Unique, the UK's largest landlord, and its 'retailers'

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Related tags: Pubs, Public house, Giles thorley

It's Saturday night, and a fashionable, affluent crowd is crammed into one of London's hippest bars, 25 Canonbury Lane in Islington, sipping...

It's Saturday night, and a fashionable, affluent crowd is crammed into one of London's hippest bars, 25 Canonbury Lane in Islington, sipping Cosmopolitans.

Round the corner in Holloway Road, the Temple Bar's dancefloor is filling up with young people from across North London who have come for the party atmosphere and to eat in the upstairs restaurant.

A few doors down, an older crowd is finding solace in the quieter surrounds of a traditional community local, drinking pints of cask ale.

What these pubs have in common is their landlord - Unique Pub Company. With the largest number of pubs in the UK, it inevitably has a broad mix of lessees, from backstreet boozers to top circuit bars.

Nearly 20 per cent of its lessees are multiple operators. Look down its estate list, and you seen the likes of Glendola Leisure, Taipan Taverns, Fiddlers Pub Company, Massive, Barracuda Group, Mezzanine Group, Interpub, Regent Inns, Hobgoblinns and SFI Group.

It has also worked with new growing pub groups such as Bel & the Dragon and Babushka.

Clearly the biggest attraction for these retailers is the length of the lease. With terms of up to 30 years, it provides a lot more stability than a three-year tenancy while not requiring as much capital upfront as buying a freehold.

About 70 per cent of the 2,800-strong estate is on a long lease, with an average term of about 14 years.

"The longevity of our agreements attracts the best people," chief executive Giles Thorley explained. "It gives people a longer term to recover their investment, and still have some value if they want to assign after 10 or 15 years.

"We provide a service to operators because they can't afford to buy pubs of this magnitude."

Substantial sums of money are spent on Unique's pubs by its lessees. The pub company itself spent £19m on its pubs last year, a figure which is set to be matched this year. The biggest projects involved Unique investing as much as £150,000 and £300,000, although most involved smaller, highly focused spends. At the same time, this has been matched by often-substantial sums from lessees.

Because it attracts retailers with much greater experience, each of its business development managers looks after an average of 65 to 70 pubs, much more than the industry average of about 50.

"Generally multiple operators are running bigger and better outlets," Thorley said. "They are more experienced and understand what they want."

Unique aims to take a modern approach, referring to its licensees not as lessees but as "retailers". While all its pubs are tied for beer, it also believes that barrelage is not the only part of making money from leased pubs.

"The pub has got to be seen as a retail outlet," Thorley said. "We have to break the mentality that our outlets are for selling beer. Other pub companies haven't broken out of that.

"In the past, lease companies wouldn't have been considered as suitable by operators such as Taipan Taverns' Jim Thompson's."

But Thorley is keen to play down the proportion of multiple operators leasing Unique's pubs. Most of its efforts are focused on helping individual lessees, providing them with free training, trade marketing and other support when it is needed.

If you look again at its estate list, it includes a wealth of traditional pub names - there are 17 Black Horses, 15 Fox and Hounds, 13 Greyhounds, 22 Swans, 22 White Harts, 23 White Horses and 31 Red Lions.

There is also the familiar carnal house of royal appendages - 24 Kings Heads, 32 Kings Arms, 16 Queens Head and 41 Royal Oaks.

This year, one of its lessees, the Settle Inn in Battersea, South London, won the title of Evening Standard pub of the year, while it owns many landmark pubs in towns and cities across the UK.

The company has clearly put its turbulent background behind it. It dates back 13 years to Grand Metropolitan which decided to develop a long-term lease. It created Inntrepreneur Estates Ltd, which went through a difficult birth before being sold to the principal finance arm of Japanese bank Nomura between 1995 and 1997.

Faced with complex legal challenges from some of its lessees, Nomura split the estate. The litigious lessees found themselves within the 1,400-strong Inntrepreneur Pub Company, while the remaining 2,600 became part of a new business which was launched in October 1998 as Unique.

Since then, Unique has disposed of underperforming pubs and last year bought another 109 from Inntrepreneur.

Last month, it spent £5.5m on buying 12 pubs from Eldridge Pope. Nomura is now about to complete the £625m acquisition of 988 Bass managed houses, and it is expected that many of these will be transferred to Unique once they have been converted to lease.

In May last year, it bought 13 pubs from InnSpired Group. The package operated as Wishing Well Irish theme pubs and were bought by Unique specifically to lease to its original founder Terry O'Sullivan.

Thorley is proud of this part of its acquisition strategy, which aims to match good retailers with suitable pubs even if it means buying them especially for them.

While the Office of Fair Trading has looked into whether the tenanted and leased pub companies' supply agreements are restrictive, Thorley believes its SupplyLine deals should be seen as a benefit to lessees.

"It doesn't have to be a restriction at all. It can be a virtue," he said. "Otherwise they would have to do separate deals with wholesalers and suppliers."

Last year, it finalised a group buying deal with the Society of Independent Brewers, offering ales from smaller brewers in the North. This year, it is considering extending this to brewers in the South.

"We listen to what our lessees want," Thorley said. "If it is practical, we will supply a product."

In January, SupplyLine added more cask ales to its product portfolio, which is made up of more than 200 drinks brands including beers, ciders, soft drinks, wines and spirits. Lessees served by its Chelmsford, Duston and Norwich depots can now get Adnams Broadside and Adnams Best Bitter Bow, while Lewes, London West, Maidstone and Reading depots offer Fuller's London Pride.

Details of SupplyLine's brands and promotions are available on a new internet-based business support service, Unique Online, launched in December.

Every Unique licensee and employee has been issued with a personal username and password which they can use to access the website.

The information currently available includes a range of detailed guides on issues facing lessees, such as employment law, and an events calendar and weather forecasting to help licensees plan orders and promotions.

It is also planning to develop an online ordering service for SupplyLine products and a lettings site so that potential lessees can see details of the pubs that are available.

From a difficult start, Unique has put in place the systems and structures to allow it to continue expanding and be a leader in the leased pub sector.

In March 1999, it boosted its ability to acquire more pubs by raising £810m by securitising its pub assets, using their future income such as lessees' rents as the base for investment bonds.

It was expected to follow this with a further bond issue last week to raise £335m.

"Our pubs vary from traditional inns to cutting edge bar concepts," Thorley said.

"Every lessee runs their pub as their own individual business - making their own business decisions on everything from purchasing equipment to marketing.

"This means that no two of our pubs are ever the same."

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