Something for nothing …

... not often that you get to put this into practice, but after a recent visit by family members I’ve got a great little way to do this and get you out of the pub for a couple of hours.

It’s easy really, get in your car, head out of town and when you come across the first stretch of brambles go blackberry picking!

A 5 year old and I picked 2kg of blackberries in just over half an hour – and at 56.3p/100gms (Asda price at time of writing) this amounts to over £10 of free stock.

The down side? A few scratches and a couple of quid petrol money, the latter I would put down to stress therapy rather than food costs.

The upside? A break from the pub, some fresh air and enough blackberries to freeze (for later in the year) and some to make a blackberry and apple crumble for the pub that day.

(By the way blackberries will cost you as much as three times the current summer price when they are out of season – so this brief stint of foraging could potentially be worth £30!)

Here’s the recipe I use for making a perfect crumble that yields 8 portions:

For the fruit: 300gm blackberries, 900gm cooking apples (four decent sized Bramleys will do) the juice of two lemons & 175gm caster sugar.

For the crumble: 560gm self-raising flour, 280gm brown sugar and 280gm of cooking margarine.

To serve: 50ml of double cream or 100ml custard or 100ml of ice cream.

Total cost: Shop bought 54p a portion (68p when out of season) or 33p when you go blackberry picking

Selling at 70% GP gives you a sale price of £2.30 (shop bought) £1.40 (foraged); 80% GP gives you £3.45 and £2.10 respectively.

Method:

Chop apple in to small dice, combine with lemon juice and bring to boil in 200ml of water; simmer for 10 minutes, strain and reserve the apples.

Wash blackberries and ensure all stalks etc removed; place blackberries and reserved cooked apple in a bowl and gently combine with the caster sugar, being careful not to break the blackberries; place in an oven proof dish (or split between two if you don’t have a large enough one).

Now make the crumble by combining the flour, brown sugar and margarine in a bowl (I use my hands for this) until you create a crumble mix to your liking.

Cover the fruit mix with the crumble mix and place the dish in a pre-heated oven at 180°C (350°F/Gas Mark 4) – cook for 40 minutes.

Much better than any crumble supplied by any third party, home-made with provenance and a great return.

As the meerkats are want to say – simples!

The landlord giveth and the landlord taketh away ...

With ever decreasing sales and greater pressure on margin, all too often publicans will be advised to offer price reductions in the form of promotions ... BOGOFs, meal deals, happy hours etc.

But who pays? Certainly not the pubcos or suppliers so there has to be some balance in the system ... this is exactly what big business does ... and they do it through as mechanism called "Dynamic Pricing".

They sometimes squeeze as much as 25% extra margin out of their goods and services ... if you'd like to know more see the article on my website by following this link: How To Run A Pub - Dynamic Pricing

At which point does a groundswell become a tsunami?

The BISC inquiry into the pub trade has heard calls for a statutory control of the industry from the Independent Pub Confederation as the years of inaction by pubcos to put their own houses in order has resulted in the decimation of this vital social and economic institution … the great British pub.

Self regulation is like asking playground bullies to decide amongst themselves just how much lunch money they will extort from other children … it hasn’t worked in the press and it hasn’t worked in the pub industry.

No wonder Ms Simmonds of the BBPA (which as we all know really only represents brewers and pubcos not tenants or free-traders) would prefer that HMG “would concentrate on other things”. Let’s face it she and the BBPA would never bite the hands that feed them and her (and her organisation’s) entire raison d’etre is to spin and deflect attention away from the sharp practices of her paymasters.

With the professional bodies such as the BII and RICS prevaricating and vacillating for similar reasons as the BBPA it is no wonder that MPs are adopting a more strident tone with the likes of Enterprise and Punch.

It is becoming ever more apparent (even to Parliament) that the BBPA is a trade body for the brewers and the pubcos and that groups such as the Independent Pub Confederation are more likely to be the true representatives of publicans.

The outrageous behaviour of Peter Rachman (and his ilk) was curtailed by HMG in the 1965 Rent Act and legislation to control corporations that are causing as much, if not more, harm to its victims is long overdue.

It cannot just be about proscribing an effective code of practice though.

It must also enshrine elements of natural justice so that tenant and landlord share equally the risk and rewards of operating pubs. It must ensure the sustainability of tenant businesses (not to be confused with subsidising sub-standard operators) and end the indentured servitude of thousands of families in this country that would be deplored elsewhere in the world.

We all hate the Nanny State but at some point Nanny has to intervene when certain children resolutely refuse to play nicely.

Lies, damned lies and statistics ... Part 2

“Annual income twenty pounds, annual expenditure nineteen six, result happiness.

