Thursday, 30 January 2014

Sauce for the goose...

Regular readers will know I have been somewhat silent from the blogosphere over the last couple of months and part of the reason is increased work elsewhere (on consultancy work and the How To Run A Pub website) and partly due to my increased frustration over the Government's seeming inability (or more likely) lack of political will to deal with the pubco/tenant relationship.

Even though there's a new parliamentary tradition, the annual January opposition debate on the pubcos now in its third year, and despite a staggering 9,000 submissions to its own consultation of regulation for the tenanted/leased pub industry (or as Vince Cable et al say because of it) no government response has been forthcoming.

Even the dullest of nuMPty must realise there is something fundamentally wrong with the current system when one reads of Greene King and its dealings with its pubs both let out and directly managed by themselves.

Former Greene King tenants Dominic McCartan and Tony Leonard, who have had enormous success runaway success at The Snowdrop in Lewes, a backstreet freehold acquired from Punch Taverns four years ago, publicly fell out with Greene King and surrendered the leases of their former Brighton pubs, The Hop Poles and The Eagle, after running them for 12 years, in March 2012, after Greene King refused all attempts to negotiate rents that had become unsupportable. 

Under their management, turnover at The Hop Poles rose from £2,000 a week when McCartan took it on in 1999, to an impressive £50,000 a week ending August 2008, making it the highest trading pub per square foot in the Greene King estate. At the time of leaving, rent at The Hop Poles had risen to over £79,000 (114% of divisible balance) plus 10% of turnover for free-of-tie on all but one Greene King product. This fixed rent plus the turnover rent amounted to 199.99% of divisible balance, the couple claimed. 

But in true cut their own nose off to spite their corporate face style, Greene King took the pubs back. Although I can't find any details relating to the current levels of trade at these pubs, I'd be happy to put a tenner down on them not trading at anywhere near those levels now. 

In stark contrast is Greene King's experience with The Golden Fleece in Queen Street in the City of London, trading under the Capital Pub Company banner, which has seen nil uplift in rent on review thanks to agent AG&G, who's director Anthony Alder says:
“Both Greene King and the owners knew that the venue was experiencing strong demand and buoyant trading, but that wasn’t enough on its own to justify an increase in the rent,” 
“We were able to prove that buildings with an A3 designation were not seeing any increase in value in that location, so there was no reason for an increase. This was accepted and the result was a nil uplift. Current market knowledge once again proved crucial.”

Which brings me back to the beginning, surely what's sauce for the goose should be sauce for the gander? A multi-billion pound company takes advantage of even it's most successful of tenants (who no doubt thought long and hard about walking away from 12 years hard graft as the rent being sought by their landlord was unsustainable) whilst bleating to its own landlord that good trading figures weren't enough to pay more rent... really, you couldn't make this shit up even if you had a Pullitzer on the mantelpiece. And Greene King wonder why they're lampooned and reviled in equal measure as "Greedy King" by many in the pub trade.

Vince... pull yer finger out and get the pubco mess sorted as the price of my medication has soared in the last few years and I'm now having a cost of sanity crisis!

Nurse... you know the drill!