Tuesday, 29 January 2008

£391m Pre-Tax Loss for M&B

Pub Operator Mitchells and Butlers have posted an astonishing loss of what amounts to two years profits from a disastrous delve into "hedge funds". Those interested in how this came about can look it up for themselves, but suffice to say, heads will roll. The Morning Advertiser calls it "a catastrophe".

On a more general point, remember the days when pubs were owned by breweries, were virtually debt free and everyone from owners to tenants and managers could make a fair and useful living out of them? Had we but known it, these were halcyon days. Now pubs are owned in the main by companies who have bought, sold, re-mortgaged and securitised the living daylights out of them. Each pub has more debt round its neck than the most reckless of credit card abusers. Most of the the companies that own them are up to their ears in all the financial ploys they can be, while tenants and lessees struggle to pay rents that would make Rachman blush. The costs of all this are in turn passed on to the hapless customer.

Next time you fancy a pint, bear in mind that in almost every case, it is not the landlord that benefits from your custom, but the Pub Operator. While M&B came unstuck, none of this is remotely illegal of course. All I am sure work well within the law, but nonetheless, if this isn't an unacceptable face of capitalism, what is?


Alex said...

Wouldn't it be good if pubcos just concentrated on what they are supposed to be about-ies pubs rather than playing fast and loose with their assets.
The've announced a review of "strategic options for value creation" which means the for sale sign is up. Quick lets have a whipround!

Ron Pattinson said...

Oddly enough, M&B weren't originally a brewery that bought pubs, but a chain of pubs that bought a brewery.