City Diary — 15 october

What odds on Bilimoria pledge?

Lord Karan Bilimoria is pledging to pay some of the £71m owed to Cobra creditors out of the profits from his new joint venture with Molson Coors, Cobra Beer Partnership. Fanciful? Here's what one industry figure who knows his way around a mash tun reckons: "Although I don't know anything about their joint venture structure, I do know that margins in beer are slender and it surprises me that Coors will transfer enough income to the joint venture to achieve this idea." Time will tell.

Saxons spike Marston's plan​

Marston's plan to open new-build pubs got halted in its tracks in the Kent town of Sittingbourne. Building work uncovered no fewer than 2,500 historic objects, including a perfectly preserved pair of glass drinking cups, swords, spears, shields, decorative beads and other jewellery, as well as fragments of clothing. A total of 229 Saxon graves were discovered along with four burial sites dating from the Bronze Age. They were of men, women and children with a number having swords, spears and shields buried with them. Several of the burial places were of high-ranking members of the Saxon ruling class, judging by the objects discovered with them. The project ended up delayed by a year as archaeologists pored over the site. Ouch.

Fallon: no-go for opco/propco​

Jim Fallon, the former boss of boutique finance firm McQueen's and former Marston's and Fuller's advisor, reports that he missed out on the big money during his 11 years working at HSBC. "The bank never paid large bonuses — it took me 10 years to work that out and one year to leave." He also told M&C's Future of Pub Retailing conference that he thought opco/propco structures, which saw the separation of pub freeholds and pub operating companies to create a bigger pot of money, were "clearly not right" for the pub sector. An operating company would typically have to increase its EBITDA by a mighty 28% over 10 years to service its rents. Fallon said he'd advised Marston's and Fuller's against such moves, which were pioneered by investors with a "10-minute view compared to a 100-year view" on pub investing. He noted: "Fuller's and other regionals have had the last laugh."

Gastropubs grab Google browsers​

Is the sector harnessing the power of the web? Google's industry manager John Ray reports that there have been no fewer than 110,000 "lucky dip" searches of the word "gastropub" in the past 30 days.

Spirited response to pub complaint​

It's full marks to Spirit Group for engaging with customer Duncan Smith, who had a far from satisfactory experience at the Shakespeare pub next to London's Victoria train station. Mr Smith's experience, described in an email copied to City Diary, was pretty awful. Spirit Group has responded with a list of actions and an invite to Mr Smith to return for a free meal. Area manager Eddie Hall will also meet him after his meal to make sure he was entirely happy. Eddie says: "It is only through guests telling us where we need to improve that we can achieve the guest satisfaction that we strive for." Quite.

Carrot dangling for 15-year-olds​

Daily Telegraph blogger Ed West writes comedically about the curse of binge-drinking. "One does not need to be called Rev Jock McDour to think that public drunkenness makes almost every provincial city in Britain, and every suburban area especially, horrible after 11pm," he states. But, encouragingly, he believes in the carrot rather than the stick. His solution: "Allow 15-year-olds to drink in pubs if they are accompanied by someone over 30 who takes responsibility."

Diminishing returns at Globe​

Morgan Stanley pub sector analyst Jamie Rollo, bearish on tenanted pubcos, has been doing some number-crunching on Globe in the wake of news that the 421-strong estate is now worth 62% less than it was at £160m. Rollo thinks average pub EBITDA is now just £11,000 compared to £16,000 in August 2007.

The ugly nag's now a thoroughbred​

The White Horse in Brancaster, Norfolk, was one of the UK's ugliest pubs until Cliff Nye bought it. After heavy investment on extensions, rooms and general re-modelling it's transformed. Not least of its new-found charm is a top-class food offer — the pub sells an incredible £20,000 of food a week. And it keeps picking up awards for the sheer beauty of its views. Gordon's Gin has picked the pub, which is now run by Cliff's very likeable son, James, as one of the seven best places in the UK to enjoy a gin-based cocktail.