Enterprise Inns: Managed estate to aid L&T development

By Rob Willock

- Last updated on GMT

Related tags: Bermondsey pub company, Public house

Enterprise says it will have 50 managed pubs by the end of the year
Enterprise says it will have 50 managed pubs by the end of the year
Enterprise Inns has revealed its primary motivation for developing a managed pub estate - to better understand how to run pubs and to share that learning with its leased and tenanted (L&T) estate.

Group commercial director Paul Harbottle - brought into the business last year to head up the managed division - told the PMA's​ sister title M&C Report​: “Even if we went to 500 pubs in five years, that’s still only around 10% of the total estate and a relatively small part of the business.

“But it will be a big benefit to our L&T business for us to better understand how pubs can be run. Otherwise we risk running out of ideas.”

The Government’s decision to impose a statutory code and free-of-tie option on tenanted pubcos was also a factor in the decision. Harbottle said: “In a period of such flux and change we’d be foolish not to look at every opportunity to maximise value for our shareholders.”

Openings

Enterprise currently has 12 sites operating within its managed business - the Bermondsey Pub Company - and will add another three within the next month. “Then we will draw breath until May,” said Harbottle.

Recent and imminent openings include: the Wig & Pen in Swansea; the Kings Head in Dursley, Gloucestershire; the Shiny Sheff in Sheffield; the Beaumont in Chorley, Lancashire; and another unnamed site in Cheshire.

“We’ve committed to do 50 within the first year,” said Harbottle, “but while we’re not short of opportunities within the estate, no one’s holding a gun to our head on the numbers. It’s more important that we get the pubs right.”

Harbottle insisted that the company was not planning to take sites off high performing Enterprise tenants and lessees. And neither was it intending its managed pubs to compete with them.

“All our managed pubs are run as tied houses – we sell nothing that a local licensee couldn’t sell. In fact as a result of our managed experience we have looked at introducing new products to the whole estate.”

Pub types

Harbottle - who also looks after Enterprise’s 190-strong Beacon ‘managed tenancy’ division - has been involved in a project to segment the company’s pub estate, which has identified nine pub types. He believes that three of these are right for the managed estate: community hubs (wet led); family dining (50:50 wet:dry split value food); and premium drinking (70:30 wet:dry split).

With a typical capital investment of £150k to £200k per site, Harbottle revealed: “An £8k a week turnover is our breakeven point for an Enterprise managed pub, given annual HQ overheads of £30k per pub, but our sweet spot is north of £12k per week.”

The first managed pubs were originally clustered geographically around London and Manchester “for resource reasons”, but the business is already expanding outside of those areas.

The Bermondsey Pub Company team currently comprises two regional managers (who will look after up to 18 sites each), a retail auditor, an HR & training manager and an interim divisional director (Steve Cash, the former brands operations director at M&B). But Harbottle added that he is looking to create a ‘new openings team’ which will take the company’s capacity to one new site a week.

Performance

In terms of business performance to date, Harbottle said: “Our sites are reaching maturity in six months. Those that have been open that long are all in profit. But I’d be lying if I said that all of our sites have been an immediate success.”

Harbottle added that Enterprise is exploring a new identity for its managed division. “We might change the name from Bermondsey Pub Company, which is probably not right for a national managed pubco. We’ve given the marketing team until the end of January to come up with something!”

Related topics: Ei Group

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4 comments

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Learning Curve

Posted by Alan Drabble,

If you made this up in a novel it would be branded as ridiculous. If you don't understand the business you are in, you certainly don't TELL everyone!!

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better understand?

Posted by dean,

Enterprise ran out of ideas as soon as they started. They haven't ever listened to licensees.
If they had listened they would have one of the largest assets the business ever needed....happy licensees.

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Corporate plaything.

Posted by Steve Molyneux,

I was interested to read this article and somewhat bemused that Enterprise want to personally operate a small group of pubs to better understand the market.Surely it would have been a better idea to better understand the market before acquiring several thousand pubs.Another classic blind leading the blind statement!

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