 
Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”

Charles Dickens, in his 1849 novel David Copperfield, provides us all with an apt Profit and Loss Statement, income and expenditure recorded and the result analysed.

Your pub business is like any other it will make a profit or a loss depending on two factors – income and expenditure.

I have provided many examples on this website on how to improve sales and control costs (and many others will provide similar information) but for many pub businesses knowing what targets you should aim for in cost control is less clear.

On July 4^th 2011 the Association of Licensed Multiple Retailers (ALMR) announced the publishing of its annual Benchmark Survey Report in which it details its findings on such things as sales, costs, capital expenditure etc amongst its members. The survey taken in October 2010 coincides quite nicely with a report from a well known licensed trade accountancy firm.

Between them they provide an insight into what pubs in certain sectors are achieving in terms of profitability based on the profit and loss information on a virtually identical number of sites so comparisons (whilst usually odious) should be valid.

The ALMR report suggests that the average cost of running a pub (out of the 699 pubs surveyed) is 47.1% of annual turnover in freeholds and 44.9% in tenancies and leasehold pubs (excluding rent and cost of sales). Add the 11.4% of turnover that represents rent and this means non-freehold pubs have to give over 55% of their turnover to running the pub (although this includes a figure of 7.2% for tenant’s drawings), which nets out to 47.8%.

The accountancy firm gives the following analysis of some 701 pubs (no detail is given of whether they are tied or free of tie) for three levels of trading, under £3,000 per week, £3,000 to £5,999 per week and those over £6,000 per week. Average cost of running these pubs is 46.8%, including rent at 9.22%.

Analysing their results using an average of all their averages (i.e. different levels of turnovers etc) the results would appear quite encouraging:

Detail	weekly		Annual		% of sales
Wet	£     4,219		£219,388		70.16%
Dry	£     1,319		£  68,605		21.94%
Accommodation	£        475		£  24,700		7.90%
Total	£     6,013		£312,693
Cost Wet Sales	£     1,715		£  89,162
Cost Dry Sales	£        535		£  27,812
Total Costs of Sales	£     2,249		£116,974
Gross Margin					Gross Margin %
GP Wet	£     2,504		£130,226		59.36%
GP Dry	£        784		£  40,794		59.46%
Total Margin	£     3,289		£171,019		59.38%
Gross Profit	£     3,764		£195,719		62.59%
Overheads					% of t/over
Rent	£        620		£  32,245		10.31%
Electric	£        123		£    6,420		2.05%
Gas	£         87		£    4,513		1.44%
Wages	£     1,051		£  54,667		17.48%
Other	£     1,219		£  63,404		20.28%
Total overhead	£     3,101		£161,248		51.57%
Profit/Loss	£        663		£  34,472		11.02%

Assuming that the draught/bottled beers represent 70% of wet sales and an average price per pint of £2.70 this would be a MAT (Moving Annualised Total) barrelage of approximately 197.5.

Making the same assumptions as above the cost to tenant of a barrel of beer would be £338.60 or £206.92 for an 11 gallon keg.

Does any of this sound realistic, in terms of tied tenancies and leases? Is it really possible to make over £34,000 profit from a 200 barrel pub?

The answer is yes if the divisible profit is equitably split – the landlord charging rent at 10% and selling beer to tenants at £338 a barrel. This would mean somewhere in the region of £100 per barrel discount earned by the landlord being passed on to the tenant.

Yes, that is, if you also accept the premise that the provision of accommodation is akin to “getting money in for changing some sheets”. If this income is treated as “cost free” in these accounts then it accounts for 72% of the net profit of the business. For those pubs not able to provide this service it means net profit would be reduced to £9,772.

Put in the real price of beer, as evinced by contributors to the Publican’s Morning Advertiser forum, that beer is nearer £256 for a 22 gallon, this means the averaqe of all average pubs from these samples of the trade universe are making a loss of £6,735 a year … I bet that rings true!

Whilst these “benchmarks” may be of use in setting targets or as comparitors for your business you must remember that your business is unique and the trick is to closely examine all areas of income (to maximise them) and all areas of expenditure (to minimise them) in order to make the greatest profit from your endeavour.

Lies, damned lies and statistics ... Part 1

Tied pubs not more likely to fail than free of tie pubs … Greg Mullholland reinterprets pubco figures and  proves them wrong ...

Parliament as an institution is no fool, its constituent members is a different matter, let's hope that the continual misinformation (and in some cases according to Parliamentary reports outright falsehoods) put out by the pubcos and those with vested interests in them will prompt some action to end the rapacious activities of these companies.

