Tuesday, 25 November 2014

Hastings Brewery; or, this is how I choose beers for my pub

Hastings Brewery of East Sussex came to my attention when they sent me an email before I opened the Finborough. I got a lot of emails like that. I responded to them all with the same basic message: if you think I'm going to pay you so much money that I have to sell your beer at £3.95 a half, you can piss right off. I didn't set up this pub to scalp people who are new converts to good beer (unlike certain others).

The chap from Hastings didn't get the hump, and suggested I try their beers in a pub in the brewery's hometown. I liked that idea. My favourite pastime is hiking. I got a couple of the lads together in spring and we got the barley and grain to Rye and walked to Hastings via Winchelsea, Pett Level and Fairlight. It's a lovely walk of about 15 miles I'd done before. Part of the path had collapsed at the very up-and-down section along the cliffs near the end. That just added a touch of excitement, and made us all the more jolly when we arrived at Hastings.

The lads arrive in Hastings.
We had fish and chips from the efficiently-run chippy on the front, before repairing to the Jenny Lind, a freehouse in the heart of the old town. My type of boozer. Shit but loveable live music and some really sketchy characters at the bar. Two Hastings beers on handpump: one excellent, one interesting. Next we went to the Whistle Trago, a singular and likeable cafe bar with a credible draught beer selection, cocktails, a man who begged us to buy him a half and some very strange seating. I sat on a bongo drum and supped a pint of Hastings Best. All in all, the three of us were convinced this brewery was a winner. Then we drank loads of tinnies of Fosters on the train back to London. It was a brilliant day.

Since then, we've sold dozens of casks of Hastings beers here at the Finborough. They deliver to us direct from the brewery to the pub every couple of weeks and we've never had a dud beer from them. They don't use finings, but their beer isn't murky, because they know what they're doing. The Session Pale (3.7%, using citra and cascade hops) is probably the most accomplished but the Slovenian Brown Ale (6.5%) is probably my favourite so far. I drank it while I wrote this post. This week we take delivery of firkins of their new 6% abv Stout. In December they're releasing their Saison. I'll be buying it.

People often ask me how I choose beers for my pub. This is how I choose them.

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!


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.