Wells of the Bedfordshire-based family-run pub operator and brewer also told The Morning Advertiser how the Government hasn’t gone about its business “terribly well” so far.
“Our financial year runs from October to September and we’re pretty pleased with the results,” Wells states. “We always want more but our sales for the year were up £3.5m, which is 6% and reached £65.8m. And operating profit was up to £3.5m and that’s a 14% increase on the year before.
“It’s a challenging environment that’s not been helped by the weather.
“Interestingly, we record the daily sunshine, rainfall and temperature because I got so bored about complaining about the weather that I thought I need to get more than just anecdotal complaints in place so we’ve just done a bit of research analysis that shows if a storm comes through at the weekend, it will cost us, as a group, £50,000.
“Christmas was good for us. Like-for-likes were up 12% across the three-week trading period. If you look across the five-week period we were up 7%, although that includes that last week of November when we had a storm. And then January feels quite flat, and we’ve all seen some of the CGA data coming through, which isn’t very pretty and certainly it feels like we could do with a really good spring.”
The operator runs pubs in France as well and recently reopened sites after investing more than £400k. On the weather though, Wells says: “There was 20% more rain across the country. It was the wettest year since about 1950 or something like that. The problem is, with our pubs, the outside terrace area is really important to trade so if everybody is scurrying to get inside – that’s not ideal.
“It was pretty tough but sales in France last year were up 8%, which is about £1m so that was good.”
On the Houses of Parliament site in Bordeaux, which reopened after a major overhaul, Wells says: “It’s fabulous. It’s in an old cavern that goes back a distance and you just want to sit in there and drink beer, play the electronic darts we’ve just put in there and watch sport generally.
“The darts is a new thing for us in France and we’ve only very recently started putting them into our pubs in the UK so we are just dipping our toe in the market in the water to see how the French consumer base reacts to the concept and, so far, it’s really popular.”
On the subject of competitive socialising, is the pubco that operates out of its Brewpoint headquarters in Bedford, looking to potentially expand on it?
“Certainly. It’s all part of the concept of having to create an experience in your pub or else why would anybody come? We’re seeing quite a lot of statistics at the moment showing consumer behaviour is polarising towards the weekend and getting them to come out on a Monday to Thursday is harder than ever before,” Wells explains. “We’ve got to create the activities and the experience to get people off their sofas and into our pubs.
Short-term outlook
The short-term focus for the group is to streamline some of its processes. Wells reveals: “In France, we’ve been trying to find a till system that is compliant with French financial regulations, which turns out to be quite different from most of the rest of Europe. That’s taken a bit of time but we’ve found a new supplier so we’re going to start rolling it out in a couple of months.
“Meanwhile, we’ve signed up Rob Calderbank as our new director of operations, who was previously at Greene King, and is really getting stuck into our managed business and making a noticeable change in terms of putting in place much firmer process and policies as well as inspiring the managers to really think further ahead about what they need to do to make their pub interesting, particularly on Monday to Thursday.
“On a consumer level, we’re investing quite a lot in insight. We did a big project last year to get under the skin of how much behaviour has changed, what are people doing, what’s going to get them off their sofas and away from Netflix and Deliveroo and into one of our pubs.
“We’re taking a lot of that insight and trying to inject that into some activity this year. We’re going to continue investing more into guest insight and make sure we’re delivering what people want because the past four years really has changed consumer behaviour within the pubs and we must give them the best experience in our pubs.”
Understanding what’s going to drive the consumer to the pub is “absolutely critical” Wells adds and it also has to manage the company’s path through “the tax raid!”.
He continues: “It’s about understanding what we need to do to be able to ensure we are still as profitable as we can be, understanding if there are opportunities to increase our margin without necessarily putting up price, how to make sure we’ve got the right number of people working in the right place to make sure we are adding value everywhere.”
Wells & Co is doing much the same with its Pub Partners (leased & tenanted division) and making sure they are all aware of what is coming around the corner and are starting to think about what they can do to respond to that, such as altering their menus, talking to their suppliers about cheaper cuts and potentially getting some butchery skills so they can take larger cuts of meat and using it to their advantage.
The group has been organising some roundtable discussions with groups of its partners, which Wells says has been “enlightening”.
He explains: “When you talk to these amazing entrepreneurs and listen to the flair and their thoughts, it’s then about taking some of those ideas and making sure we can share that across the wider group.”
Pernicious move
On the Government and, in particular, its recent move to change employers’ national insurance contributions, Wells is balanced with his answer.
“I appreciate the Government is in a difficult situation and they do need to raise cash to be able to fix some of the some of the infrastructure. I just feel they haven’t gone about it terribly well in my view,” he says.
“On economic growth, it’s got to be long-term positive to increase the national minimum wage so more consumers have more cash in their pocket and therefore pubs should be able to win in that environment because lots of our potential consumers can happily afford to keep coming into our pubs – but that change in employers’ national insurance contributions in reducing the threshold down to £5,000 is pernicious.
“It’s going to have a massive impact and I know the big companies talk about the cost of millions of pounds to them if they don’t do anything about it but, for us as a small to medium-sized business, it’s still £700k if we leave that unmitigated, which obviously is not acceptable.
“We have to review how we are looking after our cash, what investments we do, what overhead do we need within the business and that doesn’t feel like a world where people thinking about solid growth, taking on more people and pushing on – and we still very ambitious to grow but we just have to do that very carefully.
“Our position is we have this fantastic business in France and right now that feels like a better bet to be investing over there where we understand the customer base, we understand the politics (but that’s changing pretty rapidly) but we say that with our customer base fairly unaffected, they just want to go out and have a good time, which is fab and we’re able to provide that.”
With doubts, there is always concern
He adds that, as a family business, he is concerned about the impact on business property relief because that has an impact on how its shareholders may wish to treat their shares.
He explains: “Beforehand, we were exempt from that, but members of the family could die and pass on their shares to other members of the family meaning there was always that long-term consistency and almost an unwritten alliance that with these shares, we have inherited them and we are just custodians of them to pass on to the next generation and that helps support the executive within the business to know they’ve got the long-term view to carry on investing and growing the business.
“But if shareholders inherit and they suddenly have to pay 20% on the cost of shares and depending how many there are, that could be a sizeable chunk – that casts doubt on how shareholders are going to respond and with doubts, there is always concern.
“There are much bigger brains than mine within the federation of Family Business UK who are absolutely looking at this and we know the farmers are all over it with their agricultural property relief for exactly the same reasons so that is a worry because if it ends up with the business having to buy back shares because the family members are having to sell them in order to pay for the tax then that’s all cash that could have gone somewhere more effectively into investment and growth.”
Being an eternal optimist helps Wells in his forecast for the future of the pub trade. He says he was witness to events earlier in the Millennium that provided tricky times for pubs, based on a lack of consumer confidence after the financial crisis in 2012-13 when “everyone thought Europe was going to implode and the markets were all over the place”.
He says: “What was interesting there is that even when consumers were pulling back at that time, half of our estate was still in growth and that’s because they are fantastic pubs run by brilliant people and we’re fortunate where we are.
“We are in a fairly affluent part of the country and our pubs are well invested so I am optimistic and realistic that we have to think hard about how we’re going to mitigate the costs and continue to meet our aspirations for growth both in the UK and in France.
“But we’re optimistic to be still looking for new pubs to buy both here and in France, which we will do because I genuinely believe that great pubs will prosper in any economic environment and that’s what we’re all about – human beings are a natural herding group so we are at our best when we’re with other people and we saw all that at the end of the lockdowns.”
