Thankfully, Covid is well behind us and fundamentally people want to go out and socialise. While the cost-of-living crisis means consumers are having to manage their spending more carefully, we’re finding that our Amber Taverns’ model, which provides a great customer experience and is good value for money, is proving to be a winner.
In the current trading environment, it is not the time to try and back the winner of the five o’clock race at 4.30. It’s about insulating yourself. We don’t do food and therefore we don’t have to buy costly catering equipment and, coming out of the pandemic, our Finance Director Joanne Jones did a great analysis of the market, including on energy, and sensibly hedged our bets. Success is about sharing the pain of the cost pressures and providing customers with a good experience at a decent price point. When they have less disposable income, they are going to be more selective about where to spend that hard-earned and depleted pot of money.
We invest heavily in our estate, as our offer is about all-round good value, which is so much more than just the price of a pint or a gin and tonic. We have very decent, well maintained drinking and socialising environments for customers to enjoy – while our pub operators are free to fully focus on the job of convivial host at the heart of their communities.
Our model is a hybrid of a conventional tenancy and a managed house set-up. Lots of pub companies are using this now, but we remain one of the few companies exclusively working with this system. Our pub operators set up a limited company and employ all the staff and, in return, they get a percentage of the weekly turnover. After they’ve paid their staff, what’s left is their company’s profit. We pick up all the other bills and costs associated with the running of that site. We don’t require any ingoing investment either.
We want only you – the human capital – and your enthusiasm to create a great environment for the customer. We provide the physical space, as well as the beer and other drinks that can be sold competitively in the local marketplace. We will do all the important box ticking, looking after licensing, and health and safety issues, etc. We give our pub operators a stage and, in return, we ask that they put on a great performance and become an integral part of their community.
It’s a great skill to be a good mein host and it requires great skill, effort and dedication. Personality is everything and we offer a six-month training programme, less for those with experience, to make sure they are Amber-ised, which is about being up-to-speed with our systems and our ways of doing things.
The hybrid model’s success is down to the operator’s grasp of the business. Running one of our pubs is a business opportunity, not a job. There’s no salary cheque at the end of the month and we don’t dictate that there’s a quiz night every second Tuesday of the month. We do provide lots of marketing support and assets, and it’s for the licensee to discuss ideas with their Area Manager. We want our operators to be coming to us with loads of ideas to build the business – from extending the beer garden to a community event.
We don’t see any benefit in having the operator sat in their office, worrying about finding a better utility supplier. We want them centre stage, dealing with their customers and knowing their community.
Price is an important factor, but I also think customers are realistic and realise that businesses are under inflationary pressures, just as they are at home. It’s about getting that right balance, one that makes people want to go out and be in a social environment.
Our pubs have a range of good value drinks, we have premium too, and Moretti and Cruz Campo have done well for us. But what we sell a lot of is good solid brands – John Smiths, Foster’s and Strongbow – admittedly, they’re not the sexiest but they can be sold at a good price. Heineken and Molson Coors are our main suppliers. If customers want to trade up at the weekend or for a special occasion, they can do that, all at a sensible price point – with everything served in a great quality environment.
We spend between £1m and £1.5m on our new properties, which might be town centre retail site, like the ex-Marks & Spencer in Bridlington or the Bonmarché in Chester. Equally, we will buy pubs in good locations. We take a lot of care in reviewing any opportunities, to make sure a new site has legs – that means that it has the potential to join the drinking circuit and will benefit ourselves, our operator and the local consumers. We invest to create a good buzz. People have great loyalty and affection for community pubs and when they see a previously neglected site receiving investment, it generates a lot of interest and goodwill.
There is a lot of talk in the industry about pushing for reform of the Business Rates and tax system, but planning is another huge challenge for us. Getting change of use approval can take 10 months – even when, as happened to us in Chester, there’s a pub next door and a JD Wetherspoon opposite. The planning regime doesn’t help hospitality – it’s cumbersome and time-consuming. It adds an extra layer of complexity to any opportunity, as we need to judge whether the police and licensing authorities are likely to grant a new licence, if the site is ex-retail.
If we don’t buy the freehold, we will only work with landlords offering long leases with peppercorn rents – we’re not interested in taking a lease with the likes of Star or Punch, or having to deal with big organisations that will put a tie on beer.
When it comes to competition in the local marketplace, I think that we happily coexist alongside other pubs. Take a Wetherspoon’s customer – when a big match is on, they might prefer to come to us for a lively atmosphere. We have Sky and TNT and Gary Roberts, our Operations Director, is very au fait with tech and where the TVs should be positioned, to enable a range of sports to be shown at any one time. We invest in getting the audio-visual offer right.
We also have a range of entertainment, from darts and shuffleboard to pool, and we’ve had a lot of success with our karaoke booths, which are bookable and work well with drinks packages with a minimum spend. We recently took over a Wetherspoon’s in Durham, one of two sites it had there, and Durham University has now set up its student darts club at our pub.
Pricing is not standardised across the estate and each pub has a different price structure, set by us in consultation with the operator. Our area managers, who look after 12-14 pubs each, are constantly consulting with our operators. Together they live and breathe the local market.
Our model, we believe, is a win, win – in fact I’d say there are three winners. The customers, us and our operators. How can a tenant who is worrying about paying the rent, or having to spend hours trying to find a better price on electricity, going to be providing a great customer experience? We like to think of our model as us doing all the sweeping up and making the tea, leaving the operator to get on with what’s important – giving the customers a great experience.
