On the back of this morning’s full year trading update, MCA talks to Fuller’s chief executive Simon Emeny. He discusses the challenges of associating pubs with quality food and why the chef recruitment crisis appears to be easing; explains how Fuller’s is adapting to the changing face of London and talks about process of opening up The Stable to a wider audience

Trading

Like-for-like sales in the first 10 weeks of the year dipped below the full-year performance with the managed arm up 2.7%, like-for-like profit in the tenanted pubs down 2% and total beer and cider volumes down 5%.

On the reasons for this, Emeny said: “April 2015 was a late Easter and the weather was stunning so it’s a very tough comparison. Trading has been a bit volatile in the run-up to the referendum but I really don’t think the first 10 weeks will be representative of the rest of the year.”

Food

The company has this week launched its Fuller’s Kitchen programme, which aims to raise the profile of the food offer in the pubs.

It comes on the back of research which showed that only one in four people associate Fuller’s with food.

Emeny said: “Generally speaking there is this perception in pubs that they are not naturally associated with outstanding, fresh food and that is what our business is all about. First and foremost you have to make sure you have got your offer right, which is what we have spent the last five years doing and investing very heavily in our kitchens and in our teams. We are very confident in our offer and we have had five years of outstanding growth in food. I think that has put us in a position where we’re confident enough to talk to customers very openly about it. It’s a long-term message to associate us with fresh food and that will unlock even more potential for food in our pubs.”

The company is also keen to badge products as available ‘Only at Fuller’s’, such as the bespoke ice-creams being produced with Laverstoke Park Farm.

On the sector wider issue of chef recruitment, Emeny said: “For us the situation is definitely improving. We’ve been very proactive and have launched our Chef’s Guild Training programme. We introduced NLW early and the status of chefs in our business has moved forward. It’s never going to be easy but we are seeing improving retention rates across our kitchen staff.”

Hotels

Accommodation is also a key focus for Fuller’s and while no new rooms were added during the year, 99 were upgraded.

Emeny said: “We did see a drop off in accommodation in the wake of the Paris attacks, which is entirely to be expected. We expect the London hotel market to continue to be a bit soft for the next six months or so. But, that won’t put us off investing in accommodation. We are a company that always takes the long-term view and we’ve had some outstanding performances from our hotels over the last four years.

“Over the last nine months we have taken the opportunity to refurbish a large number of our bedrooms and we will continue to look to grow that side of the business. You just have to understand that with hotels it can be a cyclical market sometimes.

The Stable

As it approaches its third year of investment in craft cider and pizza brand, The Stable, Fuller’s has triggered its option to acquire a further 25% of the business – taking its stake to 76%.

He said the task was to take the brand to a wider audience. The company is on site in Kew Bridge, Exeter and Bournemouth and has three sites at advanced stage for H2 2016/17. Emeny said the company was looking at a number of potential London sites.

New areas

During the last year Fuller’s has opened its first pub in the borough pf Lewisham and made in-roads into Hornsey in north London. The company has said it hopes these footholds will pave the way to further appropriate acquisitions in these growing neighbourhoods.

Emeny said: “The population of London is changing and the investment in the rail infrastructure, firstly around Crossrail and then HS2 is changing where the next generation of London residents live and it’s making some parts of London that weren’t so fashionable in the past more accessible than they used to be. We try to stay one step ahead of the curve and that’s what these new sites are about.”

The company also bought the freeholds of three existing business and renewed six leases during the year.

Asked if this trend was likely to continue, Emeny said: “Last year we spent £80m in capex. We’re unlikely to spend that sort of sum again next year but you never know. It depends what opportunities come up.”

Technology

Since November 2014 Fuller’s has grown contactless transactions from 25% of total card sales to 50% now with the value increasing from 11% to 33%

Emeny said: “I remember presenting at a conference 18 months ago and I said then that I thought this was going to be the next area of innovation and I think that has proved to be correct. It’s making customers lives easier, giving them a chance to go out without a wallet. Things like moving the contactless limit to £30 has really speeded up service in our pubs. I think it’s important that we have been at the forefront of that and I really think we have. I can only see technology playing an increasing important role in differentiating our pubs.”

Outlook

On the opportunities for the business over the next 12 months, Emeny said: “The success of the business rests on predicting consumer trends in advance and invest ahead of the curve. I think that philosophy is why we have performed so well over the last couple of years.

“Over the next 12 months there will be further improvements around food and technology but the biggest step change is the investment in our people. There’s many ways of differentiating your pubs but having really charming staff who generally care about the business is the number one priority for us.”