MCA caught up with Ralph Findlay, chief executive of Marston’s, following the group’s Q3 trading update. He discussed the group’s increasing focus on premium pubs and the benefits of a technology upgrade. While describing the pingdemic as a “severe headache” and voicing concerns around VAT and price rises, he was nonetheless optimistic about the pub sector’s potential for recovery. 

Ralph Findlay

A focus on premium

Findlay made clear Marston’s intention “to increase the number of our pubs which operate in the premium sector”.

He specifically referred to the group’s currently 16-strong unbranded Revere pub chain saying there had been a number of conversions over the last six months, with more to come over the next 12 months.

“That’s likely to be the direction of travel for the foreseeable future,” he said, before adding, “I wouldn’t want to put hard numbers to it but it’s something that we’ll talk more about later in the year.”

By contrast, capex investment in Marston’s high street brands such as Pitcher and Piano and Lost and Found would be limited to maintenance only, he said, despite being “good brands”.

Findlay also spoke about trading benefits derived from the Inside Out programme, the group’s £3m investment in outside areas.

The benefits of technology

In addition, Marston’s has spent £10m replacing the EPOS software across its estate. He described the resulting ecosystem as, “state of the art, and very flexible” in terms of its ability to integrate with other technology, including apps, which he said, “had helped enormously.”

He described the capital cost of developing ordering apps other technologies such as QR codes for Test and Trace as being “quite low,” going on to say that the next phase of development around table ordering via an app will be to link it with the ability to take payment. “Going forward, we definitely will keep it [ordering via app],” Findlay said. “There is plenty of good feedback that people like to use it and see it as a real benefit. Provided we get the links to the kitchen working properly, it helps us in terms of efficiencies.”

However, he was quick to point out that, being a pub operator, he didn’t want to see customers only ordering while sat at a table: “We will continue to have lively bars and bars I hope, where people are standing at the bar and ordering at the bar.”

‘Pingdemic’ a severe headache

Findlay described the current disruption around the ‘pingdemic’ as ranging from something akin to a “crippling migraine, through to a severe headache,” depending on the location and the type of operator in question. He added that Marston’s was currently in the severe headache category. “We’ve had more severe headaches in the last 12 months than this to manage, i.e. being closed, and dealing with the complex guidance from government,” he said, “so I put it on the list of things that are part of the day job to get through.”

Turning to discuss the current challenges around labour, Findlay said, “the only way you will get through this is by the reputation you have as an employer and how you treat your employees and the career paths that you can offer people. We are working hard on all of those fronts.”

‘Optimistic’ about the recovery

Findlay went on to declare himself as being “optimistic” about the medium and long-term recovery in the pub sector.

“It’s part of our DNA,” he said, referencing the fact that people want to “socialise, celebrate and go out.” He believes that, similar to the public reaction during last summer’s reopening, the sector was now witnessing the benefits of pent up demand. “I think it’s been a period in which the value of community pubs and brewing has really been brought to the fore. The appeal of these is stronger than ever.”

He went on to add a near-term note of caution around the next few weeks. “Government messaging is still very cautious,” he said, “And I think that does have an impact on confidence.”

VAT and pricing

Turning to the forthcoming increases in VAT in the autumn and next spring, “It is clearly a potential headwind,” Findlay said. “It’s one of the reasons why I, and the rest of the industry, are hoping to persuade the government, that an ongoing reduced rate of VAT is extremely important for the recovery of the sector.”

Unless there is a “matching increase in the offer and the quality,” he is wary of raising prices to cover increases in costs such as VAT. “If we are going to move prices forward the emphasis needs to be on improving the quality of our food, the range of products that we’re selling at the bar, the menus, all of those kinds of things - as well as the ambiance. It has to go hand in hand.”

‘Steady the ship’

“This has been an extraordinarily difficult period and we’re not out of it yet,” he said, before highlighting the progress that Marston’s has made over the 12 months, referring to the company’s joint venture with Carlsberg and the completion of the SA Brain acquistion. “The key challenge is to continue to steadily improve from where we are and steady the ship as we head towards the autumn period.

We have only just been able to reopen the estate,” he said, “so we need to bed that in and then as a business get back to some of the bigger questions about strategy and the retail offers that we have.”