United estates
Anyone at all interested in business loves a good takeover battle. Share prices crash and rise, deals are done and broken, and billion-pound bids and counterbids are flung around, with the inevitable insults not far behind.
When Punch Taverns swung its £2.75b knockout blow at Whitbread at the end of the bout over Allied Domecq Retailing, it returned to its corner to let commentators speculate about what exactly it would do with the 3,500 pubs it now owned.
The 1,500 or so tenanted pubs were absorbed quite easily into Punch's existing estate but the remaining 2,000-pub managed estate was expected to be offloaded as soon as possible to operators such as JD Wetherspoon or Morrells of Oxford. But it was not to be. In fact, Punch kept 1,062 of them under the newly formed subsidiary Punch Retail. Former Pelican Group managing director Karen Jones was brought in as chief executive not only to run the estate but to rebuild the organisation and re-evaluate the brands it owned, such as Firkin, Mr Q's, Big Steak Pubs, Wacky Warehouse and growing concepts such as Bar Room Bar.
The Allied estate was a prize which Punch had been determinedly tracking for some time, according to Jones - so determinedly that the first business plan was drawn up back in 1997, with the individual pubs, rather than the concepts, the driving factor. "It's a collection of fantastic sites," Jones says, "and we felt we could make them great. It wasn't really the concepts that were the target, and there aren't many in there that we're going to keep.
"The thing about Allied Domecq," she adds, "was that it wasn't a pure pub company, it was a wines-and-spirits company with a pub division attached - so clearly the pubs were never going to be the primary focus. We're a pub company - we don't do anything else."
The first brand earmarked for gradual phasing out is Firkin - a case of "great in their day, but their time has passed", according to Jones. The majority of Firkins were transferred to Bass as part of the acquisition deal last year. Punch was left with 42 but eventually, Jones says, they will be changed one by one, probably into unbranded pubs, eliminating the Firkin concept from the estate.
"Our strategy is that while we have them we'll make them work for us," she explains. "The maxim has always been ‘the individual solution for the individual pub'. So, with things like the Firkins, the name will disappear as we change them by putting the right solution, whatever that may be, into those sites."
There are brands in the estate that are staying - namely Mr Q's, Big Steak and Wacky Warehouse - but they've all had a revamp from the new bosses.
Big Steak Pubs, for instance, consisted of 94 individual pubs with a Big Steak menu and 85 new-build pubs with a Wacky Warehouse play-barn attached - but the difference between the two was too blurred, says Jones. "Often, the Big Steak pubs were entirely inappropriate," she says. "The concept was shoehorned into many pubs where it really had no relevance. These big plastic menus would appear, which had a kids' section called the Wacky Gang, and these were places with no Wacky Warehouse attached."
Now a revised concept, called Big Steak Kitchen, has been introduced into 17 sites without Warehouses, to give an increased focus on food quality and a more contemporary feel, and there are plans to put it in many more.
There are also changes at Wacky Warehouse, although there are suspicions that, before Jones took over, neither she nor Punch was entirely convinced by the concept. "No, I don't think we were," she concedes. "If you think about it logically, it's quite a bizarre idea - sticking a play-barn onto a pub. Alcohol and children don't usually go together in one's mind.
"What I've realised now is how important they become to the community, especially the really good ones, and kids love them. My youngest daughter is four and she adores it. When they work and they're in the right location, they're much loved."
The main change is in a Two for One food offer, currently being trialled in 13 sites, and aimed at keeping the parents in the pub while the kids play. It is, says Punch, the first such permanent multi-site offer in the UK.
"We just felt we could do an enormous throughput of food in these sites rather than just do what everyone else is doing and pile into the discount drinks market," Jones says. "We wanted to do great-value food, and Two for One is not about piling it high and selling it cheap - we want people to notice the quality first. We want them to come out saying, ‘Wasn't that great and, incidentally, wasn't it cheap?'"
Mr Q's, the chain of 220 local pubs offering mainly pool, big-screen sports and jukeboxes, was the main concept inherited from Allied that Jones was keen to keep. It needed updating, though, and trial sites at Crawley in Sussex and Kidlington in Oxfordshire are now testing a more contemporary bar, with improved seating, food and layout. Punch has also decided to drop the "Mr" from the name.
"In fairness to Allied," says Jones, "Mr Q's is one of the concepts that was allowed to evolve and didn't sit still. Its motto is ‘two atmospheres under one roof' and it succeeds in that remarkably well. The best Q's have an area where you can sit and be quiet and read a paper, and then another area where there are pool tables, big screens and machines."
The new trials are working, too, according to Jones, even passing the key test of having women come in on their own. "We've kept all the existing customers and also expanded the customer base," she says, "so it's a great atmosphere now and we're going to take that out to a lot more Mr Q's sites."
Jones has come from a predominantly food-led background at Pelican to oversee concepts such as Café Rouge, and a new £70,000 development kitchen has been created at Punch Retail's Burton headquarters to improve variety and standards and consequently boost food sales - currently, 40% of the total.
She has also formed a new concept development division, Devco, to work on more upmarket retail offerings such as Bar Room Bar - a café-bar concept of eight sites that Jones hopes to expand across the country.
But with only six months having passed since the takeover, there is still a lot of work to be done on the estate and, with a determination to treat every pub as an individual, Jones has spent most of her honeymoon period travelling between each one. Even with all the remaining brands, there are still 600 unbranded, independent pubs.
This determination to avoid mass branding means that time will tell whether Punch can succeed in a daunting task, and show whether it was worth all the trouble it had to go through to get the pubs in the first place.
"We have to make sure that we put the right thing in the right place and not cannibalise ourselves," Jones concludes. "What we do has to fit the pub and fit the location. It's that simple."
FACTS:
Punch Retail
107 Station Street, Burton on Trent, Staffordshire DE14 1BZ
Tel: 01283 545320
Inherited 1,062 managed houses on takeover of Allied Domecq. Current breakdown of those pubs:
Mr Q's 220
Big Steak Pubs 77
Big Steak Pubs with Wacky Warehouse 85
Big Steak Kitchens 17
Two for One (about to open) 13
Bar Room Bar (by year-end) 8
Firkin 42
Unbranded 600
Source: Caterer & Hotelkeeper magazine, 27 July - 2 August 2000
