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City Pub Group taking it to the old guard as expansion shows no sign of slowing

One pub closes every 12 hours in the UK, but City Pub Group is bucking that trend as it embarks on an ambitious expansion plan
aragon house pub
Boss Clive Watson sold his last pub group to Greene King for £93mln back in 2011

It’s been a rough ride for Britain’s pubs in recent years.

The smoking ban in 2007 and hikes in beer duty have taken their toll on the industry, which is also feeling the heat from supermarkets and their cut-price booze.

WATCH: City Pub Group well-placed to achieve target of 65-70 sites by mid-2021

Perhaps unsurprisingly then, the number of pubs in the UK has almost halved since the turn of the millennium.

Despite the struggles of some of the old guard, one of London’s newest pub companies continues apace with its rapid expansion.

City Pub Group PLC (LON:CPC) had 34 pubs when it floated on AIM at the end of 2017. Barely 18 months on, that figure has jumped to 45, and there are five in the pipeline that will open in the not-too-distant future.

Growing quickly, and no plans to slow down

It has no intentions of slowing, either: by the summer of 2021, only two years away, bosses want to have added another 15-20 pubs, taking the total number to around 65.

At the helm is Clive Watson – a 30-year pub veteran, who is perhaps better known in younger circles as the dad of Made in Chelsea stars Lucy and Tiff.

Those in the City of a slightly older vintage are more likely to remember him for Capital Pub Company, which he set up with fellow industry veteran David Bruce in 2001, before selling it on ten years later to Greene King PLC (LON:GNK) for £93mln.

Armed with some of the cash from that success, he set up his new venture in 2012.

So at a time when pubs are closing at a rate of knots – recent data from the Campaign for Real Ale (CAMRA) suggests one is closing every 12 hours – what is City Pubs doing differently? The answer is a few things.

Different strokes for different folks

“The consumer is much more demanding now,” Watson tells Proactive, pointing to the surge in popularity of craft beers, gins and meat-free food.

“So we flex our offer in different locations to suit the different markets. What works in Southampton might not work in central London, for example, and that might not work in Bath. It’s horses for courses retailing.”

Being a bit more fleet-footed in how it responds to changing demands has resonated with punters, and if you want an example of this, look no further than the food its pubs serve.

The 57-year-old estimates about 40% of the menu is now vegan or vegetarian, although he’s quick to remind me that the pubs tend to be more ‘wet-led’ as opposed to their ‘food-led’ peers, which have struggled recently as the casual dining market has become saturated by thousands of new restaurant openings.

“We have always been a predominantly wet-led operator, albeit one that served good food. [Going forward], we will probably put more emphasis on the wet-led, and less on the food, and where we can, more emphasis on room revenue.”

Speaking of rooms, accommodation only makes up around 2.5% of sales right now, but this is expected to quadruple over the next 18 months as the number of rooms in City Pub’s portfolio jumps from 50 to around 200.

Not on the high street

Should you be looking for a City Pub to stay in or have a drink, don’t bother venturing down your local high street, you won’t find one.

“We target cathedral cities where, in most cases, there is a large student population, lots of tourists coming along and lots of local businesses.

“But I don’t like to be on the high street, I never have done. We prefer to be in slightly off-pitch locations, still near to the footfall, though.”

Slightly off the beaten path has a couple of advantages, says Watson. Firstly, there are no extortionate rents, while it is also more difficult for a rival operator to set up shop next door.

The Company calls itself a premium pub operator, but that doesn’t mean the hostelries are the reserve of the well-to-do.

The pubs often play host to quizzes, table football competitions and even games of conkers.

As Watson explains: “Our whole rationale is to widen our target market as much as possible; to be ageless, classless, to be premium without being overly expensive or too posh. Really to be somewhere where anyone, as long as they behave themselves, can feel comfortable.”

Happy staff, happy customers

Perhaps the stand-out difference between City Pub and most of its peers, though, is the attitude towards staff.

The hospitality industry is notorious for its high turnover rates, with overworked and underpaid staff not staying in one place for long.

While some of City Pub’s peers have reluctantly agreed to up their staff’s pay – and then moaned about it after – Watson has embraced the additional costs.

All retail staff – bar staff, chefs etc – are now on a weekly bonus scheme where, if their pub hits its targets, they get an extra £1 per hour added onto their pay packet. If the pub exceeds its targets, they get an extra £1.50.

“If you’re going to get decent bar staff, the days of paying just the minimum wage are over.

“Now, when our staff come in on a Monday, it’s not ‘oh how many hours am I working?’, it’s ‘right, what’s the target and what have we got to do to hit it?’”

He hopes this extra investment will be seen by customers through better service, as well as encouraging the staff to stay with the company and work their way up through the ranks.

“I’ve often said: ‘Happy staff, happy customer. Happy customer, happy shareholder. Happy shareholder, happy chair’.

“At the end of the day, you can have the best pub in the world, in the best location with the best design, but if you don’t have the right staff, you’ll be found out eventually.”

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