An industry experts view on the top 5 things you need to be thinking about when looking to re-start your food sales in your pub.

So what is it that you can do now, to ensure you give your pub and yourself the best possible re-start to your pub food business?

I would strongly recommend you view the re-start of your food offer, as an opportunity to relaunch your food offer, to both previous regular customers and potential new customers. We know the big brands will have put well thought out strategies in place to get customers into their pubs. Make sure you give yourself a fair chance to get your best share of the market!

CUSTOMER CONFIDENCE IS CRUCIAL – you have one chance to get this right.

Have a look below at my top 5 recommended actions.

Over the coming days we will give you a short checklist for each of the 5 actions below. Check if you can put a tick by each one.

1. Review and tweak your kitchen and stores set up whilst closed (or just doing take away) ready for re-opening.
2. Revise the layout of your pubs’ inside and outside space, to ensure social distancing when customers are allowed back.
3. Adapt your service practices to minimise any contamination concerns. And train staff accordingly to ensure you build customer confidence.
4. Review and adapt your menu content to; avoid wastage if trade is slow at the start and to ensure you can cope with demand if you have trade peaks.
5. Get all your customer communications published and printed, so customers are 100% clear about your plans and tactics to serve great food in a safe way.

Start making a list now of all the things that come into your head. As so not to lose any great ideas!

Look out for tomorrow’s blog with a short checklist on action point 1.

For more on independent help and training from food specialists, click here.

Yes, we really do think that will be the case. Honest non-landlord client-led rent review advice is as rare as hen’s teeth at the moment. The continuing pandemic, lockdowns, social distancing will all have a dramatic downwards pressure on future rent levels. That is a certainty. Much as the Pub Cos and major Brewers would like to hide from that inevitability, reality must be faced sooner rather than later.

First, the boring technical bits to put matters in perspective.

All Rent Assessment Proposals (RAP)  MUST be signed off by a Chartered Surveyor and prepared in accordance with RICS guidance notes [Pub Code regulation 20 (3)]. So lets look at what the regulation requires of the person signing off the RAP. The relevant guidance is found in The RICS Valuation-Global Standards 2017 and subsection VPGA 4. Under the heading ‘Fair Maintainable Operating Profit’ (FMOP) which is paragraph 2.4 on page 103, it states….

”This is the level ,of profit, stated prior to depreciation and finance costs relating to the asset itself (and rent if leasehold) that the reasonably efficient operator (REO) would expect to derive from Fair maintainable Turnover based on the market’s perception of the potential earnings of the property. It should reflect all costs and outgoings of the REO as well as an appropriate allowance for periodic expenditure, such as decoration, refurbishment and renewal of the trade inventory”.

No good looking backward at pre Virus trade, the valuer, in accordance with the mandatory RICS guidance must look forward and predict the market . As an aside, one of our Directors David Morgan was emailed last week by a Licensed Trade valuer from a certain regulated pub company concerning an ongoing case and to quote…

”As I am sure you are aware we received an Independent Assessor Determination which appeared to prematurely ‘set the market’. We have appealed this determination to the PCA”. 

Erm, an interesting take on the Independent Assessor (whoever he was) following the same RICS guidance as above. Chances of success? You form your own view on that one! But it will further delay the pub concerned going free of tie.

If your rent review was at a date before say 15th March 2020 when the lockdowns began you cannot use the Virus Reality (VR) in your rent calculations. Evidence post rent review date is legally not allowed to affect the mindset of the willing tenant, more of that later. Harsh as it may seem but as your rent review may not yet be settled, the law is very specific on this point. However, our friends at the Pubs Advisory Service launched a service earlier this week for tenants and lessees of the regulated Pub Cos.

There is a good chance, any tenant or lessee who has received a Rent Assessment Proposal (RAP), deemed non-compliant, could re-trigger their rent review. This would then allow the Virus Reality to be factored into the valuation and subsequent rent review discussions. Other rent reviews that are set to fall AFTER March 15th 2020 can use VR. After 30th June, or whenever the Pubs Code Adjudicator (PCA) office releases the moratorium on ‘no rent negotiations’ the then RAPs must look forwards and of necessity, predict the market. The Pub Cos and major Breweries are dreading a solid dose of rent reality which in our opinion could see rent levels plummet from pre virus levels. Why?

