Sunday, 23 November 2014

More thoughts on the "market rent option" for tied licensees

On Tuesday Parliament voted to introduce a market rent only option ("MRO") in the tied pub sector. My initial response is here. I've thought about it a bit more since then. I also read and heard a lot of other people's opinions on the subject and think there's been something of an over reaction to this new measure. I'll explain why.

The ability of a tied licensee to insist on MRO only kicks in at certain trigger points: lease renewals, rent reviews, changes of terms of changes of pub company. Let's look at each in turn.

Lease renewals


In practice, this trigger point isn't relevant to newer pub leases. Under the 1954 Landlord and Tenant Act, "business tenants" were protected when the terms of their lease ran out. The tenant could apply for a new lease and the landlord could only refuse in certain circumstances. We talk about leases being "within the '54 Act" or being "protected leases". My Gunmakers lease from Punch - first granted to another operator in 2001 and assigned to me in 2009 - included such protection. However, legislation since 1954 allows landlords to opt out of this, and most new pubco leases are "outside the Act". Therefore this trigger will only have a limited effect in terms of banishing the tie.

Rent reviews


This trigger is also less important for newer leases. Older pub leases tended to be for terms of 20-25 years, and included full rent reviews every five years. However, long commercial leases are less popular these days. This is partly due to the introduction of Stamp Duty Land Tax in 2003, as the amount payable when a lease is granted takes into account the entire term. Punch Taverns don't usually offer terms longer than 10 years. Enterprise Inns still offer 20 year leases. Both provide an option whereby there aren't any five yearly rent reviews at all (although over the term rent will creep up due to annual CPI or RPI increases). So much for another of the MRO triggers.

Change of terms


The standard form pubco leases are rarely subject to much negotiation. Their detail and prescriptiveness beggars belief when you compare them to other commercial leases. I was sent a current Enterprise lease and was amused to find a provision that more or less required the lessee to be polite to customers. Few of these provisions are enforced in practice. The pubco really just wants you to pay the rent, buy your beer from them and keep the property in a good state of repair (in that order). However, if a pubco did want to start enforcing everything in a lease, they could take a lot of control away from the lessee. It is my contention that pubcos already have so many contractual tools at their disposal, they don't need to seek alter leases. It is therefore unlikely in practice that "change of terms" would be a trigger for MRO.

Change of pubco


As I wrote on Tuesday, to me the most interesting trigger - and the strongest in terms of protecting tied publicans - is change of pubco. Pubs and parcels of pubs are traded between pubcos frequently. Finding yourself with a new landlord who can enforce any and all provisions of a lease you entered into with someone else entirely could completely ruin your business. You could be bought by a brewery whose beer range you and your customers don't like. You could be given so little choice over products that you become little more than a franchise operation. With the market increasingly tilted towards craft beers, unbranded wines and speciality spirits, this is more of an issue now than in past years.

If I'm right, and change of pubco is the most important trigger, what does this mean in terms of the future of the tie? Practically, you can no longer buy leased pubs and be sure of retaining the income stream from the tie. When the purchase goes through the lessees are entitled to demand MRO. This completely changes the market, and will make financial modelling when disposals and acquisitions are made more difficult. It will inevitably make operating a pubco based on the tied model far less popular as time goes by. Better to simply forget about all that messing about with barrels of beer and charge top whack, free of tie rents, perhaps.

An ex-flatmate of mine is a Conservative MP. He was at the Finborough for our Birrificio Italiano event last Wednesday, a day after the vote in Parliament. I asked him how he'd voted. He'd intended to rebel against the government whip and support Greg Mulholland's amendment, but sadly his car broke down on the way to London!

The best week

This has been the best week of my career as a publican. Reopening somewhere that's been closed for so long - the Finborough has been completely empty since 2012 and hadn't been a proper pub since 2001 - has been a real challenge. West Brompton/Earl's Court isn't like Clerkenwell, with offices full of boozy workers piling out at 5pm to fill the bars. The Finborough might be on a busy thoroughfare for motor traffic but pedestrian footfall is minimal. The pub has to be a destination for it to work.

