Private Sector Helping the Local Communities
Enterprise Inns (Ei) Group, which is owned by Stonegate, is the biggest pub in Britain. Due to the negative impacts that coronavirus has brought about, the company has waived rent for 350 tenants. However, the waiver was only agreed upon after several weeks of pressure from the publicans. Ei has launched some form of package to support the tenants when they begin trading after the lockdown.
Ei agreed to give the tenants a rent waiver for three months that include April, May and June. The publicans whose pressure led to the waiver will have access to trade credit of between 50% and 75% hence minimal costs will be incurred for restocking their businesses as soon as they reopen. On 14 May, 60 MPs organized a cross-party in which they wrote a letter to the Enterprise Inns Group asking the company to cancel rents for tenants. Those who led the meeting comprised of Anthony Browne, Alicia Kearns and Stella Creasy. The MPs called on the company to ensure that it gives a rent holiday to the tenants immediately, or some other form of support, which is equivalent to the waiver for all pubs, which operate within the Ei Group. Stella Creasy, who is the MP of Walthamstow reiterated that across the nation, most pubs are fighting to survive due to the current situation posed by coronavirus. Some pubs are not even capable of reopening for customers because of lack of income to pay organizations like the Ei. As such, for these pubs to pay the money demanded, they will have to get into debt, which may be difficult to recover from even after lockdown restrictions have been lifted.
In April and May, several managers of pubs have been asking MPs in their local areas to support them as a form of social media outcry so that Ei Group can cancel their rents. However, in April, the company confirmed that it will defer payment of rent and other fees for that month, but did not talk about cancellation of rent payment. The decision regarding deferment did not sit well with the publicans due to the fear of accruing large debts when they begin to trade again after the pandemic lowers. Other companies that had informed tenants about deferring rent payments until the time when measures become less strict included Greene King, Marston’s, as well as Star Pubs & Bars. When conditions are normal for trading activities to be undertaken, pub groups like Marston’s and the Greene King always acquire most of the profit gains from the sale of beer. In essence, pubs that are in agreement with these pub groups would buy beer from such companies in exchange for a reduction in rent. However, since the publicans are not capable of shifting most of what they sell, there is a higher reliance of pub groups on the rents to enable them to continue operating. When the Ei Group announced about rent deferment, the publicans argued that the company ignored the normal principle that guides pubs, which dictates that rents paid ought to reflect the profitability of the pubs. Therefore, it would be unfair to burden the tenants by requiring them to pay rents after the lockdown.
Based on the rent waiver that the Ei Group has given to its tenants, pubs will be able to trade effectively when they reopen. Trade credit initiatives put in place will provide an efficient platform to the publicans, as well as relieving them from financial pressures when restocking and restarting their businesses, thereby ensuring consistency in operations.
