After years in which the tenanted & leased sector has been viewed through the prism of legislation and closures, it is now fighting back. With the large pubcos evolving their model to suit a post-MRO world and family brewers partnering with innovative entrepreneurs, it could be time to re-evaluate this much-maligned segment. James Wallin looks a new era of dynamism in the sector and highlights key operators helping to build confidence in tenanted and leased pubs.
The tenanted and leased pub market has, over the past few years, been about as far away from a “sexy sector” as you can imagine.
While casual dining and coffee shops have seemed like an unstoppable force and the managed pub sector has invested millions to keep up, tenanted pubs have only been making headlines for the wrong reasons. The rancorous debate over the implementation of the pubs code has monopolised the attention of the larger pubcos while the pub closure narrative has tended to highlight the fragility of many under-invested tenanted businesses.
At last year’s Tenanted Pub Company Summit we examined the state of the sector at this crucial crossroads and asked whether MRO would stand for Meltdown or Real Opportunity. As we approach the 2016 summit, there is plenty of evidence to support the latter and little sign of the former.
The true impact of the pubs code, and with it the Market Rent Only option, will not become clear for some time but MCA understands that so far there has been limited uptake for MRO. Meanwhile the major players in the tenanted are seeing dividends from their work to strengthen their offer while their competitors in managed pubs and casual dining have begun to examine their own headwinds.
Jack Brumby, of Langton Capital, discussed last week his bemusement that the market has yet to fully appreciate the great strides that have been made at Punch. Since Duncan Garrood joined as chief executive last summer, the group has revolutionised its model – introducing a retail agreement model and rolling out key trading formats such as its Mighty Local concept. It has also evolved its approach to its non-core estate, transforming it into Mercury Pubs. Paul Pavli, managing director of Mercury and Punch’s development director, David Wigham, will discuss Punch’s journey at next week’s summit.
Enterprise Inns has had a similarly transformative year – and while the focus may have been on its ambitious targets for its managed estate, tenanted and leased pubs will remain its core business for many years to come. As chief executive Simon Townsend has said, the experience of running its own pubs and partnering with experienced managed operators, is allowing Enterprise to feedback learnings into its core estate – now underpinned by its segmentation approach.
At this year’s Tenanted Summit – on 9 November at the Holiday Inn, Birmingham – we will explore some of the ways in which the sector has begun to turn the tables. We will be delving into the details behind industry veteran and Stonegate chairman Ian Payne’s oft-repeated quote that virtually all the innovation in the market has come from tenanted, leased or freetrade publicans.
Among the countless examples of innovation flowing through from the engine room of the tenanted and leased sector is the currently seven-strong Scottish operator, Kained Holdings. The group, which operates sites with a number of pubcos, has established itself as one of the most cutting edge hospitality operators north of the border. It has rolled out its Lebowskis cocktail concept – themed around the cult movie from the Coen Brothers – and put itself firmly on the gastronomic map with the molecular cooking and smallplate dining of its Rye & Porter venue.
Graham Suttle, from the group will be in conversation with Greene King’s Russell Danks about this innovation would only be possible with the low barriers to entry and support of a pubco. They will be joined by Patrick Fisher, of the Ten Bells in Norwich, which has made a name for itself through its gin distillery and creative cocktail collection.
This level of operational ingenuity is not just confined to urban-focussed concepts, as Enterprise Inns licensee, Victoria Macdonald, has proved at the Cellar House, in Eaton, near Norwich. The pub is a genuine hub for the community, including housing the local post office, acting as base for a myriad of clubs and developing its own village fete and beer festival. She will discuss this approach with Enterprise’s commercial director, Paul Harbottle, and Adam Johnson, of the Plough in Harborne – who has been similarly committed to providing for his community’s needs.
The licensees of the reigning Great British Pub Awards community pub of the year, The Firbank in Wythenshawe, Manchester, have managed to combine technological innovation with a traditional commitment to be at the heart of their area. Simon and Rachael Delaney have spent 20 years working with the community to shape a pub that fits for them. They have also become experts at utilising key trading periods to pack the pub, including an interactive Halloween experience where characters from a video being screened to customers burst into the pub to continue the story. MCA filmed the couple discussing their business model with Admiral’s chief executive Kevin Georgel, with the video to be screened at the summit.
While discussion of the large pubcos has tended to dominate conversation around the tenanted and leased sector, family brewers have been no less innovative. Partnerships such as the successful relationship between Charles Wells and Epic Pubs has seen centuries of experience complementing fresh, new ideas about pubs. These themes will be explored at the summit by both Charles Wells chief executive Justin Phillimore and Adam Luck from Jim Sloan from St Austall, in conversation with the award-winning licensees at The Polgooth Inn.
The theme of partnership working will also be explored by Chris Moore, of Star Pubs & Bars, in conversation with Whiting & Hammond’s Brian Whiting and Joe Cussens of the Bath Pub Company, as well as by Peach Pubs founder Hamish Stoddart.
Ted Kennedy, who knows a thing or two about reviving flagging pubs, told MCA earlier this year that he believed the cyclical nature of the market was once again swinging behind the tenanted and leased sector. With the level of innovation on display, combined with evidence that growth is slowing for large managed operators and casual dining chains, are we about to see a new golden generation for a leaner and fitter tenanted and leased market?
To join the discussion at this year’s Tenanted Pub Company Summit, at the Holiday Inn, Birmingham, on 9 November please contact holly.hodges@mca-insight.com.
To see the full agenda, click here