This week we've been busy every night since Tuesday, with a meet the brewer event, a comedy night, two club meetings and a birthday party as well as a sold-out show every night in the theatre upstairs. To top it all Chelsea were at home on Saturday and the pub was jumping before and after the game. It was out busiest day of trade so far (as well as surpassing the busiest days at the Gunmakers over the last five years). We sold 500 pints of Portobello London Pilsner - the house lager - and pretty much cleared the cellar out. This week we can choose an entirely new draught line-up (these are the joys of being completely independent and free of tie).

We're now closed for two days as we renovate the cellar space properly. The space down there - which features the newly installed, white tiled beer cellar behind a glass wall - has had potential since day one but there hasn't been time to sort it out. Diffused lighting in the brick arches - which are lined with bench seating - and art on the walls will brighten it up no end.

Thursday, 20 November 2014

Throwback Thursday #2 - Brewing in London

Every week at 2pm on Thursday I link to a few old posts from the archives.

As regular readers will know I started this blog on January 3rd 2007 and kept it going until its third birthday before taking a five year break. While I've been busy running, selling and opening pubs, the brewing scene in London has changed beyond recognition. According to the London Beer Guide website, there are currently 73 breweries operating within the M25.

In my second ever post, Brewing in London, I reported that there were only five independent breweries in London - Fullers, Meantime, Mash (since closed down), Bünker (ditto) and Zerodegrees.

That post got 19 comments, despite the fact I'd only been writing for three days. Back then this blog was pretty much the only show in town, remember. Readers identified two breweries I'd overlooked. The first, Battersea Brewery*, was always a bit of a mystery to me and disappeared without fanfare. The second, then very recently opened, was the Horseshoe in Hampstead.

I visited the Horseshoe in May of that year and wrote about my impressions, as well as posting two photos taken with a smudged camera lens.

What I didn't know then is that the owner, Jasper, was about to embark on a remarkable journey. He founded Camden Town Brewery in 2010, and less than five years later his beer can be seen all over London and beyond. I admire Camden because they can make beers like IHL that make beer geeks salivate but also a quality, everyday pint of pale lager in the shape of their regular Hells.

Of course it isn't just the brewing scene that's changed - the pub game in London is totally different too. Just look at the London Beer Map I created in November 2007.

I kept it updated with readers' suggestions until December of the following year. I must have sensed we were chasing a target that was moving too fast. A few years on, and "craft" beer is everywhere in the capital. Sometimes I miss the old days when the forward-thinking freehouses and brewpubs were few and far between and genuinely exciting.

* Battersea Brewery - did it even really exist as an actual brewery, or was it just one of these outfits that relies on contract brewing their beers elsewhere?

Agostino Arioli at the Finborough

Last night's Birrificio Italiano tap takeover earned us a full house at the Finborough on a cold November evening and introduced dozens of new people to this reborn pub. For us it was nothing less than a dream come true: I've loved Birrificio Italiano beers since 2007 when I first found Tipopils in Rome, and was inspired by my visit to the brewery in 2013; Finborough bar manager Leo used to be the tap man at the brewery's original home in Lombardy.

Head brewer Agostino Arioli held a packed pub's attention for half an hour as he spoke about founding his brewery 17 years ago, Italian artisanal brewing today,  the "alchemy" of brewing, how he discovered roasted hops and why dark beer Nigredo is his "favourite daughter". The crowd at the Finborough polished off kegs of five of his beers (Nigredo ran out first and will surely return to the bar as a guest if not a regular beer), leaving our usual supply of Tipopils to see us through to the last bell. The giant cheeseboard - laid across the bar for everyone to tuck into after Ago's speech - included one cheese to match each of the six beers.

Thank you to all who came, particularly David Pearson who just emailed me his photos from last night.


