Charles Wells' new £1.5m Eagle Centre is symbolic of the gia
Visit the Charles Wells brewery and the first thing you might notice is a modern steel and glass complex that wouldn't shame the swankiest City lawyers as a headquarters building.
It's the company's splendid new Eagle Centre, a £1.5m investment in the future of pub retailing at Charles Wells.
The Eagle Centre, opened in March last year, is a statement of intent, a place where Charles Wells tenants, leaseholders and managers can come for the on-going training that's so vital to success in the pub business.
Since opening, more than 1,000 individuals have received some sort of training there.
"We're getting more and more people doing training here and I can see that increasing in the future," says Chris Nicholls, head of recruitment and training.
The Eagle Centre is emblematic of a sea change at Charles Wells in the last two years as it has moved to modernise every part of the way itruns pubs.
Peter Wells, in charge of retail marketing, says: "The pub business is a people business.
So everything we're doing on the training and recruitment side is looking at developing the people within the company."
The Charles Wells estate consists of 236 tenanted and leased pubs the Pub Alliance and a far smaller managed division of 18 pubs, Eagle Inns.
Last October saw 30-odd pubs transferred from managed to tenanted as the company acted on its belief that managed pubs, hit by a welter of regulatory costs, need to be taking £10,000 a week net.
The shift to tenanted is seen as the necessary prelude to expansion on the managed side and a greater focus on its existing managed pubs.
The Park, a newly refurbished pub in Bedford, is an example of how Charles Wells plans to develop its managed arm.
Formerly, a somewhatshabby pub that hosted live music and quiz nights, the new-look Park is a comfortable, modern venue with a strong emphasis on quality food.
It's smashing sales targets and has already hit the £14,000-a-week mark.
The Park's £200,000 refurbishment was undertaken with confidence provided by the social-demographic profiling system Mosaic, which revealed its neighbourhood could be expected to support a pub with a more ambitious offering.
Similarly, the White Horse in Bedford has been converted from a wet-led neighbourhood boozer into a much more contemporary venue, a little in the style of an Ember Inns pub, with an unusual food offer a wide range of gourmet burgers.
On the face of it, it was a brave step, but food sales have roared since it re-opened.
Peter Wells says: "We were slightly guilty of shoe-horning a business model into a pub in the past.
Now we can put together a marketing plan that suits the peopleliving in the area."
Charles Wells plans to buy between six and eight pubs this year - two are already in the bag and two more under offer with several earmarked for the managed arm.
The current market realities a surfeit of buyers and a shortage of quality pubs mean it's unlikely that the company will be able to act on its desire to buy a block of 15 or 20 pubs.
It's been active in bidding for groups such as Conquest and the Nice Pub Company, but Wallis admits the market has never been so competitive.
"The problem is that pubs are either selling in groups of 100 or are incredibly over-priced as individual freehouses," he says.
"As long as we feel we can add value, we don't mind paying a full price, but we're not in a hurry to overpay."
With the freehold pub market so tight, Charles Wells has set about maximising the returns on its tenanted estate.
Investment this year will hit £3m with a further £5.5m earmarked for its 2005 financial year.
The average per-scheme investment will jump from around £40,000 this year to £70,000 next year.
"We've gone back and identified the pubs that are clearly under-trading, using Peter's demographic information", says Wallis.
On a pure return-on-capital basis, the investment in the tenanted estate makes absolute sense with returns of about 20% being achieved.
"The returns are much better than buying more freeholds where, if you make more than 10% return on capital, you are doing pretty well," argues Wallis.
The record level of investment in the tenanted estate is, in part, a result of Charles Wells undertaking more "turn-key" projects.
The company identifies properties that are ripe for a scheme, makes the capital commitment and then recruits the right tenant or leaseholder to run the pub.
Its Anchor & Hope pub in London's Waterloo, run by gastro-pub pioneer Michael Belben, has garnered extraordinary critical acclaim since it opened and is an example of what can be achieved by a committed pub company and a tenant with flair working in partnership.
(Not surprisingly, Belben has opted for a 15-year lease with Charles Wells in the belief that his business will have a substantial assignable value in the years to come.)
Charles Wells prides itself on charging rents that are equitable the average in the estate is £19,768.
Tenants earn an average of £37,652, adding in the "live-in" benefit of £8,000.
Charles Wells earns about 40% of the net profit generated by each outlet.
"That's very reasonable by most standards," says Wallis.
"Tenants find that as a family company there's a great consistency about the way we do business."
Spending money on pub investments is one way to boost business.
The more cost-effective way, of course, is finding the right tenants and leaseholders for the right pubs and giving them as much help as possible.
Charles Wells has made realefforts to offer flexibility of approach with tangible support.
Aside from standard three-year tenancies and longer leases, the company offers short-term tenancies with three-month and six-month break clauses.
Business plans and training are, quite sensibly, pre-requisites for new entrants allowed to take on a Charles Wells pub.
Charles Wells has also introduced a one-stop help desk for tenants, which has improved the efficiency of response to all the niggling problems that can sour tenant/landlord relations.
Leisure Supply Group is a buying group that ensures tenants need never pay full list price for everything from crockery to crisps.
Plans are afoot to introduce a new franchise agreement in October already trialled with great success as John Bull in Europe for those tenants who want greater back-of-house support.
Tenants will pay about 2% to 4% of turnover for a package of administrative, training and marketing support.
"Some tenants are saying they are being swamped with work," says Wallis.
"It will allow tenants who opt for it, to focus on what they do best running front-of-house."
Charles Wells hosted a conference for its retailers recently, using the Eagle Centre not surprisingly as the venue.
Anthony Wallis had this to say about the company's perspective on its pub estate.
"A customer-focused pub operation asks: What do people want?'
whether it's tenants or retailers.
Our vision is to set contemporary standards in traditional English pubs."
Hard to fault, really.
Pub Alliance l Like-for-like results for Oct-Jan '04 showed total income up 4.5% on the same periodlast year l Trading profit for all houses increased by 19.7% for the period Oct-Jan '04 as compared to the previous year.
Increase of £500,000.
l ROCE (Return on Capital Employed) increased to 16.6% from the June '03 figureof 15.4% l Property spend, Oct '02-Sept '03: Around £2m 68 projects at an average spend of £29,687 l Property spend in Oct '03-Sept '04: Around £3m 54 projects at an average spend of £56,224 l Average rental is £19,768 within the estate, therefore based on 40% net profit, a tenant, on average, earns about £29,652, which, together with live-in benefit of approximately £8,000, means a tenantearns £37,652.
Charles Wells' estate Category Eagle Pub Total Inns Alliance Restaurant Food/wine led, beer ancillary 0 3 3 Destination Food 50-100 covers, food/menu led, 7 11 18 appropriate services Core Food Pub Situated on a r
