Some raw figures below for people to ponder about whether pubs should use up their grants to pay rent.
- Let’s take a hypothetical pub with annual Turnover of £360,000, with a rent £36,000 (10% of trade).
- Let’s assume this pub receives the maximum grant -lots won’t!
- Let’s assume half of turnover taken in the ‘salad days’ of May, June, July,August, and the rest spread equally over the remaining.
- Let’s assume March was a full month (!), and the pub will reopen 1st July straight back to the normal level of turnover!
If the Pubco / Landlord demands payment of the 3 months rent (in whatever form) the Pubco will have suffered ZERO loss of income, and at the same time increased the rent to 12.5% of trade. In fairness a Pub Co can also claim to have lost an equivalent amount in wet rent, let’s say about £9,000 of beer over the period, so added to the 100% of rent for 3 months its another £9,000.
Being generous its a maximum £18,000 loss for the Pub Co, compared to a £74,000 loss of sales for the tenant.
Currently the majority of publicans operating agreements from the big 6 regulated pubco’s are still being charged rent despite Covid 19 restrictions closing all UK pubs (i.e. payments are being added to the pub rent account increasing the debts of any tenant).
We hold the view that any pub, whose rent was assessed on the basis of fair maintainable trade (i.e. a profits method valuation), should not be paying rent when there is no trade. Further that pubs should be doing all that they can to adjust levels of rent set or assessed under different circumstances, as when restrictions are lifted it is very foreseeable that the pubs trade is going to be impacted and may not recover for a long time to come.