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Spirit Group prepares to achieve ‘huge potential'

12 June 2008 by
Spirit Group prepares to achieve ‘huge potential'

After an uncertain couple of years, pub company Spirit Group is looking forward to happier times and a major investment programme. Managing director Andrew Knight talked to Christopher Walton about the company's plans

It's been a difficult two years for Spirit Group. First, it lost long-term chief executive Karen Jones after a £2.7b takeover by Punch Taverns in 2006, and then it had to undertake the largest managed-to-tenanted pub conversion in the UK in record time. Most recently Mitchells & Butlers proposed to buy the company in a retort to Punch bidding for M&B during the latter's recent financial woes.

When Caterer caught up with Spirit Group's managing director Andrew Knight during a whistle-stop tour in the back of his chauffeur-driven Mercedes to some of its finest pubs in the Midlands, he admitted his first year in charge had led to "a few grey hairs and a little bit of hair loss", but insisted that he was now preparing for the company to achieve its "huge potential".

It makes a change for Knight to be focusing on new menus, talking about the benefits of carrying 100% British beef and the best of British vegetables. It's a nicer job than telling the managers of more than 700 pubs that their jobs were under threat as a lease went up for tender.

Lease transfer

"If you can imagine the emotion of that, it was a hard thing to manage and was quite painful," Knight said. "But it was the biggest lease transfer programme in the business and we did it ahead of schedule. And then we sold Old Orleans. And the pubs to Orchid Group. We started off with 1,800 pubs and went down to 869."

As a result Spirit halted its investment programme in its pubs for about eight months as it restructured. Knight is happy that the investment cycle is back and money is being pumped not only into its 138-strong flagship Chef & Brewer brand, but also into the Good Night Inn - its competition to Premier Inn - and its next pub concept, the Grill House Kitchen. "There's huge investment going in now but it takes a while to get a new concept off the ground," Knight said. "It's been a tough year for pubs, what with the smoking ban, but we have huge potential."

Revamping Chef & Brewer will be as much a challenge for its customers as for Knight. Half of its regulars are over 50, and, while they spend well, the chance of upsetting a loyal customer base is high. Knight, however, is urging the business to keep its existing customers happy while making the brand more relevant to a wider base of customers.

That process doesn't mean transforming the sites into full-blown gastropubs, but making the brand more competitive when it comes to attracting families. Despite its corporate purchasing power, Spirit is keen to emphasise to customers that its beef comes from Yorkshire, Hereford and Dorset and its cauliflower from Cornwall.

"We're trying to make Chef & Brewer more relevant," Knight said. "That means British meat and British vegetables. It ticks all the boxes for most people going out. But it also means making the decor less musty and more contemporary."

Spirit's next challenge is taking on the company it used to own - Premier Lodge, now Premier Inn and owned by Whitbread. Despite being a franchisee for eight Premier Inn sites linked to Chef & Brewer pubs, Spirit has 1,200 rooms that it's rebranding and refurbishing under the Good Night Inn banner. So far only eight sites have been refurbished, with a further 22 in the pipeline. With rooms priced from £59 a night the aim is to break into the share held by budget hotels.

"The first thing Whitbread asks us is, ‘Why is everything not a Premier Inn?'" Knight said. "But in some sites it just wouldn't work as you need the lodgings and the pub with separate entrances. Also our sites are smaller than those which Premier Inn would operate in and it would make it very difficult. If you can operate hotels on a small scale you can take 100% of the income."

On the agenda

Also on the agenda for Knight and his team is the Grill House Kitchen, a new concept based on the innovative Jospor charcoal oven, which works like a barbecue. The first site is the 135-seat Nag's Head pub at Mickleover, Derbyshire, which has reopened following a £450,000 investment. The format will be rolled out across the local pubs division, with a second site in Burton upon Trent next month.

Between £300,000 and £500,000 will be invested in each Grill House Kitchen, according to Knight, who hopes the format will capture a younger, more affluent customer.

Knight is clearly confident about the future, but realistic enough to know that the tough economic environment means success won't come on a plate for Spirit. But he won't mind a few more grey hairs if it means the group lives up to its potential.

Andrew Knight

Knight started his career with Courage before joining Allied Breweries as a graduate trainee. After two years he moved into the role of retail area manager with Joshua Tetley & Son.

After various operational roles he accepted the position of retail marketing executive within Allied Domecq Retailing.

In 1999, Allied Domecq sold its pub retailing business to Punch Group and Knight became commercial director for the newly named Punch Retail.

Following Punch Taverns' purchase of Spirit Group in January 2006, Knight was appointed managing director of Spirit.

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