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Morning Briefing for pub, restaurant and food wervice operators

Thu 11th Dec 2014 - Jonathan Neame: we accept 'market rent only' will pass into law
Jonathan Neame – we accept that ‘market rent only’ will become law: Jonathan Neame, who is chairman of the trade body for tenanted pub companies, the British Beer & Pub Association, has told MPs at a parliamentary reception that companies, and their trade body, accept the ‘market rent only option’, effectively ending the tie, will now become law. He asked, however, that MPs do not tamper with the 500 pub threshold and create greater certainty to allow pub companies to continue to invest £200m a year. He told MPs: “This is not the evening for long speeches but it would be remiss of me after another momentous year for the industry, not to identify some of the highlights. This government, perhaps more than any other I can remember, has tried to engage with the industry and create the right platform for growth, for investment and job creation. In this regard, we warmly welcome the tide of initiatives this year, with a further duty cut which secured vital jobs mainly in pubs, new investment and the lowest increases in beer prices for hard working pub-goers for well over a decade, extended small business rate relief, a full review of business rates, cuts to NI, changes to packaging waste, support for exporters and promotion of pubs and beer through the GREAT campaign. Can I thank all those who have worked hard to effect these changes, in particular your chairman Andrew Griffiths MP who has worked tirelessly on all our behalves. This year has of course also been dominated by the debate on the Statutory Code. As someone who has witnessed the debate evolve over ten long years, all I hope that this is the last! The BBPA has consistently argued during this time that the tied business model has stood the test of time, was evolving fast and would continue to evolve; that there were many and varied reasons, such as lifestyle changes, that had caused the challenge to licensees AND pub owners in recent years; and that statutory intervention was inappropriate for fear of the unintended consequences. We all remember the Beer Orders you see … and seen the impact of that unfold over 20 years. But we recognise that this House has now supported an alternative thesis and has voted for radical change. Let me re-assure those here tonight, in case there is any idle speculation on this point, that the BBPA is NOT seeking to overturn the MRO and realise that this will now become Law. However, we do have a few pleas:

1.  The Bill, as drafted, is not perfect and we would like to see some, relatively – emphasis on relatively, before I set hares running! – minor amendments, to provide greater certainty for those investing in the sector. I recognise that pub owners are not the most loved beasts in the jungle, but the fact is that they do invest in the region of £200m in to the tenanted pub sector every year is surely to be welcomed and encouraged. They are saying that the current drafting is too uncertain for them to continue to do so at the same level. This is not scaremongering, but genuine. Whether you believe this is a hiatus or becomes a long term reduction, I call on everyone to work constructively together to make amendments to give them more confidence to do so, without changing the substance of the MRO
2.  Please do not tamper with the 500 pub limit, as this will cause huge uncertainty and potential damage to the Family Brewers.
3.  If the duty and other tax cuts have stimulated confidence, then the New Clause 2 has reduced it. Thus we will redouble our call to the Chancellor to give us a hat trick of duty cuts in the next budget and hope for your support!
4.  From all sides of the debate I think there is a recognition that tied pub partnership CAN – and in our opinion DOES – work for mutual benefit of pub owner, licensee and consumer. But the gauntlet has been thrown down to “Prove it!” Our challenge and my hope is that over the next few years, the benefits and successes of this business model -of which there are many, – will become apparent once again.
5.  What the campaigners have achieved is remarkable and unexpected. But, for all the apparent polarisation of this debate, this industry is unique in that the needs of brewer, pub owner, licensee and consumer are aligned and necessitate a close working relationship. Whilst there are some that will advocate driving a further wedge between participants, I think the majority will see the benefits of finding a path to reconciliation and so establish modern, professional, transparent business partnership that stimulates existing licensees and attracts the next generation of entrepreneurs to our sector. Given the importance of this debate, can I also express the hope that we move to a more constructive dialogue about the issues rather than the personalities, that we aim to defuse this current atmosphere of hostility.
6.  In closing, can I thank all of you here tonight for your commitment, passion and enthusiasm for the industry. However hot the kitchen is on occasions, I can assure you that is preferable to indifference and apathy towards our sector!
My New Year wish is that you will continue to support beer and pubs and that, in the heat of the Election battle in 2015, do not forget the enormous contribution this sector makes to Britain’s economy and society.”

Drake & Morgan reports LfLs up 4.7% in First Half: Drake & Morgan, the London-based bar and restaurant group led by Jillian MacLean and backed by Bowmark Capital, has reported turnover increased by 16% to £20.4m in the 52 weeks to 31 March 2014. Underlying Ebitda increased to £2.7m. Pre-tax profit at £139,000 after one-off costs associated with the £30m Bowmark Capital management buy-out and expansion financing of Drake & Morgan. Two new bar-restaurants confirmed for the first half of 2015 – in British Land’s Regent’s Place in London’s West End and in the new AXA Real Estate Development in King’s Cross, taking the estate to nine sites. The company was ranked 48th fastest growing company in the Sunday Times Virgin Fast Track 100. It also achieved three-star status from the Sustainable Restaurant Association, the highest possible score. Like-for-like sales for the half-year to 30 September 2014 are up 4.7%. The latest site, The Fable, is trading well and has the highest level of Christmas pre-bookings within the group. Paving the way for future growth, Drake & Morgan have invested in developing a strong team with the appointment of a new Non-executive chairman Tony Campbell (White Company and TM Lewin), James Sherrington (ex Caprice Holdings) to finance director and Dylan Murray (ex-Soho House) as operations director. The company said a strong pipeline for further new sites in London and across other UK locations is in place. Managing director Jillian MacLean said: “Post Bowmark’s acquisition last year, we are entering an exciting period for Drake & Morgan. The business continues to trade strongly with like-for-like sales and profit in growth. As we embark on our next stage of growth we are actively seeking additional locations in London and across the UK.”

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