Young’s chief executive Patrick Dardis talks to MCA about regional expansion; plans to ramp up investment; it’s digital ambitions and the trends the group is seeing in its customer base. Speaking on the back of yesterday’s full-year results, Dardis also discussed the turnaround in Geronimo estate and the group’s plans for the three Grand Union sites it has just bought back. He also calls on the Government to see businesses as the solution to economic growth rather than a cash cow.
Dardis said the company’s outperformance of the market could be put down to several factors.
He said: “For over six years now our average like-for-likes have been over 5%. I doubt that’s ever been done before in the industry and probably won’t be again unless we do it.
“We have stuck to our strategy through thick and then – when we were challenged in 2008, 2009 and 2010, we didn’t buckle – we stuck to the course. We invested more in our pubs and in marketing and we invested at a high level to ensure the standards of our estate stayed at the highest point. We stayed premium, differentiated and invested.
“Pubs are the most popular destination for eating out in the evening now and good pubs are the first choice and we are doing everything to keep our offer premium.
“This year has also been about craft beer, cocktails, brunch and Sunday lunch. There has been a big push – both in the marketing and in the offer – around Sunday lunch and the same with brunch. On the drinks side, we’ve seen cocktail sales grow 30% and really pushed the craft beer angle.
“Overall, I’d describe our approach as an old ram with new tricks.”
Dardis said the company did not always get the credit it was due for being ahead of the curve digitally – having been one of the first pub companies to utilise the impact of websites. This year the group introduced its app, which allows diners to pay and split the bill, personalise their choice of pubs and suggest music choices.
Dardis said: “We have gone from drayhorses to digital revolutionaries in the past few years.
“We have been huge on social media for years and been very effective in driving custom through that. The app was next obvious step because these days it’s not really an option – you have to have it.
“The app was developed over two years and we did some piloting so we took our time to get it right. There is still further functionality we’d like to add in. The app for us is about jam tomorrow. It plays into two trends of the modern world – one is that people want to do everything on their phones, the other is that people are time poor. They don’t want to hang about trying to have the bill fetched. They want to pay and leave when it suits them.”
Like-for-like sales in the Geronimo Inns estate grew 3.8% this year – compared to a 1% decline the year before. The Young’s managed estate grew like-for-likes by 5%.
Dardis said: “We are very happy with Geronimo but there’s more to do.
“There’s been a huge turnaround. We have invested in the pubs that needed it, we have changed the menus and we’ve reconnected with our customers.
“I think Young’s will probably out-perform Geronimo for a few more years yet. That’s purely because we still have bigger refurbishment opportunities within the Young’s estate. There’s no reason why they couldn’t both be at 5% year-on-year.”
This year saw the group open pubs in Cambridge and Bristol – a move which it said indicated a “broadening appetite for destination market towns”.
Dardis said: “If you look at our geography - from the Cotswolds then into Oxford - where we’re looking to expand – and further east to Cambridge then Bristol, there is a huge opportunity to infill. Our priority is to infill rather than expand out further but we will look at opportunities outside that area if they are right for us.
“We will always be looking in London. Most of our recent investments have been in London.”
Grand Union sites
MCA revealed this week that Young’s had bought back the leases to three Grand Union sites – in Wandsworth, Brixton and Camberwell for an undisclosed sum.
Dardis confirmed that King’s Arms in Wandsworth will join the Geronimo estate while the Hope & Anchor in Brixton and the Grove in Camberwell will go into the Young’s managed estate. Dardis said he expected the latter to eventually be converted to the tenanted estate.
He said: “They are great sites and we have got investment plans for all three, which will start in the next 12 months or so. We have quite a bit of money set aside for both Wandsworth and Brixton.”
Dardis said the company’s investment programme for this year would rise from £38m to £44m.
He said: “That will be the same right up to 2022 – our plan is to invest more not less. That will roll over as we go so we have no plans to stop investing. It’s absolutely crucial to our growth plans.”
The group added 13 Burger Shacks to its estate this year – bringing the total to 25.
Dardis said; “The scope is limited by the scope we have for gardens in the estate but that still leaves us plenty of opportunity. We could probably get up to as many as 50 but we will only do it where the opportunity lies.”
Consumer confidence and headwinds
Dardis said: “We were led to believe that Brexit would see our economy crash but we haven’t really seen any of that. We haven’t seen our customers hold back and I’m certainly not seeing any evidence that they will in the short term. Everyone seems to be in good spirits so we just have to get on with it.
“What is more of a concern for me is the attitude of Government towards business – which is the solution for driving the economy forward, not something that needs to be reined in.
“Overall if you want the economy to grow and you want businesses to invest and create jobs rather than the opposite then you have got to stop bashing businesses with taxes. Squeezing us with taxes will just result in higher prices, higher inflation and less employment.
On the need for – and approach to – price rises, Dardis said: “We do short-term deals with lots of our suppliers so we have a number of levers we can pull that will mitigate some of these cost headwinds. That will allow us to hold price increases back a little bit but inevitably there will be some price increases. There’s got to be when you look at all the cost pressures we and the rest of the sector are facing. “