Following the trade winds

The Cutter at Ely might have sunk without trace, but licensee Steve Haslam tells Graham Holter that the Enterprise pub has the wind in its sails once again

Mrs Merton might well ask Steve and Jo Haslam what first attracted them to their gorgeous riverside pub, occupying a listed building and turning over £1.42m.

The fact of the matter is that the Cutter in Ely has not always been beautiful. Two years ago, the MA took a detailed look at the extensive refurbishment that transformed the pub inside and out. With all the changes that have hit the trade since, was the refit worth the investment?

When the couple committed to the lease in 2006 — Jo had experience of pub management with Bass, while Steve's company had been cleaning pubs for 20 years, and maintaining them for major brewers for the previous seven — the pub was dilapidated, had 10 off-season customers and was nicknamed Beirut.

The Cutter had been in the hands of Old English Inns for a decade before finding itself under the ownership of Greene King, and according to Steve, it was achieving its £350,000 sales purely on the strength of its scenic location on the Ouse.

It did not require a great feat of imagination to work out what could be achieved with some clever investment — and a reasonable food offer.

Financing the refit

The couple bought the lease from Greene King for £30,000, though it subsequently transferred to Enterprise Inns. The cost of refurbishment — including a complete exterior repair, internal refit, new EPoS and the conversion of an old disco area into a restaurant — quickly escalated from an estimated £250,000 to nearer £400,000.

"We went for a top-of-the-range till system and an increased level of finish while it was still in progress," says Steve. "Enterprise did offer us money, but at a price. We decided it was more productive to use our own money.

"We approached banks and various institutions who laughed us out the door. We raised money ourselves through what we already had, and remortgaged. "If we hadn't have done the refit ourselves it would have been a hell of a lot more expensive."

Fit for purpose

"The place was in total disrepair," recalls Steve. "It was only trading really from about a third of the business. Windows were falling apart, there was no paint left on the walls, it was totally dilapidated. No money had been spent on it since 1964."

"It took 16 weeks. We traded from one area or another throughout the whole refurbishment. As we closed different parts of the building we put up glass screens so customers could watch the work — we decided to make ourselves like animals in a zoo."

Although the couple never lost heart during the work, which took place before the pub's summer season got under way, there were bleak moments. "It was just the monotony of seeing the same 10 people coming in the pub every day," says Steve.

"It was the end of March and it was still a hovel and of course nobody came in except this group of regulars. I thought: are we ever going to get another person in here? Are we ever going to get a woman?

"Towards the end of the work we got sick of everyone telling us 'you know, I was going to buy this...'"

Food, glorious food

The couple were determined to prove it was possible to provide a good quality, affordable dining experience for families. "We found that in the mid-market dining experience your choices are limited," he says. "It was the typical Harvester/Beefeater type concept, which never really hit the spot with us, and where do you go from there? You go into expensive dining and that's not something we wanted to do."

After refurbishment, the pub's 80:20 wet to dry ratio was reversed as the Cutter made a selling point of its wholesome food, and a wine list with the vast majority of bins priced under £15 a bottle. This investment in the restaurant was instrumental in helping the pub's total sales hit £1,058,000 in the first year.

"A GP of 70% on food is phenomenal, and that's down to our head chef who is absolutely relentless in driving a hard bargain with suppliers," says Steve. "She is a dream. "It's traditional food, all British meat, fresh vegetables, quality service and value for money."

Service and smiles

"I bloody well hated it as a father of three children going into a restaurant where I had to sit on other people's dirty food. We clean our restaurant twice a day — we don't leave it all day before something gets done about it. That's kind of what sets us apart.

"We are renowned for good service and we have a book in reception for comments, which we welcome, warts and all," says Steve.

"We have a budget for training, which Jo looks after. We also have a manager, Richard Howe, who, again, is a credit to the business. He's someone we'd worked for in our cleaning business for about 20 years."

Maintaining investment

In its second year, turnover increased to £1.42m, but the Haslams were keen to maintain capital expenditure rather than simply bank the profits. "We invested £30,000 last year on keeping it looking great, instead of just bleeding it dry.

"We changed the furniture in the Captain's Lounge: it was only 18 months old, but it didn't work for functions, so we bought better furniture." The pub was also redecorated and the manager's accommodation refurbished.

"We have £24,000 capital expenditure this year and we're fitting air conditioning throughout the building — including behind the bar, because the staff were getting too hot, and now in the kitchen too."

Positive thinking

Steve refuses to dwell on the economic downturn or falling on-trade sales. "Negativity just drags everybody down so we try to look at everything in a positive way — after the Budget we fought back with a beer-tax credit voucher.

"We set our budget forecast lower this year than we might have, but we're still aiming for a good increase. There have been a couple of comments lately, with all the closures, suggesting we're going to lose some bad pub operators who were riding on the back of a very strong market.

"Everybody looks at the doom and gloom, but if you've got a good offer you will still make it through. But you've got to be reactive to your market and your customers."

April 2008 saw the business exceed its targets by a modest margin, and May was hugely successful, with wet sales 33.5% over budget, and dry sales 18.5% ahead of projections.

Building an estate

Now the Haslams are turning their attention to more ventures, starting with another Enterprise leased pub, the White Horse at Ramsden Heath, near Billericay in Essex.

"Enterprise were putting in £150,000 and we were putting in £350,000 but now the budget has risen to £1.25m," Steve says. "This is going to be a fantastic place, though, branded along the same lines as the Cutter. It's a village location with a 140-seat restaurant, an 80-seat bar and 200 seats outside.

"Our target is to have 10 pubs:

obviously we've got these two leaseholds, and we're looking into the market while it's declining a bit for some freeholds. Really the expansion depends on capital. If we take investment, it will roll out quicker. If not, we will continue self-financing and do one a year.

"We believe we've got a product that very few in the market have got."

Facts 'n' stats

Tenure: Enterprise leasehold (12 years to run)

Terms: £70,000 per year

Wet:dry split: 20:80

Tie: Draught and bottled

beers

Covers: 85 including private Captain's Lounge area

Average spend per head:

£10 drinks, £17 food

GP: 63% drinks, 70% food

Staff: 42 (21 full-time)