Last week was grim for the quoted owners of tenanted pubs such as Enterprise Inns (LSE: ETI), Punch Taverns (LSE: PUB) and Greene King (LSE: GNK). MPs passed a bill to get rid of the tied pub where tenants are tied into deals to buy beer from their pub group landlords.
The tenants have typically paid preferential rents, but inflated beer prices (compared to negotiating separately with a brewer). The profit margins on beer sales have made up a big chunk of the income pub groups get from their tenanted pubs. So how will they cope?
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