The Pubs Code only applies to tied pubs and is not intended to apply to restaurants and hotels.
So what exactly is a tied pub? The answer is, it has to be occupied under a licence or tenancy and the main activity or one of the main activities has to be the retail sale of alcohol.
However, very often food-led venues may look like a pub, with a pub sign outside, a very traditional pub name, a drinking area, but are unquestionably, a restaurant. And the sale of alcohol will undoubtedly be one of its main activities.
Why does this matter?
There are two reasons why the definition of the business matters:
- If you are bound by the Pubs Code and all that entails you need to know what a tied pub is, and whether you fit that criteria
- If you are not bound by the Pubs Code you might be part of self-regulation and this could mean continuing with the Industry Framework Code.
Clearly the lines between a pub, restaurant and hotel are blurred and the Government has clearly struggled to find an acceptable definition. “We all think that we know a pub when we see one and we think we know the difference between a pub and a fish and chip shop, but increasing food consumption in pub, gastropubs and so on has made separation by legal definition more complex”. So said Baroness Neville-Rolfe in the House of Lords back in 2015.
Sale of alcohol a key factor
This has been an issue in the past, with the original intention of the Landlord and Tenant Act to ensure that pub tenants would not have the benefit of the security of tenure provisions, although restaurant and hotel tenants would have that protection (this was subsequently changed in 1990). The Government had exactly the same issue in that they wanted to provide a clear distinction between, on the one hand, pubs and, on the other hand, restaurants and hotels.
Some years ago, in a case Taylor v Courage Limited, the criteria was applied that more than 50% of the takings of the business came from food as opposed to drink, (even if soft drinks and beverages were included with intoxicating liquor under the heading “drink”).
A restaurant would not be very much of a restaurant if it did not sell intoxicating liquor and it is difficult to see that the sale of fine wines, spirits and other alcohol is not one of the main activities in a restaurant. Nonetheless, if it is one of the “main activities” it would appear to fall within the definition of a tied pub.
Indicative factors
The lessons from previous cases, including Taylor v Courage Limited, can give us an insight into how to decide whether the retail sale of alcohol is one of the main activities at the premises. Factors will include:
- What is the percentage of the takings which relate to alcohol? The proportion of alcohol to non-alcoholic drinks and food is clearly a factor.
- If alcohol comprises more than 50% of the takings it is going to be difficult or impossible to argue that it is not a main activity at the premises.
- What if the proportion is 25-40%? It is possible to envisage a restaurant having alcohol sales within that range. Is that a main activity? In such a case you would have to consider some other factors below.
However distinguishing between a pub and restaurant is becoming more difficult and other factors that could be considered are:
- Lay-out and adaptation of the premises
- Can you drink at the bar?
- If you can drink at the bar, do people drink there when not waiting to eat?
- Can you order food at the bar?
- Are orders for food taken away from the bar – perhaps at the table?
- Is there a drinking area and how is it used?
- Is the furniture and fit-out consistent all the way through?
- Does everyone receive the same menu and service?
- Are tables laid up in advance?
