EXCLUSIVE: Heineken openly discriminating MRO pub tenants

In an email leaked to the Publican’s Post, it would appear that Star Pubs & Bars (‘Star’), owned by Heineken (with a UK turnover of £1.4 billion) are actively discriminating against Market Rent Only (‘MRO’) pub tenants in relation to the rental support on offer. 

Over the last couple of weeks, we understand Star have been writing to all their tied pub tenants to offer individual rental concessions, mostly around the 50% mark (owing to the Covid outbreak closing all pubs in the UK). 

Whether or not this is sufficient is another debate, but what is clear from the email, is that MRO tenants will be getting no such support – other than a rental deferral.

In the email from a Star regional operations director, the following is advised (following a request from the tenant for a rent free period):

The relationship we have with you is on free of tie commercial lease and this is fundamentally different to the relationship we have with our core tied leased and tenanted estate. We have always been clear that tied agreements are broader commercial agreements with higher levels of support and with a risk sharing element. Commercial leases are where there is no landlord support with the operator taking all the trading risk.

The offer of a rental deferral is further described as being a “generous concession” in the context of the “wider commercial real estate market”.

The email then offers the Star complaints email address should this be an insufficient response.

Since the Pubs Code Legislation was introduced in 2016, one of the core underlying principles was that of “fair” and “lawful dealing”.

Star Pubs & Bars are currently under investigation by the Pubs Code Adjudicator’s (‘PCA’) office for consistently proposing leases that are non-compliant, containing unreasonable stocking demands. Many publicans felt pressured into accepting onerous lease terms, or else face up to a year long delay by arbitration – with no right to claim back loss of profits.

The investigation against Star is still ongoing.

However, what is clear – is that Star have resorted to any length to frustrate tenants seeking to exercise their legislative right to become free of tie. 

It is the view of the Publican’s Post that the treatment of their MRO tenants is testament to this, and needs urgent review by the PCA who just announced that they were seeking to ensure tenants were being treated fairly during the Covid outbreak.

Make or break

The Briton’s Protection, the iconic Manchester drinking hole that dates back to the early nineteenth century, is one such pub that feels discriminated against.

The pub’s rateable value is currently set at £54,000 – so also does not qualify for any government grant at present. 

The pub accepted a higher rental in return for a free of tie lease three years ago, which was a fair trade off to be able to purchase beer on the open market. 

However, now the pub is being penalised by Star for having the audacity to wish to be free of tie, and further punished by the government for having a busy trade.

Mark West, landlord of the pub, now feels the business is at breaking point. Without taking on a large debt the pub will not be able to reopen, and one of Manchester’s best loved and iconic venues will be lost. 

Mark says “Perhaps this is what Star are hoping, as if the business goes under and they get the keys back – it will be a tied pub again before you know it”.

The pub famously offers one of the best whiskey selections in the country, with over 200 bottles, including it’s own ‘Manchester Cask’ trademarked version of Jack Daniels. 

The pub won the best pub in Manchester in 2008/2009 and again in 2009/2010 and is on the CAMRA inventory of historic pub interiors. 

If the pub is lost it will be a massive blow to the community. 

The Briton’s Protection wrote to the mayor of Greater Manchester seeking support, but were just reminded of the Expanded Retail Relief on their business rates for 2020/21. This came as little comfort given the imminent situation.

The mayor’s office further advised that they were unable to offer any “discretionary” support in relation to the grant, which is a matter for the Valuation Office Agency and not the Local Authority.

Manchester publicans have begun a group to rally together, and plan to march on Number 10 in order to demand more action is taken to save our iconic pubs. 

Global brewer Heineken, who own many of the world’s best selling beer brands, proudly boast on their website to be a lover of pubs. “Pubs have long been a great British tradition – and it’s one we’re determined to keep alive”.

Obviously just not those that are free of tie.