Time for a new Pope
Eldridge Pope is confusing the locals. Pub-goers in the South-west will tell you Eldridge Pope is a typical, traditional, independent family brewer - famous for it, in fact.
Two years ago they would have been right; today they are anything but right. Eldridge Pope is no longer a brewery, it is not family controlled, and its "traditionalness" - if such a word exists - is questionable. On one count they are right: it is independent; or at least it will be until it becomes an attractive-enough proposition for a merger or acquisition to offer shareholders better value.
In short, this ex-family brewer has undergone a fundamental change in strategy in the past two years. The last of the family, Jeremy Pope, masterminded that change then handed the reins to an outsider, Peter Philipson. In February Philipson, a tough-minded Geordie, stepped in. He is a newcomer to the company - indeed to pubs - with a strong marketing background in fast-moving consumer goods.
He spent 13 years with Gillette, ending up as European marketing director before being poached by United Distillers as UK, later international, marketing director and finally taking the top job as UK managing director.
The appointment of an experienced, customer-focused marketing professional who understands the value of brand strength and evolution in a rapidly changing industry is a logical consequence of the changes that saw Eldridge Pope move from brewing to retailing.
Philipson inherits a strong position. The tough decisions have been made; an investment war chest, though modest, exists; and Eldridge Pope has identified growth areas that are achievable.
Philipson's strategy is determined by Eldridge Pope's strengths and weaknesses. It will trade within its known patch - south of the M40 and west of the M23. It cannot hope to compete with the site- and product-buying strength of the big boys so has identified a different marketplace.
Aside from a good, cash-earning 63 tenancies, Eldridge Pope has 131 managed pubs, of which 16 are run as Fireside Inns and eight as a concept that started in 1997 as Slurping Toad.
The Fireside Inns concept is of traditional food-led inns of character appealing to a more moneyed, upmarket customer base prepared to travel for consistent quality, blackboard-driven food and standardised customer service. Customers are mature, affluent, professional-calibre people who are more concerned with quality then price. Average spend here is £8. Fireside Inns' customer profile shows customers are over 35, have older or no dependent children, own two or more cars and own their houses outright. They eat out frequently but do not use pubs just for a drink. The wet:dry split at Fireside is 45:55.
Eldridge Pope also uses Fireside Inns and other buildings with charm for accommodation. It has developed up to 200 bedrooms and expects a 50% increase within the next year.
The focus is on the quality, not budget, end of the market, with room rates ranging from £40-£60. Average investment per new bedroom is £30,000, and the company will spend £10,000 getting existing bedrooms up to standard. Occupancy is already averaging 55%.
The company is still in its early days of adding accommodation, and it hasn't even started central marketing or booking.
"We're seeing strong repeat business," says retail director Mike Collins, "and we attract a higher spender all round. A nice addition is that vandalism as well as wear and tear is negligible."
Within the rest of the estate, selling off marginal houses and converting tenancies of promise to management has seen a general increase in the quality of the estate.
At the other end of the spectrum the Slurping Toad brand exemplifies the strategy of niche marketing.
"We can't compete with the majors such as Bass and Wetherspoon's investment in primary locations," says Philipson. "So instead of acquiring secondary locations in primary towns, we're finding there are excellent returns from primary locations in secondary towns."
Earlier this year the residents of Chichester protested at the name being hoisted outside a graceful decommissioned church. The Slurping element of the name was offensive, they claimed. The name has duly been changed to the Toad at Chichester and it is likely that this policy will be adopted at other locations. Another five Toad locations have been acquired and a further five sites identified.
For the Toad brand, Eldridge Pope looks for 3,000 to 4,000sq ft of trading space with character, and in a building with high ceilings, high-quality fixtures and fittings - including leather sofas - and a great expanse of natural stone and woods, as well as split levels.
During the day Toads trade as smart bar-restaurants serving competitively priced food with an average food spend of £5. They attract female as well as elderly custom among the target daytime customer base of shoppers, workers and tourists.
A computerised sound system changes music from lively classical during the day to an increasingly upbeat younger sound. After the kitchens close at 6pm the atmosphere changes to a quality circuit pub for a younger, high-spending, drinking customer base in early evening, and a DJ and video walls concept from mid- to late evening. The split between wet and dry is 90:10. Its customers are in the 18-30 age group and from the B and C marketing demographic.
Collins explains: "It's what we call a chameleon concept, or a hybrid. We're appealing to at least two clearly defined and high-spending customer groupings - with three key moods - in a single day. The returns are quite stunning."
The average Toad turnover is £600,000 with a post-rent profit of £172,000, giving return on capital employed of 27% - about double the industry average, claims Collins. New Toads anticipate weekly sales of £16,800.
