Tuesday, 4 November 2008

The Garden is Rosy. Or is it?

It seems that all this stuff we read about Pub Companies treating their leaseholders badly, is a lot of old bollocks. The buggers are rolling in it. Punch Taverns have just announced that their leaseholders make an average of £64,000 a year before EBITDA - definition here. They earn 70% above the average wage in fact.

Now I've no idea what has to come out of this nice little earner, as it doesn't say how the calculation is made, but I'm guessing though this is before all the things a licensee has to pay such as bills, wages, insurance, etc. etc.

Either way it flies in the face of what you read elsewhere in the trade press and why Parliament is once again looking into what Pub Companies are up to. Already in the comments columns of trade publications, there are allegations of economy with the truth. Seems to me the old adage fits best "there are lies, damned lies and statistics!"

Let's hope Parliament tease out the truth of it all.


The Woolpack Inn said...

I think your guess may be somewhere near the truth. A classic case of using a measure to give a false picture. It's the bottom line of the business that is really important and EBITA is not it - but you'll never get told that.

Stonch said...

[Hello President Obama.]

Even if the figure was entirely accurate - and lessees were taking away about £64k a year - is that really a lot for someone who has invested capital in and runs their own business? I think not. If all you can hope to make as profit is something comparable to the average national wage, that's not good enough in my book.

EBITDA is a fair enough measure for Punch to cite in this context - you'd be worried if they'd gone for EBITDAR!

Tandleman said...

I agree with you in your first para. Your second point would change the figure significantly. That would probably shock everyone.

The Woolpack Inn said...

As I have linked to this, and not seen in fact that Jeff had commented, perhaps I can say some more:

EBITDAR is a definition on the same site Tandleman links to.

However, I like EBITDA on wikipedia. Note that is basically says that a company can define it precisly how it likers because there is no official definisions.

I agree with Jeff. £64k is not a lot for running a pub - and many get nowhere near that.