Unions urge clampdown on 'pubcos'

GMB Union criticised pub investment groups, saying they have far greater profit margins than leading supermarkets

A leading union has attacked pub investment groups known as pubcos after claiming they have a profit margin far greater than that of leading supermarket chains.

The GMB, Britain's general union, said pubcos posted profit margins nine times that of Tesco.

The union singled out the pubcos Enterprise Inns and Punch Taverns and claimed that drinkers paid more for their pints in pubco establishments than in free chains.

Punch Taverns and Enterprise Inns, both of which are backed by venture capitalist companies, have spearheaded a new breed of leased-pub groups.

Between them, they now own a large proportion of the UK's pubs.

Some customers have complained that expansion has led to huge branded and homogenised chains offering little real choice.

A GMB study into the profit margins of retailers trading on the high street revealed that Enterprise Inns, with 7,616 pubs across the country, has a profit margin before tax and interest of 57.3p per pound of turnover.

The union said this compares to 5.9p in the pound at Tesco, 3.6p at Sainsbury and 4.6p at Morrison. At Punch Taverns, which has 8,384 pubs, the profit margin is lower than at Enterprise but is still 35.9p per pound of turnover. This compares with 13.4p profit margin at Marks and Spencer and 9.6p at Debenhams, the GMB said.

GMB general secretary Paul Kenny said: "The pubcos are yet another example of financial engineering by the City gone wrong. What a rip off. The pubcos will dismiss these figures and say we don't understand how they work. But facts are stubborn things. It is a fact that drinkers in pubco-tied pubs are paying 80p more for their pint than in free chains like Weatherspoons to generate these super profits."

A spokesman from Enterprise Inns said: "Enterprise Inns and Tesco are two totally different businesses. Trying to draw parallels between them is at best ridiculous and at worst deliberately disingenuous. Attempting to make this comparison shows the GMB hasn't got a clue about how the pub industry operates."