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Steve Brauner, editor of Crain's Manchester Business.

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1:00 am, March 3, 2008
Steve Brauner: Long lease on the last chance saloon

Pub companies need to ensure that licensees can make money

The explosion in anti-social binge drinking may or may not be a media scare story, but social drinking down the local is definitely on the decline, according to some of our pub operators.

Falling beer sales, supermarket competition, Sky TV charges, a squeeze on consumer spending and bans on smoking and patio heaters have combined to make many pubs simply unviable.

What used to be a steady living is, for an increasing number of unfortunates, a short cut to the bankruptcy courts. Even family-owned brewers like JW Lees, who like to think they offer their licensees a better deal than most, are struggling to find enough tenants. Perhaps even worse than the confluence of so many negative trends is the influence of the big pub companies, whose stewardship of this great British institution leaves so much to be desired. In the present economic climate, Enterprise Inns, Punch Taverns et al must be mad if they think people will sign up to long leases on any other than their most financially attractive properties. These organisations are basically property companies and they should remember that commercial premises are utterly worthless in the long run unless they are occupied by somebody running a wealth generating business.

A long lease and tenants struggling to make ends meet is a recipe for legal disputes and a failure to carry out maintenance which leads to the fabric of a pub falling apart and thus deterring the customers on which it depends.

Having said that, there are some which will always make money. The Peveril of the Peak, one of Manchester's most famous and atmospheric pubs, is on the market for £225,000 with 12 years left on the lease. A four bedroom city centre flat is included in the package.

It will be interesting to see how much it fetches.