Star Pubs & Bars is looking to capitalise on the opportunities afforded to “great pubs in the suburbs” in light of the trend for people to work more from home, managing director Lawson Mountstevens told MCA.
The Heineken-owned pub company has just announced it will be investing £42m upgrading its existing estate this year – “the biggest amount we have committed in the past three years” – with the focus to be on its pubs in suburban locations and those on high streets near residential neighbourhoods.
Mountstevens said the business was working on the basis that people’s change in working patterns was “a structural change for the long term”. “I think that’s going to create opportunities – it means people live differently and it definitely creates opportunities for great pubs in the suburbs.
“We all recognise the people are at home more and that they want the experience that they have had in city and town centres closer to home. And most importantly they have got the time to go and enjoy it.”
But despite the focus on its investment being on the pubs that fit into this category, Mountstevens doesn’t believe that means city centres are dead, more that people will use them differently – as places to come together.
He said the pandemic has “accelerated trends that we always saw were there”, most notably the demand for a quality experience – a lot of which is around a good food offer. But the other trend that’s been accelerated is desire for people to eat and drink outside, resulting in huge potential for great outdoor spaces. “Great retailers have really opened up that space as we see that as an opportunity.”
In terms of trading, he said there has definitely been a split, in terms of how strongly the suburbs have come back compared to the city centres. “City centres have been slower, but you can see it edging back. Is it back at 2019 levels? No, but there are signs that it is heading in the right direction. But there is definitely a certain level of consumer reticence out there about getting back to the pub I think.” However, he said that as an industry it was “wrestling to see what that breakdown of consumers is and how they have come back to pubs, as I don’t think it’s even across the piece”.
More than just a drumbeat
In terms of Star’s focuses for the year ahead, Mountstevens said it was really about working with its operators to go beyond the reopening phase, and beyond “just establishing a drumbeat”, to make the most of the opportunities over the summer and the rest of 2022.
“We are working very hard to think about how we help people to develop their retail calendar – how do they maximise key events, because when you look at how consumers are behaving, more and more big events are absolutely critical,” he said. “Therefore, how we package up that that information up, how we allow pubs to select the right activity or insight for their style of pub is really important.”
The business is also working with operators to help them navigate current cost pressures. “We are doing everything we can to try and mitigate what is incredibly volatile. Alongside that we are going to have to work to make sure we are putting out good practical advice to help people control and mitigate these costs,” he said. “How you save and don’t spend the energy units in the first place is as critical if not the most critical thing, given the inflation we are looking at.
Ultimately for all the challenges, he said there Star maintains a positive outlook about the potential for quality, well-invested, pubs. “Yes, there are some challenges and headwinds, but the industry has always shown it can work its way through those and we remain an affordable treat. And long may we be that.”
While the main focus of the business is on its core leased and tenanted estate, Star Pubs is looking to add to those on its managed operator agreement – “we will add about 20 sites over the rest of the year”.
Mountstevens added that it was seeing a good level of interest in its tenancies, with the number of prospects month-on-month slightly above 2019 levels. “Is the interest translating into a fundamental shift in the profile of people taking on pubs? It’s too early to tell, but there is no doubt there a lot of people have done a lot of reconsidering about what they want to do (over the pandemic).”
“One of our challenges, and challenges for the industry, is to get our message out about the potential and the opportunities that come with running a pub, whether that’s a leased and tenanted pub or a managed operator pub, to a broader group of people and it’s one of the things that we are going to work very hard on in the next year.”
