Britain’s biggest pub landlord is under formal investigation over suspicions it mistreated the thousands of small business owners who run its tied pubs, an inquiry that could end in a fine of up to £16 million.
The Pubs Code Adjudicator (PCA) has launched a statutory investigation into Stonegate, which has more than 4,500 sites across the UK, only the second such inquiry since the regulator was created a decade ago.
Fiona Dickie, the adjudicator, said she has reasonable grounds to suspect the company failed to comply with its duties “to provide accurate and transparent information to both its existing and prospective tied pub tenants” in a number of respects. The investigation covers a five-year period from July 2021 to July this year.
For the tenants at the sharp end, the stakes could hardly be higher. Tied publicans are small business owners in their own right, and the inquiry will examine concerns that some feel they were misled into taking on pubs that may never have been viable.
Dickie is looking at four core issues: the condition of pubs taken on by tenants, the accuracy of financial projections given to prospective tenants, whether Stonegate’s business development managers treated tenants within the rules, and whether the group reported actual or alleged breaches of the code to the regulator as required.
Her annual research has shown Stonegate’s tenants have been the least satisfied of any regulated pub group for at least three years running. Fewer than two in five report being satisfied with their relationship with the company, against an industry average of two in three.
“In order to launch a statutory investigation, I have to have evidence of the basis on which I can suspect a breach of the code,” Dickie told The Times. “I can’t launch an investigation based on hearsay or a hunch. I’m launching this investigation now because I do have such evidence on which I suspect breaches of the code.”
If found in breach, Stonegate faces a fine of up to 1 per cent of its total UK turnover, which stood at £1.6 billion in its last financial year.
The timing is awkward for a company already under strain. Stonegate, controlled by the private equity firm TDR Capital, which also owns Asda, carries a debt burden of more than £3 billion and sank to a pre-tax loss of £174 million in the year to September 2025. It is also preparing a £1 billion sell-off of more than 1,000 venues as it looks to steady its finances.
The investigation could complicate chief executive David McDowall’s plan to convert more managed pubs into tenanted and leased sites, a strategy central to the turnaround of a business that has long struggled under the weight of its borrowings. Three quarters of its pubs are now leased and tenanted.
The Pubs Code came into force in 2016 to give tied tenants a fairer deal, requiring that publicans should be no worse off than if they were free of the tie. It arrives at a bruising moment for the trade, with pubs closing at a rate of nearly two a day as costs climb.
Chris Wright, of the Pubs Advisory Service, welcomed the inquiry but questioned why it had taken so long. “These issues are nothing new, and they predate 2021, and have been raised with the regulator numerous times since 2016. Sadly, for many people the damage has already been done,” he said, adding that “lots of people have lost their livelihoods”.
A Stonegate spokesman said: “We acknowledge the launch of a statutory investigation. Stonegate is fully committed to complying with the code and ensuring all publicans are treated fairly. Stonegate has communicated at length with the adjudicator over the two specific cases that form the basis of this investigation, and we will co-operate fully throughout.”
Dickie said she wants to hear from current and former Stonegate tenants, as well as staff, former staff and advisers who may have evidence relevant to the investigation.
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