Appetite for outlets remains strong despite downturn and debate, say pubcos
THE leased and tenanted pub sector hasn’t been far from the spotlight in recent years as the business model has been scrutinised and debated by both government and the industry itself.
The relationship between landlord and lessee and the beer tie have been the focus of no fewer than four select committee reports since 2005.
During this time, the industry has moved to self-regulate, with trade group the British Beer & Pub Association publishing six versions of the industry framework code of practice; the most recent version was published in February of this year, promising greater transparency for tenants and lessees.
We need business-minded operators who want to make pubs their own.
Despite the industry’s efforts, business secretary Vince Cable last week launched a consultation on putting the code of practice, which sets out the pubco-tenant relationship, on a statutory footing; he also wants to appoint an independent adjudicator to enforce the code.
While the debate looks set to rumble on for some time, it seems it’s done little to diminish the appetite for leasehold pub businesses.
Pubcos contacted by SLTN last week said demand for leasehold outlets remains strong, with Star Pubs & Bars reporting a record number of enquiries.
“The demand for quality pubs is there,” said Ken McGown, operations and sales director for Scotland at the pubco, which has 150 outlets north of the border.
“December  was our busiest end of year and March  was the biggest month in terms of enquiries.
“Our new business start-up agreement, which offers lower cost entry where there is the opportunity to increase trade, has been very helpful.
“I think the impact of this [industry code of practice] is about highlighting good business practice.
“We’ve always worked in the spirit of transparency but I think this has made the industry, in a wider sense, more transparent.”
Lesley Welsh of Iona Pub Partnership, which has 112 outlets in Scotland, agreed that the parliamentary focus on the sector has had little impact on the appetite for leased pubs.
“I think that this helps the industry after years of bad press,” she said.
“But, ultimately, if someone wants to take a lease they will, irrespective of any code of practice.
“But the regulations are welcomed to make the industry more standardised and eliminate what people may see as potential risk within the business.”
Demand for leasehold outlets may be weathering the parliamentary focus and economic conditions, but ‘matching’ lessees to a pub or bar is key.
McGown at Star Pubs & Bars said the pubco has a “challenging” recruitment process in place to ensure potential lessees have all the information they require about running a pub, and to help them find the ‘right’ pub. Before approved applicants commit to a pub, the pubco offers them the chance to complete its week-long Innside Knowledge induction course.
Potential lessees also meet with a business development manager, who assesses their skills and experience and discusses their business venture; applicants are then required to undertake a “rigorous” business planning process.
McGown said the approach brings real benefits to would-be lessees before they take on a pub business.
“It enables applicants to gain a more realistic view of running a pub, clearly highlights the risks and opportunities, and ensures they have the business skills and financial knowledge to be successful before committing,” he said.
“Applicants who proceed are equipped to hit the ground running with a strong blueprint for success.
“We need business-minded operators who want to make the pubs their own and need BDMs to help them add value to their pubs rather than tell them what to do. The level of planning involved and commitment it requires singles out high-calibre applicants who have the capability to take ownership of a business venture.”
David Wigham, operations director for Scotland and the north of England at Punch Taverns, whose Scottish estate stands at around 300 pubs, also credits robust recruitment and training processes for equipping lessees with the information and tools they need to run a pub.
This is a service industry and the fortunes of pubs hang on the quality of service they provide, so staff training is key.
“We have a range of field-based experts to help ensure our partners receive all the technical support they need,” he said.
“Every new partner is required to attend an extensive five-day training programme before embarking upon a partnership with Punch and everyone also gets the support of an area manager who is ultimately responsible for the success of each of our pub partnerships. As this is a service industry and the fortunes of pubs hang on the quality of service they provide, staff training is key.”
Image – Pubcos say they have ramped up the training and support they offer lessees in a bid to help pubs prosper in the tough economic climate.