Family brewers and tenants look at buying Enterprise freeholds: A number of family brewers and sitting multiple tenants are in discussions with Enterprise Inns about buying sites that are among the 200 to 300 top-end pubs that the company wants to sell to reduce its bank debts. Fuller’s, Shepherd Neame and Arkells are among the family brewers that have acquired at total of 17 or 18 sites between them so for – Fuller’s bought 15 of them for £22.9m. Kent-based Thorley Taverns bought three sites – including one where it was the sitting tenant – in a £3m deal in December 2011. Enterprise Inns is also talking to a number of single site tenants that have expressed interest in buying their pub in the past. Enterprise is selling sites at a multiple of between 12 times and 14 times its own earnings. Chief executive Ted Tuppen told Morning Briefing: “These are pubs that have special use value to the buyer. We’re not selling our 200 best pubs – it’s more that we’re selling 200 from the 2,000 ‘fabulous’ pubs in the estate.” Tuppen added that there were a number of deals in the pipeline but added: “Some tenants will like the idea of buying the freehold of their pub but are going to find it too difficult to raise the funds.” Enterprise has also been selling, at public auctions, a handful of sites let to grocery retailer Tesco and sites occupied by Mitchells and Butler and JD Wetherspoon on free-of-tie leases. One example is The Crown Inn in Bingham, Nottinghamshire, tenanted by Wetherspoon, which was sold on Tuesday at an Allsops auction for £710,000, which is just over 14 times the Enterprise rent of £50,000 per annum – the guide price was £650,000 to £700,000. Tuppen said: “These sites are not part of our core business – we’re simply the property landlord and it is right to sell these at the right multiple.” It is understood sites that are owned by Enterprise and let to Tesco as convenience stores have been selling at around 16 times Enterprise’s rent earnings. (See Friday Opinion for further comment)

UK consumers to spend £15,600 in coffee shops over a lifetime: A study by Douwe Egberts has found that Britons spend £15,600 in coffee shops over a lifetime because they don’t know how to make lattes and cappuccinos at home. It found 69 per cent of 2,000 people surveyed spent between £1 and £5 in coffee shops five days a week. A total of 68 per cent would like to replicate shop-bought coffee quality but 42 per cent avoid buying ground coffee because they were not confident of how to use it at home.

Marston’s hosts analysts’ tour: Wolverhampton-based Marston’s hosted a tour of four Midlands pubs yesterday with a focus on its 494-strong managed estate. The company took City analysts to the Woolpack, Weston, the Chase, Rugeley, the Spread Eagle, Gailey and The Bell, Tong. The company reported food had risen from 28 per cent of turnover in 2005 to 42 per cent in 2011. The number of meals served per annum has risen from 14 million a year in 2005 to 26 million a year last year. Average weekly turnover has jumped from £11,000 per week to £16,000 per week now. Consumers have been getting increased value with the spend-per-head on food rising just 40p over six years to the current £6.10 per head, with food margins, however, up to 66 per cent from 62 per cent in 2005. Douglas Jack, of Numis Securities, said: “Our over-riding impression is that the managed estate is pulling more levers to drive sales, improving product range (rolling out Nestlé coffee, single hops and world beers) and motivating staff (better feedback and career management). Capital is used carefully, with the bulk of it being applied to the new build programme, which is continuing to drive strong earnings growth.”

Convivial London Pubs completes 24-bedroom development at Mitre pub: Convivial London Pubs, the operator of eight London freehold pubs, will complete a £900,000 internal refit to the Mitre pub, near Greenwich Park, London this week that has seen the creation of 24 bedrooms - it added an extra eight rooms. The five-storey Mitre will now see a few weeks of external work to finish the project. The Mitre has already been booked-out for the entirety of the Olympics by an unnamed equestrian team. Chief executive Kris Gumbrell told Morning Briefing: “We’ve refurbished the Mitre from the ground-up and it’s now looking fantastic.” Convivial added a micro-brewery to its The Botanist venue last year which resulted in 20 per cent growth at the site. Additional fermentation capacity was added as a result. Gumbrell added: “It started off as a brewpub but we’ve started to get inquiries about our beer from outside the group.” 

