Success in business is about taking measured risks. Taking the helm of a pub business that has, among many misfortunes, seen its shares suspended from the Stock Exchange and, separately, undergone an investigation by the listing authorities, is perhaps at the top end of the risk spectrum.
Add in the fact that you are a widely admired executive with numerous offers on the table, and the decision to accept a post at this pub chain seems almost perverse. But this is precisely the situation with Bob Ivell, the former head of Scottish & Newcastle's pub business and now executive chairman of Regent Inns, the troubled operator of the Walkabout and Jongleurs bar concepts.
Ivell has teamed up with John Leslie, his former finance man from S&N and now chief financial officer at Regent, to take on what is possibly the biggest challenge of his career. When questioned about his decision, Ivell makes it clear that he has more than a rescue on his mind. "There is an opportunity for consolidation in the pub market. This is not a bad vehicle for that," he says.
He is not alone in spotting the opportunity. Robert Tchenguiz, who last year bought part of the Laurel pub chain, built a 13% stake in Regent. This fuelled a lift-off in the share price as investors bet on a takeover. From a low of 30p, the price is now heading back towards £1.
When Ivell and Leslie joined the company in October last year, investor appetite for a takeover was whetted. The pair had overseen the £2.5b sale of the S&N pub and budget hotel chain, completed in October 2003. The same, if for a somewhat smaller sum, was expected again.
Ivell and Leslie are out to confound expectations. "We would have to consider it if an offer came along, but we are not sitting around looking over our shoulders," says Ivell. Nonetheless, the pair have a share-options package that pays out in three years, or when there is a change in control. They are expected to net over £1m in total.
On arrival, Ivell and Rowe set about securing the bank position and restoring the battered confidence of shareholders.
This was by no means the first time Regent's investors had taken a pasting. In 1998, a shock profit warning saw the share price plummet from 388.5p to 100p after another financial mess was uncovered. Former finance director Clive Watson, who had left the business only months earlier, was fingered for producing like-for-like sales figures that were calculated incorrectly. Watson defended himself, asserting that the whole board was to blame. He became embroiled in further controversy when it emerged he had exercised a share-options package just two weeks before the profits warning. The Stock Exchange is thought to have investigated these share dealings, eventually clearing Watson.
Those problems came as a new team was joining - Haupt and Rowe. The pair rapidly took full control, pushing aside the chain's founder, David Franks. Before the new team bedded in, however, there were more problems. In December 2000, the shares were suspended from the Stock Exchange over liquidity concerns. It took until March the following year for them to be readmitted.
Despite this setback, a new course was plotted for the business. The idea, as it is now under the Ivell and Leslie regime, was to focus on developing two brands, Walkabout and Jongleurs. The parallels look inauspicious but there are key differences. In particular, Ivell and Leslie have a much more pragmatic attitude to brands.
"It is much more about the internal than external," says Ivell, arguing that the way a pub is run counts for far more than the sign on the door. "Customers go there because it is the best pub within a 20-minute drive-time. It's about the local market," he says.
There is a similar pragmatism about making decisions about where to take Regent. "As outsiders, we can be totally objective. There are no pre-conceived ideas and no emotions," says Ivell. He adds that a few of the larger leisure businesses in the UK could use fresh eyes at the top.
Despite believing that it was a mistake to exit the unbranded pub business, Ivell is seeing through the sale of the remaining part of the unbranded portfolio. This should have been completed in 2002, but the company that bought 17 of the pubs, Porter Black Holdings, went bust and the leases reverted to Regent.
Even some of the branded outlets are being sold, notably the Walkabout in the City of London. The company has a total of 71 outlets trading in its core estate, including 49 Walkabouts and 15 Jongleurs.
The biggest shock for Ivell and Leslie when they joined was how weak the management controls in the business were. "I was surprised there was no internal audit, particularly given that it's a cash business," says Leslie. There were also no proper budgets in place and no profit targets. "This meant there was simply no incentive to control margins."
Walkabout is being gently tweaked away from its Australian theming, which Ivell believes was overdone. Other adjustments include making more of televised soccer matches, exploiting Walkabout's potential as a party venue. Despite this focus on groups and entertainment, the company has not applied for licence extensions.
Similarly, the proposed legislation to ban smoking is not causing much excitement. Ivell will simply stop serving food if business drops off. Food is only 6.8% of sales, compared with the 78.7% accounted for by liquor.