The rise and rise of Star Pubs & Bars

By Gary Lloyd contact

- Last updated on GMT

Stellar performance: Star Pubs & Bars was formed from what was the Scottish & Newcastle estate
Stellar performance: Star Pubs & Bars was formed from what was the Scottish & Newcastle estate

Related tags: Star pubs & bars, Tenanted + leased, Managed pub estate, Pubco + head office

Star Pubs & Bars is Heineken UK’s pub arm. Here, The Morning Advertiser looks at how the pub company was formed and its activity over the years.

Brewer Scottish & Newcastle was acquired by Heineken and Carlsberg in 2008. Its name continued to be used by Heineken until 2009 when it was rebranded as Heineken UK and then became Star Pubs & Bars in 2012​.

To date, Star has about 2,500 pubs in England, Scotland and Wales, of which 140 operate on its Just Add Talent model, which is a managed operator agreement. The majority of its sites are leased out to small businesses and entrepreneurs.

The company said it is “always reviewing its estate with a view to maximising it and looks at opportunities that arise on an individual basis”.

Star added: “The company’s ambition is to build Britain’s best pub company, by attracting and retaining the best operators, investing to create great pubs at the heart of their communities and by providing licensees with market leading insight and support.”

Its also said its estate consists, primarily, of suburban community locals and drive-to destination pubs, “which is where operators see the opportunities”. It added: “People are working from home more and travelling less on public transport, and so are opting to stay local. This is great news for pubs in these types of location, which are premiumising their offers. Our refurbishment projects are upgrading the pubs which is in keeping with this trend giving licensees further confidence to invest.”

Star's promise to its licensees and its plans are summarised in its Five Star Promise, which includes a fixed rent that ensures no annual rent increases until at least the third year; a pledge to invest; marketing and support; freedom to buy from different sources; and fittings and fittings help to cut down on prices. 

Back in October 2014, Star reassured its lessees that the sale of 111 pubs to Admiral in October 2014​ was the end of the company’s disposal programme.

Speaking at the second annual Star Pubs & Bars National Lessee Event, in Edinburgh, former trading director Chris Jowsey said owner Heineken was committed to UK pubs. “That’s the end of our disposals with the exception of a few individual sites. It’s now all about growth for us.”

Less than a year later, in July 2015, Heineken announced plans to invest up to £30m into its Star Pubs and Bars estate​ and was also on course to open its first managed pub site.

However, the company downplayed the move to starting a managed estate, claiming it was just a one-off to provide an experimental training site for the benefit of the wider estate.

Speaking in an exclusive interview with The Morning Advertiser​​, Jowsey said: “The key thing is that we’re not moving into that managed model, we have no plans to roll it out at this stage.”

A huge investment from parent company Heineken was made in April 2017 when it announced it would invest £20m in its Star Pubs & Bars estate during the year​ to keep up with changing consumer demands.

Star Pubs & Bars managing director Lawson Mountstevens said the money would be spread across 100 to 125 projects, with a particular focus on rural and suburban pubs.

Star acquires 1,900 pubs from Punch

The company’s first major M&A activity of modern times took place in 2017 when Heineken acquired 1,900 Punch pubs as part of a bigger joint purchase in collaboration with Patron Capital.

Heineken announced at the time it would “fully integrate” the 1,900 Punch pubs into its existing Star Pubs & Bars estate after completing the acquisition​, as part of a back-to-back deal with Patron Capital, in August 2017.

Investment firm Patron Capital completed its £1.8bn acquisition of 3,200 Punch pubs, as part of the “complex” two-part deal.

The move would make Star Pubs & Bars the country’s third largest pub business.

The pubco confirmed it planned to work closely with the incoming licensees “to help them to realise the increased potential from the pubs that they operate”.

Stefan Orlowski, former regional president Europe for Heineken NV, said: "Investing to grow our UK pub portfolio through this acquisition will enable us to unlock further value in the UK pub market.

