The Italian job

Licensee Andy Knight tells Noli Dinkovski how a sale and leaseback has enabled him to develop the Dixie Arms Hotel and roll-out a successful line in pasta and pizza

Everyman appeal

Situated in the historic Leicestershire town of Market Bosworth, the Dixie Arms Hotel is many things to many people. There's a bar for the locals, four-letting rooms for visitors and a cellar that doubles up as a function room for those wishing to hold special events. And, following a £190,000 refurbishment last autumn, it now has a restaurant area that caters for all things Italian.

"Opening La Piazza restaurant was part of a complete overhaul of the ground-floor area," says licensee Andy Knight. "Before, the bar was tired and dilapidated and we used to get a lot of youngsters in. Now, with leather sofas we've created a more relaxed feel, which appeals to an older crowd."

Taking on the lease

Cash for the refurbishment was stumped up by Marston's. The pubco bought the Dixie Arms from Knight and his wife, Wendy, in spring 2006 as a sale and leaseback. A business plan was agreed and the refurb decided upfront.

"Marston's is good at letting you make decisions, but, as you would expect, it was keen to get the building up to spec, so there would be no dilapidations on the lease," says Knight. "That way the sale price was unaffected. Instead the investment is reflected in the rent, which, at £850 per week, is very reasonable."

The couple have been running the Dixie Arms for eight years, slowly building up trade and increasing its food offer along the way. Knight was no stranger to food, having had a previous career as a consultant to the agriculture industry.

"I was in a dying industry and I felt it was time to do something else," says Knight. "It's not a decision I regret, but it was a real eye-opener at first — I didn't realise the number of hours it involved."

Made of stone

Three years ago Knight went to play golf on the Old Course at St Andrews, and, along with Wendy, stopped by in the nearby village of Falkland. "In a pub very similar to ours we noticed that they were cooking from a wood-fired stone oven," says Knight. "The food was great so we thought, why not get one ourselves?"

Having brought in the oven two years ago the Dixie Inn now does, quite literally, a roaring trade in pizzas and pasta. "Other meals are available too, but in a sociable bar environment, there's nothing better than sharing a pizza," says Knight. "It is especially popular with early drinkers who don't want to carry on drinking on empty stomachs, but equally would rather not sit down and eat in more formal surroundings."

Italy and back

Having the wood-fired oven was all very well, but the Knights still had to learn how to cook from it. It was a venture that took them all the way to Fontana Del Papa, a family-run business in the heart of rural Tofla, north of Rome.

"Wendy found the place on the internet," says Knight. "The Pierotti family take six people at a time and teach them how to cook pizza and pasta the true Italian way."

Knight says there is a high amount of preparation time involved in the cooking, but it can easily be picked up. "I'm not a chef, but I could probably teach a 17-year-old within a day — it's really that easy," he says. "Now me and Wendy manage it so we don't need a qualified chef, which saves us around £400-£500 per week.

"The quality of cooking is superb — it's like an Aga oven, but 20 times better. What's more, it's a very economical way of cooking as the heat from the burning hardwood stays in the oven for hours."

Making margins

According to Knight, the wood-fired oven's visual aspect is also very attractive to customers. "It's very impressive — most customers can watch it from the restaurant," he says. "Equally, it's noticed by people drinking in the bar area, and before you know it they're asking for some pizza."

Prior to the restaurant's opening, the Dixie Arms had an 80:20 split in favour of wet sales, but that has now moved to 60:40. The greater emphasis on food has meant sales for the first three months were consistently up on this time last year. "In January, February and March we were up 20% each time, but then April came along and we were 5% down," says Knight. "Having an early Easter clearly played a part, but we thought it was the credit crunch hitting home.

"But then in May we had an astonishing 30% sales increase. It's not something we can fully explain, but if I was to guess it could be that people are moving away from fine dining as they tighten their belts. So if they go out, it's more likely they'll go for a pasta and a glass of wine and still have change from a tenner."

Pros and cons of the ban

Another influence on food sales has been the smoking ban. Knight reckons that, whereas before it was all about smoking and drinking, now it's eating and drinking. "We are tied on all drinks, so that side of the business takes care of itself," says Knight. "But food is where the opportunity lies. When we are full in the restaurant, people are given the option of sitting in the bar and eating, and whereas before people might have been put off by the smoke, now they're more than happy to do so."

But Knight adds that the ban has come at a price: "The atmosphere's completely gone. A few weeks ago there were four people standing at the bar and I asked them whether or not they preferred the ban. The three smokers said they did — it's a fresher atmosphere, plus it's helped them cut back. However, the one non-smoker said he wanted smoking back as every half an hour or so the others disappear outside and leave him on his own.

"So instead of 40 people creating an atmosphere in your bar, you've now got 20 inside and 20 outside — it's just not the same as before."

Training approach

With five full-time and a further five part-time staff, Knight says he holds regular in-house training. Additionally, he makes the most of the Marston's training programme. "For £500, one of the company's experts came in for the day to help staff with all aspects of service, from correct serve to dealing with difficult staff," says Knight.

Knight adds that Marston's has also upped its game on helping licensees develop their food side. "In the last 12 months it has started to introduce cookery courses — Marston's understands that it is the way forward."

Appreciative of the help from his pubco, Knight still sends his staff out to Tofla to learn the Italian way of cooking. "We've developed a great relationship with the Pierottis. Our staff go out there, while a couple of the younger members of the family have spent summers over here working with us."

Food to go

Knight says the only regret he has had in eight years is not developing the food side of the business sooner — he is adamant it is the only way forward. "Of all the pub closures we are seeing, I can guarantee you the majority are wet-led pubs that are resistant to change," he says. "It's all very well closing your doors and then blaming things like the smoking ban, but what have you done to get around it?

"That's where Marston's has been so good — the last thing it wants is for you to leave and throw the keys back, leaving an empty pub."

And Knight is keen not to rest on his laurels. Next month, he plans to start up a food takeaway service. "We plan to build it up gradually. We'll start by delivering to the town and then over time spread it out wider."

"If you stand still you die — you have to diversify to survive. What we're doing lends itself to deliveries and takeaways, so it's an opportunity we can't turn down."

Facts 'n' stats

Tenure: Marston's leasehold

(21 years)

Rent: £850pw

Letting rooms: Four

Wet:dry split: 60:40

Tie: All drinks

Covers: La Piazza 40; Cellar 45

Average spend per head: £