Let's face it these corporations are not like the banks (absolutely integral to the general economic well being of society) these companies are not too big to be allowed to fall over. The countervailing benefit to society of safe and well run public houses as part of the social infrastructure of this country must far outweigh the interests of a few hundred pubco executives and managers.

Their respective shareholders and bond-holders will find a way to protect their interests (even if the value of those interests takes a temporary hit - such is the nature of free markets) especially if they are seen to be the saviour of the great British pub by ending the questionable business practices of the corporations they are funding.

NOISE! ...can't live with it, can't live without it ...

Having been rudely awakened by the cacophony of the dawn chorus - in particular a pair of warring blackbirds (whose territorial dispute seems to be centred around my bedroom window) - and then the arrival of roofing contractors to next door (complete with petrol driven roof tile cutting machine) I thought this a good time to release a new article on my website ... follow the link. below

How To Run A Pub - Noise Pollution

Listen to the pubco piggies squeal!

So Free of Tie would destroy the business model of most pubco's according to Punch? This tacit admission that their model is flawed is the most self-damning statement since Gerald Ratner trashed his own brand ... they cite such reasons as having to be a tied estate to get the level of discount they currently enjoy.

I, for one, would be extremely surprised if any supply contract was dependent upon the FOT/tied status of the estate being supplied. Supply contracts to pubcos are predicated upon one thing only - volume.

If a pubco has mixture of FOT/Tied pubs on its books it is for them to supply the FOT at sufficiently attractive rates that retain the barrelage - along with a reasonable credit stance - if they were to fail to provide what other suppliers to the free trade are offering then they would probably lose the business.

There is no doubt that a truly FOT model for the pubcos would result in the collapse of their business as they would be unable to generate sufficient income from beer discount and sustainable market rents to pay for their borrowings... hence the announcement that (for instance) Punch is to dispose of 2,300 sites that are uneconomic for them.

My guess is that many of these sites would be economic for their current tenants if realistic prices are achieved for the purchase of their respective freeholds as despite what others say I believe that the FOT model will always be inherently more beneficial to a tenant / freeholder than a tied one.

It has to be as there is one less mouth to feed from the pie!

In the words of one of my best mates "Boo Hoo Squish Squish" for Punch et al ...

Musings on March

Funny old month March isn’t it? One starts in the continuing gloom of winter, one looks forward to the warmth of spring, it’s just distant enough from Christmas and Easter to long for another bank holiday … the old adage of in like a lamb out like a lion one reserved for the climate can so easily be translated to our industry.

Yesterday’s budget has proved that winter is not yet over for the economy and more particularly pubs, another 7.5% increase in beer duty, another nail in our collective coffin. With inflation at 5.5% (RPI not CPI – see below) you could be mistaken for thinking that the chancellor might have thought that the 2% duty escalator would have been redundant. 

Fuel duty reduced, but windfall tax on the oil companies, has brought government doublethink to a new level that Labour has called “Del Boy Economics” (at least the Trotters were loveable – not something you can say of most politicians). You can guarantee, despite their “assurances” that prices at the pump will rise to claw back the estimated £2billion the oil companies will lose.

Amazing this doublethink stuff, it allows the chancellor use higher RPI to collect taxes yet use the lower CPI to dispense government largesse on such things as pensions and benefits … if only we didn’t need all those pesky hospitals and roads and schools!

Anyways suffice it to say the majority of our customers will not be better off as result of this budget or this government’s policies so Punch’s decision to demerge managed from leased businesses can more easily be understood. Just goes to prove that all corporations are psychotic … the only master they serve is the shareholder’s bottom line (and their own pay packets). The bondholders will be forced to accept a deal that is not necessarily in their interests whilst Punch will follow the managed route (probably to the expense of their own leased customers). The good news is that the planned disposal of 2,000 leased properties might help to bring freehouses back to historic price levels. It’s just a shame that so many good operators have been driven to the wall and won’t be there to take advantage of this situation.

I can feel a rant coming on about bank’s and bail-outs and lending to pubs but nurse has told me to take my meds and clam down … oh well at least there’s a royal wedding to look forward to.

That’s better … calm and collected now and able to think about spring and the skeins of geese honking their way across this lovely blue sky … must be spring 

One in the eye for Sky and the Premier League?

Today's formal opinion by the European Advocate General Julianne Kokott, in favour of Karen Murphy, the Hampshire licensee who has been battling the Premier League and Sky is a boost to struggling pubs.

Although not binding on the judges hearing Karen's case in the European Court of Justice, I certainly hope they follow the lead of the EU's foremost lawyer.

