Ian Payne: an eye for a good deal

Chairman of Town & City Pub Company and Bay Restaurants Ian Payne talks discounts, refurbishments and combining day and night trade with Phil Mellows.

It's like being on an addictive drug. Every operator's on it, even the top chefs… Gordon Ramsay, Marco Pierre White… We'd all love to get off it, but it's very difficult."

Ian Payne is talking about discounting, the drug that's helping high-street pubs and restaurants get through these hard times.

"There are deals everywhere. It's an aspect of the recession, but people have got used to it. They won't go out unless there's a deal. As things get better the deals will get weaker. But it's difficult to get off them."

It's true, too, that discounting has proved a successful strategy for the two businesses Payne chairs — Town & City Pub Company and Bay Restaurant Group. Especially Town & City. Trade is 9% up this year and Payne claims it's "the best-performing bar business on the high street".

"It comes down to taking the decision to get tough price-wise," he explains.

"Everyone's behaviour has changed in this recession. Consumers are driven by offers and deals. Other operators have tried to hold their prices and they've been hit. Now they're all coming to our point of view.

"But it's not just about cutting prices," he adds. "We're improving value for the consumer. We've not dropped our standards. Customers are voting with their feet on that and we won the Morning Advertiser​'s award for Food Menu of the Year. Pro-rata we've invested more in our sites than anyone else."

Payne has been around a long time, and while some company chairmen are content with stepping back and taking in the big picture, he's still an operator at heart and keeps a tight grip on what's going on in his businesses.

When I meet him at the Yates's in Leicester Square, in London's West End, he's chatting to barstaff, asking what offers they've got on.

Five years ago, after selling Laurel, he took a sabbatical. "I was bored witless," he says, using a slightly different word.

"I travelled all over the world, but I've been in pubs all my life and I just didn't know what to do with myself. I swore it'll never happen again."

To make sure of that, Payne has bought two pubs of his own and put tenants in, which will keep him busy in case of "retirement".

Meanwhile, he's got plenty on the high street to exercise his astute operator's mind. Town & City is coming through a major restructure that leaves Yates's as the lead brand.

"Litten Tree and Hogs Head are done as brands," declares Payne. "Yates's was always a strong northern brand and now we've made it relevant for southern consumers. We're actively looking for new sites. There are currently 72, half the estate, and we can easily get to 100. We haven't even got one in Birmingham yet."

There's also a move towards unbranded sites. "We've become smarter about where we use a brand and where we don't. We look at the size of the site, the level of competition, what else we've got in the area."

The conversion of the Litten Tree in Old Street, just outside the City, into the William Blake, is costing £400,000, the company's biggest spend to date. The average for a refurb is between £150,000 and £200,000. Add to that a £50,000 annual "refresh" for every site and you can see Payne is putting his money where his mouth is.

"Our capital expenditure is ahead of the market and we blow them away with offers," is his simple formula, but hard work has gone into maximising the potential of each site. The high street has been vulnerable because wet-led trade is over-reliant on Thursday, Friday and Saturday nights. Payne's strategy has been to extend that into the daytime and into midweek, mainly with food and televised sport.

"In a business like this you've got to have a big volume. Football has become more important to us as has rugby. We've got Racing UK in all our big sports sites. Every day there's some kind of sport."

Unbranded sites are also benefiting from the growth of cask ale.

"Two years ago we weren't serious about cask ale. Now we're working really well with Wells & Young's to improve distribution and get the quality right.

"Since the former Hogs Head in St Albans changed back into the Blacksmiths Arms even Roger Protz is saying nice things about it."

Slug & Lettuce is also part of Town & City having moved across from Bay Restaurants, which is now officially up for sale.

Payne is excited about the brand's potential "to mix day and night trade". "Slug has significantly increased its food mix — but at the expense of drinks sales. Now we're taking the brand back to what it was, bringing in more competitive drinks offers. It's getting its mojo back."

Which brings us to the restaurants. The process of selling Bay is in its early stages and Payne has no idea whether he'll remain involved in the group. But however important food is becoming to the pubs, his leanings seem to be towards the wet-led.

He's "delighted" that Mitchells & Butlers has decided to sell its wet business to focus on food. "I'd do the same thing with their estate, those suburban and country sites. It's logical — but it's also incredibly bold."

Yet, at the same time, "casual dining is a more difficult market than the bar market". Discounting is, perhaps, even more a feature, driven not just by the recession but by digital technology, something that appears to have surprised Payne.

"The growth of internet vouchers has been incredible," he says. "Websites like moneysavingexpert.com and schemes like Voucher Cloud are really powerful. There's a whole raft of customers who won't go out without a deal. It's the biggest change the recession has brought.

"We've got to make better use of social networking, Facebook and Twitter. We've just hired a new head of e-promotions. That's where the opportunities are, that's what will get the customers in, and then you can focus on getting the food right."

Of the restaurant brands, Ha Ha has begun the rollout of its new Bar & Grill concept, "a perfectly-formed little business," as Payne describes it, while Spanish tapas chain La Tasca is "fighting like hell in a difficult market". Even La Tasca, he thinks, could benefit from a stronger emphasis on the drinks side, and the brand is experimenting with televisions for the World Cup.

You get the impression, though, that Payne is comfortable with these strictly operational challenges. It's the broader political context in which he's forced to work that leaves him exasperated.

The recently departed Government "did more damage to the industry than any since the 1970s, when I came into this business".

"I was pro the 2003 Licensing Act and the move to local authorities. But Tim Martin, who opposed it, has been proven right now. All we wanted was flexibility, and we've been helped to some degree by that, though there have been more early mornings than late nights.

"The Daily Mail seems to think every pub is open 24 hours. We've got three 24-hour licences and we don't use any of them. We didn't even ask for them. The council wanted us to have them. It's ridiculous."

He remains concerned that it's his sector, and not the supermarkets, that bear the brunt of anti-alcohol campaigns. But he's against minimum unit pricing.

"If you hand control over pricing to Government you're dead. It's superficially attractive, but what's to stop the Government making it £3 a unit? It's a real danger because we're weak. The supermarkets put their lawyers in front of select committees. But as an industry we're the worst lobbyists in the world."

My kind of pub​

"I've bought my local, so perhaps it had better be that! It's the Moon & Stars at Walkern in Hertfordshire, one of two pubs I bought last year, along with the Jolly Waggoner at Ardeley. One was from Punch, the other Admiral. There are a lot of freeholds on the market at the moment so I took the opportunity.

"My kind of pub has great company, great beer and no hassle. At the Moon & Stars we're free of tie, so we let the customer