Getting active in sunny Surrey

Few in the pub sector need telling that things are tough. If the increasing cost of running a pub wasn't enough, the fact that customers are being more careful with their cash than ever is enough to give even the most optimistic operator a migraine.

In which case Clive Price, founder and managing director of Barons Pub Company whose sales growth for the year so far is in double-digit territory, appears to have happened upon some very strong painkillers.

Surrey-based Barons' estate comprises four sites - the Cricketers in Horsell, near Woking; the Star in Leatherhead; the Rose & Crown in Thorpe, near Egham, and the latest addition, the Horseshoe in Warlingham. Each serves a mix of drink and food to young and old and never loses sight of the fact that first and foremost it is a pub.

"So far this year our three existing pubs have seen like-for-like gross turnover grow 10.1 per cent," says Price, who excludes the Horseshoe, a Punch Taverns lease acquired last month.

He estimates that over the course of the coming year his four sites will each make around £1m net.

Not rocket science

Price argues Barons' success is not rocket science. "We've just got better at this since we started the company nine years ago," he says, harking back to when he left a manager's position at restaurant group Bluebeckers to co-found what would later become Barons Pub Company.

"We're presenting the pubs better, we're spending money on them - our money - to make them look good, and running and managing them better," he adds.

That he and his team are prepared to work harder and spend enough to keep the pubs in pristine condition makes all the difference, he believes.

"We strive to accommodate every type of customer and every kind of occasion. With so many pubs cutting back they end up looking a bit tired and maybe standards slip. If you can be consistent in providing a reliable, good-quality environment customers come to trust you," he explains.

Founded in 2001, the group currently leases one pub from Enterprise Inns, two from Punch and one, the Cricketers, from Kent brewer Shepherd Neame (formerly a Punch pub). The company employs around 90 staff, of whom half are part-time.

Being a multiple leased operator gives Price an overview of the industry which he finds useful. "Getting to where we have got makes us a desirable operator for landlords. They ring us to see if we want to run their pubs, rather than us calling them," he says.

On the whole the group's relations with its landlords are good. "I don't want to sound cocky but we're pretty good at what we do and we don't need that much input from them. They leave us to get on with things," says Price. Refurbishment work is funded internally and consequently not rentalised, he adds.

"The pubcos are in a far weaker position on rents than they were. They can't justify - with us anyway - the sort of rent review rises they managed to get through five years ago. In some cases we're getting no rent increases at all," he says.

No help

The banks, meanwhile, are "pretty hopeless", he finds.

"We acquired the Horseshoe lease without any help from them, despite submitting a decent business plan.

"Banks just don't like the sector, whatever else they may say. But the price of leases is coming down, so at least they are affordable," he says, noting that Barons acquired the Horseshoe lease for £130,000; two or three years ago that figure would have been north of £300,000, he says.

Meanwhile, the threat of tax rises looms large. Like many, Price fears what George Osborne might do in his emergency Budget tomorrow.

"If VAT goes up to 20 per cent that would be a massive issue for us," he says, adding it could add £100,000 to overheads. Beer duty increases meanwhile eat into his margins, as "we have to absorb the 30p a pint rise". Then there is the situation with business rates, which in the case of the Cricketers could leap from £37,000 to £77,000 yearly. Needless to say, Barons is appealing against the rate hike.

"So many pubs are at the lower end of the volume scale. You need big turnover in this game; without it you can't make it work," he says.

But the combined headaches of rising taxes and costs and an under-the-cosh consumer hasn't dulled Price's enthusiasm. "We deliver consistency across all our pubs. Ours in a reliable experience," he says.

"I want our growth to be organic. We'll buy some more pubs, maybe half a dozen or so, in the coming years. But we're not out to conquer the world."

Not the world - but Surrey maybe…