A group of co-operators are working on plans for a national, community-owned pub company, and are currently looking for seed funding to begin its start-up process.
The idea behind the the People’s Pub Partnership (PPP) is for a national multi-stakeholder co-op which will raise a pool of finance through crowdfunding to buy already closed or struggling community pubs. Each pub’s purchase would be backed by an additional local crowdfunder, as a means for each pub’s community to take ownership of their pub in due course.
The team – led by experienced publicans J Mark Dodds and Damon Horrill – are currently working on a REACH fund application; they are looking for £35,000 in seed funding to bring it to bring the idea to investment readiness.
Mr Dodds says his own experience in the pub trade saw him take on a struggling London local, the Sun and Doves, in 1995, and turn it into an award-winning pub, but also taught him harsh lessons about working in the tied pub sector, with tenant landlords subject to extractive business practices.
Between 2006 and 2008 he became involved in the campaign to scrap the beer ties that were driving pub tenants to the wall, with supporters including the Campaign for Real Ale (CAMRA) and the co-op movement. This led to the 2016 pub code, introduced by the government to regulate the tied sector, but Mr Dodds says this was ineffective –leading him to look for an alternative solution.
This would be “a radical pub company that’s properly fit for 21st century purpose. Think a blend of Brewdog, the John Lewis Partnership and Co-op Local.”
The plan would see a managed pub company established first, probably expanding its scope of operations to leased and tenanted and franchise.
The brief suggests one pub per community catchment, with each individual pub business becoming an investor in an Open Capital partnership (LLP). Surplus would be reinvested in purchasing or investing in more pubs.
The pubs will initially be bought, set up and managed by PPP, allowing it to control and monitor all costs and overheads and income. Mr Dodds says this would stay in place until there is a group of pubs operating smoothly, with inter pub communications and learning being shared.
The national crowdfunder will provide patient capital up front for buying and securing pubs for future generations; the local crowdfunders will feed into PPP’s professional overview of every aspect of each pub’s development through retrofit and refurbishment, sympathetic to each pub’s locality and character.
PPP would follow a simple structure, with no involvement with operations or supply of products. The brief considers the possibility of the purchase of the commercial property estates of pubs like Global Mutual did last year from EI Group – picking up 370 pubs for £350m.
“There are a lot of pubs and their communities that need to be saved from the ravages of private equity greed,” said Mr Dodds. “Pub companies are run by extractive hedge funds – they are asset-sweating British pubs and closing them down.”
He says this is a matter of urgency, with the pub sector already in crisis before it was hit by the Covid-19 pandemic.
“Every tied pub is by default run down, knackered, in need of refurbishment – the kitchens and heating systems often aren’t up to scratch.
“If it needs a new boiler, the tenant can’t afford it. If we can acquire the sites it would be a good opportunity to get of their gas and oil fired systems; we would carry out a low carbon retrofit.
“And we would use only local resources and beers – get rid of global brands unless they can give guarantees that they operate sustainable supply chains.”
Local involvement would come from the start, he added, with the community deciding what happens in the pub, but with a professional overview from those experienced in the pub trade, who know how to keep and sell beer and manage the clientele.
Mr Dodds says that under the plan, each pub would pay a national living wage and run a fair pay ratio; sites would would be run independently with head office organising back office functions, as a secondary co-op, for the whole network – taking care of admin, accounting, training, branding and marketing.
“The licensee would have secure long term job as an employee. We’d also work to tackle the lack of experience, skills and diversity in the industry, and address the lack of access to market from local brewers.
“We have crises running in parallel – affecting community, pubs and climate. We need something to bring them together so they can be managed at human level people can relate to.”
But Mr Dodds says there are also barriers to overcome within the co-op movement itself, citing the often-heard lament that it “doesn’t co-operate and doesn’t move”, which has in the past hampered his efforts to establish a secondary co-op for the sector. Meanwhile, he warns, the existing community pub model faces potential weaknesses – with the risk of volunteer burn-out, lack of knowledge of how to properly run a pub, and a lack of profitability.
“There are some very good ones but if all community pubs were invested in and properly run they would be thriving.”
It’s an ambitious plan: Mr Dodds estimates the venture would need to raise £500,000 per pub – “to get any pub up and running fossil fuel free that is”. He wants to see a “big plan, go to whole country to crowdfund capital – a national community share issue – along with £1 memberships. It would be a national campaign to save Britain’s pubs.”
The pubs would be protected by an asset lock, with a dividend paid to investors on the on the amount of equity they have put in; he’d like to see 4% paid on capital invested.
“If you want to take your money back out, you’d give two or three months notice; your shares would be sold among membership or the company would buy them back back; but there would be no capital gains.”
A steering group – which includes experienced co-operators Vivian Woodell and Dave Boyle – are working on the seed fund application which will bring the proposition to investment readiness – paying for legal structures, branding, marketing and Youtube videos.
“The challenge is there has been no pub co like this before,” warns Mr Dodds. “It needs team of people who know finance and property and want it to happen. Pub experts should be on the ground in the pubs.
But – in a time when national life is marked by polarisation and social isolation, the model would continue the aspirations of community pubs to offer offer social value. Mr Dodds hopes the move will “revive the world’s original social network” and offer venues to “curate the national conversation.”