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Stream 6 — Task 6.4: Operator Model Comparison
Internal working document. Not for public release. Stage 1: Gauging Interest. Prepared: May 2026. Requires steering committee review before being used in any community presentation or external communication.
This document is a comparison framework, not a recommendation. Every decision point is labelled CHOICE — it requires a decision by the steering committee (and ultimately the co-op’s board, once formed). No model is presented here as preferred.
Purpose
A co-op board does not run pub shifts. A co-op membership does not set menu prices or manage rosters. The governance model and the operating model are distinct layers, and the person (or entity) responsible for day-to-day operations is the single most important early appointment decision the project will make.
This document maps three structural options for that relationship:
- (a) Employed Publican / Executive Chef — the co-op employs the operator directly
- (b) Leased Operation — the co-op leases the premises to an independent operator
- (c) Hybrid — a management contract or profit-share arrangement that combines elements of both
Each is assessed on: who runs day-to-day operations; cost structure; risk profile; and fit with co-op governance.
Framing Principle
The choice of operator model is downstream of the legal structure choice (Stream 2) and the capital model (Stream 3), because:
- A non-distributing co-op cannot distribute operating surplus to an operator/lessee in ways that look like profit-sharing without risking loss of non-distributing status
- A lease arrangement requires a counterparty with legal capacity to enter a commercial lease — before the co-op is registered, this is impossible
- An employed publican must be the nominated liquor licence holder or manager under s.22 of the Liquor Licensing Act 1990 (Tas) — the character, fit-and-proper assessment, and appointment process are legally constrained
The steering committee should not treat this comparison as a standalone decision. It connects to Stream 2 (legal structure and licensing) and to the staffing model (task 6.3).
Model (a): Employed Publican / Executive Chef
Description
The co-op employs a Publican (General Manager) and an Executive Chef as senior salaried employees. These are the two key operational leaders. All other staff are engaged by the Publican under the co-op’s employment authority. The Board hires, manages, and can terminate the Publican; the Publican hires, manages, and can terminate all other staff.
This is the model described in the operating model source document (pre-audit community proposal) and is the default model in the Plunkett Foundation’s UK community-pub framework.
Who runs day-to-day
The Publican, with full operational authority within the Board-approved budget. The Board sets strategy, approves annual budget, and reviews the Publican’s performance — it does not manage shifts, menus, or rostering.
Cost structure
| Element | Description |
|---|---|
| Publican salary | ILLUSTRATIVE $85,000–$95,000 + 11.5% super + D&O insurance (as a senior associate of the licensee) |
| Executive Chef salary | ILLUSTRATIVE $70,000–$85,000 + 11.5% super |
| All other staff | Casual/part-time under HIGA — co-op is the employer of record; all Award obligations sit with the co-op |
| Payroll administration | Co-op must maintain payroll compliance, Fair Work record-keeping, STP reporting, WorkCover |
| Recruitment cost | One-time cost to find a suitable Publican; for a regional co-op with a community mandate, this is a niche search |
Total indicative wage cost for the full team: see staffing model (task 6.3) — ILLUSTRATIVE $333,000–$445,000 per annum including on-costs.
Risk profile
| Risk | Description |
|---|---|
| Publican departure | If the Publican leaves, the co-op is the employer and bears the replacement cost and transition risk. The liquor licence (held by or nominated through the Publican) must be transferred or re-nominated — a process with its own timeline under the Liquor Licensing Act 1990 (Tas) |
| Award non-compliance | The co-op, as employer, is directly exposed to Fair Work underpayment risk. This is not delegated to a third party. |
| Board micromanagement | The most common governance failure in community pubs is a board that crosses the line from strategy to operations. Clear documented authority boundaries between board and Publican are essential. |
| Finding the right Publican | A co-op board must hire for operational competence (pub management, financial acumen, staff leadership) and for governance fit (ability to work within a democratic, transparent accountability framework). These are not always the same person. A Publican who is experienced in corporate-hotel operations may not adapt well to co-op governance; a community-minded person without commercial hospitality experience is a viability risk. |
Co-op governance fit
High — if well-executed. The Board retains full strategic control. Members elect the Board. The Publican is accountable to the Board through a clear performance framework. This model is fully consistent with the operating model source document’s “ownership and management are separate” principle.
Requires: A well-drafted employment agreement with clear KPIs, termination provisions, and authority boundaries. Legal review of the Publican-as-licensee arrangement (Stream 2, task 2.2).
CHOICE
CHOICE (steering committee): Whether the co-op adopts Model (a) as the default structure, and if so, what the Publican’s authority limits are relative to the Board’s authority. This is the foundational governance design choice for operations.
