McMullens Camden

The year has so far gone “incredibly well” for McMullen’s, with the business seeing real volume growth halfway through 2024, managing director Heydon Mizon tells MCA.

The pub operator remains keen on acquisition opportunities in the Southeast, with an eye on sites to help grow its accommodation business.

“We are seeing the kind of volume growth we want to see,” he says.

Its London estate “has flown” in terms of trading performance, with planning permission for boutique rooms in Soho and Covent Garden helping increase room stock in its existing estate. The business has also recently acquired the Lock Tavern in Camden, the Duke of York in Fitzrovia, and the Royal Vauxhall Tavern.

“Our investment strategy of delivering what guests want, super ambience and experience, in sites able to deliver big volume, has worked well,” Mizon says. “We will grow our existing estate organically and remain keen to acquire quality hotels and pubs in the Southeast, including London.

“We will build new, convert existing non pub buildings or buy existing pubs that may or may not have failed for others.”

McMullen’s reported record turnover exceeding £100m for the first time, with sales growth of 14% to £106.6m in the 2023 financial year.

Sales have been driven by price, volume, and replacing some smaller sites with larger, better ones, Mizon explains.

Managed pubs saw double-digit wet and food volume growth vs 2022. Volumes also grew compared to 2019, “but only due to pub investments.”

“The uninvested pubs were flat overall,” he adds. “So, whilst the growth looks impressive, we are focused on delivering much larger volumes than this before we pat ourselves on the back for a job well done.

“Sales are optimal where we have the right motivated team, in the right pub for them.”

Mizon further explains the business has been “somewhat distracted” by a backlog of pub investments but remains focused on product innovation in its brewing portfolio.

“We have recruited two new members to the brew team to allow this to happen. Owning a brewery and having your own pub estate, without the challenge of trying to operate a free trade business, is a sweet spot and we want to capitalise on this point of difference in the pubs.”

Despite robust sales growth, profit before tax stood at £12.2m in the 2023 financial year – a 4.7% decline in 2022 – with profit conversion eroded by continuing cost inflation, particularly on labour.

“In mitigation of the increases we have seen, in part due to legislation and in part due to market pressure, we have worked to drive volume and price,” Mizon continues. “Our price movement is mid-single digits and our focus on volume is arguably a difficult way to work, but I think it works best in the long term.”

McMullen’s has also worked to improve efficiencies by lowering team turnover to below 65% across pubs – including students and seasonal workers – as well as increasing engagement scores.

“[This has] allowed our team to cope with volume increases efficiently, without the same or less hours used.

“All other costs have had to be managed, and like all long-term partnerships, we have found that both we and suppliers have had to feel some discomfort at times…we are now seeing the benefit of that for both parties with very little fallout.”