Pubs could ‘go bust’ if rents aren’t cancelled

Publicans have launched a campaign asking pub companies to cancel tenants’ rents while the UK’s coronavirus lockdown won’t allow them to open.

A group of UK pub operators launched a campaign called #NoPubNoRent on social media last weekend, calling on companies to cancel rent payment for the months in which sites have been unable to trade at all due to lockdown.

Prime minister Boris Johnson told all pubs, bars and restaurants to close on 20 March, leading to widespread loss of income throughout the on-trade.

Companies such as Greene King, Star Pubs & Bars and Marston’s and Enterprise Inns have told tenants they plan to defer all rent payments until lockdown measures are lifted.

But Dave Mountford, who runs the Boat Inn in Derbyshire, told the drinks business that publicans need more than a deferral if they are to survive the long-term damage the government’s lockdown measures will cause.

“By the time they re-open they will all end up with £40,000, £50,000 worth of debt,” he said.

In normal trading conditions, pub groups such as Greene King and Marstons collect the majority of their profits from beer ties. Pubs under tied agreements purchase beer from these companies, often at a large mark-up, in exchange for reduced rents.

But with publicans unable to shift the vast majority of what is in the cellar, pub groups are even more reliant on rent to stay afloat.

Mountford said the majority of businesses have continued to charge rent “simply because they can’t afford not to charge rent – the beer tie no longer exists.”

“Either we lose our homes, careers and communities or we get into a debt we cannot repay or go bankrupt,” Edward Anderson, who runs three Marston’s pubs in Cheltenham and co-founded the campaign, told the drinks business.

Pubs’ rents are calculated by their turnover as opposed to square footage, which means they typically pay more than other businesses.

“Our rents are based on turnover, as are all pubs, which means they have not been calculated to cover a period when there is no money coming in,” Anderson said.

Anderson’s rent is £14000 a month, so he will owe this much for every month his pubs are not allowed to reopen.

But monthly rent payments don’t allow Anderson to save enough to be able to pay back this debt, “it’s not how the calculation was done.”

“The only fair solution has been offered by a number of pub companies and brewers, that is no pub, no rent. We are asking for the rest of the pubcos to follow this example and give us a chance of reopening.”

Admiral Taverns is one of few groups that has completely cancelled rent for their tenants, but it plans to review the situation this month.

Others that have cancelled rents include Adnams, Donnington, Fullers, Robinsons, Shepherd Neame, Timothy Taylors, and Youngs.

Ei Group, Punch, Greene King and Star Pubs and Bars have suspended rent collection, while Marston’s are suspending rents on a “case by case basis” according to the Campaign for Real Ale.

A spokesperson for Greene King told the drinks business: “As an employer of 38,000 people who rely on us for their livelihoods we are taking financially responsible decisions.”

Greene King told db: “All pubs and pub companies are under immense pressure currently and we acted swiftly to alleviate any immediate cash flow concerns for our leased and tenanted partners by deferring rent.”

The company said it has written to close to 1000 tenants within its portfolio, and since then have been working on “long-term proposals that can work alongside government schemes to offer tailored financial support on rent to our tied tenants who have been impacted most by this crisis.”

“There isn’t a one size fits all solution and the support plan we’ve now communicated is fair, bespoke and aims to ensure that as many of our partners as possible are able to emerge from this crisis in a strong position, as we all look to recover our businesses together.”

A spokesperson for Marston’s told Metro.co.uk the group will review its tenants’ situation on a “pub by pub basis.

“Our view is that many pubs will be affected differently and there will not be a ‘one size fits all’ solution.”

Ei also told the publication that the pubco “continues to communicate directly with our publicans and have advised that rent and charges continue to be deferred for the foreseeable future.

“We will be working with each of our publicans on an individual basis in order to best provide the right level of support and assistance in each case when we are permitted to re-open for business.”

In an effort to support site operators in the meantime, Heineken, which owns Star Pubs and Bars, has launched a new website, www.thepubcollective.co.uk, which includes government advice, support and how to access it.

Stephen Watt, on-trade sales director at Heineken UK, said: “It’s a worrying time for everyone and we are doing all we can to support our on-trade customers and Star Pubs & Bars licensees. This pop up website makes it easy for them to access all the information they need in one place.”