Oak Taverns targets third brew-pub: Oak Taverns, which operates two brew-pubs in its subsidiary Ridgeway Pub Company, is looking for its third brew-pub after the success of the first two. The company has been operating two freehold brew-pubs; The Swan Inn at Faringdon for 18 months and the Cross Key at Thame for two years. Director Simon Collinson told Morning Briefing the company is enjoying “good growth” at the two venues and is about to look at a third. Brew-pub expert Alan Watkins, who took on his fifth pub this week, provides input at the Swan Inn. “We work closely with Alan at The Swan Inn – people in this industry do like to help each other,” said Collinson. Oak Taverns operates 25 pubs and also has a 50 per cent stake in a company called Recovery, which currently operate three leased pubs in Norfolk in partnership with Eddie Scott. 

Cask Taverns takes third site: Cask Taverns, the Yorkshire company led by Keith Vear, has bought the Friendly Inn from Timothy Taylor and will re-name it Pearcy Vear’s Real Ale House in memory of his grandfather who boxed under the name in the 1920s. The pub will also serve Percy’s Pint, a beer brewed for the company by Empire Brewery in Huddersfield. Vear said: “We are hoping to do the same as we have done with the other pubs and make a success of it at a time when pubs are struggling.”

Smith & Western opens sixth site: Highly rated Tex Mex chain Smith & Western has opened its sixth site. The latest venue is a former Mitchells & Butlers (M&B) pub in Crawley’s Tilgate Park, a site that M&B originally acquired a part of package from Whitbread but is leased from the local authority. The venue was closed two years ago by M&B.

Top chef takes on second pub: Former Ritz chef Ricardo Victor has taken on his second pub, Punch Taverns’ Golden Cock in Farnley Tyas on 4 April with his business partner Mark Oldfield. Victor, who has also worked at the award-winning boutique hotel Cotswold 88, already runs the Bulls Head & Bistro in Blackmoorfoot. Victor said: “This gives me the opportunity to develop a different concept of brasserie and fine dining, whilst maintaining a traditional village pub. Farnley Tyas is a very close-knit and traditional community that also attracts a large number of destination diners, so I am excited that I can return the Golden Cock back its former glory and beyond.” Oldfield has lived in the area for many years and is highly experienced in the pub industry, having run a number of multiple site operations. He said: “I have known this pub for a long time, and always thought that one day the opportunity may come my way to take it on. It’s the perfect combination of village pub with dining potential, as I strongly believe that a great pint of cask ale is just as important as great food and fantastic service”.

TCG opens sixth Henry’s Café Bar: Managed pub and bar operator TCG has opened a sixth Henry’s Bar, located in Bromley. Henry’s Bromley opened on the site of the former Ivory Lounge in the town and fills the gap, identified by TCG, for a more ambitious eating out offer. Nigel Wright, TCG chief operating officer, said: “Henry’s Cafe Bar is a strong established brand which will add huge value to our level of trade in Bromley. We’re confident that the café bar will quickly become a favourite ‘hang-out’ and informal dining destination for the town’s residents, many of whom will be familiar with the other high-profile Henry’s sites in central London and Canary Wharf.” Henry’s Café Bar was launched in the late 1980s

JW Lees sells Lakeland Vintners: Family-owned brewer JW Lees has sold the Lakeland Vintners business it owns at Ings, near Kendal in Cumbria to House of Townend. JW Lees has owned Lakeland Vintners since 1988, although it has been trading since the 1970s. The company is a wholesale wine distributor to hotels, restaurants and pubs primarily in the Lake District area.William Lees-Jones, managing director of JW Lees, said: “Lakeland Vintners is a great business and we are delighted to be selling the business to another family business who are wine specialists.”

Dhillon Group launches Crown Chop House: Dhillon Group, the company that runs country pubs and hotels, has opened the Crown Chop House at Amersham. The Crown Chop House will serve simple, wholesome dishes with a focus on the Josper Grill – an indoor, charcoal barbecue reaching temperatures of up to 500°C. It will offer classics such as chophouse steak pie & chips, cuts of Hereford and Angus cross beef, seasonal salads and traditional roasts, as well as puddings ranging from ginger pudding with confit dates to baked chocolate mousse with rhubarb. Chef David Hawkins is also in the process of developing a small kitchen garden at the back of the inn, which will provide the basis of his fresh herb and vegetable supply. 

