The Caterer and Hotelkeeper interview – Stephen Goodyear

07 November 2011 by
The Caterer and Hotelkeeper interview – Stephen Goodyear

Stephen Goodyear, chief executive of Young's, talks to Neil Gerrard about the company's reasons for pulling out of brewing and its plans for the future

What is your background in the pub and brewing industry? All my career has been in beer and pubs. My first job was with Courage back in 1974. I left in 1995 when I joined Young's as sales and marketing director. I took over as chief executive in April 2003.

I have had nearly 38 years in the brewing industry and this will be the first year that I haven't had any direct brewery association since we left the joint venture with Wells and Young's. I have seen the brewing industry change dramatically over those years. I remember being involved in a take-home promotion when I first started where we offered four 20oz (half pint) cans of Courage Light Ale for 28p!

So how do you view the pubs market at the moment? As far as Young's is concerned, we have set ourselves as a premium pub company. We have got 247 pubs and over 150 managed houses and our strategy is very clear - it is managed houses in central London. We are still devoted to our tenanted estate but we have been refashioning that a little bit and we have been selling down the tail.

We think the premium niche in the market is absolutely right for Young's. The middle market is quite crowded - there is an awful lot of good competition there, with the likes of Wetherspoons, who are a hugely successful pub company. That is not an area that we would be comfortable competing in. So we are setting ourselves right at the premium end of the market with really good food, good wine, and a good selection of beer. We are training all the staff across the company to make Young's very special. That is why we bought Geronimo, which is extremely complementary to what we do.

It was an interesting time, given that Young's is celebrating its 180th year, to pull out of brewing. Why did you do it, and why now? The Wells and Young's joint venture with Charles Wells] was formed back in 2006. That was the time we sold the brewery site in Wandsworth. We were very keen to continue brewing and look after the Young's beer brands, which are very important to us. It went very well. We had 40% of that business, with the other 60% owned by Charles Wells.

The relationship was good and they did a wonderful job brewing the beer but it came to a point where they quite rightly wanted to invest in more brands. We wanted to invest in our pub estate, so we have had a very amicable parting of the ways. We have a supply agreement with them, which was really a revision of the original one and we have a licence agreement for Young's. They will continue to brew and supply the brand at a good market rate.

Will all of the Young's beer brands continue to exist? They will continue to exist as long as they do well. The main Young's brand that we sell in our estate is Young's Bitter, which is really our bread and butter cask ale and it is very good. Young's Special is still very popular. London Gold is another one that we do and that is in some of our pubs. But the two key brands for us are Young's Special and Young's Bitter.

Charles Wells has paid you £15m for your share of the joint venture - will that all go on your pub estate? It comes in three stages over a few years. We are currently just involved in selling about 10 tenanted pubs. We have also got money that will come in from Charles Wells and we will put that against our debt in the short term and it leaves us in a good position should any opportunities come up for more managed houses.

You bought Geronimo for £60m last year - where does it sit in the Young's business?

Geronimo is a diverse business, which has airport concessions at Terminal 1, 3 and 5 at Heathrow. We also have a great pub at St Pancras station. It has opened our eyes to other opportunities, which has been good for us and set some real momentum in the business.

What about the hotels side of your business - how is that faring? We have got 370 bedrooms, and they are all in very good order but the latest development is the Alma in Wandsworth [pictured], for which we have had terrific reviews from the broadsheet papers, likening us to Hotel du Vin. They are boutique bedrooms, which are really very comfortable and we are enjoying pretty much 100% occupancy at that particular place.

So who is the target audience? It is mainly businessmen during the week, tired of sterile hotels. It gives them somewhere during the week where they can have a good enjoyable dinner in a nice atmosphere.

Is occupancy holding up OK? Yes it is. We put a new hotel team in the year before last, all run by an operations manager. We have our own discrete marketing so the hotels have a different image and a lot of work has gone into the website to create a discrete system for booking so you can book online without any trouble. At the touch of a button we can see which rooms haven't sold on any day at any hour, so then the rates manager rolls into action and we will get onto an agency if there is some spare at the last minute. It is about getting the occupancy levels up.

You have 16 hotels- are there more planned? We have planning permission for more. It is a question of timing. We have planning permission for the Spreadeagle at Wandsworth but we won't do it until the redevelopment of the brewery site starts. I think we can add more rooms to the Windmill on the Common at Clapham and the Coach and Horses in Kew too. So there will be probably another 50 or so over the next three years but if one takes the profit from just the hotel rooms it is probably 10% of our managed house profit. And our managed houses represent 80% of our total retail profit. It is a good string to our bow.

Duty was recently lowered on lower-strength beers below 2.8%. Does that make a difference to a business like yours? I think taxation on beer generally is much too high. It has some merit but it all depends on the liquid really. If there is a good taste delivery on the liquid then I think it will do quite well. Our biggest selling beer is Young's Bitter, which is 3.7% but it has bags of flavour and it has great ingredients in it. I have always found that really low strength beer doesn't really taste of a great deal.

So we won't see any lower strength beers making their way into Young's pubs? You never say never. We have got to be awake and give the consumer what he or she wants so we will wait and see what the consumer wants. We will probably trial it in one or two places and we have got to be alert to people's health and all the rest of it. It is high up the agenda.

What are your views on Caterer and Hotelkeeper's Slash VAT campaign, to cut VAT to 5%. Is it something you would support? Is it realistic to even try? I think it is realistic to try. It has worked in France and given that one is banging one's head against a brick wall on beer duty, a reduction in VAT on food would be good for our business. Let's face it, there is a big discrepancy there between supermarkets and pubs and why should we be punished?

If there is a cohesive argument for a reduction of VAT on food and it will help kickstart business then I don't see any reason why the Government shouldn't listen.

Young's top tips on social media and e-marketing

social media
We like to have a dedicated person within each pub to respond to social media comments quickly and personally. Social media is an increasingly important channel to respond to customer enquiries and promote activities happening in our pubs. It is valuable medium to drive business and learn more about our customers and to build loyalty.
â- Engage with likeminded people, grow followers in your field (people interested in pubs/dining out/foodies etc)
â- Don't spam people with uninteresting information
â- Be proactive
â- Be interesting and always positive

We have a database of nearly 500,000 with whom we communicate on an individual pub basis monthly, creating a dialogue with our customers and encouraging advocacy.
â- Punchy subject line
â- Clear call to action
â- Keep it simple
â- Compelling visuals
â- Share/forward to a friend opportunities
â- Mobile compatible content

Facts and stats

Turnover £142.6m (53 weeks to 4 April 2011)
Pre-tax profit £20.8m
Pubs 247 (94 tenancy, 121 managed, 32 Geronimo)
Hotels 16
Hotel rooms 370
Staff 2,699 (99 in head office)

E-mail your comments to Neil Gerrard here.

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