The creation of Mercury Pubs sees Punch slow its rate of pub disposals and focus on finding innovative ways to turn around its non-core pubs. New managing director Paul Pavli and Punch chief executive Duncan Garrood talk to MCA about the background, ethos and potential of its new division.
Since he took on the role of Punch chief executive last summer, the avuncular Duncan Garrood has sought out the positive in all aspects of a sector that has had its fair share of negativity in recent years.
Having overseen a restructuring of the core estate and the creation of the Falcon portfolio, which is based around operator agreements, Garrood has now turned his attention to those pubs which traditionally would have been targets for disposal.
The result is Mercury Pubs, which encapsulates the entire turnaround estate as well as a tranche of 240 pus brought across from the core portfolio, to create a permanent c700-strong division. The plan is for the division to be in like-for-like growth by the end of the year.
With a focus on small investments and a close working relationship between local operations teams and the publicans, Mercury is earmarked to assume more core pubs over time, if it can prove effective.
Garrood explained: “The creation of Mercury has come out of the success we’ve had with turnaround.
“This is a permanent new operating division that will sit alongside our core pubs and Falcon. Turnaround has been a group of pubs we put together to manage prior to disposal. It was always aimed at being temporary.
“The rate of disposal over the course of the coming time will slow. And therefore we don’t need to have a division wholly dedicated to disposals.”
Mercury will be headed up Paul Pavli, who was most recently Punch’s operations director for the south, having previously led the new business team.
Working under Pavli will be three regional directors: Crawford Scott, who has for the past three years been business development director, for the South; John Price, who has been with much for a decade, most recently as a regional operations director in turnaround and former head of HR, Tony Pilley in the north. There will be a layer of 21 BDMs working under them.
Pavli said: “Right now we are in development stage. We’re looking at the three-year plan for Mercury – how do we want to try and build on the ways of working and the success of turnaround.
“It’s about delivering organic growth from these pubs by the end of the next financial year. That’s a key goal.
“We aim to do that through simplified processes to allow my team to get into the pubs more often.
“Empowerment at a local level is key to that. For the ops teams to make quicker decisions so when they know what they need to do they can get the green light from me or their regional operations directors to crack on and do the right thing for the publican and the consumer.
“I am going to be encouraging my team to be more entrepreneurial within their role and also our publicans – encouraging them to think outside the box in terms of how they can best position their pub, trusting their understanding of their local market.”
Pavli said he expected the operations teams to be visiting pubs at least once every six weeks and ideally every four weeks.
Garrood said: “One of the bits of feedback we got in the Tenant Track survey, across the industry, is that there are publicans who would like a more frequent and close relationship with their BDMs. It’s partly because of that that we are doing this.”
Pavli said there would also be investment in the estate. He referenced a series of small investments made in the turnaround estate where pots of around £5,000 were given to area managers and publicans to decide themselves how to use it to boost the pub’s offer.
He said: “We’ve done about 80 so far and spent about £400,000. What we’ve seen from that is an increase of about 30 barrels and that’s with very little increase in rent – about £1,000 a year or £20 a week.”
Both Pavli and Garrood said they hoped the Mercury estate would grow from its current c700-strong estate.
Pavli said: “I’m hoping that we can show that these kind of pubs are better run with the ways of working we’re putting in place. Then I would hope that we can bring across the next small batch of pubs from core into Mercury because it’s a permanent division and this way of working actually suits those pubs better.”
Garrood said: “What we are doing so far is transferring 240 pubs from core now on the assumption that the publicans in that tranche are among those that would benefit from that closer relationship. If there are publicans that we identify would benefit from that approach then we will move more across. But that will, be subject to the performance of this group. We will manage the growth in a very similar way to the approach we’ve taken in Falcon. The size of the estate is dependent on what makes commercial sense.”
Pavli said he was already working closely with Andy Crump’s Falcon estate, and the retail concepts divsion under the supervision of David Wigham.
He said: “We’ve found in the past some hidden gems in the turnaround estate which we’ve then converted either into core or into one of the retail concepts. If we find a pub that we think works as a Mighty Local in the Mercury division then we’ll talk about how we do that. Maybe it’s a tweak on Mighty Local and I’m talking to David about how we bring over his team’s expertise into this division.”
