More about pub management

In the talking head we discussed different types of pub management introducing the main three types – a managed house, a leased/tenanted pub and a freehouse. But there is a bit more to know about different management structures.

One of the key issues related to pub management is the beer tie, which is often the case for leased/tenanted pubs. Jonny Garrett on the CAMRA website presents an excellent video on the subject highlighting what all consumers need to know about the beer tie.

As you can see the beer tie makes prices higher, and makes it more difficult for leased pubs to be successful. He also highlights the 2016 Localism Act which introduced the Pubs Code. The Pubs Code Adjudicator presides over the Pubs Code Regulations which seeks the principles of fair and lawful dealing by pub-owning companies in relation to their tied tenants and that tied pub tenants should not be worse off than they would be if they were not subject to any product or service tie. These regulations allow pubs to ask for a ‘market-rent only’ agreement without a tie. However, as Jed Meers and Liz Hind note in their 2022 paper, the MRO process is complex, can only be triggered in certain circumstances, and there have been problems with delays (sometimes a gaming tactic by PubCos), where the burden of proof lies, and that there are still very few free-of-tie arrangements in place.

In recent years, due to worries about loss of pubs, especially in rural areas, consumers have taken the issue into their own hands and a number of community pubs have come into operation. The Plunkett Foundation has supported many communities to purchase and run their own pubs. Starting with one community pub in 1983, there were 146 community pubs by 2022. New openings peeked in 2019 with 19 pubs opening. These community pubs take on many different legal structures including pubs being Community Benefit Societies (CBS), Co-operative Societies, Companies Limited by Guarantee and Community Interest Companies, and may also include Private Companies Limited by Shares. You can read more about community pubs in the Plunkett Foundation’s “Better Form of Business Community Pubs Report 2022”.

References

Meers, J and Hind, L. (2022) The ‘code adjudicator’ model: the Pubs Code, statutory arbitration and the tied lease, Legal Studies, 42, 296-314