British Pubs Struggling
As far as cornerstones of British life go, there are as few traditions seemingly rooted in the English countryside as firmly as that of the Public House. More than just a bar or a restaurant, the public house or pub is place to meet one’s neighbors, catch up on local news, to reconnect with the community. For centuries they were also the best place in town to stop in for a half-liter of bitter, a basket of fish and chips and simple pleasures of small town life.
However, in the last few decades British pub life has been increasingly challenged by the presence of Public House Companies, often called pubcos for short. Large national businesses, these public house companies often own 500 or more pubs which they license out to various publicans. While none of that is terrible in and of itself, the current state British law allows the pub companies to enforce unfair control over the publicans and the pubs themselves, leading to lifestyle where pub-lessees are constantly teetering on the edge of financial ruin.
The way this works is that the pubs owned by pub companies are tied by British law and contractual obligation to the pub companies, forcing them to buy their beer from the pub company, who often charge more than 150% of the market price for their alcohol. This means that beer a publican in Britain buys is likely to cost him more than one and a half times what it cost you to buy in the store. Because of this pub-lessees are constantly forced to raise their prices and lose customers, or sacrifice more their own livelihoods to just break even and survive.
But just how bad are living conditions for pub-lessees in Britain? Well according to the Jo Swinson, the Parliamentary Undersecretary of State “It has been a huge concern of mine that pubs, often the hub of our communities, are closing down at an alarming rate. What is also shocking is that the figures show that almost half of tied pubs earn less than £15,000 a year, and struggle to make ends meet because of rising beer prices and rent.”
In addition, CAMRA (Campaign for Real Ale) a UK based consumer rights group that lobbies and advocates for pub-lessees as well as other beer quality issues released the following as a press release on May 14th “Currently tied licensees must purchase their beer and other products from the pub company at an inflated rate, which is often at least 50% more expensive than the market rate. As a result 57% of tied licensees earn less than £10k a year.”
For those of you who are not sure, £15,000 a year is roughly the equivalent of 21000 a year in US dollars,with £10,000 a year being between 13 to 14000 US dollars a year. With yearly returns like these, is it all that surprising that British pubs are struggling at an unbelievable rate? And just how many pubs are tied into the larger public house companies? Well, out of some 50,000 pubs in the United Kingdom, some 48% are tied to larger public house companies, meaning that thousands of pub-lessees are affected in some way by the current legal framework.
Last year, the British government published the results of a consultation effort they undertook as a result of the lobbying of groups like CAMRA on behalf of the pub-lessees. This consultation report, also prompted the government to allow for their Adjudicators to handle complaints of the pub-lessees themselves, if they felt that they were themselves being treated poorly. Specifically the government had this to say on their website “If pubs feel that they are being treated unfairly or there has been a breach of the Code, they will be able to complain to the Adjudicator who can investigate and arbitrate the dispute for them. They will have the power to enforce the Code and impose fines on pub companies if the breach is severe.”
Moreover the British Government asserted that “Under proposals the Code will make sure that:“pubs are fairly and lawfully treated by pub companies, tied pubs are no worse off than free-of-tie pubs, pub companies charge fair rents and beer prices, with the possibility of open market rent reviews, tied pubs could have the option of a guest beer, picked independently, which could help the growth of small beer and ale manufacturers in the community.” Despite these strong assurances, however, pub-lessees continue to struggle in a system that seems designed against them.
According to CAMRA, the British Government is delaying necessary action, including the creation of the post of Adjudicator, who is supposed to provide oversight to prevent the continued monopolization of the pub industry, as well as other key provisions of the report. The refusal of the British government to act on this matter continues to render the pub-lessees powerless in a struggle they cannot win. To this end CAMRA recently launched (and due to overwhelming support) closed a petition designed to remind the government of its own promises and show them that the majority of British citizens want to see their public houses open and stocked full of a variety of beers, not just the same selection in each pub. In addition, CAMRA is currently “campaigning for a rebalance to the current unfair relationship between the giant property companies (pubcos) and their licensees. This rebalance must include an option for lessees to become free of tie, accompanied by an open market rent review, so that they can buy beer on the open market. This could potentially save each pub business tens of thousands of pounds every year.“ Given the heavy political turnout in favor of making the adjustments, its likely only a matter of time before the British Government makes good on its promises, however, for pub-lessees teetering on the edge of financial ruin, its simply taking too long.