Pubcos say support they offer brings raft of benefits for lessees
FROM this year’s business rates hikes to the ongoing Brexit uncertainty, there is ample reason for operators to move a bit more cautiously in today’s licensed trade.
But for those looking to get a foot on the trade ladder – or expand their estate – amid such choppy waters, help is at hand.
Pub companies say the range of support and guidance they can offer new and existing licensees brings a host of benefits, especially during times of political and economic uncertainty.
“The partnership element of a lease is particularly attractive at such times,” said Gary Corney of Heineken-owned Star Pubs & Bars.
The operations director for Scotland and the north explained: “Operators aren’t on their own; they have the support, expertise and market insight of an experienced pub company behind them and a dedicated business development manager to work with.
“Through our regular local, regional and national forums, Star licensees also get to know each other and create their own licensee networks that they can call on for advice.”
Reinforcing this viewpoint, Michael Thomas, operations director at Iona Pub Partnerships – the pubco arm of Glasgow-based multiple operator G1 Group – said the company’s lessee support covers everything from marketing, training and finance to investment and legal matters, and is “easily available and tailored to [each] venue”.
Thomas added that one of the most appealing aspects of working with a pub company “is having the responsibility of your own business without the sense of being in it alone”.
This was echoed by Corney, who said the difference in terms of financial demand between sole operators and those working with pub companies can also play a major role in the decisions made by prospective licensees.
Claiming that interest in leased pubs “tends to hold up well despite political and economic uncertainty”, Corney said: “Buying a freehold requires operators to either invest significant capital of their own or borrow significant sums, which can be hard to do when lending is tighter.
“By comparison, the entry cost for a leased pub is low and operators’ financial exposure therefore much more limited, giving applicants the ability and confidence to proceed.”
The financial benefits go beyond initial capital outlay, however, according to Corney.
Operators aren’t on their own; they have the support, expertise and insight of a pub company.
For instance, under Star’s new kitchen fixtures and fittings policy, Corney said the pubco has reduced prospective lessees’ ingoing costs by 60% to 70%; under the policy, Star owns big-ticket items, such as ovens, fridges and grills, which Corney reckons helps “save [lessees] capital, improve cash flow and create more sustainable businesses”.
The benefits of working with a pubco also extend to major events, according to Thomas of Iona Pub Partnership, who said the company offers additional support in the run up to busy periods, such as Christmas and New Year. He said the pubco’s dedicated marketing manager holds regular ‘festive tracker meetings’ from as early as May “to ensure every venue is prepared and organised ahead of both the booking season and [the] actual festive season itself”; this support includes the creation and distribution of an Iona Christmas booklet, which contains a range of festive artwork options, ready-made point of sale kits, costed festive menus and marketing ideas.
While the benefits of working with a pubco are said to be plentiful, any partnership is a two-way street.
Corney of Star Pubs & Bars said there are a number of factors the pubco looks for in prospective operators.
“Successful licensees tend to have the same core attributes and these are what we look for: a love of pubs, commercial and business savvy, and a knowledge of and passion for giving customers outstanding hospitality,” explained Corney.
“Experience is not essential as we offer comprehensive training and a high level of support.
“We actively look for people from outside the industry. Their varied business experience and fresh ideas can often breathe new life into a pub and create a unique and exciting offer.”
Considerations before taking on a pub lease
• Business plan
Create a robust and well thought out business plan; check it over with experts before making any commitment.
• An objective view
Prospective operators should view a pub with their business head – not their heart – and look at its potential.
• Strength of partnership
Any agreement with a pub company will likely involve a partnership lasting a number of years; operators should ensure it’s one they are happy with. They should scrutinise the support offered to ensure it meets their needs. On another level, do they feel comfortable with the firm’s partnership approach? Do they have an honest and open relationship with its representatives?