The Pub Estate Company has been keeping a low profile — until now. Lorna Harrison reports.
One could be easily forgiven for not knowing anything about The Pub Estate Company. The company itself, based in Chorley, Lancashire, admits that until recently it has kept a low profile about its three-year existence.
But now it feels it has something to shout about and claims it has to be more pro-active in order to attract the good quality tenants it is after.
In fact, it is a company of considerable size, boasting 301 pubs — 273 of which are tenancies. Its current trading area covers Lancashire, Yorkshire, Cumbria, the North East and Scotland.
The Pub Estate Company was formed in August 1995, following the acquisition of 230 pubs from Scottish & Newcastle.
Managing director Colin Homer, who joined the company in June 1996, explained that at that time the company was lacking in the expertise to manage its properties, so the operation was handed over to Foxberg Ltd.
In February 1996 a further 105 pubs were bought from Allied Domecq and 22 from Go-Ahead Leisure. This formed the Second Pub Estate Company. Finally, the Third Pub Estate Company was set up when 16 houses from Trust Inns were purchased.
So why the three companies? "It was an easy way of purchasing and financing the packages and it was all linked to loans and ties," explained Homer, who admitted there were disadvantages. "We had lots of different bank accounts and supply agreements and the tenants were all on different contracts so we realised it wasn't the way to move forward."
In April this year the companies were brought under the banner of the Pub Estate Company (PEC) and the contract with Foxberg was terminated.
From the start, the company has invested heavily in its properties to bring them up to a "reasonable" standard.
"The properties were at the tail-end of other estates so they needed considerable work," said Homer. "It has been a slow process and the priority has been given to making them wind and watertight. After the end of our fourth year (August 1998) we believe we will have properties to be proud of."
The pubs are very individual — from town centre boozers to rural, food-dominated houses. Around 70 per cent are suburban. The company has devised its own tenancy agreement and slowly but surely the former S&N and Allied Domecq tenants are moving over. Ninety-three tenants are now on the PEC agreement.
"It is always difficult for tenants when they have a new owner but the response to us so far has been very good indeed," said Homer. "There has had to be careful management but tenants are more settled and the fact that one third have signed up to our agreement shows that."
The agreements are traditional, three-year contracts with barrelage incentives. However, they do contain the controversial upward-only rent clause.
Finance controller Ian Magowan said: "We felt this was prudent at the time. We do look at individual cases and it is useful for those who do not pull their weight while we can normally come to an arrangement with the others."
Training is a high priority and a dedicated department has been set up in Southport where training company Anthony Stockbridge runs courses.
Newcomers are expected to sit the BII Induction incorporating the National Licensee's Certificate and other courses include basic food hygiene, drug awareness and the Advanced Wine Certificate.
"Where we've had quality training there have been improvements to the bottom line," said Homer.
PEC employs six business development managers who are responsible for around 40 pubs each. It also has a special hotline number for tenants to ring with problems ranging from late deliveries to cellar management.
Now the company is nearing its initial four-year plan, it is looking to the future.
"We have to grow bigger," said Homer. "We are a lean company and the next stage will be a new ball-game with in-house credit control, surveyors and so on.
"It's a choice of being swallowed up by the bigger fish or becoming one of the bigger fish.
"In the short-term we will be topping up our patches and then we will be looking for a major acquisition and would hope to double our size in the next two to three years."
The company employs a person who is currently on the lookout for 65 properties in the existing trading areas at around the £100,000-mark.
PEC has no plans to create any concepts or themes and in fact has no corporate branding through the estate.
"It is not important to the customer," said Homer. "There is still a strong market for a locals' pub and that's where we are."
Currently 69 per cent of the pubs turnover less than 200 barrels a year, while the remainder are above.
Significantly, in September 1996 the average barrelage per pub per week was 2.8, compared to 3.5 in August 1997.
"This is down to teamwork," said Homer. "Getting the people out there and making the improvements to our properties is showing results.
"By having these excellent working relationships we generate the power which is driving the company forward in continued and ever-improving achievement."