hero of mine :o)

Drop me a comment and let me know what you think? Agree, disagree, bored

Steve at the Kings Head

Editorial Note

Hi Steve, a great Blog.

The whole industry has been screwed by Local Authorities allowing unrestricted growth of both ON and OFF licences in towns and urban areas without justification of need or viability, hitting the urban and rural pubs, in a dash for additional rating income.
Previously neither licences were allowed without justification of need, and the rules were very strict, keeping a balance with both, in fact most pubs had a steady Off Sales business because the price variation was minimal.
Because of all thes controls responsible drinking existed in the majority of pubs.
Now we have a constant price war because of an over supply in both sectors, the big Multi Nationals in Supermarkets and Pub Chains have enormous buying power, creating a constant price war on a shrinking market with loss leaders.
The anti Smoking and Drinking lobby have driven the retail prices up in the pubs with increased taxation and the exit of smokers to drinking at home.
The Pub CO’s rent demands and failure to pass on realistic discounts, relying on rents rather than sales has further increased prices and these idiots that caused all this complain about pub closures.
Some of us are trying to change certain problems in the Rent and Rates having successfully raised a considerable number of issues with RICS and the last two BISC’s.
We have formed a new company to combat Rent and Rate reviews, none of us have been tainted with taking the Pub Co Shilling, two are Chartered Surveyors and I was a member of the RICS very briefly before I bought pubs, if you have a Rent Review in the next eighteen months, please contact me at info@buyingapub.com to see if we can help.

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.

 

 

Rent Valuations by Pub Co’s, BDM’s at Rent Reviews and some other questionable activities. (Barrel Dregs)

Bad Beer For Export

Rent Valuations by Pub Co’s, BDM’s at Rent Reviews and some other questionable activities.

Having studied the so called method of rent assessment used by the Pub Co’s for Rent Reviews.

Firstly all rents are supposedly worked out by Valuers and BDM’s on the future sustainable earnings potential by a competent operator/reasonably efficient operator (REO) or an alternative method of operation??? Valuers, at least qualified valuers in the main have never run a pub and would have virtually no idea how to expand a business without personally running it, understanding the local problems, features, advantages and disadvantages, BDM’s the majority have very little hands on experience, certainly neither are capable of being called a competent operator, yet these people dictate rental levels that are totally unsustainable in the majority of pubs, causing extreme hardship and lack of profitability to the majority of lessees.

Competent Operator has largely been Replaced Reasonably Efficient Operator  (REO).

They are reluctant to define a competent operator, in the words of one of the BII Vice Chairman, when the BII was a well respected body, someone with at least three years profitable experience and some of the advanced qualifications available or five years profitable experience with basic qualifications, he should know and I agree with him.

Yet these companies across the board put all new lessees through a basic five day course with the APLH, and maybe food hygiene or cellar management if they are lucky.

This at the greatest stretch of the imagination does not make a competent operator or REO.

They are then put into pubs with rent levels based on this goofy method, it is totally obscene and the fall out factor is enormous and dire, most people lasting 12 to 18 months before their money runs out.

As an experienced operator I would not touch the majority of them without accurate up to date accounts that prove the rent is payable with a profit, not some “will o the wisp” calculation ignoring the existing business turnover.

Bringing any Rent Review seriously into question.

A small brewer was taken over by one of the major Pub Co’s who sold on all the pubs that they did not want, to a number of smaller Pub Co’s.

I received a call from a lessee who had been there for about seven years, he had been invalided out of the Navy and had taken this village pub by himself and ran it as a village boozer with a reasonable trade.

Just before the pubs were first sold his BDM came in and said that they had made a mistake, they should have charged him about £5 for every barrel of local real ale that he had bought, everything had been declared but the brewery had omitted to charge him, consequently he owed them several thousand pounds.

The BDM said that he would have words with the Director and get it written off which he did and was agreed but not confirmed in writing.

The pub changed ownership and the new company sent him a bill for several thousand pounds, he told them what had been agreed and the pub was sold to a minor Pub Co, who immediately tried to claim the money, threatening bakruptcy, court action etc.

The lessee was terrified and called me I got someone to advise him the Pub Co backed off and then made him an offer to vacate the pub, which he accepted, thinking he was going to retire happily, in the last week they slapped him with a dilapidations bill that wiped out all the compensation for vacating the pub.

They wanted the pub for redevelopment, the dilapidations should have been substantially reduced or removed, because of the development. Link

Another pub with the same company took over a very successful pub with a good landlord who had been there twelve years, he said he wasn’t worried about the change of ownership.

