Prepare to fight now to save street corner locals that could be sold off
You might think, in the middle of this third phase of grim lockdown, that the pubs business is one that lacks a viable future and isn’t worth investing in. You’d be wrong, as companies big and small are preparing the way to add to their estates this year.
It’s partly opportunism, of course – there are bound to be many pubs put on the market by exhausted individual owners, or chains which want to concentrate only on the most profitable, dining oriented outlets by offloading tenanted pubs that are more boozers than restaurants. But whether it’s international business ventures or smaller, more local entrepreneurs, there are plenty who see a future in pubs of a certain type.
You’ve probably never heard of RedCat Pub Company, a new venture run by former Greene King boss Rooney Anand who has secured a £200 million war chest from American investors Oaktree. He also expects to raise £300 million in “debt funding”, meaning there could be half a billion available to spend buying pubs, which will mainly be in southern England.
“I’ve always been a strong believer in the great British pub,” he said. “It has survived the Blitz, the Great Plague and the credit crunch — always bouncing back and taking its rightful place at the heart of the community. We want to partner with talented licensees and entrepreneurs to give them the support, capital and help they need to thrive.”
So far, so good, you might think – and we must welcome anything that offers the pub industry a future. But you have only to look at the model followed by Greene King, Marston’s and many others to realise that small, traditional pubs aren’t part of the master plan. Many of these were sold off or closed down during Anand’s tenure at Greene King from 2005-19, but many more were added through take-overs. The fall-back for anyone investing in pubs is that at least they will have a valuable property if they fail to take enough money over the counter.
Many smaller chains are also keen to expand, including the high-profile Oakman Inns whose portfolio of nearly 30 pubs includes the Blue Boar in Witney, Crown and Thistle in Abingdon, and Old Post Office in Wallingford, the first two also being small hotels.
Announcing a shares offer which is already well on its way to raising £4.5 million, Executive Chairman Peter Borg-Neal, said: “We believe that there is a huge unsatisfied consumer demand for premium public houses right across the UK. Large pubs with a strong all-day food offer, a high level of amenity and, most importantly, great people running them is the future of the pub market. We want to play a big part in fulfilling that demand.”
This is very much the model pursued by most pub companies these days, which could leave many smaller, wet-led pubs out in the cold. Wetherspoon is said to want to raise £100 million to fund buy-outs, but as its model caters only for large pubs, that would probably limit its options among existing pubs. Brew Dog, another strong brand which operates a former traditional pub on Oxford’s Cowley Road, is also keen on expansion.
There are signs too that some mid-range breweries are looking to offload pubs, battered as they are by the pandemic with an estimated 87 million pints of beer washed down the drain so far. Marston’s, which has forged a joint venture partnership with Carlsberg, has agreed to take on more than 150 pubs belonging to Cardiff brewery Brains, but at least this secures the future of the brewery.
Wadworth, which has scrapped plans for a new brewery, has sold 21 of its pubs to the Liberation group of Jersey, which owns Butcombe brewery. A welcome side effect of this is that Butcombe’s excellent beers will become available at two local pubs that are part of the deal, the Victoria Arms in Old Marston, Oxford and the Beehive in Carterton.
Whatever happens, you can expect a lot of pubs to come on the market during 2021 and many of these may be snapped up by developers unless councils stand firm and refuse “change of use” applications, which may be more difficult after the hellish conditions of 2020-21. CAMRA will support any initiatives to keep pubs open, including community ownership, which has proved a particular success in Oxfordshire with the number of such pubs nearly in double figures. If you think your local might be in danger, start preparing now to fight for it.