Ei Group offers support package following pressure from publicans

Stonegate, which owns UK pub company Ei Group, has launched a multimillion pound support package for its tenants to help them to reopen and start trading when lockdown ends, following weeks of pressure from publicans.

Stonegate Pub Company has promised to give tenants within its recently acquired Ei Publican Partnerships three months worth of “rent credit”, between April and June, and to cancel fees for beer ties and fixtures.

Publicans who are also eligible for government grants will also be given between a 50% and 75% trade credit so it will cost less for them to restock their sites with fresh beer when it is time to reopen.

Stonegate revealed the plans on Thursday evening (14 May), hours after a cross-party group of MPs wrote to the pub company asking for it to cancel it tenants’ rents.

A group of 60 MPs led by Anthony Browne, Alicia Kearns & Stella Creasey, signed a letter to Ei Group today (14 May) calling for an immediate rent holiday, or an equivalent level of support of some other kind, to all pubs within the group.

Walthamstow MP Stella Creasy said: “Across the country many pubs are now in a fight for their survival but without being able to reopen for customers, they don’t have the income to pay the monies companies like EI are demanding except through getting into debt.”

Dozens of pub managers wrote to their local MPs throughout April and May calling for support as part of a social media campaign to cancel pub groups’ rents.

Last month,Ei said it would defer rent and fees for the whole of April, but stopped short of cancelling rents altogether. Dave Mountford, who runs The Boat Inn in Derbyshire, told the drinks business that publicans will be faced with huge debt when they finally start trading again.

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

As previously reported by db, companies such as Greene King, Star Pubs & Bars and Marston’s and Ei have told tenants they plan to defer all rent payments until lockdown measures are lifted, but this could leave thousands of pubs in huge amounts of debt once they start trading again.

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.

The letter said: “We are dismayed that Ei Pub Company has not made any public undertaking to provide a rent-free period to its tenants and is instead simply deferring the rent to be paid off after the pandemic ends.

“This is despite being one of only five companies adhering to the Pub Code to not have announced measures. This will put many tenants deep in debt, making it financially more difficult for them to reopen. Ei is ignoring the normal guiding principle that pub rents reflect their profitability, and it is unfair of you to require tenants to take the entire financial burden of the lockdown.

“We urgently call on you to offer a rent holiday, or an equivalent level of support of some other kind, to all pubs in your group.”

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

Mountford told db the campaigners lobbied their local MPs all through April in order to drum up support.

He said it was “fantastic” to receive backing from UK lawmakers,

“We now have a load of politicians who are starting to realise these companies have an unfair business.”

A spokesperson for Ei told the drinks business the pub group had been working on the support package for some weeks before MPs published the open letter.

Nick Light, managing director of Ei Publican Partnerships, said: “The support packages we are providing ensure consistency, whilst remaining objective, as well as taking into account the Government support grants of up to £25,000 which are now filtering through to businesses, which the Chancellor has stipulated are aimed at providing financial relief towards fixed costs, including rent. We are delighted to see that over 80% of our publicans who qualify for a grant have now received this payment.

“It is vital to us that our pubs and our publicans are in a position to trade successfully when pubs are allowed to re-open. The rent support and trade credit initiatives are intended to provide our publicans with a strong platform to do so, and to help relieve some of the financial pressure required to restock and restart.”