Old Monk Company - changing habits
Despite ups and down in the markets, the Old Monk Company reported record results this month. Mark Ludmon talked to boss Gerry Martin.
When Gerry Martin started running his own pubs more than five years ago, it was a rare thing for big brother Tim not to be mentioned in the same breath. As the business grew, he continued to be compared to the boss of the high-profile, larger JD Wetherspoon.
But now Gerry's Old Monk Company has evolved into a force in its own right, both on London's financial markets as well as on an increasing number of high streets across the UK.
There are now 18 outlets trading under the Old Monk format, with another five due to open by the end of this year. Its South African themed Springbok bar concept, which has been in only two sites since 1997, is now set to expand into a third in Leeds.
A small number of unbranded pub-restaurants is also being developed, along with the company's new third concept, Bar Humbug.
The core feature of the company's pubs is high quality traditional freehouses that have a comfortable environment that appeals to a broad range of customers — "unthreatening", as Martin describes it.
Despite the ups and downs in the markets and consumer confidence, the Old Monk Company this month reported record results.
Its pre-tax profits, before exceptionals, rose 75 per cent to £854,000 in line with a 77 per cent increase in turnover to £11.4m. The roots of the business lie in Barnet in North London, close to the Hertfordshire border, where Martin opened Ye Olde Monken Holt in May 1994.
His career began at Allied Breweries and Grand Metropolitan before he joined his brother at JD Wetherspoon as development manager for four years, involved in opening more than 60 new outlets.
From the beginning Gerry and Tim were described as being involved in a melodramatic tale of fraternal rivalry — the first site was close to a Wetherspoon pub. But they have never been involved in any public sparring, with Gerry's pubs tending to be smaller and more intimate than his big brother's superpubs.
With the backing of dad Ray, Martin opened two further Old Monk outlets in the City of London before forming the current company in March 1995 with the aim of creating a chain of 15 to 20 pubs in London by 2000.
Last year, Martin decided to step up growth by gaining a listing on the Stock Exchange's Alternative Investment Market and floating shares.
As a successful focused managed house operation, Old Monk looked likely to be a hit on the financial markets, but it suffered because of events beyond the company's control.
First the wet spring and summer washed out many pub companies' sales and then Regent Inns, another small managed house operator, scared off investors with its June profits warning.
Old Monk was forced to scale back its original target of £3m and, when it floated in October, managed to raise only £477,000. However, the listing gave a new boost to the company's profile and allowed it to raise a further £551,000 by issuing new shares to institutional investors in February.
A further share issue is likely by the end of this year to top up a war chest made up of bank debt and the pubs' earnings.
Despite the impact of last year's poor weather and dip in consumer confidence, Old Monk appears to have escaped relatively unscathed.
"Being a small company, we tend to be much more focused and react to everything more urgently," Martin said.
In the 12 months to May 1, Old Monk nearly doubled the size of its estate from 11 to 24 at a cost of £6.6m. After expanding out of London to Peterborough, Cambridgeshire, more than a year ago, it now has sites from Birmingham and Doncaster, South Yorkshire, to Newport in South Wales.
It aims to continue focusing on the Old Monk pubs, which have gained a reputation as a brand, particularly through promotional shots of staff — as well as Martin and his directors — dressed in monks' outfits.
National expansion is giving it a greater northern presence, through sites in Liverpool and Leeds, while it is taking the brand into Scotland, with a new Old Monk in Waterloo Street, Glasgow.
It also has four unbranded traditional pubs in the South, including the recently acquired Bar Humbug in Stratford-upon-Avon, Staffordshire. A second site is planned for the concept next to Canterbury Cathedral in Kent.
"It's a good pub-restaurant concept that is doing very well and has something we think we may be able to repeat," Martin said.
Old Monk opened its first Springbok sports bar in Covent Garden in London's West End three years ago, opening a second in Shepherd's Bush in West London the following summer. Aimed at visiting South Africans, the bars have increasingly proved popular with customers from other countries, including Britain.
"Over the past 12 months people have been saying they think Springbok has got more mileage than just the two," Martin said. "It's a fun outlet and sports-oriented, so we are opening a third in Leeds, where sport has a wide appeal."
Unlike the Old Monk brand, the Springboks feature televised live coverage of major sporting events and have a higher proportion of wet sales, including South African beers.
The Old Monk in Birmingham may be converted into a fourth, while the original Covent Garden site is also being developed at a cost of £600,000, creating a new coffee shop in a 400 sq ft store room.
The company continues to look for high street locations, both licensed and unlicensed, learning a lesson from other operators by tailoring its brands to regional markets. On top of the seven outlets already due to open by Christmas, terms have been agreed on another four.
Admittedly only five sites have been open for long enough to provide figures for like-for-like sales but over the past two months these have gone up by about seven per cent.
"Since the start of this calendar year, trade has been doing very well, especially as the Old Monk brand is becoming better known," Martin said.
"We will continue expanding at last year's rate and we're confident the coming year will be another successful one for us."
