Going for Gould

Stephen Gould made the switch from major pubco to family firm two years ago, and will now take over as Everards' MD six months earlier than planned. ANDREW PRING reports

Six months earlier than planned, Stephen Gould will take over as managing director of Everards at the March agm. It's a move that will delight his many friends, and confound a few doubters. For after joining as trade director two years ago, in a move from Punch that raised more than a few eyebrows, the tall, easy-going37-year-old sociology graduate has accelerated his promised promotion by displaying a sure touch with hitherto unfamiliar disciplines of a family brewery and proved he's ready for the top job now.

Handing over the reins of a distinguished 156-year-old operation to a young outsider was never going to be undertaken lightly by the Everards board, even when the existing and outstandingly successful MD Nick Lloyd was also non-family.So in contriving a two-and-a-half year handover period with Lloyd, the company was displaying the innate conservatism of any long-lived family firm. But it was also hedging its bets. For it had found the imagination and nerve to bring in someone young and relatively untested from a major pubco whose relationship with many of its tenants and lessees left a lot to be desired. This was not a risk-free call.

As it's proved, Gould's strong work on the tenant training front with Punch ­ which helped it sweep the board at the BII's Nitas two years running ­ was a better guide to the man than the torrent of angry letters to the Morning Advertiser vilifying his old pubco's approach to doing business.

Since joining Everards, Gould has introduced modern practices to the BDM-tenant relationship, including sophisticated laptop packages and Nucleus Data monitoring, as well as luring one of Greene King's leading pubco personnel, Tracey Marshall, to head the estate. And in recent conjunction with ex-Punch colleague David Bremner, who he brought in as marketing director, he's ditched the Tigermania logo and introduced a classy new look for the beer branding, which stresses the importance of locality and the local pub.

Gould's new approaches to the business of running a family pub estate ­ and that, rather then the brewing side, is where he's needed to focus most ­ are, however, tempered by the differing timescales and pressures that a family brewer operates under in contrast to its modern pubco rival. Whereas Punch and peers are young companies in a hurry, Everards can afford to take its time when it comes to buying pubs or selecting their tenants. No big investors breath down its neck; decisions can be more leisurely. Which is not to say, less critical. The constant acquisitions and churning of the major pubcos can hide duff decisions in a way that's not possible when you're buying 10 or so pubs a year.

Similarly, relations with individual tenants count for more when there are only 137 of them, and they're in possession of the family's crown jewels. Greater care and attention is taken over getting the right tenant than most pubco systems allow. Both sides must agree the business plan before keys are exchanged.

Furthermore ­ and this is the biggest difference of all from what Gould used to do ­ leasing your pub to someone who'll run it at arm's length for 25 years is philosophically alien to Everards, as it is to most in the cautiously-prudent world of family brewers.

Gould and Lloyd debate the merits of leased versus rolling three-year tenancies on a regular basis, but always with the same result. "We think that leasing introduces a high level of risk into the mix," says Lloyd, who is staying on in a full-time basis as vice chairman until October, then goes part-time. "Assignment, for example, reduces our control over the pub. If a licensee wants toexit after five years, our commonality of interest vanishes. What the assignee is interested in may be quite different to what we're interested in. That way, a pub can change performance overnight when the previous owner goes. After all, he's the good will' and the incomer may struggle.

"And when it comes to repair responsibilities, if he's pushed, the lessee will always put his investment into trading rather than repairs. This way, the licensee can build his business without worrying about repair responsibilities."

That said, Gould stresses leasing is not totally out of the question. "We don't have to be driven by a rule book, so we can always look at things on an individual basis. There's a couple we're talking to at the moment who want to lease and we're seeing if it might work.

"We also have some multiple operators who'd like a few of our pubs, but we'll take those discussions slowly."

For Everards, the crucial question in this debate is this: "Does running a tenanted operation stop us attracting talented licensees?"

No, says Gould. "At least, not at this stage. When I was at Punch, I thought having purely three-year tenancies would have held the business back. Here, though, the lack of an assignment clause becomes a non-issue if the profit opportunity is there.

"Naturally, the level of interest varies from pub to pub. But they get re-let pretty quickly, even though finding good people is always a challenge, particularly people who are good at food."

Last year, Everards had 22 new licensees to find, that's a churn of 16%, against an industry average of around 20%. "Of course, the idea of churn isn't all bad," says Gould. "You don't want to restrict movement and there are plenty of people who leave just because they want to do something different with their lives. But the comfort level for us would be about 10%."

Incoming tenants are told Everards has a vision for its estate: that every licensee will be helped to become the best operator in their trading area. To that end, Gould has invested heavily in training, knowing from his Punch days how effectively it lifts licensee performance. "The first six to nine months are critical if the business plan is to work. So we hire a professional trainer, at our expense, to go in early and talk it all through with the licensees. It's our view that if you invest a lot upfront, then there's less chance of volatility."

Nucleus Data monitoring systems, which are now in nearly half the estate, have been another big investment decision made specifically, it's claimed, to help licensees grow their business. "We're not doing it to try to catch buying out," says Gould. "We believe it's a management tool and a great way to support the licensee and properly hone the investment."

Introduced in December 2003, implementation of the monitors has been very smooth, says Lloyd. "There was none of that attitude which says: The brewery will want to know my inside leg measurement next.' Quite the opposite. It was more a case of: At last I know my own inside leg measurement. And if I use this properly, I'll be able to afford a better pair of trousers.'"

According to the pair, Everards licensees are happy to be open with management. "There's none of that If I share with you, you'll put the rent up' stuff," says Lloyd. "If we make joint investments but then charge a rent that didn't work for the licensee, that would be foolish. We might have had the benefit of the increased rent for 12 months, but then it's back to scratch."

Everards has not had a rent dispute that's gone to arbitration in living memory. "You could say we're not renting hard enough," says Lloyd. "But we take a longer-term perspective than others. And we don't want to harm a goose which lays golden eggs. Good licensees should have the opportunity to make more profit than average licensees."

If licensees are central to Everards' vision, so too is beer. Gould believes there is significant scope to drive real ale much further in its own estate ­ and throughout the Midlands through national account sales. "Ale, and particularly cask ale, is fundamental to making our tenanted pubs different. Our new Support Your Local campaign stresses the importance of great beer and great pubs.

"And by developing our business w