He phoned me nine months later in tears saying that they had bankrupted him, again they wanted the pub for redevelopment, they induced him to sign a new lease without professional advice and hung him out to dry, how they did it I have no idea. But someone runs a successful pub for twelve years does not go bust without something untoward occurring???

Barfly

Please note, access to this site is totally free if you would like to subscribe (No Bad Beer For ExportCharge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

Barrel-Dregs has been run for many years, we change all the identifiable details, but give you an insight as to many of the sharp or bad practices by a number of companies, they are mostly just legal but morally unacceptable.

We have a number of Pub owning companies that we will not recommend, their actions have featured in Barrel-Dregs too many times, we did hope that by highlighting their antics they might change, but in Barrel-Dregs terms “Leopards do not change their spots, they cover them with more Mud.”

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.

Questions and Answers before you take a Tied Lease (Part 1)

 Barrel-dregs 3
Essential Questions and Answers before you take a Tied Lease

All these questions you need positive answers to, in writing, from your Pub Co/Landlord before  you consult a Solicitor/Commercial Lawyer or consider taking a Tied Lease.

These questions are based on a standard Commercial Lease, they do not represent or replace using a Commercial Lawyer or legal advice, they are all issues that people failed to understand or caused, in many cases serious problems for people taking Tied Leases.

There are two copies of the Q.A’s, the first you need to ask any Landlord or Pub Co whose property you may be considering, for written answers, do not accept blanks or verbal answers under any circumstances.

See Note Below Click on the link  for the second set of Questions with our thoughts on the Answers.

Pub Co/Landlords Copy to view and complete, if they refuse or leave blanks, don’t have anything to do with that company.

The Lease.

1. What happens if I fail to pay the rent?

Landlords Answer:-

2. What happens if I fail to pay the Business Rates?

Landlords Answer:-

3. Why do I need a Survey?

Landlords Answer:-

4. Why do I need dated photographic evidence of any survey faults?

Landlords Answer:-

5. Why do I need approval to carry out improvements to the property?

Landlords Answer:-

6. Can I sell or change the Fixtures and Fittings (F&F)?

Landlords Answer:-

7. Why do I have to pay a deposit to the Landlord and how much?

Landlords Answer:-

8. What is the Authorised Guarantee Agreement (AGA) and the implications for me?

Landlords Answer:-

9. Do I have to use the Landlords Insurers?

Landlords Answer:-

10. Does the Landlord have right of entry to the premises at any time?

Landlords Answer:-

11. Why do I have to have Brulines or similar as a monitoring system?

Landlords Answer:-

Training.

12. How many qualifications do I need to take and which ones?

Landlords Answer:-

13. How long will these courses take and how much do they cost?

Landlords Answer:-

14. How much training will I get after I have taken on the lease?

Landlords Answer:-

15. How much training do I need to become a Reasonably Efficient Operator (REO)?

Landlords Answer:-

Landlords Supply Tie

16. What is the Supply Tie?

Landlords Answer:-

17. How much credit do I get with the Supply Tie?

Landlords Answer:-

18. Do I get any discount?

Landlords Answer:-

19. Do the discounts get included in the so called divisible split of profits?

Landlords Answer:-

20. Can I buy out in an emergency?

Landlords Answer:-

21. What happens if I can’t pay my Supply Tie Account?

Landlords Answer:-

22. What happens if I go on to a Rescue Package?

Landlords Answer:-

Rent Reviews

23. Do I need professional Advice on a Rent Review?

Landlords Answer:-

 

 

We will add more Questions to the list as further problems are reported.

Click on this LINK for our thoughts on Answers to the Questions above, so that you may be able ask suitably direct questions and get answers that you understand. 

Please note, access to this site is totally free if you would like to subscribe (No Charge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

TREND WATCH: Plant power from Speciality Food

 Follow us @specialityfood

Plant power from Speciality Food

An interesting article, it would appear that the a lot of people are moving towards being vegetarians for a number of reasons, health, slaughtering animals, fitness, the list is nearly endless. Having been taken round a large Abattoir some years ago I was appalled at the cries of the animals about to be slaughtered, it made me think. I am not a vegetarian, but I do not eat as much red meat and prefer fish, the sad thing is, if we stop eating red meat the animals will vanish from our farms, like shire horses and become a novelty. 

Once it was mums making us eat our greens, now it’s the food industry, says Sally-Jayne Wright. They’re sneaking veg into everything from ice cream to water

VEG WATER! REALLY?
At the lunch! show we came across JF Rabbit’s range of waters ‘infused with the power of vegetables’. Their Cucumber, Ginger & Lime and Carrot & Orange Blossom waters contain under 10 calories a bottle and all your daily vitamin C and zinc requirements.