“The performance of our Star Pubs & Bars business clearly shows that well-invested pubs, in the hands of skilled and ambitious independent operators, can outperform and we will seek to replicate that success with these new pubs in partnership with their licensees."

And 12 months later, Star added an expanded support package for its Just Add Talent operators​, a year after launching its turnover and profit share agreement.

Designed to add back-of-house efficiency to the programme, the new package added a state-of-the-art back-office system provided by Zonal, a comprehensive food offering – with menus, marketing materials and produce provided – as well as a 24/7 health and safety consultancy from Shield Safety to provide information and guidance on health and safety related issues to the backing provided by Star. 

As the new year of 2019 began, Star and the East London Pub Co completed a £2.2m investment in the Gun​ in Spitalfields, London – the brewer’s largest investment in a single pub from its Star Pubs & Bars estate to date.

The record revamp followed a year in which Heineken invested a total of £3.2m in Greater London pubs as part of its £44m UK-wide annual investment programme in 2018.

The Gun, which was named after Henry VIII’s artillery ground formerly located in the area, opened in 1929 on the old site of the London Fruit and Wool exchange.

While also creating office space for local businesses, Heineken’s largest investment in a single pub site saw a taproom-style lounge bar added to the venue as well as an open cellar at the site’s rear.

Millions to be pumped into estate

In February 2019, Star Pubs & Bars managing director Lawson Mountstevens indicated the business was prepared to pump millions of pounds into its tenanted and leased estate​.

Some £140m had already been invested, following the acquisition of 1,900 sites from Punch in 2017 and there was a focus to renovate more sites, Mountstevens said at MCA​​’s Tenanted Pub Company Summit.

The focus for Star in 2019 would be to continue investing in its portfolio, which would take priority over acquisitions for the next five years.

“In the next five years there’s a massive job integrating the business, we’ll do that well and then reflect,” Mountstevens said.

Fast forward to September 2019 and Star had agreed to sell more than 150 tenanted community pubs from its estate to Admiral Taverns​.

The acquisition saw Chester-based operator Admiral’s pub portfolio rise from approximately 800 sites to around 950 wet-led venues across England, Scotland and Wales.

The 150-plus pubs were made up some of the pubs purchased from Punch back in 2017.

Star has a history of partnering with operators and one such example of flourishing combination shone brightly in February 2020 when Star partnered with multi-site operator Blind Tiger Inns to help take its leasehold partnership to 17 sites​, including a £450,000 joint investment across five pubs.

The pandemic left many people stranded but Star helped with rent concessions.

And as the on-trade began to emerge, Star announced licensees on core leased and tenanted agreements in England would have to start paying rent in full​ when restrictions ended in July 2021, following a period of discounted rates.

The company extended its 90% rent concessions, which were due to end on 1 March, to 16 May, leaving 10% payable by licensees.

From 17 May (when pubs were able to reopen inside with restrictions in place) until full reopening, the discount would be reduced to 10% in rent concessions, leaving 90% payable by licensees.

Star estimated the combination of these rent discounts meant about half (50%) of rent would be due for the month of May, with full rents due to restart on full reopening.

During the pandemic, the pubco invested a whopping £62m into its estate via rent concessions since March 2020.

Coming up to date and, in August this year, Star revealed it had negotiated savings for its licensees​ through an agreement with energy services supplier Inspired Energy.

The initiative was said to reduce electricity and gas bills by up to 10%.

Also in August, Star announced a £38m programme​ that would benefit almost a third of its sites by the end of the year.

It said 700 of its pubs across England and Wales would see investment that would create circa 500 new jobs.

Among those to reap the rewards was Ye Olde Hob Inn, Bamber Bridge, in Lancashire, which received a £165,000 investment that included a renovation of the outside, a complete redecoration of the interior as well as a new 60-seat garden, doubling the pub’s capacity.

The move came as many in the trade look forward to a rise in fortunes after the havoc wreaked during the pandemic when only the strong were able to survive.

Related topics: Star Pubs & Bars

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