Britain’s biggest pub owner is under an official investigation into allegations he mistreated thousands of small business owners who run their jailed pubs, an investigation that could result in fines of up to £16 million.
The Pubs Code Adjudicator (PCA) has launched an official inquiry into Stonegate, which has more than 4,500 pubs across the UK, only the second such inquiry since the regulator was created ten years ago.
Fiona Dickie, the judge, said she had reasonable grounds to suspect that the company had failed to comply with its duties “to provide accurate and transparent information to both its current and prospective employers” in a number of ways. The investigation covers five years from July 2021 to July this year.
For employers on the sharp edge, the stakes could not be higher. The taxpayers arrested are small business owners themselves, and the investigation will examine concerns some feel they were misled into taking over pubs that may never have worked.
Dickie looks at four key factors: the condition of the pubs occupied by tenants, the accuracy of financial statements provided to prospective tenants, whether Stonegate’s business development managers are treating tenants according to the rules, and whether the group has reported actual or suspected code violations to the regulator as required.
His annual survey showed that Stonegate tenants were the least satisfied of any group of regulated pubs for at least three years running. Less than two in five report being satisfied with their relationship with the company, compared to an industry average of two in three.
“In order to start a formal investigation, I have to have evidence on which to base my suspicion of a code violation,” Dickie told The Times. “I will not be able to conduct an investigation based on hearsay or my imagination, I am starting this investigation now because I have evidence that I suspect that something is breaking the law.”
If found in breach, Stonegate faces a fine of up to 1% of its total UK turnover, which amounted to £1.6 billion in its last financial year.
The timing is not right for a company that is already under pressure. Stonegate, controlled by private equity firm TDR Capital, which also owns Asda, has a debt load 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 sale of more than 1,000 sites as it looks to shore up its cash flow.
The investigation could complicate chief executive David McDowall’s plan to convert owned pubs into leased and leased sites, a key strategy to turn around a business that has been struggling under the weight of debt. Three-quarters of the pubs have been leased and are being leased.
The Pubs Code came into force in 2016 to give bonded tenants a fair deal, requiring taxpayers to be no worse off than if they were free. It comes at a tough time for trade, with pubs closing at a rate of almost double a day as costs rise.
Chris Wright, of the Pubs Advisory Service, welcomed the inquiry but questioned why it had taken so long. “These issues are not new, and they are before 2021, and have been raised with the regulator many times since 2016. Sadly, for many people the damage has already been done,” he said, adding that “many people have lost their means of livelihood”.
A spokesperson for Stonegate said: “We welcome the launch of an official investigation. Stonegate is fully committed to complying with the code and ensuring that all taxpayers are treated fairly. Stonegate is in close contact with the judge on the two specific cases that form the basis of this investigation, and we will cooperate fully throughout.”
Dickie said he wants to hear from current and former Stonegate employers, as well as employees, former employees and consultants who may have evidence relevant to the investigation.
