Tenancy contracts set to replace managed pubs

Managed pubs are set to become a minor concern in the UK as companies switch to tenancy contracts, according to a new report.

The UK Public Houses Market Development Report predicted that by 2008 there will be just 8,345 managed pubs, representing 14% of the total market, compared with 25% now.

The report, published by Market & Business Development (MBD), predicted the number of public houses in the UK to remain largely constant at 58,525 (2003: 58,788).

However, it added that companies are increasingly favouring tenancies as they required lower levels of involvement.

Recently managed pub companies Mitchells & Butlers and JD Wetherspoon have cited rising utility and staffing costs as areas of concern.

Greene King has also moved some of its underperforming managed pubs into its leased and tenanted division Pub Partners to combat cost-pressures.

However, for those pub companies planning to make the switch, MBD added that it expected half (48%) of pubs by 2008 to be food-led and this growing revenue stream would not be available to tenancy operators.