Frill Refreshing Green frozen smoothie looks like mint ice cream and contains spinach, avocado, basil, celery, pineapple, mango and lemon. Improbable as it sounds, it tastes good: £4.99 for 500ml at selected Waitrose branches, Whole Foods Market stores and online at Ocado. You can also use this ice cream alternative as a base for veg smoothies.

At The Book Club, a trendy bar in London’s Shoreditch, you can even consume veg in your cocktail. Order a beetroot espresso martini or peach and fennel spritz.

DOES THIS MEAN THE END OF STEAKS, SAUSAGES AND PORK PIES?
No, but you’d better be prepared for sweet potato steaks, veggie sausages and wild mushroom and asparagus pie filling. Mintel’s Meat-Free Foods UK Market Report, August 2017, found over a quarter (28%) of meat-eating Brits had reduced or limited meat consumption in the previous six months (to March 2017).

Many see eating too much meat as a major driver of climate change, and younger people and women – particularly city-dwellers – are reducing the amount they eat or cutting it out. Reducers are known as flexitarians.

ARE YOU SURE THIS ISN’T JUST A TRENDY, CELEBRITY-LED, LONDON THING?
Quite sure. You don’t associate the nationwide pub chain, Wetherspoon, with Quorn sausages and quinoa salads but both are available. The letters page of their magazine abounds with pleas from vegans wanting more options. Regulars can already choose a five-bean chilli, veg lasagne, and sweet potato, chickpea and spinach curry.

Marks & Spencer has a new Veggie range which includes edamame bean burgers, topped sweet potato steaks, veggie sausages and veggie mince.

Big brands are using plants as a selling point. The blurb on Unilever’s Flora Buttery spread reads: ‘powered by plants’, highlighting linseed and rapeseed oil as healthy ingredients.

ANY OTHER EVIDENCE THE FUTURE IS GREEN?
‘fraid so. The sandwich chain Pret a Manger opened two more veggie branches in London last year following the 2016 success of the first-ever Veggie Pret in Soho. Food campaigner, Hugh Fearnley-Whittingstall, who built his reputation writing books about humanely reared meat and nose-to-tail eating, is now more likely to prepare Jerusalem artichoke gratin than jellied tongue and tail. His second veg-based cookbook River Cottage Much More Veg appeared in September. The Hairy Bikers also jumped on the parsnip and potato bandwagon with Hairy Dieters Go Veggie (Hairy Bikers).

WHAT DO YOU PUT THIS TREND DOWN TO?
Many factors including more adventurous palates; vegan, dairy-free and gluten-free eating; concerns about climate change; and alarm about intensive meat production. The biggest reason, however, is health.

It began with the government’s five-fruit-and-veg-a-day campaign. Most of us heard only the fruit bit, and bought fruit smoothies, juices and punnets of raspberries to gobble at our desks. But then we worried we were consuming too much fruit sugar, hence the rise of veg smoothies, spiralizers and NutriBullet blenders. On social media, bloggers loved to make us ‘guess the healthy ingredient’ as they baked beetroot, cauliflower, courgette, carrot, sweet potato and avocado into pizzas, cakes and desserts.

With the coming of the sugar tax, we learnt how much refined sugar ‘healthy’ fruit yoghurts contained. So Arla launched the first branded fruitand- veg yoghurts for kids. Waitrose followed with such combinations as Apple, Carrot, Beetroot & Ginger and Pineapple, Butternut Squash & Turmeric.

WHERE IS THE VEGGIE TREND MOST SUCCESSFUL?
We’ve mentioned it before and we still love Cavi-art – a Danish faux caviar made of seaweed, ideal for vegan canapes and garnishes. We also love ChicP’s carrot hummus, Pelagonia’s Malidzano aubergine spread and their roasted pepper spread, Aivar. We like Rubies in the Rubble’s cucumber-based London Piccalilli.

SHOULD I STOCK UP ON VEGGIE PRODUCTS BIG-TIME?
The usual rules apply. Know your customers. The Mintel survey suggested younger generations are the most likely to be vegetarians with one in five (19%) Brits under 25 saying he, or more likely, she, doesn’t eat red meat or poultry.

If you have a café or restaurant, make veggie options imaginative. Flexitarians get bored with goats cheese tartlets and butternut squash risottos. How about vegetable moussaka with tofu topping, curried sweetcorn fritters, or spiced potato-filled rice pancakes (marsala dosa)?

