Being asked to write an article about my four and a bit years leading the transformation of Admiral Taverns, from bankrupt laughing stock to securely-financed pub company of the year, feels like looking in the rear view mirror at your old home for the last time as you pull out of the gate. One gets a narrow reflected view of the totality of what you are leaving, while likely missing much of the full perspective that comes with distance. The view is also slightly misty-eyed at leaving behind somewhere I was very happy, but also excited about moving on to a new future.
When I accepted Lloyds’ offer to lead the restructuring of Admiral in the autumn of 2009 a number of friends thought I had taken leave of my senses.
If I had any doubts myself, they were soon dispelled on joining. I found a core of good people, decent if under-invested community pubs and some fantastic licensees. I quickly came to the conclusion that this was a business with a good future if the right radical actions were taken.
So what did we do that led to the turnaround?
1. Get lucky with the debt holder/owner. Lloyds was excellent; pragmatic about the debt the company could sustain, its potential value and in allowing management to set the strategic direction and run the business with little interference. The fact that I changed the restructuring plan radically on joining did not throw Lloyds, and it was soon rewarded as its debt was redeemed much more quickly than it had expected. Hence, Lloyds supported us in buying the Piccadilly estate (a further 189 tenanted pubs). Finding Cerberus to succeed Lloyds was another stroke of good fortune.
2. Take the big, slow-to-impact decisions quickly and don’t try to run more than one or two major initiatives at one time. The smaller, operational or tactical decisions can wait until the big strategic decisions are starting to work. For me, getting the estate strategy agreed and underway, and sorting out the leadership team were the big early priorities. I was fortunate that there was a cadre of excellent, committed people at Admiral on which to build.
3. Honesty about which pubs could survive and how the business needed to change. We decided to sell over half the estate progressively as being unviable, many pubs being too far gone to survive even with investment. I would draw an analogy of a patient with necrosis – the surgeon needs to cut away all the infected flesh. The reason that so many other troubled businesses have been through a series of restructurings is that management have been insufficiently radical in cutting out the failing parts of the company.
4. Adopt a clear simple strategy, consistently pursued, that the whole team can understand and support. Ours was focused on becoming the best operator of wet-led community pubs and independently financeable. The fact that we all loved community pubs of whatever type made this enjoyable and because we never wavered in this, our staff and licensees realised that we were sincere.
5. Recruit the best people. We understood that we may not have the best pub sites, so we needed to get the best people. Fortunately, we already had some great staff and licensees, but we needed plenty more and worked hard to get them. The best are often idiosyncratic and don’t fit into organisational straitjackets easily. I have been amazed in some prior employments at how companies squandered their best talent because it was uncomfortable, and settled for the comfortably mediocre. We found it quite straightforward to recruit the best business development managers (BDMs) I have ever seen, and to keep them, without paying over the odds.
6. Run an organisation built around licensees and BDMs. Don’t delude yourself that sitting in head office means you can second guess a decision made by your employee on the ground who knows the pub and the licensee. I’m certainly not omniscient or telepathic, and neither were my colleagues, and, therefore, you have to trust the person in front of the customer – if you can’t trust them, don’t employ them. In my first six months we dismantled the bureaucracy that existed, saving millions and empowering the frontline to take decisions without head-office interference. We just maintained essential financial controls and otherwise monitored peoples’ performance on the aggregate impact of their decisions, rather than intervening in their making them in the first place. Poor decision-makers left and the good ones thrived, and recruited their equally talented colleagues from other companies by telling them how much job satisfaction they were now getting. Furthermore, licensees liked it because their BDM was now empowered to help them on the spot and we were increasingly accepted as being on their side; distrust waned and trust grew.
7. Align head office teams with those in the field. Most organisations are bedevilled by distrust, if not conflict between HQ and the field, and Admiral was little different. Seeing the improved quality and ways of working of the field teams, those in HQ became more supportive and less distrustful of their field colleagues’ decisions and the field reciprocated. Almost all new BDMs would tell me that they were unused to calling an HQ where people wanted to help and didn’t need to be asked twice. For me, that was always one of the more emotional moments.
8. Attack cost relentlessly if it is not directly contributing to building more successful pubs. Of course, there are always company costs you need to carry unrelated to selling things or helping licensees, but organisational costs are like onions, cutting away one layer of waste may be tearful, but it always exposes another you couldn’t see before. I know that some of my work colleagues thought I was obsessed about cost, but I always translate every item into the number of barrels of beer our pubs have to sell to pay for it.
9. Try to ensure that the deals you agree with licensees are fair and will be motivational for them. I can remember quite a few occasions where a deal agreed with a licensee came to me for final approval and I sent it back with a lower rent or other income reduction for Admiral, and only one or two that went the other way. We both need to make a good living together over the long term.
10. Worry about reputation, but recognise that image is just reality with a time lag. Kevin Georgel really convinced me to put effort into the former as worth investment, whereas I, by nature, would otherwise just focus on improving the reality. Between us, our reputation was transformed for the better far faster than I could ever have imagined with little spin, just doing the right things and telling people after we had done them.
Of course there’s more, but that’s the essence as it appears to me today. But most of all, it was about people working together on achieving common goals and having faith that community pubs and licensees have a great future, and ending up proud to work under the Admiral Taverns banner. I certainly am.
Jonathan Paveley has just stepped down as executive chairman of Admiral Taverns and remains chairman of Hook Norton
