Adding value for multiple traders

Punch operations director Kevin Georgel and head of recruitment Adam Smith tell Graham Ridout about their attitude to multiple managed operators

A new breed of operator is entering the market. Although the sole trader will remain the face of the industry in many customers' eyes, multiple operators are becoming more prevalent. Their commercial clout is also changing the business relationships that they have with their pubco landlords.

Around 15% of the 750 former Spirit managed houses that Punch Taverns transferred to leaseholds were snapped up by multiple operators, including 25 acquired by Clear Pub Company.

Punch's operations director Kevin Georgel remarks: "Over time, I see a greater engagement with and a higher representation of multiples in our business. We have a responsibility to work with multiples, not in a controlling way, but to ensure they consolidate as they build."

Punch's head of recruitment Adam Smith adds: "Some are funding expansion through cash flow because of the strength they have in the business, while some are raising finance through private equity. Our obligation is to ensure they are growing at the right pace."

Georgel says: "A key word for me would be 'enabling' — making sure the right companies expand by being flexible towards them."

He thinks that, in the past, there may have been a perception that pubcos adopted an intransigent approach and treated all multiples in the same way. Punch's ops director comments: "They are all different — they do want to be treated differently and they do need to be treated differently.

"There is frustration that we try and apply the business model we use on an individual to what is a very different type of business. One of the biggest frustrations is the multiple contact points. We're trying to get a better alignment with them to give them a dedicated resource where appropriate and where we can."

He continues: "We are working with some third-party suppliers such as Brulines (drinks monitoring equipment) to aggregate data so that they can more easily use that data to create an insight into their business — that can be very powerful for them."

Likewise, Georgel believes another way Punch can create added value for its multiples is via the Matthew Clark connection, a joint venture with drinks giant Constellation,

The country's largest pubco increasingly wants to engage in dialogue with multiples to highlight what it has to offer.

Smith explains: "There are no conversation topics that are off limits. It's about what will work best for both companies.

"If we feel there is value by flexing the way our agreements are structured, then we will look at it. There is enough expertise in our business to be able to deliver what they think will enable them to be a success."

Georgel is keen to explore the opportunities that exist for transferring experience and knowledge contained within the Spirit managed house division to support the multiples, whether it's training, food development or management infrastructure.

Similarly, he senses that Punch can learn from the multiples. "I think we can work harder unlocking some of their knowledge and understanding to help the rest of our customers.

"So, we really want to drive this open-door, transparent, engaging approach."