UK’s biggest pub firm probed over treatment of tenants
The UK’s biggest pub landlord is being probed by the industry watchdog over concerns that it is mistreating its tenants.
Stonegate, whose 4,500 UK sites include the Cannick Taps on Cannon Street and the Cheshire Cheese on Tower Hill, is facing an investigation from the Pubs Code Adjudicator (PCA).
The watchdog said it had “reasonable grounds” to suspect that the pub giant has failed to meet rules requiring fair treatment of tenants.
Stonegate may have failed to comply with legal obligations to “provide accurate and transparent information to both its existing and prospective tied pub tenants,” the PCA said.
Fiona Dickie, the adjudicator, said her annual research into the satisfaction level of pub tenants revealed “concerns and issues” among Stonegate’s pub operators.
The firm’s satisfaction rating has been the lowest of the six regulated pub companies for three years running, she said.
“Upholding the core principles of the Pubs Code, ensuring fair and lawful dealing and that tied tenants are no worse off than free of tie operators, is our priority,” Dickie said.
The Pubs Code was established in 2016 to level the playing field between breweries and giant pub companies and to give a fairer deal to their tenants. This is only the second investigation in the decade since the code was set up.
The regulations “provide important rights entitling tied pub tenants, and those in negotiations to take on a tied pub, to transparent information including with regard to the premises and the rent,” Dickie added.
Stonegate took £170m loss
The investigation will examine Stonegate’s conduct during a five-year period between July 2021 and 2026, the regulator said.
The PCA has appealed to current and former tenants of the pub conglomerate for information on whether the pub code has been broken.
Stonegate was founded in 2010 following the acquisition of 333 pubs from London-listed Mitchells & Butlers. The group expanded rapidly to become the UK’s biggest pub operator, and owns the Slug & Lettuce and Be At One bar chains.
The firm is controlled by TDR Capital, the private equity firm which also owns budget supermarket Asda and David Lloyd gyms.
The probe into Stonegate’s treatment of its tenants could prove a block to the company’s existing plans to convert more of its directly-managed pubs into the tenanted and leased model.
Stonegate suffered a £174m pre-tax loss in the year to the end of September, spending £411m on its debt alone.
A spokesperson for Stonegate said: “Stonegate is fully committed to complying with the code and ensuring all publicans are treated fairly.
“Stonegate has communicated at length with the PCA over the specific cases that form the basis of this investigation, and we will cooperate fully throughout. We remain committed to working fairly and transparently with our publicans and to building strong, successful partnerships.”