All change!

Since Pitcher & Piano, now owned by Marstons, was rolled out in the 1980s, breweries and pub companies nationwide have invested heavily in developing brands. All Bar One, Scruffy Murphy's and Slug & Lettuce, to name but a few, are now familiar sights on many high streets and such brands are generally run as managed houses. But there is a trend emerging whereby some companies, having seen the commercial success of such outlets, are now developing brands for their tenanted estates. Increasingly, tenants are being offered a package comprising pub design, marketing and menus.

Cooper's Kitchen and James H Porter are two such operations introduced by Scottish & Newcastle Pub Enterprises (S&NPE). The company plans to invest £10m in the brands over the next three years, at the end of which around 10% of its 1,000 tenanted pubs are expected to have been converted.

The idea for the brands came from watching operators on the managed side of the estate developing their retail brands. "We had to understand the motivation in pub branding and decide whether it could be applied to the tenanted estate," says Martyn Gray, marketing director for S&NPE. "The motivation is different for tenants and we had to consider whether the constraints [of a brand] would dissuade them."

The constraints are a set of design and operating guidelines developed for each brand and to which the tenant must adhere. Says Gray: "We present the tenant with building blocks which are an integral part of the brands and say, ‘This is the way to go down'. He is then left to use his own entrepreneurial ability to develop the business."

Currently, 17 pubs have been converted to one or other of the brands, and in many cases turnover has doubled. Investment in the James H Porter brand, developed for community pubs in main road locations, is around £25,000 to £30,000 by the tenant and £100,000 to £120,000 by Scottish & Newcastle. For Cooper's Kitchen, a rural destination pub where food accounts for 50% of sales, the averages are £50,000 to £60,000 by the tenant and £150,000 by the company.

Pubs deemed suitable for conversion are pinpointed by establishing the site characteristics for the brand and drawing up a target list of potential branded operations which, following a demographic profile of the area, appear to meet the criteria. If the tenant wants to invest and has the right type of operation, the conversion will go ahead. "The benefit of branding is consistency," says Gray. "We're not reinventing the wheel every time."

But consistency won't be as easy to maintain across a brand in a tenanted estate, according to the deputy director of the British Institute of Innkeeping, John Walker. "The ability to maintain consistent standards will be a challenge," he says. He attributes the trend for branded pubs in the tenanted sector to the changes in ownership of the large tenanted estates and increased competition. "It's not a bad thing," he says. "The sector is becoming more competitive and enormous investment on the high street has pulled people away from community pubs into towns. This is one way of responding."

Family operation

Responding in a similar way is regional brewer Mansfield. Its family dining concept, Captain Kids, is being trialled at two pubs from its 280-strong tenanted estate, which covers Yorkshire, Derbyshire and Northamptonshire. "We recognised the need for a family operation to allow our partners to compete with their counterparts in the managed houses," says Neil Bircumshaw, Mansfield's general manager for trade partnerships.

A total investment exceeding £250,000 in the two sites has been borne by Mansfield since, under its "partnership plus" scheme, the company owns the fixtures and fittings as well as the freehold of the pubs. As many as 15 further pubs are expected to be converted in the next two or three years.

The converted sites have indoor and outdoor play areas for children themed along the lines of pirate adventure. The theme is carried through to the children's menus, but the tenants can change the suggested dishes to retain some individuality. "The pubs are run by individual business people and, while we work closely with our partners, we are not in it for control," says Bircumshaw.

The Captain Kids format is working for Rita and Stephen Petty, who were attracted to the idea of a Mansfield tenancy by the fact that individuality is encouraged alongside the theme. "I have my own à la carte menu for our 35-seat restaurant which is totally separate from the Captain Kids children's menu," says Rita Petty who, with her husband, has been running the Eyre Arms at Hope Valley in Derbyshire since April. She has found that the format has boosted business because the children's facilities attract people to the pub from up to 20 miles away and, once there, the adults discover the à la carte menu, which brings them back time and again.

While developing brands for tenants is relatively new, the idea was implemented by leisure retailer Greenalls around three years ago. The company's Inn Partnership division currently runs seven trading formats in its estate of 1,350 pubs, the majority as franchises. "There are a lot of traditional tenanted pubs out there and a lot are community locals," says Andy Cooke, concept development executive for Greenalls Inn Partnership. "The trading formats enable us to give a competitive edge to our partners."

The seven formats vary considerably and, while they are more formal than a standard franchise operation, Cooke says they are constantly evolving. "I wouldn't expect one which started three years ago still to be the same," he says.

The latest format to be developed by Greenalls is the Village Ale & Eating House, piloted a year ago, which Cooke describes as somewhere between a pub with food and a restaurant in a rural setting. There are now two pubs trading under the name, with the company planning to start rolling out more towards the end of the year.

Other formats include: Porter's Ale House, offering cask-conditioned ales; Clubhouse, a sports bar with gaming machines and a dart board; Finn M'Cóul's Irish bar, designed for Irish operators; Country House, offering high-quality food in a relaxed atmosphere; Your Local Tavern, the traditional community local, themed around the local area and supporting local charities and causes; and County Fayre, a destination family steak house operation with a big-portion menu. The last of these is the most rigid of the formats, according to Cooke, who says: "People from managed houses tend to be more comfortable with County Fayre."

So far, 98 pubs have been converted and some multiple franchisees, originally approached to turn one pub into a branded operation, have liked a concept so much they have asked to convert another.

Cooke, however, accepts that the idea does not appeal to all franchisees. "Trading formats are not for everyone," he says. "It's a step forward to a managed operation, especially for an independent business person. They need to be comfortable with the format, which will include menus and menu costings."

To help franchisees decide, Greenalls is setting up reference houses for each one, a task they expect to take about a year. Two have already been completed and are run as managed houses. "We need to have complete control as a test base for the concept which we can change without upsetting people," says Cooke. "We can't go into someone's business and say, ‘do you mind if we mess about with it?'."

The average range of investment required by the franchisee to convert his business to one of the trading formats is £50,000 to £80,000. The amount invested by Greenalls can vary from £50,000 to as much as £150,000, although Cooke points out that the amounts invested are not nearly as much as would be put into a managed brand. "The formats are not meant to be like managed brands," he says.

Greenalls, which has invested nearly £8m in trading formats since 1996, recovers its investment by rent and a continuing fee of 3% of gross turnover excluding VAT.