Punch boss cautiously optimistic, but calls for more support for wet pubs

By Ed Bedington

- Last updated on GMT

Related tags: Property, Punch pubs

Running a pub company when the pubs are closed was always going to be difficult, admits Punch Pubs & Co CEO Clive Chesser, who described the coronavirus crisis as the “most challenging period of my career to date”.

However, as we emerge out the other side, he is cautiously optimistic for a challenging future, and with 92% of the Punch estate managing to reopen on 4 July, he’s got grounds to hope for a good recovery.

To be fair, Punch didn’t wait for Government confirmation of a reopening date and started planning for 4 July a couple of weeks before they got the official nod, and that paid off for the business. “We're pretty pleased actually that we did get almost all of our pubs open on the Saturday,” he said.

And that reopening went smoothly: “We were relatively pleased with how the opening went. First and foremost, we provided a safe environment for our publicans, their teams and for our customers. And we had no real incidents on the first 'Super Saturday' that I think people were having a little anxiety over. So that day went well and we had set the pubs up to succeed.”

He added, while they were complying with the guidelines they made a conscious effort to be hospitable: “Importantly when you approached a Punch pub for the first time on that Saturday, the first thing our customers saw was a welcoming message, 'we've missed you, great to have you back'.”

And that seems to have worked, said Chesser. “We were pleased with the levels of trade. By and large levels of trade were probably better than we expected.”

He said wet sales were particularly strong, and held up well with like-for-like comparisons, however, he did flag food sales were noticeably lower, and he added the caveat that at the moment, not all pubs had opened, and as they do, there would be more pubs looking for a share of that business.

Key trends starting to emerge

However, he said the first week of trade had already revealed some key trends: “We’re seeing the evolving patterns of trade. We could already see that wet was outperforming food. We could see gardens were over indexing so pubs with gardens did well. Patterns of trade also seemed to be slightly earlier in the day and younger clientele had come out more readily than older clientele.”

He added that spend per head had also been higher, and people were treating themselves to things they couldn’t get at home, and more premium products.

He said the company would continue to monitor the changing behaviours and patterns and adapt and evolve the business to meet those needs.

“In Punch we talk about managing this in three phases – so stabilise, which is getting the business open again and up and running, and then flex, which is understanding changing consumer needs and demand. And then you're getting your business set up to grow.”

Uncertainty was probably the biggest challenge for the Punch team he admitted, particularly in the early stages, when they were having to guess how long things might go on for, but Chesser is pleased with the way his team rose to that challenge: “I'm pretty proud of the way we've dealt with it. We are well-placed to start to make progress now. As a team we should hold our heads high that we've battled our way through to this stage.”

But with hindsight, are there any regrets on how Punch tackled the crisis? “I'm sure there's some things we could have done better. But fundamentally no. We've made the right calls in how we've navigated through it, and we've looked after our team well, and we've supported our publicans well, but ultimately the evidence will be, when we look back at this in a year or two's time then we'll really judge how well we did it. Our goal was to get all of our pubs through this crisis, and to get our business through this crisis, and to, you know, to be able to regain momentum - as and when, the Covid and the reopening enables us to do that.”

Difficult decisions

He said the crisis meant they had to make some difficult decisions. “During the closure period we chose to provide support where it was needed most.”

Chesser added Punch looked at the support the pubs were getting from Government and other sources, and tailored its own support “so the support we provided was different for different groups of pubs”.

Now that there is greater clarity and the pubs are reopening, the support is now more uniform with all Punch pubs receiving 75% rent support in July. “That will last for a period of months but tapering down until until we get to the end of November. And of course, we'll learn as we go, we're ready to provide further support, depending on on how long social distancing is in place and how trade performance is over time.”

About 15% of the estate stayed open during the lockdown, doing takeaways or community shops, and Chesser thinks that will be recognised: “That will be rewarded by the local trade supporting them going forwards. Localism and community spirit has got stronger and stronger. And that will play out in support for local pubs.”

He said technology had accelerated in the sector with people rushing to sign up to order and pay apps, and he was interested to see how things evolved: “A lot of the technology will stick but I'd be very surprised and sad if it really took over from the authentic pub experience.”

He added the shift to introduce takeaway offers into pubs was also a positive move and one that probably would stick moving forwards. 

Support needed for wet-led pubs

He also praised the support from the Government throughout the crisis, but, while he welcomed the recent stimulus announcement, he still called for greater support for wet-led businesses.

“We would like to have seen more support for community wet-led pubs, and in particular, a VAT cut that included beer as well, because the challenge for community pubs is still there, we're certainly not out of the woods. There is lower capacity and increased cost in running these businesses. And we certainly hope that there is more support forthcoming.”

He praised the hard work of the sector’s trade association in lobbying government hard, work that has certainly paid off: “We've now got to a place where the Government recognises the contribution hospitality and pubs make to the economy and to society as a whole. It is right they continue to look at how they can support us. 

“As an industry we carry to heavy a burden in taxes – £1 in every three spent in a pub in the UK goes to the Government in tax, and that's disproportionate. If you look at beer duty, compared to the rest of Europe and Germany in particular, we were paying 12 times the level of beer duty, it’s disproportionate.”

He said more support was needed: “This week has been a great start, but we would encourage the Government to extend the VAT support to include beer, we would encourage the Government to seriously take a root and branch review of business rates and to reduce business rates for high street bricks and mortar businesses including pubs and community pubs, and for a cut in beer duty.

“All of those things are crucially important for the long-term survival, first of all, and then health of the Great British pub industry which is an industry that the whole country and the Government should really care about.”

Looking to the future, Chesser said Punch was remaining very “cautious and anxious” about what the next few months held, and they were desperate to avoid any further periods of closure.

Despite these challenges and uncertainties though, he remains positive, and says his business and his tenants will have to adapt to succeed in a tough environment. “We are cautiously optimistic about our ability to move forward, but we will need to be ready to adapt.

“I said to the team a few times during the closure periods we've dealt with what felt like worst case scenarios, and they keep coming at us. So we need to be ready for more. And if they come, we will adapt and we will support our publicans, we will support our teams and get through it.”

Related topics: Punch Pubs & Co

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