Monday, 19 January 2009

Beer tie again

I recently set up statcounter on this blog, it's a rather good web stats tool for monitoring hits on web sites. The best bit is it's completely free and transparent to anybody visiting your site. I have Jeff, of Stonch's blog, to thank for publicising this facility on his blog. I also have Jeff to thank for prompting me to write this as a result of this post. Golly, he's a good chap.

I've commented about the beer tie before on several occasions. I am not going to pretend I like it and I'd prefer it didn't exist. You can get my previous posts on the subject here. I find it interesting that statcounter reports a significant proportion of readers of my blog, find it by putting something in Google like "beer tie", or "tied houses" or something similar. I've tried testing similar phrases in Google and haven't found this blog quickly, so anybody who gets here cares a lot about the subject and is going to the somethingteenth page to find me.

A question that is clearly being asked is "Can a profit be made from a tied pub?" or variation thereof. My knee jerk reaction would be to say "no"; This can't however be the case. There are clearly going to be many places where profits for the licensee, lessee, are likely to be quite sufficient. My suggestion would be that where the pub freehold value runs into 7 digits and the turnover is a very health fraction of that, a profit may well be possible for somebody who takes on the lease. This is likely to be true of a good town centre pub.

I accused Jeff of being a supporter of the tie. He put me in my place and I'm sorry I misunderstood. But he does state "I don't support people who break their tie arrangements - it's a contract they freely entered into". This I have a problem with. Not because Jeff is wrong in pointing out that it's the contract, but that I'm not sure that a good proportion of people who enter into the contract fully understand all the implications. For instance, they will not get a choice when their beer is delivered. If they miss the beer delivery their business will be without a product to sell and they can't go anywhere else to get it.

Jeff makes a further, very good point. If it were to be outlawed by Government, it would no doubt be done in a clumsy unhelpful way. Indeed I'm not sure I know how to do it without throwing the whole of the industry into chaos. So this leaves me to think that the only real way of sorting the situation out is by market forces.

So here I do my bit. If you've got here because you are seriously thinking of taking on a tied pub, then don't, not unless you really, really think you can make it work. Running a pub is hard work; No, I mean really, really is hard work, harder work than you can ever imagine. What you just don't need is some Pub Co making it harder for you by narrowing down the options on your supply chain. 

6 comments:

Velky Al said...

Without wanting to sound like some red-misty eyed commie, I am not convinced that market forces are the best of dealing with the problem of the tie. For a start the big pubcos have the capital and resources to accumulate power and influence, thus protected their investment at the highest levels and as a result maintaining some form of tie, because that is in their interests.

Market forces will however take out those pubs which are failing, and regardless of whether a pub is in the Good Pub Guide or not, the fact that not enough people want to drink there tells me that there is something wrong with the pub, whether tied or otherwise.

I find myself agreeing with Stonch in that when a person takes on a tied pub then they should make themselves fully aware of the implications of the contract. It sounds blatantly obviously really, but I wonder how many new landlords read through the contract and understand it fully, as it is no doubt in legalese.

Jeff Pickthall said...

JB is right to say that people should be fully aware of what they're letting themselves in for. The problem I see is that the chains move the goalposts afterwards, months into the tenancy.

In my darker moments I believe that a high turnover of tenants is built into the pubcos business model, incoming premiums etc being a primary revenue stream.

Woolpack Dave said...

Velky Al, I don't think you sound like a commie, just for questioning the concept that market forces might sort out a problem that market forces created in the first place.

Jeff P is right that many don't understand when they enter into a lease. If I can make some difference here then all the better.

The fact is though, for a small business to be tied into one supplier is putting that business at a disadvantage. If that supplier messes up and you have to arrange for an alternative, and suppliers mess up all the time, then you've got a problem.

The best way to break the tied system is for nobody to take out tied leases.

Tandleman said...

"The best way to break the tied system is for nobody to take out tied leases."

The bleeding obvious, but the bleeding correct. At least as far as PubCos go.

Paul said...

I love my beer as much as anyone else but I have to say that all the Wetherspoons I've ever been in sell good real ale cheaply. I can't say that for that many other tied houses I've been to.

Woolpack Dave said...

'Spoons a tied house? Arguably it's a managed chain, a different beast altogether.

The beer might be good value, although that is a matter of opinion. The pubs are generally dives though and I'd rather get a few bottles of something nicer from Tesco or better still mail order from many good bottle suppliers and drink it at home. As for the food......

Give me a good pub any day.