The pub industry in the 21st Century: Business realities behind the brand

Leslie Budd:
Behind the brand of manufacturing beer, you’re also a retailer and effectively a property developer. I wonder if you’d like to tell us how those bits of the business operate.

Rooney Anand:
Sure, well we started life in 1799 in Bury St Edmunds in Suffolk. We started out like many businesses as brewers, and we still brew very fine ale, IPA and Old Speckled Hen and Abbot Ale being three of our most popular sellers. But in the last 20 or so years, we’ve acquired as well as built pubs and become much more of a pub company. The brewing part of the business accounts for about 15% of our earnings, so about 85% or the lion’s share of our earnings come now from running retail managed and tenanted pubs. We own 97% of our freehold assets and we have 2,500 in total; 1,000 are run as retail, where the staff on site are on our payroll, and 1,500 we rent out to tenants and lessees with Greene King branding, but they’re effectively running them as franchisees of Greene King if you will.

So in a way what I think of myself as running a business that’s a brewery business which is really all about production and marketing and sales, in terms of the skills you need to succeed in that business, and then on the pub side the sort of three things that I sort of think we have to do well. One is of course buy and sell and refurbish and protect the quality of the property very well, so there’s a property dimension to what we do on the pub side. There is a retailing dimension, a lot of people may not think of us as retailers but we are making retailing decisions, what products should we stock, how should they be merchandised, what should the pricing be, how should that be dramatised and articulated to the customer in the form of point of sale and communication materials and what have you, and then the use of data to make those decisions through the epos and scanning data, and the use of digital data to actually try and trigger a purchase decision with the customer, so they are classing retailing sort of things. But the third bit that is probably different to retailing is that we’re in the hospitality business.

You know, it’s fundamentally, your decision about where you drink will be convenience, yes, is it where your friends or colleagues at work, or near where you live, you know, so there’s a degree of peer pressure, but most importantly do you feel at home when you walk through the door and is it a space that you can claim to be yours. You know, there’s a place where you live, there’s a place where you work and then there’s where do you go and eat and drink and hang out, and so the whole way in which our staff make you feel that this place is for you; it’s safe, it’s clean, it’s more than that, it’s actually a really great place to come and spend time and money. That all comes from the staff and how they bring the pub to life – that’s very different to retailing.

Leslie Budd:
Yeah, but although people would be surprised that you see Greene King as part retailer, but you say about hospitality management, in a sense is there an opportunity in your business to bring leisure management and retailing together and combat common misperceptions about retailing?

Rooney Anand:
Yes, I think, well I think what we have to do is appeal to, as an employment brand we have to appeal to people who are looking for a career, a career in a business that offers them the chance to run their own business, as a retail house manager or as a licensee. You know, in the past you worked in a pub whilst looking for other work, or whilst waiting for your next acting assignment, you know. So we’ve had that to contend with, you have the issue of the whole British view of service and that it’s riddled with class connotations that to serve somebody in some shape or form means that you’re of a lower, you’re lower down on the social hierarchy in the UK, which other countries and other cultures don’t suffer from. So there are some barriers that we are having to overcome as an employer to ensure that people see working in an environment like Greene King as offering a really exciting and rewarding career.

Now you start at entry level, if that’s where you come in, and you’re taught how to work in a kitchen or how to serve behind the bar or how to be front of house in terms of serving customers food and drink. But as you progress through you’ll quickly realise that in running a pub, you know, you have a number of members of staff, you’ll have a say in some of the range and stocking decisions you make, you’ll have a say and an influence on some of the pricing and promotional decisions, you’ll be accountable for delivering sales and profit performance, so actually I start to describe some of the things a retail house manager would be accountable for or in charge of, I’m describing a mini general manager’s role.

Leslie Budd:
And finally, the apparent death of the pub in the high street seems to open up new opportunities for retail, particularly in the countryside, but perhaps in urban areas as well, I wonder what your thoughts are on that?

Rooney Anand:
Well I think, a bit like Mark Twain, you know, rumours of my demise are slightly overstated, I think there are a lot of headlines catching people’s attention relating to the number of pub closures. You know, to a degree I think that’s very sad of course, particularly if you know that’s a livelihood that’s been taken away from somebody and it’s a service that’s being provided to local members of the community, so I don’t applaud it. But I would have to say as I think as a child how many pubs were there, how many corner shops were there, how many post offices were there, how many petrol forecourts were there in the West Midlands where I grew up, there are substantially less now than there were then.

There’s a natural order that’s taking place here in terms of balancing supply and demand, and there probably are too many pubs in the UK. And the credit crunch from ’07 onwards has probably accelerated a trend that was slowly happening anyway over the last 20 or 30 years. That said, a number of people are making a very, very attractive living running pubs, both as drinks led pubs but predominantly now, as you will have seen widely reported, particularly around food and accommodation and what have you, and particularly in suburban neighbourhood locations as well as rural destinations, those parts of the pub market for many players and many licensees and many operators are in very strong health.

Leslie Budd:
Rooney Anand, thank you very much.

Rooney Anand:
Thank you very much.