Following his final full-year results announcements as chief executive of Young’s, Stephen Goodyear speaks to MCA about how the group continues to outperform the market and whether its impressive like-for-like growth is sustainable. He discusses the group’s new focus on brunch, the continued transformation of the Geronimo estate and the potential of Burger Shack. He also reflects on how Young’s and the wider sector has changed during his 13 years at the helm.
The 2016 financial year saw Young’s grow like-for-like sales above 5% for the third consecutive year.
Asked if Young’s could sustain this level of growth, Goodyear said: “We continue to aim high. The strategy remains the same. We have an estate of premium pubs and we spend a lot of money to make sure they’re as good as they can be. We generally spend around £11m driving our like-for-likes and keeping the pubs up to snuff and we are really serious about staff training. We’ll keep doing that and hopefully we’ll keep being rewarded with the kind of growth we’ve seen over the last five years but that’s not a goal in itself.”
Acquisitions
Goodyear said the growth strategy would continue to focus on London but said the acquisition, after the end of the financial year, of the Blue Boar in Chipping Norton showed it was willing to look outside its heartland. It joins the nearby Bell in Stow-on-the-Wold, which Young’s acquired in January 2015, and which Goodyear said was trading above expectations.
Last month the group completed on the acquisition of the Woolpack in Bermondsey from Punch. It will go into the tenanted estate but Goodyear said there is scope for it to move into the managed division further down the line.
He added: “It’s a great pub in an area of London where we are a bit short of pubs, to be honest.”
He stressed that there were no targets for further acquisitions but the company was in a good position to move when the right offer presented itself.
He said: “We have got the facilities in place to buy more pubs – the bank is very keen to lend. So, if another Geronimo came along or packages of threes and fours we’d be very interested.”
Geronimo
The now 40-strong Geronimo estate came under direct control of Young’s last summer, after the departure of managing director Ed Turner, but Goodyear stressed it remains a separate entity. Revenue in the estate grew 3.2% during the year with a 1% fall in like-for-like sales. Goodyear said in the first part of the new financial year, like-for-like sales were up 2.5%.
He said: “Geronimo just gives us options. Consumers have a view of Geronimo Pubs that is very positive. For acquisitions it’s very useful because if we come across a pub in an area where there’s already quite a few Young’s pubs it can go into the portfolio.
“We’re really pleased with the progress Geronimo is making and there is the feeling that the momentum is back with the business.
“We are keen to add to the estate and we added four pubs into Geronimo in the last year.”
Burger Shacks
The group currently operates eight Burger Shacks across its estate and recently opened the first standalone Burgershack Bar & Grill in Wimbledon. The goal remains to have 20 Burger Shacks by the end of this year.
Goodyear said: “It’s mainly to drive incremental trade in outside area of pubs and it’s been very successful in that.
“If an opportunity (for another standalone site) came up we’d consider but Burger Shack was mainly designed to unlock hidden value in our existing pubs and that’s where we see the focus.”
The group is also looking to do more pop-up versions of the concept to drive sales during the summer and alongside events.
Brunch
A new focus for the group is brunch, with new menus being rolled out across the estate.
Goodyear said: “Brunch is the new lunch. It will be in 80% of our pubs and it’s aimed at capturing the weekday business meetings and lazy Sunday mornings with the papers.
“People’s habits are changing and we have to keep up.”
Drinks
Drink sales rose 8.6% in the year and 5.2% on a like-for-like basis. Wet sales make up 65% of total sales in the managed division, compared to 30% for food.
During the year draught lager like-for-like sales were up 5.2% and ale 5.6%. On wine sales, reds were up 3.7% on a like-for-like basis and sparkling up 25%. Gin sales rose 29% and rum 14%.
Goodyear said scotch was also showing signs of resurgence and Young’s has begun introducing small craft whisky producers from Kyoto to New York to appeal to a new, curious whisky drinker. 130 whisky tasting experiences were held with customers in Young’s pubs from January to March, driving whisky sales up 10.2% year-on-year.
Goodyear said: “Everything is becoming premiumised. Our wine sales continue to grow. Our spirits sales continue to grow – gin is up 70% over the last two years. Craft beer is very exciting and we’ve put a Young’s craft beer into 90 of our pubs and that’s been a great success. But the Meantimes and the Camden Towns of this world sit very nicely and naturally alongside Young’s traditional beers. Sparkling wine is up 24%.
Legacy
As he draws to the close of his 13-year tenure as chief executive, Goodyear reflected on some of the changes both at Young’s and in the wider sector.
He said: “Young’s has changed a huge amount. We’ve got about 40% more managed houses and we’re no longer vertically integrated so we are very focussed on our pub estate.
“Food has changed immeasureably and that has been at the heart of a lot of the changes in the pub sector over the last decade. In 2003 our pubs were wet-led. Now food is over 30% of our sales and in terms of driving trade to the pub it’s probably 50% of the attraction.
“The transformation of outside spaces has amazing. It seems such a long time ago that smoking disappeared from pubs and it’s been so positive. Pubs are now much more female-friendly, family friendly. The way people use them has changed as well. Instead of set periods when you could guarantee trade, pubs are now seeing trade throughout the day.
“You would never have seen boutique rooms in our pubs in 2003 but now we have 250 of them.
“People do bang on about the death of the pub but we certainly aren’t seeing it. If you’re still trying to be a 2001 pub in 2016 maybe you are going to fall by the wayside but if you respond and adapt to the changes around you, the pub is still a very attractive prospect for a large number of people.
“It’s been a hugely exciting 13 years doing this job and a hugely enjoyable 21 years with Young’s. I have had a thoroughly good time and I wish Patrick (Dardis) every success in taking it forward.”