Agostino Arioli speaks at the Finborough 
Birrificio Italiano tap takeover at the Finborough
Drinkers at the bar
Pouring Nigredo
A happy Leo!

OUR NEXT MEET THE BREWER / TAP TAKEOVER EVENT AT THE FINBOROUGH WILL BE WITH THE BRAND NEW PARK BREWERY OF KINGSTON-UPON-THAMES ON SATURDAY 17TH JANUARY 2015 - FULL DETAILS HERE.

Tuesday, 18 November 2014

My view on the "market rent option" for tied publicans

Today in Westminster MPs have voted 284 to 269 to amend the Small Business, Enterprise and Employment Bill so that tied publicans will have the right to insist on a "market rent" option. The Morning Advertiser has the details.

This is a good thing. Pubcos have long maintained that their way of getting a return from their estate of pubs - rent plus an income from charging higher-than-market prices for beer to the the lessees via the tie - provides flexibility and a low-cost entry model for pub operators. Opponents have argued, among other things, that the pubcos have their cake and eat it: they charge high rents and they scalp you for the beer. A market rent option (backed by a independent review if no agreement is reached) at least makes this more transparent.

In fact the pubcos have already been offering free of tie deals in exchange for a sufficiently high rent. For example, all four four of the five "Craft Beer Co" sites in London were leased on this basis, from Greene King, Enterprise and Punch. (Because people talk I happen to know exactly what each was let for, and it was much higher than a tied rent would have been - one figure in particular was eye-watering). There are many other examples.

Those were new lettings, however, so the negotiation between the pubco and the lessee was on open terms. The new legislation gives a market rent option at various trigger points for existing lessees. The key ones are rent reviews - most commonly held every five years under existing pub leases - and when the freehold is sold by the pubco.

The rent review trigger will give a new option for lessees who see their pubco try and increase their rent after years of strong trading. In case of successful pubs that sell lots of tied beer and therefore generate lots of "wet rent", the knowledge that the lessee can demand an independently assessed market rent might make the pubco reticent to demand a cheeky uplift in the "dry" (i.e. actual) rent. I hope it works out that way.

The change of freeholder trigger is even more interesting. One of the several factors in my decision to sell the lease and business at the Gunmakers was fear that Punch Taverns would go into administration, or otherwise dispose of my freehold, leaving me with a brand new freeholder to deal with. I'd got on fine with Punch and won myself lots of concessions on the tie which had enabled me to offer an excellent cask beer choice. A new freeholder would still have been able to enforce the tie provisions under my lease but would not have had to offer me any flexibility at all. That was a big risk to my business. Under this new legislation I'd have been able to at least demand a (inevitably much higher) market rent and ditch the tie altogether.

One thing to note however is what "market rent" actually means. It's basically the notional amount that a freeholder could achieve in the open market for the property in question, bearing in mind the building's size and location. Lots of publicans - particularly those that don't sell very much beer - would be worse off with a true market rent, particularly if their business is seasonal.

The amendment was steered through parliament (despite being opposed by the government) by Greg Muholland, the Liberal Democrat who heads the Save the Pub group of MPs. Greg Mulholland is also in favour of a "safe standing" option for top level football clubs, something I also agree with and a goal of the Chelsea Supporter's Trust who meet in my pub the Finborough Arms. On a less positive note he was Britain's most expensive MP in 2011/12.

I wrote that blog post in ten minutes. Not since my finals have I written so quickly.

Saturday, 15 November 2014

The Park Brewery

There are now over 70 breweries within the M25. The newer ones fall into different categories. There are the vanity projects. There are the self-confident homebrewers. There are the beer industry lifers striking out on their own. And of course there are the bandwagon jumpers.

The Park Brewery are based in Kingston-upon-Thames. Technically London, but no Big Ben cigar. I know nothing about them other than the fact some samples were dropped off here the other day. An ex-girlfriend of mine gave them my name, apparently. I don't really get on with her so that's not the best start.

The Gallows Gold (Simcoe and Galena hops, 5%) was the first I tasted and it was an immediate winner. A great exposition of upfront hop without overbalancing. Let's crack on.