This is a good time to stock award-winning meat alternatives such as MacSween or Ramsay veggie haggis and Cauldron’s Lincolnshire sausages. But don’t over-buy anything too weird if your customers are older, more traditional omnivores.

WILL THIS TREND LAST?
We don’t see the whole country going vegetarian or vegan; we do see more families sharing a veg-based meal once or twice a week, instead of feeding the family vegetarian separately. We predict meat-free products and ready meals will improve and vegetable sales soar. Our mums were right.

The Reason why we set up “Barrel-Dregs”

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The Reason why we set up “Barrel-Dregs”

I originally set up www.buyingapub.com, when I was working for the BII as Consultant looking after Membership in various Regions in the Southern half of the UK.

At the time the BII was a respected body in the industry.

I was horrified and totally fed up with meeting decent honest people who had invested their savings in buying a Tied Pub Co lease without having done serious investigations in what their profitability, responsibilities were in running a tied leased pub.

The real sting in the tail, what their responsibilities are when they assign their lease.

Barrel-dregs 3Most had no idea, their business plans were accepted by the Pub Co’s, in many cases the figures in the Business Plan, were complete fantasy in respect of that particular pub.

A solicitor told me that he had never had a pub Co refuse a Business Plan.

The lack of serious knowledge and experience by the majority was and is immense.

You cannot teach people to run a business after one or two weeks training, without additional back up and further in house training to say the least.

A learned colleague, said we have to set up something to expose the outrageous activities by a number of companies, most were technically legal at the greatest stretch of the imagination, but morally unacceptable from the larger and some small Pub companies.

We set up Barrel-Dregs, anyone who has a genuine sorry tale can send us the details and if we can help, we will.

We change the location, names are not mentioned, but the activities are correct, to make people aware and hopefully embarrass the Pub Co’s to mend their ways.

By changing the names and locations etc., the results have been amusing, two phone calls in the same morning from different Pub Co’s, threatening legal action for the same piece of villainy, one definitely related to one company, the other thought they recognised that it was one of theirs.

Neither knew which one was responsible, it was confidential info. Barrel-dregs 2

The stories on Barrel-Dregs are sad, humorous, chaotic, obscene, unbelievable, should never be allowed with decent, honest people who think they can make a career change.

Before the recession one major Pub Co had 5,800 enforced closures in two and a half years, the majority described as Retailer Failure, the majority of these people were good honest people who invested their redundancies, life savings into a false dream, many to lose it all.

The Pub Co’s have the best lawyers, best professional advice and in the main are property companies, they have taken a good tried and tested system and in our opinion changed it for tied leases pocketing massive discounts, there are better ways of leasing pubs without making good honest people and good licensees expendable commodities.

The old Family Brewers trained people well, they knew that good successful licensees/tenants were the key to their profitability, they were and are in business to sell beer and any other products that they produced.

Pub Co’s in the main do not own breweries, they are property companies, they collect massive discounts on everything that is tied within the lease, these discounts are not factored into the divisible split and are never disclosed.

Without going on, anyone who is considering a tied lease with a Pub Co should read through a large number of Barrel-Dregs to get streetwise or take a Family brewer Tenancy or buy a genuine Freehouse,  a Bistro or a Coffee/Sandwich Bar.

We cannot print the names of Pub Co’s that feature in Barrel-Dregs for obvious reasons, but we have a list that we prefer to avoid recommending.

Potboy

Please note, access to this site is totally free if you would like to subscribe (No Charge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

Barrel-Dregs has been run for many years, we change all the identifiable details, but give you an insight as to many of the sharp or bad practices by a number of companies.

We have a number of Pub owning companies that we will not recommend, their actions have featured in Barrel-Dregs too many times, we did hope that by highlighting their antics they might change, but in Barrel-Dregs terms “Leopards do not change their spots, they cover them with more Mud.”

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.

La Bella Vita Cucina

screen_shot_2017-05-28_at_3.41.03_pm_0

La Bella Vita Cucina

Food?  You bet we do a LOT of talking about cooking and baking, mostly Italian, lots of Southern, but always delicious!  Sharing is so much fun isn’t it?

An interesting Web Site with loads of Italian recipes

just click on the links to go to their site

 

How to Make Home-Made Italian Ravioli

How to Make Hand-Made Italian Ravioli

Fried Green Tomatoes

The BEST Fried Green Tomatoes with Garlic, Bacon and Buttermilk Sauce

Classic Bruschetta

Classic Bruschetta with Tomatoes, Basil and Garlic

Spaghetti with Toasted Garlic Breadcrumbs

Spaghetti with Toasted Garlic Breadcrumbs