Mitchells & Butlers benefits from GoRecommend app: Marketing Week reports that Mitchells & Butlers is one company that has recognised the benefit of real-time feedback from customers that goes viral. Paul Madden, head of digital and CRM at M&B, said: “Many of our customers like to tell their friends, family and colleagues about a positive experience they have had with us. “To help amplify these recommendations we use the GoRecommend app, which enables customers to make a brand recommendation to their connections on Facebook and Twitter. Nearly 30,000 of our guests have recommended Mitchells & Butlers brands to more than four million people.”

The opportunity of Enterprise sell-offs by Paul Charity: Opportunity can be like warm weather, always unpredictable and with no guarantee of how long it will last. Right now, there are a number of Enterprise Inns lessees who must be wondering whether they can make the most of the rays and start to produce hay. Back in 2009, Punch Taverns decided it would chip away at its debts by selling freeholds to anyone who could come up with the right offer. A large number of high quality Punch lessees – Innbrighton, Beds and Bars, Peach Pub Company, People Pub Company to name but a few – found the cash to buy-in their freeholds. The opportunity was a time-limited one but quite a few smaller multi-site companies stacked up a few freehold bales. And it feels a bit like history repeating itself right now as Enterprise Inns takes the same route as Punch. It plans to sell as many as 300 of its better quality pubs in the next couple of years to raise as much as £400m to reduce its bank borrowings when it comes to re-finance no later than December 2013. The starting pistol has already been fired with the sale of 15 pubs in Sussex, Surrey and Hampshire to Fuller’s for £22.9m and a few other sales. Explains Enterprise boss Ted Tuppen: “It’s a bit of asset management – we have the opportunity to generate lot of cash by selling a relatively small number of very attractive pubs.” The opportunity is, of course, one that the company has already taken on a large scale, albeit by the unusual route of selling freeholds on a leaseback basis at the public auctions. This method of sale allowed the company to retain an operating interest in the pub at least. This time around, it’s much more straight-forward sale of top-end kit – if buyers can meet the Enterprise price targets. Without getting too technical, these revolve around Enterprise being paid 12-14 times its earnings. So, for example, if Enterprise earns, say, £100,000 in rent and beer income from a particular pub, it’s happy to flog it for between £1.2m and £1.4m. In some cases, this will favour the encumbent lessee, who will have the advantage of being able to marry the value of its lease to Enterprise’s freehold. So at the pub where Enterprise earns £100,000, it might well the case that the licensee could be earning a very similar figure. The combined earnings of around £200,000 “married” together mean the pub could well be worth a conservative eight times earnings, which equates to £1.6m. The more the lessee is earning above £100,000 in this example, the greater the actual freehold value and the more it’s worth making Enterprise an offer.

Getting involved in the community by Ann Elliott: I am chairman of our local village Diamond Jubilee committee which sounds like a pretty thankless task but it isn’t. It’s been a fantastic opportunity to be part of a wonderful community and to try and create something of a legacy for the village- something where those who come to our event can say ‘I was there’ in years to come. We have been given £3,000 by our Lord of the Manor (yes we do have one) and that’s meant we can close the High Road for the day for our Big Picnic with town criers, bell ringing, maypole dancing and a whole load of free entertainment for every generation. What’s been great is to see how pivotal our local pub, The Crown, has been in the planning of the whole day. We hold our meetings in their pub (they attend them with everyone else), make a real contribution to the discussion and are now organising children’s activities in their garden and temporary marquee during the day. All free of charge. What’s also great is they know what’s going on (including all the local gossip) so they can gently suggest that we might want to change ‘this and that’ to ensure that our guests on the day are happy. They really do have their fingers on the pulse and are confidantes to many. It’s meant we have avoided some (maybe all) of the mistakes made by committees where loud voices can often drown out the contribution of the less vocal but equally important member. A word in someone’s ear from Sara, the licensee, has been a godsend. The whole Diamond Jubilee event has been a great example to me of how pubs are central to their communities – of how they can pull the whole community together for the common good and of how they do put the needs of that community above and beyond their own. I know the involvement of Sean and Sara, the licensees, does have a commercial edge but it doesn’t seem that way – they are selfless and generous with their time and thoughts (and often their cider). Not enough pubs in my experience have grabbed this opportunity with both hands. Many have waited for the community to do something before they join in. Other pubs just don’t seem to see the benefits of participation. The more enlightened have led the charge and will reap the benefit. Local authorities in my experience are bending over backwards to support those who want to do something for the Diamond Jubilee. They are helpful with road closures, send out hints and tips and provide free bunting for those who apply. Pubs should be at the forefront of working with their local authority and making things happen. I am not suggesting that pubs generously donate £3,000 like our Lord of the Manor, but I am suggesting they do something now, not three weeks before the event, to take the lead in their communities. Both parties will benefit enormously for years to come.