The Two Storm Ruby (Columbus and Pacific Jade, 7.1%) has perhaps a tiny bit too much sweetness for my liking but is another accomplished brew. Doesn't really drink its strength so you'd be legless before you knew it.

The Dark Hill (Polaris and Summit, 6.2%) is one of the best hoppy dark beers I've had. I hate the term "black IPA" but this would probably fall into that category. Outstanding.

I tasted the Killcat Pale (Galaxy and Motueka, 4.3%) last. An obvious error, you might think, but that's how it worked out. A palate refresher. Absolutely enjoyable. And this is the real demonstration of the English brewers' skill, that only the Czechs dare challenge us on: beers under 5% abv that taste great.

A bit of research the morning after reveals that the brewery hasn't even officially launched yet although their bottles are on sale in local offies down in Kingston.

UPDATE: Since writing this post I've been in touch with Josh and Frankie of The Park Brewery and we've arranged a launch night and tap takeover at the Finborough on Saturday 17th January. Details are here. Come along and try these fantastic beers yourself.

Friday, 14 November 2014

There's a beer for that

I just got around to watching the "there's a beer for that" advert on youtube. I cannot see how anyone in this industry could find that objectionable.

I don't know anything about who made it but assume it was paid for out of the marketing budgets of the big brewing concerns. However it doesn't show any brands at all so this really is a case of a rising tide lifting all boats - the small brewers who didn't contribute a penny will benefit too. I'm particularly pleased that most of the happy people depicted are enjoying beer in pubs and restaurants, as opposed to at home.

Since I started writing this blog again I've been catching up on the others that have kept going or sprung up in my absence. I've tried to skim over all the boring bits about marketing campaigns but what I've gathered is that there's been lots of fruitless debate about this particular ad.

If something like this has been on telly ten years ago those of us who loved great beer back then would have been cockahoop. Although the market has matured and grown since then, this is still a boost. Frankly it's a sign of how nerdy and cultish so many people who profess to love beer are that they get upset when the mainstream impinges on their chosen interest. You'd almost think these people don't want drinking beer to be something the majority of people do without thinking about it.

ADDENDUM: Thinking about this a little more, perhaps the real reason for the mystifying outrage about this ad from people writing about beer is self-interest. They see themselves being bypassed by big money corporations and just don't think it's fair, because of all the effort they've put in. You can probably guess what I think about that.

Thursday, 13 November 2014

Throwback Thursday #1

Looking back over the archives of this blog I find many posts I have no memory of writing. A few I've read over the last few days have chimed with me and might with you, so I'll present them again. I'll do so with a handful every Thursday at 2pm. This is rancidly nostalgiac and, let's face it, a touch narcissistic on my part. But I am a pub landlord, after all: my gaff, my rules.

The tapman at U Hrocha, Prague.

If I ran a pub for thirty years - on what makes the troubled lot of a publican worthwhile for me.

U Hrocha - I visited one of my favourite Prague haunts in 2009 and reflected on what's changed for the British publican in the last few decades.

There's nothing wrong with that - on the real reason why so many people steer clear of cask ale. With the rise of craft keg and the challenge to cask ale it undoubtedly presents, perhaps this is even more relevant now than it was when I wrote it.

Opera at the pub - chronicling my visit in April 2007 to one of London's theatre pubs. Little did I know then that I'd become landlord of another - the Finborough Arms - seven years later.

Wednesday, 12 November 2014

What annoys you in craft beer bars?

A tweet from my personal account garnered dozens of retweets today. For a vain old sausage like me that's always gratifying. The subject matter was a conversation I heard between a member of staff and a customer in a trendy (and very nice, I should say) Bloomsbury coffee shop.


Now that really is verbatim, and requires no further elaboration. Many of you will empathise with the customer and think back to your own encounters in similar establishments.

