The night watch: Morrells of Oxford

Paul Beadle sounds almost poetic when he talks about his job. He is chief executive of Morrells of Oxford, leading it through a transition from a family brewer to a modern pub retailer over the past two-and-a-half years.

But, despite making changes, he is not interested in following fads or making quick fixes.

"I'm the night watchman just passing through," he said. "We have to invest in our pubs for the future.

"We stick to the simple things and do them well. I have been down the road of complexity, and I know there's no crock of gold at the end of it."

He arrived at Morrells after it was taken over in a £48m deal led by his former boss, Michael Cannon, who had made his fortune with the Magic Pub Company. At the time, Cannon was living in New York and concentrating on building up the 200-strong US restaurant chain Fuddruckers. He is now back in Britain but, although he takes a close interest in the development of Morrells, he trusts Beadle and his management team to run the business.

"We have worked together before and know how each other thinks," Beadle explains.

He originally worked with Cannon in 1987 when he joined Inn Leisure which merged with Devenish. When the business was sold to Greenalls in 1993, Beadle went with it as operations director.

With his background in managed pubs, it is no surprise that the estate of 132 tenancies has been transformed.

There are now only 74 tenancies and 60 managed houses, including a handful of café-bars and a restaurant - a very different picture from the days when the Eld family was in charge.

The head office team are still based in the Lion Brewery's buildings, which date back over 200 years, but it is due to move out in the summer when developers move in to transform the site into flats.

The ale brands, such as Oxford Bitter, Varsity and Graduate, are now produced under contract by Thomas Hardy in Dorset - and, according to a taste test in the Oxford Mail, real ale lovers have grudgingly admitted that the beers are as good, if not better, than before.

A whole portfolio of regional ales is also still available, with names like Advent, Old Don, Summer Scorcher, Blustering Breezer and Trinity.

Tradition also still rules when it comes to the pubs despite the increased emphasis on modern retailing systems.

"Although we have a small high street presence, we run neighbourhood pubs," Beadle said. "We do not run restaurants, but pubs that do food.

"The neighbourhood sector is probably the most underexploited in the pub business. It accounts for about 80 per cent of the pub population but there's still a fascination with the high street, where you are only as good as the next place that's opening.

"We cater for Mr Normal. We provide a safe environment with a reasonable choice of beers and other drinks and a food offering that matches what Mr Normal wants."

Morrells has made a considerable investment in refurbishing and redeveloping the pubs, some of which were in a very poor state. It has its own in-house team of architects so it can keep a tight control of costs.

Tenants can also use this service for their pubs, with the cost of both interior and exterior work met by Morrells in return for higher rent.

"Tenants can see the uplifts we have had in our managed houses and they want the same for their businesses," Beadle said.

Last September, it invested in two community pubs in Cowley, Oxford. It increased the size of the King of Prussia and spent £60,000 on the Jolly Postboys, opening up the interior, creating a new dining area and carrying out external works. Since then, weekly sales have shot up from £2,500 to £8,000.

Beadle said the aim was to spend small sums carefully, which was producing returns on investment above the industry average.

"We can never outspend the big boys, but we can out-run them," he said.

Beadle has an experienced team, such as operations director Tim Bird who began his career as a manager for Berni Restaurants before joining Greenalls and Scottish & Newcastle. There is also a team of area managers who have all run outlets themselves and each have at least 15 years' experience in the pub trade.

"We have all been in there and run pubs ourselves, so we have a clear perspective on what is important and understand what managers and tenants are going through," Beadle said.

"We are very close to the front line. Other organisations' management are stuck in an ivory tower, but we are out there and always have been."

Despite the conversion of nearly half the pubs to managed houses, Beadle remains convinced that tenancies have a part to play.

He said he was "suspicious" of the financial institutions who increasingly clamour for pub companies to focus on one kind of pub or another.

"The City is driven by short-termism," he explained. "We don't care whether it's a tenancy or managed house, so long as it works. We have some tenancies that could be a managed house, but you look at the tenant in there and he is doing a great job.

"I don't see why you have to be only one or the other. It gives you the flexibility to shift pubs between the two."Like-for-like barrelage within its tenanted estate was up by eight per cent in January, with further growth predicted.

Despite Beadle's aversion to the high street, he has led it into the world of city centre venues. In 1999, it opened its first café-bar, Rendezvous, in Oxford, although it claimed to have elements of a "traditional British pub".

Last year, it spent £200,000 on Que Pasa, a gothic, jungle-themed bar with cocktails, flashy lighting, a 2am licence and a DJ.

It also embarked last year on developing the nearest it has to a brand: Oxfordshire Alehouses. It had been tested at the Old Bookbinders Alehouse in Jericho, Oxford, since April 1999, when a run-down boozer was converted into a unique bohemian local. Sales have soared from £800 a week to about £8,000.

It is not a brand in the strictest sense, but more of a format that has been rolled out to five other pubs, with the help of the Old Bookbinders' licensee Ed Bradbury.

The Jericho pub has many of the core features, such as collectibles on the wall, monkey nuts in a barrel and up to 12 ales on tap.

Beadle said it was not a brand but there was a common theme of humour, such as a fake door next to the gents and ladies bearing the sign: "Not sure".

"All the pubs have their own identity," he said. "They are places with personality. Whenever people go into one of our pubs, they know they will get a certain quality of service - that is the only way in which Morrells is a brand."

The work done on the managed estate helped to push up like-for-like sales by 28 per cent in December and by 22 per cent in January. Food sales have improved through developing five different menus ranging from pub snacks to substantial dishes, although it was almost at zero in the days of the original Morrells Brewery.

"We are generally trying to keep the food simple so we don't need people with particularly great experience to run it, because it is so difficult to find good chefs," Beadle said.

There has also been substantial investment in training, with an emphasis on building up a team of good assistant managers for the future.

"It's very important for us to have a source of good people coming through the business," he said.

The Morrells estate was historically focused within a 40-mile radius of Oxford, but it has begun looking for pubs further afield. Last year, it bought six large outlets from the Big Pub Company in Poole, Bristol, Bedford, Stevenage, Cheltenham and Swansea.

"We are in our third year now and have seen gradual growth all the time," Beadle said. "We look after our pubs. We don't invest in them and run away.

"But we are still sharpening the act. We always believe that every single pub can be much better."