For too long Sky and Premier have ridden rough-shod over the UK pub industry whilst squeezing ever exorbitant fess from cash-strapped publicans.

I, for one, ditched Sky and bought a foreign system some 18 months ago and the savings were some £15,000 p.a. - with the added benefit that the matches we chose to show were unencumbered by the inane ramblings of "experts" and pundits.

Congratulations on this significant step toward clearing your name Karen, your fortitude and courage are an example to us all on not taking it up the a**e from big business anymore!

Thrive on 5

So, further to my last post, it would seem that along with other commentators we all feel the burden of duty and taxation visited on the pub industry is too big.

Accordingly, it is great to see the launch of the Morning Advertiser's campaign to get VAT reduced to 5% for the hospitality industry.

I, for one, will be writing to my MP to enlist his support for this campaign as our industry is surely one of the few that can help lead our economy out of the doldrums. You should do the same.

Nice one MA !

"There is no such thing as a good tax" - Winston Churchill

Fair enough - there will always be some who view tax, per se, as an evil, I for one realise that taxation (with representation) pays for all the social good a developed society offers (health, policing, education, care for the elderly etc) and as such is a "necessary evil". I partake of the benefits so should contribute my fair share for the costs thereof.


However, what Churchill also went on to say was “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”  Had he been around today his words would have fallen on deaf ears.


What the Coalitionistas (HMG) and their predecessors have done is to target alcohol, more specifically beer, as the cash-cow that will sustain their other policies. The great democratic drink, beer, that has been a part of this country's heritage and culture  (drunk when the water was too foul to consume and now as part of a developed social structure) and its brewers and drinkers have been continually abused by rapacious chancellors.


We now pay more than nine times the amount of duty than France and Germany for the "privilege" of supping our national tipple and contribute an estimated 40% of all duty collected within the EU - a staggering £3.1 billion.


When will this Tory led administration take heed of one of its greatest figures and realise that the common man and woman in this country who enjoy a few beers are fed up with being the ones to pay for their other priorities, such as protecting their political allies and financial backers from paying their fair share of tax ( to wit, off shore status and the ridiculous minimum pricing they propose for alcohol) or benefitting from the largesse of the tax purse with bail-outs to corrupt banking institutions?


"My rule of life prescribed as an absolutely sacred rite smoking cigars and also the drinking of alcohol before, after and if need be during all meals and in the intervals between them ..." it would appear that this was good enough for Winnie but not the proletariat ... nuff said!

BII Business Magazine

Just got my January 2011 edition ... as promised full of great stuff for the pub trade ... until you look at it in detail.


I shan't go into all the detail of the BII's work on codes of practice for pubcos, training etc.


What irks me is that for a professional body, the BII (or its copywriters/editor) gives some pretty rum advice ... or in the case of Phil Dixon, opinion. His 20 ways to improve trade are generally sound advice until you get to point 18.


Here he recommends that a drinks offer at the end of a match (25-50p off a pint) be run for 15 minutes after the final whistle, after a particular team loses ... the BBPA guidance on running responsible drinks promotions specifically indicates that one shouldn't run a promotion that is linked to unpredictable events - e.g. ‘Free drinks for five minutes after every England goal’ or are an incentive to speed drinking"


I would venture that the advice Mr Dixon is giving in his article is in direct conflict with this guidance. This is just symptomatic of the mixed message industry bodies give out and they really should get their act together.


My advice ... don't run this promotion (save your profit to reward customers in a more meaningful way, say, on some extra channel blocks for the urinals when all those footie fans take their half/full - time pees!)


And as for the article on The Martin's Arms in Colston Basset - what on earth is representative about that? 2 hunts meet for their stirrup cups, the Prince of Wales occasionally pops in for a pint and it has a Michelin Star - not exactly run of the mill is it? 


Spend more time on highlighting extraordinary pubs that real people frequent (not the "well heeled residents" featured in this Horse and Hound piece) ... the only good things about the article are the sound advice to spend some money on flowers (although who can afford £90 a week and £25 a week for a flower arranger?) and the advice on only putting prices up once (at budget time if you can afford to absorb the VAT and suppliers' price increases in the interim).


Oh, OK then .... they have been there 21 years and have undoubtedly worked their collective arses off to make the place a success and the industry needs to champion its best and brightest ... just feel this was a missed opportunity for the BII and the owners of the Martin's Arms to pass on some really useful hints, tips and advice to the less well placed.  


Rant over ... and as it's less than 15 miles from Nottingham might just have to save my pennies and pay it a visit and see if it's all it's cracked up to be ... good job I don't like Peroni (at £4.30 a pint before the VAT and budget!)