MCA talks to Thwaites chief executive Rick Bailey about his plans to make the company “bolder” and how the managed estate is its engine for growth. He discusses the new concepts being trialled by the group and reveals plans to de-brand its Shire Hotels group top bring its accommodation offer all under the Thwaites umbrella. He also talks about returning to an entirely tied estate and why he feels the Government needs to look again at the National Living Wage.
“There’s no one quite like Thwaites in the UK”, insists Bailey. “There is no one that is running – at one end of the business four-star full-service spa hotels - and at the other end good quality community local tenanted pubs. There are other family brewers running hotels but not on the scale that we do. That breadth gives us huge opportunities as a growing business and as an employer.”
The last financial year – to 31 March – was described as transformational for Thwaites. It began with the sale of the trading operation of its beer business to Marston’s for £25m and saw the group sell 20 non-core pubs but also make some acquisitions, including two pubs from Mitchell’s of Lancaster.
Now Bailey insists the focus for the company is to be “bolder” and add to its managed estate – which currently sits at around 20 pubs and hotels – at the rate of two or three units per year going forward, as well as opportunistic additions to the tenanted portfolio.
Major changes for the group include new brands such as Grill & Grain – a wood-fired oven and microbrewery concept which, as revealed by MCA yesterday, will launch at the Boatyard in Riley Green, Lancashire, in November following a £1m refit.
The group is also de-branding its six-strong Shire Hotels business and bringing all its hotels under the Thwaites umbrella.
Bailey says: “The sale of our wholesale business has done two things – it has allowed us to be much more focussed about where we’re taking ourselves in the future and has simplified the business. It has also given us some money to invest in the other parts of the business. We’ve slimmed down, been through the restructuring and created a really solid platform to grow the businesses we continue to run.
“The investment programme we have put in place will lay the foundation for future growth but also gives our people lots of opportunities within the group.
“This year we invest somewhere between £25m and £35m. That’s the biggest investment programme we have had in the last 15 years.”
As well as re-shaping the estate, the group is on track to move into its new £10m headquarters and brewery in the next 18 months. Bailey says the investment in the brewery is an important signal that – while a smaller part of the business – brewing is still an important part of the Thwaites mix.
He says: “We have gone back to a wholly tied model because we’re really proud of the beers we brew but we want to focus on the retail side of the business.”
Thwaites is in the process of bringing four new managed houses online, including the Grill & Grain and the Boot & Shoe in Lancaster, which will focus on a wood-fired pizza grill. As with the Grill & Grain, this will sit at the centre of the restaurant and be a focal point.
Bailey says: “The reason we did the Boatyard is that at our annual strategy day last year we challenged ourselves to be bolder. The competition in this market is so fierce that we wanted to really develop our offerings and push what we’re doing.
”Grill & Grain is all about bringing a wood-fired grill experience right into the heart of a restaurant and it’s the same ethos with the Boot & Shoe. It’s about giving people an amazing experience that they can’t get anywhere else.
“The investment programme is part of a wider investment programmes to grow our number of managed properties over the next five years, so we’re continuing to look for acquisition opportunities. We’ve got some offers in on stuff at the moment.”
There are unlikely to be many further conversions from the tenanted estate, which will continue to receive investment, especially in the key areas of food and accommodation, according to bailey. He stresses that there are still significant opportunities to add rooms into the estate.
He also says the disposal programme, which has left Thwaites with an estate of 275 pubs, is now largely over.
On plans for the hotels business, Bailey says: “In the next month or so we will be bringing our hotels and the rest of our business under the Thwaites umbrella. So, Shire Hotels is going to be de-branded. In October we will be launching a new website which will allow us to market our properties and bedrooms more successfully across the piece.
“Last year we looked at our hotels and where we want them to be in 10 to 15 years time and put together design plans for all our hotels based on individuality, locality and artisan produce, which has laid the framework for an accelerated investment plan back into the hotels. We’re going to invest £6m over the next two to three years – over and above our normal spend – to bring them in line with our design plans.
“We want to innovate on our customer offer so that when people come to us they are having a great and interesting experience. It’s about pushing our food and beverage offer and investing in rooms at the right level. You’ve got to constantly push yourself to do new things because the market will not stand still.
Bailey says trading has been solid throughout the summer, despite the relatively poor weather, with the hotels trading particularly well.
On challenges for Thwaites and the sector, he says: “National Living Wage is a key one. Whether Brexit will have an impact on what the Government does isn’t clear yet but on the course we are set at the moment, NLW is a big challenge.”
He added that a key focus would be training and development under new people director Jo Carlin.