Red Oak Taverns co-founder Mark Grunnell has told MCA that the pubs code threshold of 500 sites is the only barrier to the group’s growth ambitions.
Grunnell founded the group in 2011 alongside Aaron Brown through the acquisition of 32 pubs from a package operated by Scottish & Newcastle. The pair sold eight of the pubs in order to invest the proceeds in the remainder and added four through individual acquisitions.
Last year the group added 146 GRS Pubs to the estate and the past 12 months have been spent consolidating the estate – with eight pubs disposed of and £750,000 spent on 23 investment schemes.
The Red Oak estate is now approximately one third tied and also includes three managed and two franchised pubs.
On plans for the future of the now 170-strong group, Grunnell says: “We’ve always had a strategy from day one – to build a portfolio of between 200 and 300 pubs.
“We are always open to opportunities and what we do next really depends on what comes along. We have a very supportive group of private backers, many who have been with us since the start. When we bought GRS, everyone stayed with us and almost all increased their investment. Some new investors also joined the group.
“The important thing is that the deal has got to be right for us and there has got to be room to build on the business. With the GRS portfolio we identified opportunities within the estate and a year on we’re on plan with all aspects of our business.”
The only thing that could curtail Red Oak’s ambition is the spectre of the pubs code, Grunnell admits.
“Unfortunately the code may present a ceiling for us because going beyond that point means a fundamental change to the way we look to run and invest in our business.
“It risks taking away much that’s entrepreneurial about a tenanted pub company and how it works with its tenants. The increase in paperwork for BDMs and other front line staff can only divert their time and efforts away from their core task – to spend time developing the business and identifying the next tranche of investment opportunities. That kind of paperwork paralysis is the absolute opposite of the way we work.”