Model (b): Leased Operation
Description
The co-op owns the building and leases the entire pub operation to an independent operator (lessee), who takes on the licence, employs staff, sets pricing and menus, and runs the pub as their own business within a lease framework. The co-op receives rent. The lessee receives trading revenue and bears trading risk.
This is the structure used by many heritage-building custodians (National Trust properties, community land trusts) and some community-asset organisations that want to separate building ownership from trading risk.
Who runs day-to-day
The lessee — who is an independent operator, not an employee of the co-op. The co-op has no role in day-to-day operations, staffing, or trading decisions (within the lease terms). The lessee holds or nominates the liquor licence.
Cost structure
| Element | Description |
|---|---|
| Co-op’s costs | Building maintenance (lease terms determine who pays what); building insurance; property management; compliance with heritage conditions; mortgage/debt service |
| Co-op’s income | Fixed rent, or percentage-of-turnover rent, or hybrid. Rent level is a commercial negotiation. |
| Lessee’s costs | All staff wages, all Award obligations, all trading costs, all licence fees — the lessee bears full commercial risk |
| Co-op’s payroll obligation | None, except for any co-op administrative staff (e.g., a part-time co-op administrator) |
ILLUSTRATIVE lease income range: A regional heritage pub on a commercial lease might generate $50,000–$150,000/year in rent, depending on building size, condition, location, and market. This is a very rough range for a building in need of renovation — the rent would likely be lower until the building is fully rehabilitated.
ILLUSTRATIVE — subject to a commercial valuation and lease negotiation. Lease income for a heritage building in a small Tasmanian town is not well-published data.
Risk profile
| Risk | Description |
|---|---|
| Loss of community mission control | A lessee runs the pub as their own business. If the lessee’s commercial decisions conflict with community expectations (pricing, events, local produce, community hire), the co-op has limited levers beyond lease terms and renewal decisions. |
| Lessee failure | If the lessee’s business fails, the co-op has an empty building and a mortgage/debt service obligation but no operating revenue. Finding a replacement lessee in a small regional town is not guaranteed. |
| Rent vs mission tension | A lessee maximising their commercial return may not prioritise community benefit. Lease covenants can impose some obligations (e.g., maintain public bar, price accessibility, community room access) but enforceable obligations reduce the lessee’s commercial attractiveness and may reduce rent. |
| Building maintenance | Heritage buildings require ongoing maintenance. If the lease puts maintenance on the lessee, they may underinvest. If it stays with the co-op, the co-op needs a sinking fund. |
| Co-op non-distributing status | RISK: If the co-op is a non-distributing co-op and receives rental income, there may be tax and structural questions about how that income flows. This needs legal advice (Stream 2). |
Co-op governance fit
Partial — the co-op retains ownership and strategic asset control, but loses operational influence. This model suits a co-op whose primary mission is building preservation and community asset stewardship rather than active operational governance. For a project where the community’s interest is specifically in how the pub is run (local produce, community events, membership culture), a lease model is a less direct expression of that intent.
Might suit: An interim arrangement if the co-op cannot find or fund an employed Publican at launch. A lease to a known operator with community alignment may be lower-risk in the early years.
May not suit: A co-op whose members joined because they want a community-run pub with democratic input into its culture and programming.
CHOICE
CHOICE (steering committee): Whether a leased model is acceptable in principle, and if so, under what conditions (e.g., interim-only, or permanent with strong lease covenants on community obligations). Also: whether a lease is compatible with the co-op’s non-distributing status and grant obligations (needs Stream 2 legal advice).
Model (c): Hybrid — Management Contract or Profit-Share
Description
The co-op employs or contracts an individual or small management company to run operations, with a compensation structure that blends a base fee/salary with a performance component tied to trading results. This is different from a full lease (the co-op still bears trading risk and employs most staff) and different from a pure employment relationship (the operator has a commercial incentive structure).
Examples of hybrid structures:
- Management agreement: A professional hospitality manager is engaged on a contract (not employment) to operate the pub on behalf of the co-op. The co-op employs all other staff directly; the manager is a contractor or an employed GM with a performance bonus.
- Profit-sharing arrangement with an operator: The co-op and an experienced operator enter a joint venture-style arrangement, with the operator taking a percentage of trading profit in exchange for their operational contribution.
Who runs day-to-day
The contracted manager or management company, under a formal agreement with the co-op. The degree of day-to-day autonomy depends on the contract terms.
