Tenancies & Leases Guide: Pubco Profile - Heritage Inns

The only way is up for Heritage Inns and its tenants, says MD John O'Neill.

Last summer, the landlord-tenant relationship at the Ram in Peterborough reached something of a low point. John O'Neill, managing director of Heritage Inns, which had just taken over the pub, turned up in person to find that he had to negotiate through a barricaded door.

"The tenant had been in litigation with the previous landlord, Pennant Inns, for two years and she had barricaded herself inside the pub," he explains. "She kept us on the outside and I had to negotiate with her from there. It took us five months to get the pub back."

There is a happy ending to the story, though. After being closed for two years, the Ram re-opened with new tenants and an £80,000 facelift. It's now doing six barrels a week and, as John puts it, "we've given it back to the local community".

Although an extreme case, the Ram is no isolated example on the Heritage estate. Its story supports the premise John O'Neill has applied consistently over the year that his company has been running the 240 ex-Pennant houses - "there are no bad pubs, only badly operated pubs".

Eighteen houses were closed like the Ram when he took over. Only five of those have been sold off. The last one to re-open did so at the end of June.

"A few were past their sell-by-date to the extent that they just weren't going to make it," says John.

In the first week of the new company, a mere 325 barrels of beer were sold through the pubs. That figure is now double thanks to the re-openings and the nearly £3m Heritage has spent on upgrading the estate over the past 12 months.

"It's been an amazing year in some respects," says John.

"In one day we took on 240 pubs that lacked investment and direction. The only way was up! We saw it as a huge opportunity to turn those pubs into one pub company.

"We resolved some outstanding issues and put in place a programme of investment in the fabric of the pubs - to improve the offering and attract better quality tenants. We also introduced training programmes, something these tenants hadn't seen before.

"Only 34 per cent of the tenants left their pubs when we came in, less than we expected. It has been a hearts and minds issue. We don't promise any more than we can deliver, we have a robust way of treating people and we're prepared to listen."

Listening means somehow getting around Heritage's widely scattered estate, which has pubs as far apart as Newcastle, Exeter and Hastings.

"Commercial director John Finney and I spend half our time out in the pubs," says John. "We've seen every tenant and talked about their business. You've got to get out and talk to people, understand what's going on, listen to what they say."

Heritage also has a higher ratio of area managers to pubs than most tenanted groups. The six area managers have only 40 pubs each to look after, and that's paid dividends, according to John.

"We are looking for more pubs but we'll maintain about the same level so we can keep hands-on," he adds.

At the moment the bulk of the estate is on a traditional three-year tenancy agreement with some one-year probationary deals. But Heritage is about to introduce its first lease - with John Kelly at the Clayton Arms in Peckham, South London, following a £100,000 refurbishment at the pub.

It will be a 20-year deal but Heritage will be flexible on future leases, "depending on the pub and the person".

"Leases will give us another dimension," says John. "They will give licensees security of tenure and encourage them to make an investment of their own."

Good heads for business​

The cash that Heritage has been prepared to pump into the estate has been key to turning around many businesses. It completed 28 refubishment schemes in the first year - "they would have died without that," says John. "It shows that when you invest, people respond."

On the whole, people have responded with great ideas about how they can revive their businesses.

• The Full House in Barnsley re-opened as an unusual combination of sports bar, themed around "Barnsley legends", and Thai restaurant, which has increased trade from five to eight barrels a week.
• The licensee of the Welcome in Oldham, went on the Heritage marketing course and decided that her USP would be takeaway kebabs! She goes round the bar every night at 10pm taking orders and serves the kebabs at closing time, keeping people in the pub and selling them a kebab they would otherwise have bought on their way home
• The Plant in Mexborough, Yorkshire, invited local people to rebuild the pub's garden over a weekend, turning it into a focal point for the whole community.

To celebrate the spirit of innovation, tenants have been invited to the company's first annual awards night in October, at Derby County's Pride Park ground near the Heritage HQ. The list of awards includes businesswoman of the year, reflecting the fact that a lot of the best ideas come from women.

Pictured: Karen Clark and Sangdoo have brought Eastern promise to the Full House.​

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