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Business model
Punch Taverns is the UK's leading pub company with over 8,400 leased and managed outlets.
The company has lease agreements with licensees, who are self employed and operate a retail business within our pub premises. Punch does not directly manage the retail business in these pubs.
Managed outlets are wholly owned and operated by the company through its managed division, Spirit Group.
Lease agreements are generally 10 to 25 year agreements assignable after two years, and with full repairing liability. Alternatively, we have a number of tenancies which are non assignable, non repairing agreements of up to 6 years. Other short term agreements exist for temporary situations, notably the tenancy at will – TAW, which allows us to run the pub under a short term tenancy - an arrangement which gives flexibility to both parties.
Under all agreements the licensees pays a rent based on a share of the estimated fair maintainable profitability of the pub. The rent is usually index linked and subject to periodic rent reviews.
The licensee is also required to buy certain products from the company (“the tie”). In general the tie covers all beer, lager and cider products (sometimes with the exception of one guest ale). Depending on the agreement it may also cover soft drinks, wines, spirits and flavoured alcoholic beverages.
In some agreements, the company agrees to manage the machine income opportunity in the pub by using established links with suppliers to provide each site with the most appropriate AWPs (amusement with prize), slot machines, jukeboxes etc. Again, Punch offers support through dedicated field based managers.
Generally the agreements provide a low cost entry into running a pub business with professional support. These range from essential processes (order taking, debt collection), through care and maintenance (business relationship manager support, customer administration) to development (asset management and investment). In addition the company maintains an infrastructure covering finance, systems, purchasing, HR etc.
The managed estate comprises of over 800 wholly owned and managed pubs. Here, the company has full control of all aspects of the operation and supports it with high quality marketing, training and operational teams. All aspects of the commercial offering of a managed pub are centally controlled. The estate comprises a wide range of quality locals, destination, dining venues in both city and rural locations. |
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