RE: Should pubcos go free of tie?

I read all these articles by the so called guru’s and knowledgeable writers in the trade papers, most would appear to have been totally indoctrinated by the existing system without questioning the logic of the situation.

If you are tied and totally focused on the current leasing and tenancy system you have no opportunity to get involved with a straight commercial rental or leasing agreement.

The rents that are being continually being pushed higher and higher are in my opinion way in excess of any straight commercial rent for a business with restricted trading ability, add in the profit from the tie and it is money for old rope for the landlords.

The Pub Co’s major mistake was not expecting a recession and not making adequate provision, they now have to work to their lessees ability to make profits, which is even harder because most lessees have been unable to invest in their businesses because they have been screwed at every turn with unsustainable rents and the draconian extent of the tie.

Punch’s net worth is just £267m over debts of £4.4bn from this weekends press, how many other companies are the same to a greater or lesser degree. Profitability has to come from sales of either property or products depending on your bias, the property as we all know has been totally over valued by a bunch of compliant, incompetents. Punch’s deficit would appear to be too great to recover from trading and the estate so over valued with a net worth that will cause every banker involved to be running for his ring fenced pension.

But the true enormity is that we have a massive sub prime in danger of occurring through corporate stupidity and business naivity by the so called Guru’s and Whizz Kid’s of the industry.

You either have sensible rents and no tie or low rents and a partial tie and both sides have to make money, not both sides paying the bankers for forced loans to survive and corporates paying for over valuing.

The years of experience gleaned by sailing close to the wind and listening to the honeyed words of bank money lenders, occasionally at a younger age when common sense did not prevail has cost me dear on a number of occasions.

I am hopefully somewhat wiser and for the first time the recession would appear to have not touched me too significantly, but when I see the so called directors of Public Companies within the industry rushing head long over the financial cliff like the proverbial lemmings, almost every pub owning company has been inflicted with this lunacy.

Enterprise are going to change their ways, Punch are deep in discussions, Greene King are addressing the problems etc get real you guys the system is seriously flawed by greed and a bunch of surveyors who know nothing about running pubs, turnover or market share.

Your only real chance for long term survival is by profitability by your pubs ability to trade better than all the others.

If you want the best operators give them great trading conditions so that they invest in their businesses and generate profitable sales, don’t screw them. Sell off your non profitable pubs and keep the freehouse market buoyant, if you have low rents and profitable pubs the leases are then worth serious money and you attract  the good operators. If you have the occasional failure you can capitalise on the sale of the lease.

Running good pubs is easy, you Pub Co’s make it difficult.

Barfly