“Outrageous corporate greed” is pushing popular locally-run pubs to the brink of permanent closure, it has been claimed.
Watering-holes across Tayside and Fife locked in to tenancy agreements are being sent bills by UK-wide giants, despite having no income.
Some local pub owners have told The Courier they are facing demands for full rent, leaving their futures in doubt.
It comes as pubs are being hit by a loss of trade during lockdown. Many are also worried social distancing measures will mean too few customers for them to turn a profit when they eventually do reopen.
Paul Waterson, spokesman for the Scottish Licensed Trade Association, picked out Star — a subsidiary of Heineken — and Greene King as some of the worst perpetrators and said the behaviour was a “stain on the licensing trade”.
“It’s outrageous corporate greed,” he said.
“There is no other way to describe it. It will close pubs unless more support is given, there is no doubt about it.”
Tenancies — known as tied pubs or pubcos — have been the subject of increased scrutiny in recent years.
They were first established in the 19th century when breweries began to buy pubs to ensure they had a guaranteed market for their product.
They can be technically complicated but usually centre on an agreement that the tenant will be given cheaper rent on the stipulation they only order stock from the landlord’s breweries.
Labour MSP Neil Bibby launched his Tied Pubs (Scotland) Bill at the beginning of February, seeking to reset the relationship to better protect tenants.
Greene King has 20 tenanted pubs in Tayside and Fife while Star has 30.
The companies both argue grants handed out to local pubs are specifically for running costs, including rent.
Greene King say now these grants are starting to dry up, it has promised all tenants a 90% reduction in rent costs from June 11 but this does not cover the previous period.
Star say it is offering support on an “individual basis”, including waiving rents of up to 90% but will not introduce a blanket policy.
Both say they are deferring payments but others, such as Caledonian Heritable, made an early decision to waive all rent entirely.
The owners of one Dundee pub, who wished to remain anonymous, say it is hard to fathom that the companies expect so much of the government grants to go to them.
“I cannot believe it’s fair to keep asking us to pay so much rent,” the owner said.
“We’re doing everything we can to continue paying staff while also paying for all our other bills.”
Mr Waterson added: “The type of protection English tenancies have just isn’t in place in Scotland yet.
“We’ve been hearing lots of reports of pressure from these big companies.
“Some will struggle to survive. How can they be expected to pay full rent when there is no money coming in?”
A Greene King spokesperson said: “It is incorrect and misrepresentative to say we are not supporting our tied pub tenants currently.
“None of our tenants are expected to make any payments to us while they’re closed, we have given £4m of rent concessions to tenants to last up until 10 June, depending on the level of government support they have received, and from 11 June all our tied tenants receive an automatic 90% rent discount until four weeks after they can legally reopen, when it will move to a 50% rent concession for the next four weeks.
“In addition to that, we are replacing all the unopened kegs and casks in tenants’ cellars for free that will be out-of-date when they reopen.
“While we’ve not been in a financial position to give an open-ended commitment to cancel all rents while pubs remain closed, as we must ensure our business survives for our 38,000 employees, we feel we’ve done as much as we possibly can to support our tenants.”
Lawson Mountstevens, managing director, Star Pubs & Bars said: “We are and will continue to do as much as we can to help our pubs.
“In addition to the Scottish Government’s waivers and grants to help cover outgoings, Star Pubs & Bars is offering additional support on an individual basis, including cancelling 50% to 90% of rent for many pubs and suspending the collection of any rent until at least June or whenever pubs reopen.
“Once the restrictions are lifted, we want to see all of our pubs open, trading and operating as viable businesses as soon as possible.
“We know the rent relief, which represents a significant investment on behalf of Star Pubs & Bars during challenging times for the whole industry, and the support we provide on a pub by pub basis will have a significant bearing on the future sustainability of our licensees’ businesses – and clearly we want to see our pubs thrive in the long-term.”
