Greene King court case

I have run a pub for nearly two years and thanks to the friendly brewery: Greene King, there is nothing left but debt…

Diary

Aug 2007: Lack of information

Despite several requests for information during the tendering process, nothing was forthcoming. The pub was presented as an investment opportunity; not a life-style choice (i.e. a reasonable profit could be made by taking on the pub).

Sep 2007: Incompetent change-over

Our pub tender was successful. Despite this, there was a lot of confusion over the time-table for the change-over. The pub suffered greatly over the period of a month with damage to the floorboards, equipment and walk-outs by some of the existing staff. The area manager, Peter Hussey, was incompetent alienating the current tenants, staff and ourselves.

11th Oct 2007: Contract diligence

Peter Hussey stated his surprise in our due diligence with their standard probationary agreement. He said that any changes would delay the change-over (which would mean we were without a home).

Oct-Nov 2007: Living on a building site

The flat was a building site for just over 6 weeks. We were assured the work would be complete and ready for living at the start of the tenancy. This was evidently untrue.
The workmen assigned to the flat started at 8am each day (unsuitable for occupants in charge of running a pub) and caused stress and sleep deprivation over the critical period after take-over.
The standard of refurbishment was poor and incomplete. The floorboards were bare, had nails protruding and numerous gaps. Some of the wall sockets, light fixtures and electrical were not safe. Fire hazards addressed in an email on 19th October 2007 were never properly addressed. The bathroom floor covering was incomplete. The banisters were not secured correctly and came apart after a short time.
Greene King refused to cover for any alternative accommodation during the refurbishment.
Throughout this time and the entire time we were living above the pub, water would seep through the ceilings and even a light fixture in the bedrooms. This issue was never properly rectified.

Jan 2008: Back-tracking on wood burning stove

As with this and several subsequent requests, Greene King back-tracked on its agreements. We had to expend time and energy on securing the wood burning stove we were initially told we were entitled to.

Jan-Mar 2008: Scaffolding

The essential maintenance to the exterior and roof is delayed causing scaffolding to be up for much longer than planned. It is present for over two months, noticeably effecting trade. No compensation is offered for loss of trade despite my requests.

Mar 2008: Damaged outdoor lighting

All the fittings and many of the connections of the newly installed outdoor lighting was damaged by the builders. All outdoor plants needed to be replaced due to damage. The eventually bill was settled by Greene King four months later.

Mar 2008: New signage

Without our consent, new signage was installed that went directly against the image of the pub. The pink “FT” neon branding was not suitable for a small traditional pub. This affected trade as it betrayed the feel of the pub.

Sep 2008: Garage doors

Reneging on previous agreement to fix two broken garage doors, they decide to fix just one. They didn’t even know which one was “broken” from the two.

16th Oct 2008: Rent increase

We signed for a second probationary year with the option to continue for up to five years. Despite stating that we had a difficult first year without profit, only having made losses, Greene King decided it was acceptable to increase the rent by approximately 10%.

Nov 2008: Real ale festival

We were nominated to host a real ale festival by Mike O’Connor (one of our many area managers). Unfortunately, the event was neglected by Greene King at the time as they failed to supply the ale and didn’t provide us with the equipment until the last minute. The event lost us hundreds of pounds in unsold ale.

Dec 2008: Avoiding delaps repayments

On the sole occasion we used our delaps fund (paid into by £10 a week), we were refused. The current area manager, Sean Clarke, refused to honour the previous area manager’s agreement to cover two improvements to the pub. After much email correspondence, he relented.

Mar 2009: Wall reinforcement charge

We were invoiced for approximately £5,000 to cover wall strengthening last year. This was Greene King’s responsibility. After several phone calls, this invoice was cancelled.

22nd Apr 20009: The deal

During a meeting with Sean Clarke to discuss reductions in rent, he let slip that the pub was put on intended for two people as it would barely make any returns for even one person. According to his own results using our accounts, he could not make the pub show a profit. He identified the rent as a major factor that needed to be addressed. He did not mention the price of wet stock as Greene King has a policy of never offering discounts to tied-in tenants.

Late May 2009: Rent review declined

After a long decision process, any reduction in our unrealistic rent charges were rejected.

3rd Jun 2009: Meeting

A meeting with Sean Clarke and a more severe David Carless, an area manager from London. As a justification, David stated “there was no point” as we would couldn’t recover either way. During the meeting he stated that we had to continue to operate the pub until the end of our second probationary year. With the full rent in place, it would undoubtedly increase our debt from £13,000 to something considerably more. David Carless returned to see Martha alone and acted in an aggressive manner in stating that we must stay at the pub despite our mounting debts with Greene King.

26th Jun 2009: Lieu

We were bribed with a small rent concession in exchange for signing a Lieu to Greene King. We did not sign the lien.

Aug 2009: Tie-in fine

Sean Clarke dropped a £1,500 fine on us for buying stock through The Hop Poles, another Greene King pub, in Brighton. By this time we had no other choice but to buy from another source as Greene King required us to stay open, yet would not deliver any stock.

