Faith can be sorely tested when times are tough. And few would contend that these are tough times for many in the licensed on-trade. But London Town chief executive Billy Buchanan argues that, when it comes to the concept of what is a 'good pub', his is a faith of the "completely unshakeable" variety.
For while the media may be chock-a-block with gloom and doom stories about the economy, falling consumer confidence and pubs on the rack, "there are still good stories out there", he says.
With 220 tenanted and 90 managed pubs spread throughout the UK, 43-year-old Buchanan appears undaunted by the challenge he took up when he joined London Town last month, as the group's third chief executive in a year.
"There are still some very good, well-run, busy pubs in our estate," says Buchanan, a qualified accountant with 20 years of licensed sector experience, though none in the pub trade itself. "Some tenants and managers are making a good living. Of course there are those who are not doing so well," he adds.
No short-term fix
It's those pubs that are trying hard but still finding things difficult that Buchanan says he and his colleagues want to help.
"We want to work hand-in-hand with tenants in much the same way as we work with our managed estate. We're rolling out a series of marketing initiatives and working with suppliers to help tenants improve their businesses," he explains.
Initiatives are all very well, but what about cold, hard financial assistance? "We're helping around 15 tenants with rent concessions," Buchanan says.
"But you've got to be careful in getting the balance right. I read statements from pubcos that are doing this or that in terms of rent concessions, but this can make things worse; everyone will be wanting one, whereas in some cases the rent charged is not out of kilter with how the pub is performing. But where someone is suffering we will look to help," he says.
But Buchanan argues he is against short-term fixes. He says: "What help we offer is designed to grow the business, things like marketing allowances so tenants get marketing tools for free. There's no point in giving a six-month rent concession then having to give another six-month period thereafter. That's no incentive to grow the business."
Buchanan acknowledges some tenants are suspicious of 'helpful landlords', "but we try to persuade them that we're here to help", he adds.
Then there's the question of costs. "I've heard people talking about battening down the hatches and slashing costs, but you can only cut costs once. We're turnover-focused and sometimes growing turnover means your costs increase for a while," says Buchanan.
In such a tumultuous time for many financial institutions, London Town at least has the support of its banks, with a small but doubtless useful loan facility of £2m being agreed recently for working capital purposes. Meanwhile shareholders will support the business with further investment "within reason" as it seeks opportunities going forward.
Keeping pubs open
All well and good. What Buchanan doesn't like is closed pubs. "It costs anywhere between £30,000 and £50,000 a year to have a pub closed. Instead we want good tenants, with a good attitude, serving customers the right product," he says.
London Town recently re-opened 30 formerly shuttered pubs, while 20 remain closed, though eight are apparently close to welcoming customers again.
Buchanan says finding the best possible tenants remains an issue, but he is encouraged by a low churn rate across his estate.
"It's below five per cent since the GRS deal (see box)," he says. "We don't churn people who are good. We want people to understand the opportunities that are available to them and how they can work towards achieving them."
London Town "is not a charity", Buchanan says, "but nor are we naïve. We realise the pressures our people are facing and we're doing what we can to help. Success is out there."
London Town - a brief history
June 2006 - completes the acquisition of 14 pubs to kick-start the portfolio
November 2006 - buys 160 pubs from property tycoon Jack Petchey
February 2007 - appoints former Carlsberg on-trade sales director Mark Crowther as chief executive
April 2007 - buys 39 pubs. Chief executive Mark Crowther says a "serious number" of the group's 225 sites need "new blood" to run them
August 2007 - puts 12 pubs up for sale
December 2007 - John Sands appointed non-executive chairman after reverse takeover of GRS Inns in a £4.3m deal. Move sees departure of chief executive Mark Crowther, who is replaced by GRS managing director Richard Gundry
February 2008 - assumes back-office control of its 220 tenanted pubs from County Estate Management
July 2008 - non-executive chairman John Sands resigns to "pursue other business interests". He is replaced by finance director Ian Robinson
September 2008 - appoints chartered accountant Billy Buchanan as chief executive. Former CEO Richard Gundry becomes development director. Also announces new funding worth £2m for "working capital purposes"