The UK’s largest pub group, Stonegate, is under formal investigation by the Pubs Code Adjudicator (PCA) over concerns related to the treatment of its tied tenants. This statutory probe, only the second of its kind since the regulator’s establishment in 2013, focuses on allegations that Stonegate has breached rules intended to ensure fair dealings with pub tenants.

The investigation, announced by Pubs Code Adjudicator Fiona Dickie, examines the company’s conduct over a five-year period from July 2021 to July 2026. It centers on suspicions that Stonegate failed to provide accurate and transparent information to both existing and prospective tenants, particularly in relation to the physical condition of premises, rent information, and financial projections. The regulator is also scrutinizing whether Stonegate’s business development managers engaged in appropriate conduct and if the pub group met its obligation to report breaches of the code.

Stonegate, which operates more than 4,500 sites across the UK, is controlled by private equity firm TDR Capital, which also owns the supermarket chain Asda. The company was formed in 2010 following a series of acquisitions, including 333 pubs from Mitchells & Butlers, and now manages a portfolio where approximately three-quarters of its pubs operate under lease or tenancy agreements rather than direct management.

The Pubs Code, introduced in 2016, aims to balance the relationship between large pub companies, known as pubcos, and their tied tenants by ensuring transparency and that tied tenants are no worse off financially than if they were free tenants. Dickie emphasized the code’s role in providing tenants with important rights to transparent information regarding premises and rent.

Concerns about Stonegate’s treatment of tenants have been longstanding. According to the adjudicator’s annual tenant satisfaction research, Stonegate’s tenants have recorded the lowest satisfaction levels among the six regulated pub groups for at least the past three years. Specific grievances include the state of buildings at the time of lease, unexpectedly high repair costs, and the reliability of promised rent projections. One Stonegate tenant, speaking anonymously, described significant personal financial strain caused by necessary but costly property improvements that were not disclosed upfront.

The investigation’s origins lie in complaints from two tenants, according to Stonegate. The company’s chief executive, David McDowall, has plans to convert more managed pubs into tenanted or leased operations to adjust the firm’s business model amid challenging market conditions marked by rising costs and changing consumer behavior. Stonegate reported a pre-tax loss of £174 million in the year ending September 2025, primarily due to servicing a debt burden exceeding £3 billion; however, its performance has shown signs of improvement in the first half of 2026.

If the PCA finds Stonegate in breach of the code, it could impose fines of up to 1 percent of the company’s UK turnover, which stood at £1.6 billion in the last financial year. Stonegate has stated its commitment to complying with the code and said it is cooperating fully with the investigation.

Industry advocates welcomed the probe but questioned why regulatory action was not taken sooner, given the persistence of tenant complaints well before 2021. Chris Wright of the Pubs Advisory Service expressed concern that many tenants may have already suffered significant financial harm due to ongoing issues that predate the current investigation.

The outcome of this inquiry may have significant implications for Stonegate’s future operations and could signal increased regulatory scrutiny of the broader pub sector as it navigates economic pressures and structural changes.