Managing expectations

Brakspear may have a heritage in pubs stretching back 250 years (and in beer more than 300) but as a managed operator it is still very much a fledgling.

So young is the estate that when there was a fire, three years ago, at the Porch House in Stow-on-the-Wold, Gloucestershire, chief executive Tom Davies recalls: “My fellow operators found it terribly funny that half of my managed house portfolio had burnt down in a single night.”

Over the intervening years, the group has grown from two to nine sites and now has another two in the pipeline for this year as part of a plan to reach 20 by 2020.

Even then, as Davies is at pains to point out, the managed division will still be only a fraction of the current 130-strong estate. He insists that the group intends to keep investing in and adding to its tenanted estate and remains committed to the tied model, although he admits that he is concerned about how increasing headwinds will affect the viability of many tenanted pubs.

Davies clearly delights in getting to grips with all areas of operation in his managed houses. During a trip around a selection of the company’s directly managed sites around the Cotswolds, Davies tinkers with the level of the music, clears a few tables and directs arriving guests to the reception area.

Lessons learned have been poured back into the tenanted estate, but the group has also developed its first roll-out model.

Individuality rules

The Retreat in Staines, Middlesex, has only been open since November, but Davies said he is confident it is a model that can work in different areas. The second iteration of the format will be at the Dog & Duck Inn in Wokingham, Berkshire, which will transfer from the tenanted division.

Davies says he is still considering whether it will be just the format that moves across or whether the new pub will be the Retreat at Wokingham.

He says: “We have mulled over the merits of a brand as we have grown the managed estate. With the Retreat, I suppose you could call it a brand, but it’s certainly a model that we think could work in lots of different places.

“At the moment, all our managed pubs are individual. That comes down to the design of each bedroom being bespoke. It drives our FD mad – he just can’t understand why we can’t have the same lamp for each room and buy a bulk load of them.

“I would never want to have identikit sites but, as we get bigger, it puts us in a good place to have a roll-out vehicle.”

As the managed division has grown so has the expertise within it, with former Mitchells & Butlers executive Paul Gilchrist joining as director of retail; Antony Ely, formerly of Lucky Onion, taking on the role of executive chef; and Sue Williams joining from JD Wetherspoon as head of people.

The growth plan for the managed estate includes both acquisitions and conversions from the tenanted portfolio, although Davies is conscious that with an estate stretching from the Cotswolds down to the Sussex coast, he needs to ensure the managed team isn’t overstretched.

He says: “The way we have built our managed estate is very much in the mould of the family brewer – we have built it for the future. If you look at a development like the George Town-house (in Shipston-on-Stour, Warwick-shire) – we spent around £1m in an area where, to be frank, there isn’t much competition. Shipston isn’t really on the map in the way Stow-on-the-Wold, Gloucestershire, is, but if you look at the amount of new housing being built and the sort of operators that are starting to be interested in the area, you can see there is a lot of potential there. It’s not the sort of decision every pubco would be comfortable with making, but we aren’t fixated on the short term.”

MRO not as simple as it seems

To fuel the investment in the estate, the company will continue to churn non-core sites, with three sold in the past year.

The company remains keen to add to its tenanted estate, but Davies admits there are huge challenges ahead for the sector.

He says: “The threshold of what sort of turnover a tenanted pub can make and still be sustainable keeps rising year on year.

“I can easily see, in 10 to 15 years, that threshold being at £10,000 a week and any pub with a turnover under that point is likely to struggle in the tenanted model as it stands.”

On the impact of the pubs code and the controversial market-rent-only (MRO) option on the wider sector, Davies says: “Now this debate is finally open, I hope operators see MRO for what it is. It can be a really good option for experienced operators with access to cash. But, for tenants who aren’t in that position, it can be a real risk. It’s utterly simplistic to say that it’s all about paying market prices for your beer, but unfortunately that is the message that has been parroted. I don’t think it’s always obvious to tenants how much they get from their pubco until that is taken away.”

Davies says that the past 12 months have been a positive time for tenant recruitment and retention, but said that on the managed side it is one of the key challenges.

He says: “The level of service that people expect in pubs has rocketed in recent years. You can spend all the money you want on décor and have the world’s best chef but it is the service that brings it all together.

“In Staines, we were almost at the point of delaying the opening because we just could not find the staff. I never expected to find that in a busy area like Staines – that we would be almost unable to find people to staff the bar and the kitchens.

“When you are getting the likes of Bill’s and Côte coming into an area, you know that what is already a small pool to fish in has become even smaller.”

Beer collaboration

The final piece of the jigsaw for Brakspear is brewing.

Since 2004, Marston’s has brewed the company’s portfolio of beers, but they remain an important part of the Brakspear DNA.

Three years ago, the group opened a four-barrel microbrewery in Henley, Oxfordshire, where it produces limited runs for its own estate. One of the most successful products emanating from this brewery was its Honey Bee golden pale ale.

So successful has it been that Brakspear is now in negotiations with Marston’s as to whether it can be produced on a mass scale and go into Marston’s own distribution chain – reinforcing Brakspear’s three centuries-old status as a true family brewer.