Laurel Pub Company banks on success

Laurel Pub Partnerships has discovered a new freedom now the company is owned by a bank. Phil Mellows meets the managing director, Robbie Halkett.

Pub companies are still annoyed by the fact that those hideous ordinary people in the street still call them brewers. Hundreds of years of history make for a sticky legacy to shake off - and there is more to it than a public misapprehension.

At Whitbread, before the beer business was finally divorced from the bulk of the pub estate earlier this year, there was always a worry on the pub side that they couldn't be proper retailers, free to take every commercial opportunity, while there was that feeling that what the pubs were really there for was to sell the company's beer.

That particular worry should have been dispelled, now that the company is called Laurel and owned not by a brewer but by a bank, Morgan Grenfell. But there are other legacies to be struggled against.

One relates to the traditional practice of larger brewers running, in effect, two separate pub estates in parallel.

Most outlets were run by tenants while the brewer creamed off the best of them to run under management - and keep the profits for themselves.

This did not happen, understandably, without some antagonism between the two estates. There was rarely any helpful communication between them and always the possibility of divided loyalties.

These days, most pub operators have avoided that by choosing to run either a wholly managed or a wholly tenanted or leased estate. Laurel is a resolute exception.

Robbie Halkett (pictured)​, managing director of the leased estate, Laurel Pub Partnerships, is an enthusiastic advocate of the two estates approach - despite the history.

Elsewhere, he has admitted that "the leased interests of Whitbread had not, perhaps, received the priority given to its managed houses. We felt we did not have the opportunity to expand the business quite how we would have liked".

Yet, free of the old brewer's culture, he now believes that both sides of the business can benefit from a climate of co-operation.

"The takeover gave us the chance to take a fresh look at the business," he said. "My board is experienced, but this was the first time we've had a chance to review what Pub Partnerships is about and consult our lessees. We can develop an open, challenging culture in which everyone takes a personal responsibility to make the business better.

"I have always thought that running both a managed and a leased estate was the right way for a pub company to go," he continued. "Building a wall between managed and leased is a nonsense.

"Managed houses are more volatile, the leased pubs give the business stability, solid cash flow. A managed estate is more formulaic and it has systems and processes. Lessees have the opportunity to experiment, to bring new ideas into the business. Both sides can benefit from the same training programmes and initiatives, such as our clean air campaign.

"When the two sides exist in harmony, they complement and balance each other and can create a very strong business.

"You can make it too complicated, tell yourself there's a difference between a managed and a leased pub. But the customers don't care, they don't know what kind of pub they're in.

"They either leave your pub happy or upset. The quality of the pub and the service they get should be no different. Some of our best pubs are leased."

Robbie's confidence that the leased side of the business will not be the poor relation of the new set-up has been boosted by the current transfer of 200 managed houses across to Pub Partnerships.

The process is on track, with more than 130 lessees in place, and positions over-subscribed by three to one.

"Where the properties are good, 15 or 20 people have been going after a single pub," said Robbie. "So the market is buoyant. It's very encouraging.

"We have attracted a significant number of existing lessees and tenants and most of the others have some understanding of the trade."

Managed house transfers are sensitive processes, of course, with potential problems surrounding the incumbent managers. But in Laurel's case it seems to be going smoothly enough - at least judging by the lack of complaint to the Publican's offices.

Robbie expects that by the end between 25 per cent and 30 per cent of the sitting managers will go over to Pub Partnerships as lessees of their pubs. Othershave been given other options.

"We will never force them to come across," he said. "If they show an interest we talk to them about their aspirations for the pub and try to find out whether they will be successful as lessees. They certainly do not have first refusal on a business. That did cause some concern at first, but I think we've proved that it's the right way to go about it."

The transfers are being carried out under a separate division called Opportunity Inns, but apart from the involvement of agent Fleurets in marketing the properties, it is all the same Laurel people.

"We have to do our day jobs as well," said Robbie. "We have 1,700 pubs to run day-to-day and we couldn't neglect our core business. It has been a huge task, but fun.

"We have learned a lot, mainly in planning the exercise in detail from end to end, making sure we get everything right from the surveys and valuation to the marketing.

"The key is to get the communications right. Fleurets, the operations team and the property team all have to be meshed together.

"There are so many facets to it. For instance, no matter what you say in the adverts, people will phone Laurel first and not Fleurets. We had to make sure we didn't lose them, by having a tracking mechanism nailed to the ground."

With that process nearing its end, there will be time for the pubs to settle into the estate and be absorbed into the core business before Pub Partnerships begins the next stage, as Robbie puts it, "unlocking the development potential".

The division has £10million set aside to spend on pub development this financial year and a similar figure for the next. He anticipates that, over three years, all 200 transfers will have been assessed, the options considered in consultation with lessees, and the necessary work done.

There will be more acquisitions. Robbie believes Pub Partnerships will benefit from future rationalisation in the industry and there might well be a recession to contend with.

"The impact of any recession will depend on what kind of pub you are in," he said. "But overall the pub industry is one of the most resilient. The thing is that it is hugely innovative. Licensees will always find a different angle."

The Laurel Pub Company​