Cost structure
| Element | Description |
|---|---|
| Management fee or base salary + bonus | ILLUSTRATIVE: $90,000–$120,000 base/fee; performance component TBD by negotiation |
| Staff | Typically still employed by the co-op (to maintain employer-of-record control over Award compliance) — or sub-contracted through the management company (increases complexity and risk of Award liability chain) |
| Legal cost | Management agreements are more complex to draft than standard employment contracts; require clear risk allocation, IP provisions, and exit mechanisms |
Risk profile
| Risk | Description |
|---|---|
| Contractual complexity | A management agreement that is poorly drafted can create ambiguity about who is the employer of record for bar and kitchen staff — a Fair Work liability trap. Legal drafting must be careful. |
| Misaligned incentives | A profit-sharing arrangement gives the operator an incentive to cut costs (including staff costs, maintenance, and quality) to maximise their share. Lease-like behaviour can emerge within a management structure if the performance metrics are not well designed. |
| Legal structure compatibility | Profit-sharing arrangements with non-members of a non-distributing co-op may raise questions under the Co-operatives National Law. Legal advice is required before this structure is adopted. RISK — flag for Stream 2. |
| Governance ambiguity | If the Board, the management contractor, and co-op staff are all involved, authority lines can blur. Clear documented decision rights are essential. |
Co-op governance fit
Medium — can be designed to work well, but requires more legal and governance design than Model (a). Suits a situation where an experienced hospitality operator exists who will not accept a standard employment relationship but is willing to operate within a co-op governance framework for an equity-style return.
May suit: If the co-op finds an operator with strong community alignment and proven regional hospitality experience who wants a stake in the outcome, not just a salary. This is the “operator-partner” model.
CHOICE
CHOICE (steering committee): Whether a hybrid model is explored as an option, and if so, what the legal advice requirement is before proceeding (Stream 2). Also: whether a profit-sharing hybrid is compatible with a non-distributing co-op structure.
4. Comparison Summary
| Dimension | (a) Employed Publican | (b) Leased Operation | (c) Hybrid / Management Contract |
|---|---|---|---|
| Who runs day-to-day | Employed Publican | Independent lessee | Contracted manager |
| Co-op’s trading risk | Full | Minimal | Partial |
| Co-op’s Award liability | Full (employer of record) | None for pub staff | Partial (depends on structure) |
| Community mission control | High | Low–Medium | Medium |
| Governance simplicity | High | High | Low–Medium |
| Revenue certainty | Variable (trading-based) | More predictable (rent) | Variable + performance component |
| Suitable for non-distributing co-op | Yes (standard employment) | Needs legal advice | Needs legal advice |
| Key risk | Publican departure; Board overreach | Mission drift; lessee failure | Contractual complexity; misaligned incentives |
| Plunkett/community-pub precedent | Strong (preferred model) | Occasional (heritage custodian role) | Occasional (operator-partner models) |
5. Key Decision Points for Steering Committee
All of the following are CHOICE — they require a human decision, not a research answer:
-
CHOICE: Which operator model does the co-op adopt as its primary structure? (Decide after legal advice on liquor licence and structure implications from Stream 2.)
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CHOICE: What are the Publican’s authority limits relative to the Board? (Needs to be written into either an employment agreement or a management agreement before any operator is appointed.)
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CHOICE: If Model (a) is adopted, what are the KPIs and performance review process for the Publican? (Board design question — the project’s own governance briefings suggest monthly financial reporting and quarterly KPI review as a minimum.)
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CHOICE: Is a leased model acceptable as an interim arrangement if the co-op cannot fund an employed Publican at launch, or is it ruled out on mission grounds?
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CHOICE: If a hybrid model is considered, does the steering committee commission legal advice on its compatibility with the co-op’s structure before engaging any operator in that conversation?
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CHOICE: What is the succession plan if the first Publican leaves? The liquor licence dependency makes this question non-trivial — the Board needs a clear protocol for how the licence is managed during a transition.
6. What This Document Does Not Answer
- Which specific individual or company should be appointed as operator — that is a recruitment and due-diligence question
- Whether any of these models is financially viable — that depends on the capital model (Stream 3) and the path-to-profitability model (task 6.6)
- Whether the chosen model is legally permissible under the co-op’s rules and the Tasmanian liquor licensing regime — that is Stream 2’s output
Sources: Plunkett Foundation (UK) community-pub governance frameworks; operating_model_source.txt (community proposal draft — pre-audit, sociocracy model described); workplans.md Stream 6 guidance; project feasibility_and_costs_briefing.md; Stream 2 and 3 framing from workplans.md.