TMT Day 3 - On Running a Tied House

How do you compete when your hands are tied?

19 Nov 2023 — 5 min read

Hello Tipplers,

Today was a rather slow one. The morning rain was enough to justify catching up on some sleep in my newly acquired, surprisingly plush bed.

Oh yeah, I moved my ass to an Airbnb and slept like a fucking baby. Rash? Yes. Worth it? Yesssss.

Yesterday, we talked a bit about the tremendous consolidation happening in the brewery and pub world - but what does that look like on the ground?

According to Dave Law of The Eagle Ale House, toxic.

As the publican of a tied house, there's nothing you can do about the beer you serve. You're stuck with whatever cask ales and lagers the brewery or pubco will let you buy. For the longest time, the only lager he could stock in his pub was Heineken or Becks, or "piss," as he called them. Naturally, this hurt his ability to search out and find all the new, interesting beer out there: the IPAs, lagers, sours, and all the beer newer microbreweries are making.

Quick aside -

This might be a good time to define keg beer vs cask ale. For most of us, keg beer is what you'd think of as the typical beer that you'd get on draft. This type of beer is filtered and force carbonated, making it more bubbly, a bit colder/crisper, and has a longer shelf life. Virtually every beer made in the U.S. falls under this category.

Cask ale, on the other hand, is unpasteurized, unfiltered, and has no added carbonation, solely relying on natural yeasts. It's not quite as cold or bubbly but incredibly smooth and rich. And since it's technically alive and active, it'll have a shorter shelf life. It's a more traditional way of making ale, so many folks in England also refer to it as "real ale."

This is fine for older folk who still prefer the cask ales, but younger generations looking for an interesting new beer to try were out of luck, forcing them to go to another pub. And not only are you stuck with the same old beer, but the pubco forces you to pay double the market price for that beer. Why? Because they can.

They'll even install small sensors on the keg lines to count how much beer has been sold and try to reconcile that with how much beer you purchased from them. If you’ve poured more pints than purchased, expect a hefty fine. The problem is those sensors can't distinguish between beer and water used to clean the lines, which frequency varies between publican (obviously hoping for more frequently).

The pub tie can also extend to other products like the ciders, the wine, the sodas, the insurance the pub has to buy, and even the earnings from the pool tables.

And what about repairs? The publican is largely responsible for fixing and paying for those out of their own pocket. During our conversation, Dave pointed out the flooring, chairs, and doors he and his partner had to fix in the late evening before opening up the next afternoon.

After hearing all this, it's not too surprising that there's this perception about pubs being these places for old, stodgy men sipping on their cask ales.

So what's the option? Do you charge more for the beer? Many of these old pubs have working-class customers, so every incremental increase in the price of a pint risks alienating your longstanding patrons. And with free houses like Wetherspoons opening up all over, you're competing with them on lower prices.

It certainly sounds like a racket, no? What was once a mutually beneficial agreement between pub and brewery has turned into a toxic relationship where large national and even multi-national corporations squeeze out profit at all costs.

For many years, Dave and his partner were making a mere 200 pounds a week running The Eagle House. That was until they managed to sever the tie.

A few years ago, Dave and other publicans joined an organization called The Fair Pint, a group campaigning hard to get rid of the pub tie. Of course, their efforts were up against the billions of dollars and lobbying efforts of pubcos to keep the tie. After all, Dave was paying ~70,000 pounds a year for beer to the pubco, so losing the tie would be losing out on a guaranteed revenue stream.

Eventually, after years of fighting and campaigning, they helped pass The Pubs Code Regulations 2016, which granted some pubs the "Market Rent Only" (MRO) and let them operate "free of tie."

The MRO effectively lets pubs who feel they are being treated unfairly ask for a review of the price of their rent or the beer they have to buy. If an official review determines they’re paying too much, they can choose to go free of tie. All things considered, this felt like a big win for pubs.

But Dave says there are still some issues with this regulation:

It only applies to pubcos that own more than 500 pubs.
Your lease has to be up for renewal after the law was passed. If you signed a 20-year lease in 2015, you're out of luck for another few years.
The MRO assessment process can take up to 3-4 years and is often stalled by pubcos and various governmental red tape.
There are various tactics the pubcos can employ to make sure you don't qualify, like giving you a "new" lease rather than a renewal.

Still, Dave and The Eagle House managed to qualify for the MRO and go free of tie.

Dave said it's changed his life.

He no longer has some overbearing entity trying to squeeze him for every pound. He has far more options for beer and spends significantly less on it. And he can actually afford to make some improvements to the pub, like re-upholstering the couches, fixing the bathrooms, and general preventative maintenance.

All while actually making enough money to support his family.

Before you say, "Please, god, stop talking about beer policy," I realize this is all a ton of nerdy esoteric regulation talk. I'm trying to thread the needle between providing useful context and actual on-the-ground experiences. Every part of this has so many sticky, thorny details that it will definitely need a longer, more cohesive story.

And, of course, these last two editions are only one side of the it. I have some scheduled meetings with two actual breweries coming up - Hook Norton and Stroud. Hook Norton is an old-school family-run brewery from 1856 with many tied houses. Stroud is a newer microbrewery focused on sustainability. I'm hoping to get some interesting perspectives from them as well.

-SR

Pub Tracker

I thought tracking all the pubs I visit and some data (like the cost of a pint) might be fun. Many of these pubs have been recommended to me by publicans and folks I’ve talked to on this trip, so it could be a good resource if you have future plans to visit the U.K.

London