Sep 2009: VAT Collector

The VAT collector made a few visits to the pub. He did not collect any fixtures and fittings for auction. He said that he empathised with our situation and that other brewery pubs were in the same situation. It helped that I was in regular contact with our VAT office since the problems emerged with out VAT in summer 2008.

22nd Sep 2009: Electricity disconnected

Electricity was disconnected and the pub could no longer operate.

26th Sep 2009: Notified creditors

I notified all creditors that we were insolvent and no longer trading.

“Investment opportunity”

I personally invested many thousands of pounds in cleared funds into Farm Tavern Limited. Much of this was paid to buy fixtures, fittings and stock and to commence trading. The remainder of this investment was soon paid to cover stock and rent.

The tie

One landlord, one wet supplier = monopoly. They used this privilege to the full extents. The prices of stock, steadily increased above any tax increases and inflation through the period of our tenancy. At the same time, our customers demanded lower prices (almost every other pub in the area was aggressively discounting their prices). As we were tied in, we had to make further sacrifices that we could ill afford to keep money-savvy customers appearing in our pub.
In June 2009, Greene King performed the ultimate contradiction of requirements. They required that we continue trading. Yet, they would not supply any stock unless our debt was repaid in full. As we had no way to repay any money without selling stock, we were put in an impossible situation. Numerous emails are testament to this fact. Our area manager at the time, Sean Clarke, could never offer a solution. He just repeated that we must continue trading.
Subsequently, we were landed a £1,500 penalty for sourcing our wet stock from another Greene King pub at prices even higher than ours. This is a perfect example of Greene King greed, arrogance and short-sightedness.

The obligatory accountancy firm

The compulsory accounting firm assigned to us by Greene King: Roslyns, did not meet our basic accountancy requirements. We later found, the weekly takings and expenses sheet was an optional task, not compulsory – wasting our much of our precious time doing data-entry for them. The weekly approach was not suitable for us – monthly accounts show a better picture of expenses over time. The reports produced by this firm were not competently explained to us, making the data virtually useless to us as a new small business.
Most significantly of all, our liaison did not mention anything about putting aside money for our substantial VAT obligations. This had a significant impact on all future financial matters and prevented us from seeing the true condition of our accounts. It was at least six months before we realised the true scale of our VAT expenses, and we never managed to repay more than a fraction of what we owed.

Playing for time

At the start of 2009, we applied for a reduction in rent to help our business survive. We knew that we had to address our two largest expenses: wet stock and rent – both controlled by Greene King. Our area manager at the time, Sean Clarke, made us believe there was a realistic chance of having our rent reduced so that we could remain solvent and a stem our losses. In January we produced a detailed business plan to argue our case for a reduction in Greene King related costs. In April, after a series of unintended delays, we managed to secure a meeting in which we presented a second evaluation of the business and plans to reduce costs and maximise takings. A further six weeks passed and we were notified that we would not receive any reductions in rent at all. By this time it was already too late to save the business.

Obligating us to stay

Despite declaring that we could no continue as a viable business and wished to terminate our contract (3rd June 2009), our area manager, Sean Clarke, obligated us to stay at the pub until a new tenant was found. We now know there was little barely any chance in finding a successor, due to the heavy financial burden imposed by the brewery and the failure of an apparently successful pub.
By the end of June, I had made my intentions clear that we could no longer operate with such losses and owed it to our other creditors to stem our debt.
The pub remained open until 22nd September 2009 when the power was finally cut off due to non-payment.

Change of tune

Greene King are greedy. They know that most of their tenants fail in the first year. They end up with the majority of their investment and most of their takings over the period. If there are any debts left over at the end, they will pursue the signatories (individuals, not a limited company) as a matter of course to recover anything remaining. This is the case here and it is unlikely to be uncommon.
In June 2009, I informed Sean Clarke that, contrary to their beliefs, I was not financially secure with alternative revenue sources and a healthy savings account. This information fell like a lead balloon and their tactics changed as a result. Finding a replacement was now of genuine urgency. We were finally listed on their website and Martha observed some evidence of prospectors. Unfortunately for Greene King, the pub was evidently no longer viable even to inexperienced potential tenants. If we couldn’t make any profits with the great reputation, excellent Sunday roasts and regular events, then no one else would.

Conclusion

Greene King required us to sign the one year probationary contract in our own names, not as a limited company, on 17th October 2008. They have knowingly had us commit our personal savings, not the company, to an enterprise that would yield poor returns at best and most likely ruin us.
During the past two years, I have never received any income from the pub and have been repaid a paltry £2,000 of my initial loan. Now, I am here today, testament that all our money, all our hard work, all our time is not enough for this brewery and monopoly over our business. They require more, they require all the money we could possible have and then some. Unfortunately for them, I have absolutely nothing left to give them. No businesses. No savings. No assets. Nothing.
I strongly believe that their actions towards their tenants is a big con and immoral. This con should end now.

Last updated on Monday, 23rd February 2015