Realising the potential of pubs

The 1989 Beer Orders set off a bomb under the brewing industry. We’re still feeling the shockwaves. To a certain estate management student it all looked rather thrilling at the time.

Chris Moore, now trading director at Scottish & Newcastle Pub Company (S&NPC), was in the second year of his degree and it infused him with “a deep fascination with the industry”.

“It satisfied my requirements at the time as a study in how business and property work together. Pubs were there for brewers to sell their products before the Beer Orders came along. Then they realised there’s a property angle.

“Property value and business are very directly linked in the pub industry. And you can’t get too excited about offices, shops and warehouses. So it was pubs for me.

“I spend my days talking about pubs and beer. My friends are always interested in what I’ve got to say. What’s not to like?”
Moore turned down his first job offer, from Grand Metropolitan, “because it wouldn’t give me a company car”. After a brief distraction at a local authority he joined the pub industry with a previous manifestation of his current company and established a pubco career unlocking the true property value in those sprawling tied estates the pre-Beer Orders brewing giants hardly knew they had.

Then, a few years ago at Punch, he switched from property to operations. As he points out he had acquired transferable management skills — “I was never a pure property techie” — and you could see it as just another way of unlocking the potential in property, by making them more profitable pubs.

Bar Boosters​

Now, at S&NPC, he has a key role in working with the Heineken-owned group’s 1,400 leased and tenanted pubs to unleash their full potential, making sure the offer is right and opening new profit streams through the Bar Boosters scheme.

“A good pub will always do well,” he says. “But the industry is going through a change. There are still 50,000-plus pubs, but on the wet side the market has declined. Pubs have to adapt and change.

“As with most leased and tenanted pubs, 70% of our estate is community pubs, and if the offer isn’t right people won’t come. We mustn’t lose sight of that.”

He gives the example of his local pub, the Hare at Loddington, near Kettering, Northamptonshire.

“It’s a freehouse that was aimed at the hunting and shooting set, which alienated a lot of villagers. But it changed hands in June and is now a community pub with mid-range food — and Heineken products on the bar, which is a bonus!

“It was rammed when I was there at the weekend. People were saying we’ve got our village pub back. It’s transformed. It’s giving people a relevant experience. Do that and they’ll use the pub. Sometimes we just don’t provide the right offer.

“Bar Boosters is a simple approach that’s working for us,” he continues. “We want our pubs to have multiple income streams, the capability to be a sustainable business and make the lessee more profitable.

“That means food and rooms and a broader service offering things like coffee and Wi-Fi. Very few pubs can’t do something, though you have to make sure it’s cost efficient. There are places where some things may not work.”

And it probably wouldn’t work at all if the relationship’s not right with the lessees. You can’t wade in and tell a publican what to do. At the heart of that challenge is the business development manager (BDM).

“We are trying to get better at the relationship,” says Moore. “It’s difficult to get right, but good BDMs make a real difference. A BDM should motivate, coach and inspire, and it’s how you get consistency in that.”

Finding the right people​

The company has appointed a ‘capability coach’ to help train BDMs in matters such as quality, the economics of the pub and negotiating skills. The latter might make some lessees run to the barricades. But “it’s not a like a landlord and tenant situation,” Moore explains. “In fact our estate manager does most of the rent negotiations and that’s healthy, I think.

“For BDMs good negotiation is about growing the size of the business opportunity, it’s not an I-win-you-lose situation. We want to avoid any confrontation and come up with successful solutions.

“We have got to be realistic. Yes, rent is one measure of success. But it will not add longer term value. We are about growing the profit pool, not dividing it up a different way.”

The other human element is the lessees themselves. Moore believes S&NPC has got the right pubs, the challenge is finding the right publicans for them.

A revamped recruitment website, which went live in April, has already brought double the inquiries and double the applications.
“We are trying to differentiate ourselves in the marketplace and we are attracting more experienced operators. There are some brilliant people in the industry and most will know what we’re strong at and make a business decision based on that. That creates a virtuous circle for us.

“An element of proximity comes into choosing the pub, but it’s the business opportunity that comes first — and if you’ve got that mindset you’ll be successful. I remember meeting the finalists at a Punch Shine Awards and, out of 16, 13 had run a business before they came into the pub trade.”

Are pubs a strong enough attraction for good business people?

“Well, it’s a low-cost entry, but what pubs can also do is put the licensee at the centre of a community and give them status. Pubs can offer that kind of kudos.”

Moore also wants to encourage successful lessees to take additional pub businesses.

“We’re interested in small multiple operators with two, three or four pubs, and we’re trialling a training programme to help develop that opportunity. Running a multiple requires a different skill set, and it may not work for them. The course will help them find out. If you don’t do that you’re setting them up to fail.”

Is the Heineken tie an issue?​

“Our lessees are tied for beer and cider, but we have arrangements for them to sell local cask beer. We offer discounts and we can be bespoke to add value to their business. And we’re getting better at activating our brands in the pub. So I think we have a lot of flexibility.

“But we believe the tied model is right for the UK. It’s a question of making sure rents and rewards are appropriate. We had a sector that was heavily indebted, so cash was sucked out. That’s what caused the problems. It’s not the model that’s wrong.”

Owning an estate gives Heineken some advantages over its rivals. “Pubs are a shop window for our brands, and they provide us with a test-bed.” And there are pluses for the pubs, too. Something Moore comes across as being especially focused on is quality.
“We are relentlessly passionate about how our products are delivered. People are paying a premium for the experience they get in a pub. If beer is served in a dirty glass it’s not the best example of that pint for that price, so we don’t want to have to apologise for that.

“We’re really getting behind the brand quality message this year.

Everyone in the company is expected to know what a good pint looks like and everybody should be able to pull a pint and help out behind the bar on a busy Saturday night.

“I’ve done it myself. I quite enjoy it actually. It’s dealing with the money, working the till that’s the problem for me!”

Key dates​

1991​ Chris Moore leaves university with a first in estate management and gets a job with Bassetlaw District Council

1992​ Joins Scottish & Newcastle Retail as estates manager

1998​ Becomes property manager

2004​ Spirit Group takes over S&N’s managed houses. Moore stays on as property director

2005​ Punch acquires Spirit. Moore becomes group estates director

2007​ Switches to operations side as customer operations director for Punch

2009​ Returns to Scottish & Newcastle following its takeover by Heineken as property director for the leased pubco

2010​ Becomes trading director for S&N Pub Company

My kind of pub​

“I spend a lot of time in Edinburgh and London and usually look for a small, traditional city-centre pub.

Kay’s Bar or Pearce’s Bar in Edinburgh spring to mind — they’re both ours — and my London pick would be the Grenadier in Belgravia.

“They’ve all got a great atmosphere, good quality beer and are everything a customer expects a pub to be.”