Tied Houses …

You know, I’ve got to admit, I wasn’t surprised to read this article on the BBC’s website, today.

I wasn’t.

To summarise quickly, the article say’s that shares in various pub companies — mostly the ones, like Punch Taverns and Enterprise Inns, that specialise in leasing pubs to landlords, rather than ones that directly run pubs — after various MP’s called for the Competition Commission to investigate the fact that most such companies imposed unnaturally rents on their tenants; the landlords who actually run pubs.

I think a little bit of explanation's in order, isn’t it?

I’m no expert on this.

But I have been a barman for some 14 years, which means I understand the basics.

Basically, pubs in the UK are run in three different ways.

Many are what’s called managed houses; in other words, they’re run by managers, directly appointed by a brewery or pub company, and the brewery’s the company that takes all the profit. Pretty much like an off-license* or supermarket that sells beer; the main difference being you can drink your beer on the premises.

Another kind is the freeholder; the person or people running actually own the pub building and the pub business that’s run there. The landlord gets all the profit.

Then you’ve got the ones who are having serious problem, here; leased pubsª, and their owners. Which is similar to, but not identical with, a franchise. The people in charge are tenants of the pub company and rent the pub from the brewery so that they can run a pub business in it. As with the freeholders, they get the profits.

But that’s where the similarity stops; freeholders own the pub, and the business that’s run in it. Leaseholders own the business, but pay rent on the pub.

Part of which is the wholesale price the pub companies charge their tenants for beer and spirits; usually it’s a lot higher than what a managed house in the same area would pay. And a tenant can’t go to any other company; he or she has to get it from the brewery.

Just as an example here, I used to work as a barman at The Hutton, many moons ago; when it switched from being a managed house to a tenancy, the prices of beer went up roughly 35 to 40 p, with spirits going up 25 to 30p. And pushed many of the prices over that psychologically significant £2•50 mark. And nearer the £3•00 mark in the more pricey range.

The tenants at the time I left didn’t last much longer than I did. About two months after I left, Punch pushed up the beer prices another 50p, and the rent up by 50%.

I don’t think anyone was surprised by that.

Which is partly Sue, who took over, was having such problems; she took over as tenant, after the pub had been closed for some six weeks, and couldn’t lower her prices. Possibly why events went the way they did with the quizzes I tried running there; only a small handful of the old punters ever bothered going back, from what I could see, discouraged by the emptiness and prices.

So reading that MP’s — and there’s probably a cynical line about setting a venal money grabber to catch a venal money grabberº — have recognised that there’s “… the existence of the tie pushes up prices for the consumer”.

Whether anything will be done as a result is a whole other matter, but …

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Just as a thought, though, here … have a pint!

(From what I found out, years later, the company that made that ad had to find the one remaining lighting designer who knew who to light for black and white movies. Who was roughly 70, and the most expensive pensioner in the film industry!)

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ª Which are also called tied houses, I should add.

* And I’m talking about somewhere like Threshers, or Tescos, here. A chain off-license or supermarket, in other words.

º Oooh, bit of satire, there, My name is Ben Elton, Goodnight …

And just as a warning to those of us are tempted to really overindulge; remeber, this could happen to you …