Mark Dodds

Charlie good point on Wetherspoons. I'll come back to you on that later, in the meantime: I pay ?1.19 for that bottle of Becks. Steve pays ?1.25. Why on earth do we do that when it's readily available for a LOT less? The point of this thread has nothing to do with Becks. Becks is used because it?s an easily recognisable product that's nationally available in a package that everyone knows. We all know it can be bought for 49p (someone above pointed out he's bought it for 45p) and we all know the same product can cost as much as ?3.75 in a bar. All the points about status, what a bar can get away with charging and so on are relevant in part but miss the point which is this: This is about TIED pubs and their relationship with the Freeholder. And how that relationship affects the price you ? we, all of us ? pay in a pub; and how much profit the pub owner is able to get by selling their BEER. 49p including vat is what a supermarket can justify selling a bottle of Becks for (as with San Miguel, Fosters, Kronenbourg, Grolsch et al ? they?re all on offer pretty much most of the time). Even as loss leaders this works for them. Supermarkets offset a low margin on bottled beer against their volume of sales and their huge product ranges; price structuring and buying power. TIED pubs operate on leases which oblige the leaseholder to buy beer wholesale from a supplier decided upon by the building?s freeholder. The vast majority of pubs in the UK operate under tied leases. FREE HOUSES are pubs which are FREE OF TIE ? i.e. the person running the business can go to any brewer and negotiate a product range and purchase price of their own choice. If they don?t like what the brewer offers ? they go to another supplier and get what they want there. The BEER TIE is a legal construct outlawed in most other markets such as Europe and the ?States but which is still perfectly legal here because the UK pub industry attracted luxurious ?block exemption? from European law when we joined the EEC fully following heavy government lobbying by stating that most pubs in Britain survive only as a result of the huge amount of support (known as ?counterveiling benefits?) Freeholders and brewers provide publicans. Support, in commercial relationship terms usually means things such as marketing and promotional goods that provide advantages over competitors; a combination of free stock, point of sales material, sales incentives, industry training, general hand holding and business expertise a big business gives to little business in return for a little business selling the big business?s products ? as a franchisors offer franchisees as part of their business model. I own a 20 year lease on The Sun and Doves pub, on Coldharbour Lane in Camberwell. My Freeholder is Scottish & Newcastle Pub Enterprises and their nominated beer supplier is Scottish & Newcastle Limited (used to be called Courage). They are both owned by Scottish & Newcastle Plc. I buy beer from Scottish & Newcastle from their wholesale price list with a non negotiable discount of ?42.24 per brewers? barrel (36 gallons). The wholesale price of that bottle of Becks to me, after my discount, is ?1.19. The entire catering industry operates on a gross profit margin of 65% or the cost price of a retail product should be no more than 35% of the price paid for it. This is a time honoured rule of thumb established over centuries of trading which means that all the overheads of a business, rent, rates, wages, light heat, marketing and so on, everything needed to keep a catering business going and making a profit (assuming people actually come in and buy the food and drink) will be met if the 65% gross profit margin is achieved over every thing the seller sells. We sell a bottle of Becks for ?2.95. If I apply a gp of 65% to my ?1.19 Becks I get a target selling price of ?3.39. If I apply the same to the supermarket Becks I get a target selling price of ?1.41. We lose 40p on every bottle of Becks we sell. When these rules are applied to draught beer the figures are much worse. I?m in a terrible rush right now and can?t fill in any more detail. The truth is that ALL beer sold in TIED pubs is sold as a loss leader. Tied pubs don't work unless they are really busy - when sheer volume of turnover through the business generates an operating profit that keeps the wolves at bay. The truth is that the PubCo's makes MUCH more profit out of every bottle, or pint, of beer that is sold over the counter than do the people who are opening the bottle, serving the pint, doing all the work. An another CRAZY thing about this is that the PubCo's make more profit out of the beer than the brewers as well. The PubCo's have so much buying power they negotiate fantastic discounts with the brewers, because no brewer can afford NOT to supply the PubCo's. There is so MUCH more than this inequity, this imbalance in the market, that almost no one outside of the business knows about that it's impossible to recount properly here. The PubCo's have got everyone over a barrel mate. The irony is they can't run pisspups in breweries! Having a discussion about all this over a beer or two can establish the reality remarkably quickly. Scor46 might be able to elucidate further. Before I come back to this. RENT on TIED pubs has not even been whispered about yet!

Charlie's missed the point just like everyone else. (edit sorry beer loving chaps and chapettes I don't mean to sound clipped but I'm in the pub business and know exactly where Scor46 is coming from and, I suspect, wanting to go to on this thread). This is not about strategy. It's about operating a business. All businesses must make a profit. Even charities must run and operate a surplus to stay in existence. This is simply about how much you pay for something against how much you sell it in order to remain in existence as a business. It's wholesale costs and general overheads versus retail income and the mark up that must be applied to any product, whether widget, cardboard box, Barbie doll, just charitable cause or a pint of beer, in order to keep going and do more of what you want to do.

Er... Keef All Bar One do not own the Phoenix Denmark Hill Station. That is owned by Mitchell and Butlers, owned by er, I've lost track of who owns who now. All Bar One might be part of that lot now. Come to think of it the Shite Fart in Crystal Palace. Oops that was a genuine typo, I think deserves to be left, please excuse the guff, is a Mitchell and Butlers as well. As is the Commercial in Herne Hill and The Gipsy Moth in Greenwich and and... They have many dotted around. Their signature is they try to appear independent. They are not. They are a chain. Like All Bar ONe. Sorry if this is filling in on stuff that's already been pointed out. I just get pissed off that few people actually know anything accurate when it comes to the pub trade. It's full of myth and nonesense. Which I enjoy adding to. And kind of hate and love working in.

Oysters from Scotland and Falmouth. Long travelled aren't they?

The Sun and Doves is always free entry.

I was hitching a lift at the blue house roundabout from Newcastle going north, a car slowed right down and the window wound down. 'where you going to mate?' I leant over close to the driver to speak and he spat a huge great greeny right in the middle of my face. The car raced off with the occupants whooping and wailing with glee. Now that really was funny.

Impromptu Jamie Cullum:

The post is truly rubbish in this area, if not everywhere. Last week I got two letters from the same sender on the same day that were posted two weeks apart. The second was a threat beacuase I'd ignored the first. It crossed my mind as I spoke to the sender (who was quite understanding), that I was lucky I'd received wither of these letters at all, ther ebsing so much mail going missing - in all directions - these days.

spot on

Yes ms dulwichmum the same.

scor46 I had a glass of wine with Bryan Ferry on table 69 in The Sun and Doves. I used to cut his grass and hedges in another life and Roxy Music was the first live band I ever saw at Newcastle City Hall in 1974. So we had a lot to chat about... A glass of sparkling water will get my autograph anytime.

You could try The Sun and Doves, it's between ED and Clapham, does a great new year's eve, till late, dj, spontaneous dancing and just about the friendliest crowd you could imagine...