Large pub companies are still charging tenants an average of £30,000 in rent despite all U.K. pubs being ordered to close, putting hundreds of businesses on the verge of collapse and thousands of jobs at risk.
All on-licensed premises have been shuttered since March 20 in response to the COVID-19 crisis, and despite tenanted rents being based on the amount of beer a pub is expected to sell, many are still being forced to pay the full, monthly amount. With no income, one landlord says some pubs’ lifespan can be “measured in days,” one example of the stark contrast between this year and 2019, which saw the first rise in the number of pubs for a decade.
In response, the government has offered to cover 80% of any pub’s wage bill, make grants of up to £25,000 available to struggling businesses, and has agreed to waive all business rates. Meanwhile pub companies such as Shepherd Neame, Fuller’s, and Admiral have canceled rents during the crisis. However, around 14,000 pubs are still being charged rent by Marston’s, Ei Group, Greene King, Punch Pubs & Co, Star Pubs & Bars, and other small pub companies—just months after some were accused of effectively artificially inflating their fees.
Ei Group and Greene King have both said they will defer rents, but many landlords point out that deferring rent just means mounting debt for them further down the line, and are calling for fees to be canceled completely. If they aren’t, the crisis will touch every tenanted pub in the country, hitting large and city center pubs hardest. These are traditionally the most resilient, but the government’s bailout grants will only apply to pubs with a rateable value less than £51,000.
Chris Wright, founder of the Pubs Advisory Service, which consults with landlords in legal disputes, is critical of pub companies for failing to lower their rents after decades of pushing them upward when pubs performed well.
“The pub companies pushed this model,” says Wright. “They established the rent based on turnover and it served their purpose. Now the pendulum has to swing the other way, it’s rank hypocrisy for them to turn around and say, ‘No, it doesn’t work like that.’”
As a result, Marston’s, Ei Group, Greene King, Punch Pubs & Co, and Star Pubs & Bars have become the target of a coordinated industry Twitter campaign, #nopubnorent. The idea is to expose the issue to the public, and the campaign has since been shared over 7,500 times and has reached more than 60 million people, and has also been featured on national radio.
Thais Robinson, who operates the Ei Group-owned Elsted Inn in West Sussex, “isn’t surprised” by her pub company’s actions, but is angry enough to recruit other Ei Group tenants for the #nopubnorent campaign. She says collective action became important after she received an email from Ei Group—supposedly following up on a phone call Robinson says never actually happened—clarifying that landlords should prioritize rent over other payments.
"We appreciate that future repayment is governed by affordability and we intend to adopt a commercially pragmatic approach to their recovery," reads the email. "We do though expect all qualifying publicans to efficiently access any available government support, such as grants, and that you will look to use such funds to meet your liabilities, prioritising rent wherever possible."
The last sentence is the catch: government grants are for all liabilities of running a business, not specifically rent. Robinson says Ei Group’s language is tantamount to a demand for rent before staff wages, utilities, and suppliers. Ei Group and a regional manager cited as author of the email declined to comment.
“It’s shocking,” she says. “They say, ‘This is the deal, take it or leave it.’ I understand that, like us, Ei Group is going to lose a lot of money, but it doesn’t benefit anyone if the publicans go bankrupt.”
The situation comes just two months after the government’s Pubs Code Adjudicator (PCA), which mediates disputes between landlords and pub owners, released a judgment accusing Marston’s of misrepresenting how much beer is in its casks. In doing so, the company increased the rents at all its pubs and sold them beer that never existed.
Ed Anderson, whose Railway Inn pub in Cheltenham was at the center of that PCA judgment, runs three pubs in the Midlands. He decided to spearhead the #nopubnorent campaign after being told he would still pay £14,000 of rent to Marston’s and Ei Group for the pubs he rents. Ei Group has at least said it will defer the costs, but gave no indication of how and when that debt will have to be repaid. Anderson says his attempts to get clarity have been ignored.
“It forces me to make a decision about whether to walk away from the business and make everyone unemployed,” he says. “It’s either that or take on about £14,000 in debt [every month] for renting something that doesn’t exist. That’s the choice me and thousands of other landlords have.”
Despite offering no additional information on rents, Ei Group, according to Anderson, has been calling him regularly to check if he has been offered the government’s grants for small businesses affected by COVID-19. Anderson stands to get two £25,000 lump sums for two of his pubs—the third is too large to qualify—and says he believes that Ei Group is only checking on his application because it hopes the money will go directly to them in rent. The British Beer & Pub Association caused fury when it suggested grants should go straight to the pub companies, not landlords’ businesses, but Ei Group is likely to get its hands on them either way.
“They could smell the money,” says Anderson. “They sent out their COVID-19 rent policy the day after those grants were announced. Now they just want to know your financial position and how far they can push.”
In a statement to Good Beer Hunting, Ei Group said the company would ensure tenants “are kept up to date with Government and practical support available for their businesses as well as deferring collection of rent and fees, which we will keep under constant review.”
Anderson admits the pub companies could well be checking with insurance, calling in debts and getting assurances from the government before enacting any hard policy. It’s worth noting, however, that many of these companies have venture capital backing, so have likely had the required cash reserves all along. Ei Group, for example, is backed by TDR Capital, a Cayman Island-based investment fund with over £7 billion ($8.6 billion) in assets.
Given his complicated legal history with pub companies, Anderson isn’t planning on getting any further support. He’s taken out a personal loan to ensure he can pay bills and the remaining 20% of his staff’s wages, but didn’t want to disclose how much that cost him. He says he’s seen some fellow publicans give up and “already hand back the keys.”
Without absolute clarity and financial support from the country’s pub companies, plenty more will have those keys taken away from them.
Marston’s did not respond to multiple attempts for comment.
Words by Jonny Garrett