Competent Operator as defined in Pub Co rental valuations.

By | April 12, 2016

Competent Operator as defined in Pub Co rental valuations.

(From the Archives)

The definition of Competent Operator in rental valuations has been ignored for years by all Pub Co’s in rental valuations as an historical term.

Nobody would define it and it was totally ignored in all previous enquiries into the problems in the licensed industry.

It has been replaced by Reasonably Efficient Operator (REO), but again not clearly defined by the majority of Pub Co’s.

To my mind it was and is a vital definition in all valuations, historically it evolved from the old Brewery tenant system, a tenant went into a training pub and after a couple of years, if successful went to a promotion pub where he became a Competent Operator and his target sales were based on existing sales and what the Brewer knew would provide a good tenant with a good living and a sensible profit for the Brewer.

With the growth of leases, in the indecent rush to buy them and sell them the definition Competent Operator was totally ignored by all Pub Co’s as padding and flattery to the would be lessee.

The lessee was given minimal training in thousands of cases only the one day licensing exam and a few days with the outgoing landlord if he had not been evicted.

The rents got vastly higher to fund further expansion and in turn vast over valuing of estates, the failure rates grew as rents went up and the tie became even more draconian.

The constant cry was tenant failure, the BII pushed for greater training and created qualifications that previously took two weeks of intensive work to one week and now three days, the advanced qualifications which replaced and upgraded the two week course were largely ignored by the majority of Pub Co’s, a limited number of Companies did provide them all.

The major Pub Co’s ignored in depth qualifications and provided tuition and minimal qualifications for between one day and five days very occasionally two weeks, these qualifications would only qualify for Graduate or Associate membership depending on the level of qualification, neither require practical managerial experience which is essential in this now very complex business, it is no longer pull a few pints and chat to the customers.

At no stretch of the imagination could any of these courses meet the criteria of a Competent Operator without at least couple of years practical managerial experience.

The training provided by virtually all leased and tenanted Pub Co’s would never ever meet that criteria, which raises serious issues about the activities of these companies because they are knowingly putting people into situations that they know that they cannot meet the criteria of the rental demands, in fact a vast number of the rental levels are far beyond the capabilities of a genuine Competent Operator.

As a consequence the industry has lost many of it’s best operators who are rapidly becoming disillusioned with the trading conditions and the failure rate of new and inexperienced lessees and tenants rises continually.

There are many problems as we all know within the industry, the BEC Findings confirmed all these issues, inadequate training has been identified as a major cause with an accurate definition of Competent Operator the task has to be addressed.

Greene King allowed a tenant/lessee with no experience to take over a pub with a history of failures with the Licensing qualification and a Cellar Management course, this is dark age stuff and totally irresponsible in my opinion, it is not the action of a forward thinking Pub Company.

There should be continual development  and guidance for up to two years before anyone should be allowed to sign a lease if they are new or limited experience in the industry, they must have profitable managerial experience, pulling a few pints in a club bar does not qualify.

Sadly the companies with the greatest failure rate are property companies with tied leases and very little interest in the development of long term professionals in the industry.


One thought on “Competent Operator as defined in Pub Co rental valuations.

  1. Editor Post author

    Your arguments about stopping inapropriate people taking pubs isnt really something that I feel holds water, I understand your point, but would suggest grown ups are able to make their own decisions about their careers and money – as an example we could end up in a position where fast cars which actually kill people could be regulated whereby car salesmen must give potential purchasers health checks (vision and hearing) and checks on how safe a driver they are? Clearly this is sensible in one respect but not in terms of a big brother. THis is also an argument to limit how much people drink in a pub, not a path that should be walked down in my book!

    In terms of i ncentivising, there is a school of thought that most people will hit a plateau and be happy in that position, ie no
    incentive to work harder because more money will go to landlord…if rent goes up regardless, tenant will have to work harder to stay in same position. Tenants who are not stretched will stagnate. Just a thought…

    I absolutely agree that pub operators should be in it for the long term so long as they view it as a vocation and keep continually trying to improve their service and offer.

    Investing in the pub is important, unfortunately many of the tenanted operators I have met feel that they do not want to improve a landlords property, and dont understand that such improvements can be disregarded at review.

    Lastly I would point out that elements Pub Rental model apply to all other forms of rental valuation for commercial property(retail and industrial), and that the “average tenant ” is at the core of the assumptions detailed in many leases. You are not going to get this changed. I would suggest you are better placed to encourage people to request turnover leases directly from their landlord.



Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.