Not resting on his Laurel

Laurel's chief executive is an all-round pub man who wants his company to be the undisputed leader in managed houses. Mark Stretton meets Ian Payne.

He is known across the industry as a pub man, a man's man, a proper bloke, someone who knows his customer. Seeing him in the corner of a pub, a stone's throw away from the River Thames, it's not hard to see why.

Engrossed in the fruit machine, pint in one hand, mobile in the other, Ian Payne looks like he has occupied the same spot every lunchtime since time began.

He is familiar with both staff and customers - he could be the landlord. He is the boss.

The chief executive of the 600-strong Laurel Pub Company is checking out his company's latest investment - one of four newly revamped Hogsheads.

With 100 outlets, the high street chain represents a large chunk of the Laurel mix. It started life as something of a real ale mecca, a straightforward male-orientated boozer, and somewhere you might think Ian Payne would quite like. "Well, 'real ales are us' is not where we want to be with this brand," says Ian. "My biggest criticism of Hogshead was that it was boring - this is not boring. We just want to make it a fun place to be."

Fun would certainly seem the order of the day. A plethora of arcade games and fruit machines, table football and giant Connect Four are all here against a backdrop of wooden floors and whitewashed walls. The external Hogshead silver and blue facia have gone, replaced by red lettering.

Laurel has introduced table service and a range of different offers called the Rhythm of the Week. "We're trying to fit the offer to the way people live their lives," says Ian. "We have food offers at the beginning of the week and more drink-led offers towards the weekend. We've introduced Sunday roasts because that is what people want." The four-pint Stella tower would seem particularly close to Ian's heart.

Karen Forrester has been put in charge of the 100-strong Hogshead chain. Having come from managing director for the entire group, that would not seem like a promotion. But as Ian explained, "we have a group of pubs that are absolutely critical to our long-term health. My view was that they needed intensive care and in my opinion there is no better operator in the country than Karen."

The four Hogsheads on test have seen encouraging sales uplifts. "Every week since the trial started, sales have gone up," he says. "There are various other pieces of evidence - trading patterns, customer surveys, input from staff, personal observations.

"You put all that together and you know whether it is right or wrong. The key things are the lighter interiors, a more female-friendly offer and the service."

The trials may be going well but the straight-talking Laurel boss is not about to sit down and say everything is rosy.

"It is bloody tough at the moment," he says. "I don't believe that anybody can be in growth. I think it's safe to say we, as an industry, are going through a difficult trading period."

The Laurel boss says it will only get harder for the town centre operators. "There is definitely a supply and demand issue at the moment - look at Old Monk," he says.

"Over the past 20 years there have consistently been around 60,000 licences in the country. The trouble is that some of the pubs are about five times bigger - everyone is going up in scale. The actual trading space within the industry has grown enormously."

The tough environment has led him to adopt a more aggressive pricing strategy. "Look at JD Wetherspoon and Barracuda Group," he says. "Both of them operate in our market and both are discounting.

"I work on the basis that we can either sit there and let them take our business or we can get in there and slog it out with them." The company introduced late summer bargains in Hogshead, selling a pint of Stella Artois for £1.65 and then "Scary Deals" in the run up to Hallowe'en with the price of Stella at a slightly less aggressive £1.95.

"You have to be aggressive. Discounting is like being a virgin - you either are or you aren't," he says. But the company is not just a high street discounter. "What many don't realise is that a high proportion of Laurel's estate is located in residential areas," he says. "We have Champion pubs, which is more of an internal flag than a message to the consumer, which are big local boozers with strong loyalty."

A deep-set man in both body and opinion, he has strong views on liberalised drinking hours. "The whole issue of licensing reform has been clouded by the amount of noise made by Tim Martin, who has closed more pubs in the UK than Adolf Hitler's bombs did," he says. "Unless we lobby Parliament with a united voice we will end up with something we don't want."

Ian was involved in the de-regulation of both the bingo and casino industries. "We used to have the most almighty arguments behind closed doors but we always presented a united front," he says. "If we now work with the government we may have a chance but if we try and headbutt everyone we'll end up with nothing.

"The first thing we need is maximum flexibility in terms of opening hours. Market forces will dictate when people open and close as they do on the Continent - people are allowed to open 24 hours there but nobody does."

He says Frank Dobson and the other Labour backbenchers who fear a wave of anti-social behaviour after reform need to take a dose of reality. "The same happened when afternoon drinking was introduced," he says. "People thought drunks would be spilling out of pubs at all times of the day and night."

Ian, 49, started his career pulling pints at the Bull at Barming in Maidstone and then the Sir Thomas Wyatt. Working his way through the trade he sold both Swan Lager and Guinness before taking an area manager position with Mitchells & Butlers, the Midlands division of Bass.

He headed both the retail and lease businesses of Bass before joining Ladbrokes Casinos. He joined Laurel in March, 2001.

Laurel was formed when Morgan Grenfell Private Equity (MGPE), which belongs to Deutsche Bank, bought 3,000 pubs from Whitbread for £2.6bn.

MGPE has subsequently sold 1,299 tenanted pubs to Enterprise Inns in two tranches for a combined £1.14bn.

One of the first things that Laurel did when it took control of the former Whitbread pubs was to put the cheque book away. "Whereas Six Continents typically spend £500,000 in capital expenditure, we spend about £87,000 per pub," says Ian.

Talking of 6C, the industry is braced for the creation of a £3bn thundering beast when the leisure giant splits its pubs from its hotels in April. Many are predicting the new business will adopt a fierce acquisition policy, buying up business after business in the managed house sector.

"I think it's going to be very interesting when 6C demerges," says Ian.

"I think we will see the same consolidation that has taken place in the tenanted sector."

Laurel has been the subject of intense speculation, touted as a possible takeover target for the 6C business. Ian bristles at the suggestion. There is no for sale sign above Laurel.

"We have our own acquisition policy," he says. "We are looking to grow our estate by 200 pubs." Testament to that is the recent acquisition of the Contemporary Bar Company, a four-strong operation in west London. Laurel is also in talks with Nomura to free up capital from its estate through a sale-and-leaseback deal.

"We said when we bought this company that we wanted to be the undisputed leader in managed pubs," he says. "There is a lot more work to do. I want to be in a situation where any Laurel pub I go in is the best in that trading area."

The life of Laurel​

• March 2001:​ Morgan Grenfell Private Equity buys 3,000 pubs from Whitbread, forming Laurel. Ian Payne recruited to head up the business