Big Interview: Peter Linacre, New Pub Company

Perhaps Peter Linacre took his former pub company’s name too literally. There was a period, of course, when Massive punched above its weight on the London scene, setting high standards and breeding some of the most talented teams behind bars.

However, now he admits that he tried to grow too fast, and when the tide went out on the UK economy it turned out to be one of the pubcos that wasn’t wearing any trunks. Linacre had founded the group with an old friend from the City, Peter Brook, in 1993, and expanded it to 50 outlets that included
the Tup sports-bar chain, L’Auberge France-themed pub-restaurants and a variety of high-quality individual houses.

“It was when we bought the Tups from Hugh Corbett in 1999 that things started to get serious,” he remembers. “I pushed too hard.” By the time the 10-strong Thomas & Carter town-centre gastropub chain joined the group in a £6m deal financed by Bank of Scotland, the company was over-leveraged, says Linacre. “That was principally my misjudgement. We shouldn’t have done it and we had a tough time sorting it out. It was a sticky period.”

The sale of 25 wet-led pubs to Sports Café for £13m in 2007 would have solved the problem. But in the wake of Northern Rock’s collapse, Sports Café couldn’t raise the equity and went into administration, taking Massive with it. “I was hugely disappointed when Massive fell apart,” says Linacre.

Tired portfolio​
But now he’s back. Or, rather, he never quite went away. We’re sitting in the Camden Eye, north London, part of the New Pub Company, a more modest and accurately-named enterprise of seven pubs in and around the capital. They’re all leased from Heineken UK’s Scottish & Newcastle Pub Company and were originally taken on by Linacre operating as Glasshouse in 2005.

“It was a very tired portfolio,” he says. “The pubs were part of Spirit and had the pile-it-high, sell-it-cheap approach of that company at the time. They were run-down and the staff were disheartened. But with each of them there was an opportunity to do something. We’ve spent £200,000 around the estate since 2009.

“Last year we took £5.25m and made £220,000 pre-tax profit, and we’re half-way to reaching our target of £8m to £9m revenue and £1m profit by 2013. Like-for-likes are showing 14% growth, rising to 20% in the last part of the year. “Four of the pubs are food-led — up to 35% of our trade is food — and the other three are liquor-led, which still works if you’re in the right place.”

The Camden Eye is wet-led and must be in the right place. “It’s our smallest site, yet it takes the most money,” he says. “It was a horrible pit when we got it. The toilet had been blocked for many years. It was doing £4,000 a week and now it’s up to £20,000.”

And behind the bar is Mahdis Neghabian, the newly-crowned Iranian-born 31-year-old BII (British Institute of Innkeeping) Licensee of the Year. It suggests the old Massive ethos of people development has been carried over into New Pub Company — as, indeed, have a number of ex-Massive people themselves.

“At Massive the focus was on developing managers and staff with structured training programmes through the whole business. It was always a deeply entrenched part of the culture — and that’s still the case in New Pub Company.

“It’s a synthesis of everything we’ve learned over the years,” declares Linacre. “The guys who run the businesses work incredibly hard, and what I find remarkable is they never say they’re tired. The best operators, though, are never tired — they’re supercharged with excitement. I’m in the pubs all the time and that’s the enthusiasm I like to see.”

Different trade​
Linacre says he’s a better retailer now. He knows that because he’s measuring it. Last year he introduced a Net Promoter Score system into the estate. Customers are asked whether they’d recommend the pub to others and they respond on a 0 to 10 scale. It effectively condenses customer satisfaction into a single figure.

“We monitor scores weekly at each site and have an overall score of 8.26. If anyone scores us under seven managers phone them within 24 hours and the feedback we get from them is very illuminating. It focused our attention on what we do and we’ve seen the improvement in sales. We’re beginning to measure a good time.”

Giving people a good time is key to the pub trade maintaining its margins, he believes. “It’s a different pub trade to what it was four or five years ago. We’re all trying to be better retailers, we’ve learnt the lessons. The beer-duty escalator is having a powerful effect on costs and food prices are going up again. We have to get better, so we can charge higher prices.

“Licensees might balk at a £4 pint, but we’ve got to get over that. We’ve not sought to improve our margins, but prices have gone up and I can’t see an end to that pressure. You pay £4.30 for a pint in here, but the focus is on having a good time. My observation is that if they’re having a good time people don’t complain about the prices. It’s when the quality slips that they complain.

“Pubs are still fantastically good-value places to go in comparison to restaurants and successful operators are making good money.”

Customer focus​
Linacre might be one of them, but his ambitions are more restrained than they once were. Size isn’t everything any more. “We might expand, but it’ll be on a slow and measured basis,” he says. “One of the enjoyments for me is that the business is small enough to get round and there’s so much more we can get from running what we’ve got.

“There’s no debt in the company, we’re simply free to extract the best out of the seven pubs. The point of the exercise is proving to ourselves what you can achieve if you really focus on your customer base and your teams. At Massive the only focus became to satisfy the bank. I didn’t have time to worry about the customers.

“At one point we wanted to buy the freeholds of the pubs,” he goes on. “But now Heineken is clearly committed to the pubs side of its business and we’re working well with them. We have a very stable group of people, we know what else we’re capable of and we’ll continue to raise the bar — we know we can make it even better.

“We never had time to do that at Massive. If we’d had more time the story might have been different, but at least there’s the opportunity to do that now.”
He is optimistic, too, about the prospects for the pub industry as a whole.

“There has been enormous fragmentation. The pubco model has blown up and that’s brought fantastic opportunities. The tie isn’t going to come to an end, but it’s fraying, the world is changing.

“The local pub is a special place and I have confidence in it,” he adds. “It’s a very alluring sector because it changes all the time. You can always think of something else to improve the business, and I really enjoy that aspect. My wife doesn’t get it, though. She’d be frustrated at having to pay all that attention to detail. But I’m a bit of an obsessive. In a perfect world, I’d have one pub I could constantly obsess over.”

Key dates:​

1978​
Peter Linacre graduates from the London School of Economics and gets a job in corporate finance in the City
1982​
Moves to South-East Asia, working for the Economist Intelligence Unit
1986​
Returns to the City where he builds a stockbroking company
1992​
After selling the business he buys out Stephen Brook’s partner at Joe’s restaurants
1993​
Sets up Massive Pub Company with Brook
1999​
Buys Tup chain from Hugh Corbett

2002​
Acquires Thomas & Carter gastropubs. Brook leaves Massive
2005​
Linacre sets up Glasshouse group to operate Scottish & Newcastle Pub Company leaseholds
2007​
Sports Café deal collapses and Massive goes into administration
2009​
Glasshouse undergoes pre-pack administration. Seven sites acquired by Linacre as New Pub Company