As I sat there with my flat white and delightful carrot cake (it really was excellent) I started to think about equivalent experiences I've had in craft beer bars. Top of the list for me is when I ask bar staff what sort of beer something is when it isn't obvious from the badge, only for them to insist I sip some of the beer from a warm thimble as opposed to just telling me using words.

I'm sure you've had some too. Share them in the comments please.

I've poked fun at the coffee shop but also praised it, so I see no reason why I shouldn't reveal the name - Fork on Marchmont Street. It's two doors down from my old haunt the Lord John Russell.

Tuesday, 11 November 2014

Birrificio Italiano tasting notes

The specialist glassware we'll serve in.
As announced previously on this blog we will be hosting Agostino Arioli of Birrificio Italiano at the Finborough Arms on Wednesday 19th November for a "meet the brewer" event (they're all the rage these days).

Andreas Fält of Atlas Brands - UK importer of B.I. beers - has provided tasting notes for each of the six beers we'll be serving with matching cheeses. They're far more informative than anything I could provide - I've only had three of the beers in the past - so I'll reproduce them here:

Tipopils – It might seem the most normal of our own beers and instead it is the one that most leaves its mark, the one that makes you fall in love. It whispers stories about fields of barley and hop gardens delivering the intact essence of their perfumes. Brewed with hops directly selected by us from the best hop growers in the area of Tettnang, Germany.

Bibock - Fresh and aromatic fruit flavour, herbaceous and spicy/ resinous hops aroma typically English. The malt brings hints of hazelnut, caramel and honey. In the mouth (as you drink it) the sweet and rich full body, gives way to a bitter aftertaste even more complex and generous of its smell. Fresh and rich but at the same time dangerously drinkable.

B.I. Weizen - A top-fermenting yeast encounters a wort produced with 50 % of wheat malt (in German "Weizen"), returning amazing aromas and tastes. Very fragrant, with a bitter content and refreshing acidity. Fermented a second time using a bottom-yeast.

Nigredo - Bottom fermented black beer, hopped in the manner and quantity typical of a Dark IPA, but using only German hops, including above all Hallertauer Mittelfrueh hops.

Imperial Pils - A Pils with double malt produced using green hops within three days of harvest, once a year, in September. Splendid and sumptuous celebration of hops with floral aromas and a warm alcohol taste.

Piccola - A light ABV Saison, dark amber in colour. In the mix there is a slight scent of wheat toast with beer scents that are absolutely unique. In addition, shortly before kegging Sichuan pepper was added that gives this Saison a strong and spicy feel.

The Birrificio Italiano "meet the brewer" with Agostino Arioli is at The Finborough Arms, London SW10 9ED on Wednesday 19th November 2015. Doors open 5pm. No entry charge, beers £4.90. Agostino will speak after 7.45pm.

Saturday, 8 November 2014

Twickers

Do you love pubs? I do. There are few things I like more than stepping into a boozer and immediately feeling that I'm in the right place at the right time. That happened last night.

I'm lucky enough to be  considered a friend by a large, extended family. That family happen to be rugby fans. There was a spare ticket going for a Harlequins cup game at the Stoop, so I ventured down to Twickenham for the evening. We met in the Sussex Arms before the game. The fire was roaring, the ale was flowing and everyone had a smile on their face. I felt at home even before I spotted my pals and made my way through the crowd to join them.

It's always refreshing to visit a brilliant pub. It reminds me of why I'm in this business.

We drank Dark Star Revelation and Red Squirrel Hopfest at the Sussex Arms and Greene King IPA at the Stoop.

Friday, 7 November 2014

How we learned to stop worrying about missed flights and love micropubs

Before I talk about Kent's micropubs, let me tell you a story. In February this year I made what was to be the first of three trips of the year to Franconia in Germany. Eddie and Jack had been helping me with the refurb of the Finborough so I got us flights to Nuremburg so we could spend a weekend on the sauce. We had a great time and resolved then to return in June for Forchheim's Annafest. Derrick agreed to make the trio a quartet and flights were booked weeks in advance. So far, so good.