A simple solution to a taxing problem by Tim Martin: Successive governments’ misguided belief that increasing excise duties solves all ills within the pub trade actually threatens this vital British industry and the jobs and community benefits which it brings. As we know, a strong current of tribalism flows through the veins of humanity. Even in apparently orderly and well-behaved democracies, the vitriol of political differences is astounding, as witnessed now between democrats and republicans, in America, or perhaps even more vehemently among republican candidates themselves. Stir in religious differences and nuclear weapons – and tribalism threatens even the future of humanity itself. However, in Britain and Ireland, for the most part, tribalism is evident in more prosaic patterns. In the last edition of our customer magazine Wetherspoon News, I discussed “euro tribalism”, whereby the highly educated elite of Britain and the continent sought to subvert the democratic control of the masses they distrust by diverting democratic powers to remote institutions, such as the European Central Bank and the European Commission. Another great tribal divide, more significant perhaps that Liverpool and Everton or City and United, is that between pub-goers and dinner-party-goers – and rarely do the twain meet. The last Labour government members were dinner-party-goers to a man or to a gal. Tony Blair was no lounge bar lizard, and none of his ministers resembled a pub regular that I’ve ever seen. Gordon Brown wasn’t a pub-goer, but, then again, he wasn’t a dinner-party-goer either, but that’s another story. Steeped, as they were, in dinner party lore, they decided that so-called “binge drinking” could be cured by a “crack-down” on pubs. The resulting policy was to transfer pub licensing from magistrates’ courts to local authorities, at great expense to pubs (and probably to local authorities), to increase greatly the level of taxes on pubs to implement Draconian rules about underage drinking. These involved the police recruiting 16-17 year-olds and sending them into pubs to see whether they could get served; if they could, pubs were put under serious threat of losing their licences. The upshot of all this is plain to see: many pubs have closed down, as a result of the direct or indirect consequences of taxes and ill-considered legislation. Many young people have lost the historic pub-going traits of old and drink at home or in the street, while pub customers complain bitterly about pub prices and repeated requests for ID of those patently beyond the first flush of youth. The paradox, as many of us warned, is that the 50 per cent of beer and other products which have been lost by pubs to supermarkets are now consumed in circumstances which are less convivial and less supervised that the imperfect world of pubs often in parks, at parties or at home alone. In addition, the other major economic effect has been to denude many high streets and suburbs, especially in less affluent towns outside of London and the southeast, of their pubs. This factor has helped to produce a domino effect in many areas, since the pub formed part and parcel of a visit to the shops, cinema, for a large percentage of society. Two things need to be done to rectify the absurdly counter-productive policies of the last government which have been continued by the current coalition. The first is to bring down excise duties to the European average. Currently, Britain, with a population of about 60 million, pays 40 per cent of the excise duties for all of Europe which has a population of 300 million. Just as the bankers and manufacturers say that they need to be competitive with Europe, so do pubs, for similar reasons. Second, supermarkets now pay virtually no VAT on food, while pubs pay 20 per cent. This tax advantage enables supermarkets to subsidise their alcoholic drink sales, increasing the price disparity with pubs. It also means that pub-goers are providing a tax subsidy to dinner parties. In order to be competitive, our governments needs to follow the example of France and 13 or 14 other European countries and reduce VAT for pubs and restaurants to about seven per cent - the French level. Contrary to the widespread folklore, this will increase taxes for the government, since every pint sold in a pub produces far more tax and jobs than a pint sold in a supermarket. So, listen up, David Cameron, George Osbourne and Nick Clegg, we pub-goers are looking at you, kids. We want you to see economic and social sense. Pubs aren’t perfect, but they do provide a better forum for drinking than parks and parties and a far better forum than crushingly boring dinner parties in places like Notting Hill. Not only that, but the encouragement of home drinking, which results from your government’s tax policies, is economically destructive, reducing jobs in less well-off areas, especially, and reducing the tax which the government collects, since you’re driving people to supermarkets. Pub-goers are tolerant, but we’re the great majority. We’ll let you stay in charge for a while, but you’ll be out on your ear, unless you listen to what we say.