MCA talks to Young’s chief executive Patrick Dardis about its half-year performance. He talks about the company’s plans for further regional expansion, the turnaround in the Geronimo estate and the continued growth of Burger Shack. He also describes the company’s 43% hike in business rates as “a tax on aspiration” and reveals that the company is looking at whether it can continue to pay the National Living Wage to employees aged under-25.
Geronimo
Dardis said the Geronimo Inns estate was now fully back on track, having turned around a 1.4% decline in like-for-like sales in the first half of last year into a 3.5% rise.
Asked about the strategy around the turnaround, he said: “We have made a lot of changes in terms of people and of menu presentation. It was going down a French route and we’ve brought it back to very much a classic British route because we know it works. The pubs were also looking a bit tired so we have started to invest in them again. We’ve introduced more craft products and a whole new team who are very energised.
“There’s also been a huge transformation in marketing. It was all done centrally, whereas we have given that responsibility back to the pubs. We have introduced websites for every pub, we’ve 580,000 mailers this year versus none last year.
“It’s essentially about making the individual pub king, whereas before it was very much the Geronimo brand that was driving everything. The strategy now is about making the pubs famous and through that reinvigorating the Geronimo brand.”
Regional expansion
In the second half of the year, Young’s acquired the Station Tavern in Cambridge and exchanged contracts on the Riverstation in Bristol.
Asked whether this heralded a focus on regional expansion in the near future, Dardis said: “We’re still actively looking in London and it remains our heartland. However, with our second pub in the Cotswolds opening last week and the two pubs we have acquired in Cambridge and Bristol, it’s clear we’re not just focussing on the capital. We will continue to look outwards and in our pipeline we are looking at quite a few outside London. We have started to widen our net. However, we still have lots of slots to fill in London.
“We’re very excited about our first site in Cambridge and obviously we’ll be looking for more sites there. We’re also keen to look to expand in other areas where we’re already present.”
Business rates
Dardis said the company was facing a 43% rise in rateable value for 2017 compared to 2010 levels and faced an increase of almost £5m over the next five years with £1.8m in the first year.
He said: “Business rates only go up for businesses that invest heavily. As we do that we are also increasing the numbers of jobs and boosting the local economy. So, it’s a tax on aspiration and hits those who are trying to improve their businesses the most.
“Combined with the National Living Wage and the apprenticeship levy, it’s a big whack on the back of the head for good businesses.
“We are trying to find a way of mitigating it. We certainly won’t pass everything on to the customer but inevitably some of it will be in pricing.”
National Living Wage
Soon after the National Living Wage was announced last year, Young’s made the decision to award the rate to all its workers, regardless of age. Then chief executive Stephen Goodyear declared the age barrier “illogical”.
On whether the equality would be maintained next year, Dardis said: “We have a lot of pressures going into 2017, not least the business rates hitting us. We will certainly be doing it for 25s and over. We may now have to look at a slight enhancement for under-25s. However, more than 60% of our staff are earning much more than that anyway.
Burger Shack
On the now 21-strong Burger Shack estate, Dardis said: “We have rolled out a few out into the Geronimo estate, which have worked really well. We’ve also created a pop-up version called Burger Shack in a box, which works for pubs with smaller gardens or when there’s a big event on. It gives us huge flexibility.
“We’re looking for other opportunities but they will always be attached to a pub.”
On trading at the one standalone Burger Shack & Bar, in Wimbledon, Dardis said: “It’s doing all right. It was a test but we have no intentions of rolling it out as a standalone model. It has good weeks and bad weeks, as you would expect.”
Young’s On Tap
The group is in the process of launching its first app, of which, Dardis said: “We’re very proud of this app, which we own and is quite different to what is out there at the moment. We’re only on phase one at the moment where you can book a table, pay and split the bill and even order a taxi. It will evolve over next three to four years.”
Recent trading
“We haven’t seen any Brexit effect whatsoever. We remain cautious about what the impact might be but at the moment we aren’t seeing any shift in consumer behaviour. Our plan is to assume there will be change – we’re investing as we always have done, doing lots of marketing. The bigger impact for us is weather more than anything else. April wasn’t a great start but May was a good month, June and July not so good but then it really picked up from there.
“We’re expecting to see a bit of inflationary pressure next year on pricing but we are prepared for that.”
Christmas
“We introduced a tracker many years ago where we started – from September – mapping all the bookings coming in and brought it back to centre to co-ordinate. From that evidence and what we’re hearing anecdotally Christmas is looking very healthy. We’ve had Christmas Day booked out in some of our pubs stretching back to January.”