A recent YouGov piece of research echoed our views that people will just not feel comfortable returning to Pubs and Bars. YouGov found at 63%.. They also found that 57% of restaurant customers are uncertain about dining out again. Add to that the almost inevitable requirement for social distancing. The heady days of a crowded pub full of ‘vertical drinkers’ or a restaurant of closely packed full tables are well and truly gone for the foreseeable future. Even beer gardens will look strange if social distancing is strictly observed. Future trade levels will fall dramatically. The question is how much ?

The assumption for rent review is that of a willing landlord and a willing tenant. Not necessarily the captive tenant in occupation. That willing tenant would be very cautious indeed about even creating any bottom line profit with all of the constraints and social fears that will then be rife. To tempt that willing tenant, one of the inevitable fixed costs will have to be very tempting and the only fixed cast that is capable of variation is rent.

We estimate that in the first year post VR trading operations would struggle to make any profit. Second year, if you are lucky, a return to say 30% of pre VR profit. Then in years 3-5 normal profits. Best guess is that the initial rent level could be 30%-40% lower than compared to pre VR levels. OK so we are speculating, but off a very solid and practical base linked with the Virus Reality which will if anything get worse before it gets better.

Guest Blog – Morgan and Clarke Surveyors

If you are a publican who is concerned about rent and wants to adjust it, then please see here

Low outcome – why not change the game?

Reading the news over the past seven days, it shows an incredibly low number of businesses are managing to access any CBILS (Loans). Similarly, an incredibly low number getting business insurance cover to pay-out (we have not heard of a single pub managing to get a pay-out yet), it struck us how these results are practically a mirror of each other, so is this poor return down to COVID-19 and the crisis, or was this happening long before?

It’s clear that right now a huge number of businesses are routinely getting 1% access to the policy ‘outcome’ and in the pubs trade we see this mirrored in the pre-COVID-19 crisis period too. When you look at the actual number of publicans who managed to access the policy, get an MRO, break their tie and go FOT it is 1% (jargon buster here if you are not sure of the abbreviations).

The Pubs Code Adjudicator (PCA), who just like banks and insurance, were supposedly put in place to support you (in the pubs code case to enforce the code, reform the trade, deliver no-worse-off, fine unfair business practices, underpin a fair business environment), but instead they too have simply overseen a period where some 10,000 pubs should have accessed MRO, yet under 1000 were given an MRO offer and of that figure, only 122 actually got MRO in the end. Back to the 1% again – uncanny!

Not a single fine issued either during the last 4 years, apparently the Regulator with 30 years’ trade experience cannot find anything bad going on, despite having asked for £1m budget to carry out investigations! The awful reality is laid bare in the PCA accounts which show they do not spend the budget at all, and in fact return it in full to the Pub Cos every year.

Despite the huge shortcomings, the PCA are closing down any attempts to hold them to account and are increasing their opaqueness in a draconian shut down of anyone daring to ask questions about their operation, or very poor policy outcome they have delivered. The PCA legal director Katharine Diamond has recently issued a clampdown not repeated in any other Government agency – this unprecedented move was put out under the cover of the crisis, you can read it here.

Why do statutory bodies like the PCA, the Banks, and Insurance companies lord it over your business. They give such poor outcomes, then proceed to get away with it and try to close down avenues to bring it to account – they seemingly seek to only to be congratulated on their performance by their trusted friends, and never ever want to be held to account by independent people for the demonstrably poor outcome of their service and policy they are paid to uphold.

Those put in place to deliver to businesses are controlling your future stake in the #ukpubs industry like never before, it’s high time the business men and women changed the game, if you don’t you will continue to get the 1% they deem acceptable.

Join us, let’s change the game together and hold the service providers to account, demand Government investigation, take action, change your future end the 1% service culture.

Join us here

Regards

PAS