By the harbour in Whitstable.
When the day came we all decided to congregate in one flat to await our 4am taxi to Stansted. After much guitar playing, singing and excitement we all dropped off one by one. Phones were on silent and the taxi came and went. I woke first at dawn and leapt from bed, ran into the living room and woke the others to deliver the bad news that we'd missed the flight. In my panic I did so stark bollock naked and so when the announcement was made there was an extra shock for the lads.

After an hour or two of heated argument and frantic searching online for alternative flights, we accepted the trip wasn't going to happen (Jack was reluctant to do so, and had some mad plan involving a flight to Strasbourg, but was outvoted). We'd all planned four days off work and the sun was shining, so we decided to make another plan. We repaired to the Wetherspoons by the south end of Tower Bridge and picked over 1450 calorie fry ups while waiting for their alcohol licence to kick in at 9am. Bouyed up by some farcically cheap cans of American craft lager, we agreed to get the train to Eddie's mum's gaff in Whitstable.

And so we come on to micropubs, the subject of this post. That part of North Kent that extends from Whitstable and along the coast to the Isle of Thanet is the cradle of a new pub civilisation. These tiny, single-roomed premises - usually converted from shops - have a focus on cask ale, not much in the way of food and often (but not always) limited opening hours. They tend to be operated by people who aren't pub professionals and are infectiously popular so far.

During our four day stay in Whitstable we haunted the Black Dog (in between dangerous and naughty leaps into the nearby harbour), made the trip up the hill to the Tankerton Arms and then rounded off the holiday with a day in Margate where there's a micropub right by the end of the harbour arm.

In the Black Dog, Whitstable.
The best micropub of all was without doubt Whitstable's own Black Dog. I'm pleased I didn't sign the tied lease on the Prince Albert at the end of Harbour Street in late 2012 (I came very close), because less than a year later this beauty opened close by in a former shop space. It's already a firm fixture on the busiest stretch of the high street, popular with locals and tourists alike. The Black Dog has four real ales, a clutch of ciders, cheese toasties, a friendly landlord, great decor in a tiny space and decent music. I even bought the t-shirt. On one of our several visits we met a seemingly crusty seadog called Lawson. He conned us out of a few drinks before admitting his only job had been in a factory in Dagenham.

The Tankerton Arms
The Tankerton Arms was a cheery place. After spending our afternoon by the sea drinking cans of Fosters we walked along the beach and up the hill to reach it. The absence of tourists made for a stronger community feel, and four pint jugs of beer suited our group. We met one of the Queen's old royal protection officers who had some interesting chat. Everyone else just wanted to talk about UKIP.

Our last day was a Tuesday, and scorchingly hot. We'd probably overstayed our welcome at Eddie's mum's gaff so resolved to get out of dodge. The chap in the Black Dog recommended we visit the Harbour Arms in Margate. Arriving in the town by train, we spent our first few minutes discussing where exactly the coach had blown up in Only Fools and Horses, before making our way to the harbour. Now people will tell you Margate is grim, deserted, derelict. I imagine in winter that's just how it feels. But this was the hottest day of 2014 so far and even Dreamland and the Wimpy looked fantastic.

The Harbour Arms, Margate
The Harbour Arms occupies an old fisherman's store at the end of the harbour arm. It's an amazing location. Sadly the beer just wasn't cool enough and totally flat, so we switched to Westons' cider (he had nothing Kentish, sadly). But it didn't matter what we drank that afternoon. We watched the tide go out and the boats that had bobbed on the glistening water settle into the mud. We were all happy and there was agreement in the group: nobody cared anymore that we'd missed that flight.

I restarted this blog a fornight ago after a nearly five year break. My old pal Tandleman warned me that things had changed in the world of beer writing since I pressed the pause button. He's right. As I've scanned various blogs I've seen lots of self-righteous, synthetic outrage about beer-related advertising campaigns, for example. It's all a bit serious. Maybe my style doesn't have much of a place in this brave new world. We'll see.