Making changes

Laurel Pub Company had big plans to develop its pub estate. Chief executive Ian Payne tells Lorna Harrison how its recent pub sale has brought a new focus.

Ian Payne is not one for mincing his words. He will tell it to you straight, you know where you stand and he's a well-liked and genuine industry character. So when he announced that he's been forced to axe 110 jobs following the sale of 432 pubs, you could almost see the lump in his throat.

The £654m sale of Laurel's neighbourhood pubs to Greene King, due to complete on August 6, is being heralded as a good deal by both sides. Laurel got the price it wanted - if not the deal of preference - and Greene King will be topping up its growing estate and boosting its status and power within the industry.

For Laurel, a massive drop in estate numbers from the 3,000 former Whitbread pubs it started with three years ago to just 177, means the inevitable shedding of head office staff.

Who is to stay and who is to go was due to be announced as this article was posted - a tough call for any chief executive.

The staff were expecting something to take place but, as Ian admitted, they were surprised that it was the neighbourhood pubs to go rather than the tricky high street pubs Laurel has been left with.

He couldn't comment on the head office reaction, but of the managers he said: "They have been very supportive. One manager complained that I had sold out on him, but once I went into detail about Greene King and the benefits, I heard nothing more."

A deal has been on the horizon for many months, prompted by Laurel's failure to acquire the Scottish & Newcastle Retail estate back in October. While Spirit Group celebrated its success in scooping the 1,450-strong estate, Laurel took a strategic decision to sell all or part of its estate - a far cry from the original aim to be Britain's biggest managed estate.

"Out of all the deals we've considered, the sale to Greene King is the one I feel happiest about," says Ian, who has clearly got a great deal of respect for the company.

"There is a cultural fit between the two businesses and I am happy that Greene King is keen that the pubs won't change." Many of the pubs were among the best performers in the high quality Whitbread community estate.

Greene King supports old fashioned, short-term tenancies and many of the Laurel managed pubs are set to be transferred to tenancy over time and are unlikely to lose their identity. Other than Hungry Horse and Appletons, Greene King isn't into brands. It concentrates on providing the community with what it wants and the Laurel estate will undoubtedly fit in with its traditional values.

So, what of the future for Laurel - a company which has made no secret of the fact that its heart lies with community pubs but, from next month, will be left with the not-so-sexy high street estate?

Ian has big plans. "I would like to lead the consolidation on the high street," he said, dismissing rumours that Mitchells & Butlers is poised to buy the estate as "nonsense".

"I genuinely believe we can do something on the high street by pulling together two or three companies," he said.

Ian would not be drawn into naming his targets. Laurel has already had a serious look at the Yates estate, but dropped its plans after reviewing Yates' financial information last month.

It's through consolidation that Ian believes the high street's current ugly image can be improved. "The things that will lift the high street are pulling prices closer together and getting them back to normal, sourcing good licensees and continually improving standards," he says.

But can Laurel really be the saviour of high street pubs when, as Ian readily admits, Hog's Head regularly scoops Wetherspoon on pricing?

"We are cheaper than Wetherspoon, but not suicidally cheaper. While promotions are legal and competition is out there, we will compete as best we can. We are responsible - we are members of The Portman Group and we comply with minimum price schemes in areas that operate them - but we support the right to compete."

Laurel is not afraid of boldly going where other operators fear to tread. It led the way for no-smoking pubs and before the sale was on target to have 50 no-smoking pubs in its estate this year - a move that most operators would struggle to copy.

So if anyone's going to shake up the high street, perhaps Ian's the man.

"Come September we're going to have more time to look at what we want and where we want to be." Watch this space.

Laurel's history​

• October 2000:​ Whitbread announces plans to sell most of its leased and managed pub estate, retaining only pub-restaurant brands such as Beefeater and Brewers Fayre as part of its restaurant division
• March 2001:​ Morgan Grenfell Private Equity (MGPE), owned by Deutsche Bank, backs a number of Whitbread managers in an MBO. It tops a long list of bidders to acquire around 3,000 pubs from Whitbread for £1.625bn
• March 2001:​ Ian Payne is appointed by MGPE to run its new pub estate. He joins from Bass, where he had held senior roles including managing director of Ladbroke Casinos
• May 2001:​ The Laurel Pub Company is formally launched with Ian Payne as chief executive
  November 2001: Punch and Laurel are reported to have held "informal" talks over a merger
• April 2002:​ The 1,860-strong Laurel Pub Partnerships leased estate is sold to Enterprise Inns for £875m, leaving Laurel with its managed pubs and bars
• August 2002:​ Respected City figure John Lovering is appointed Laurel chairman as the company considers plans for a flotation if it can expand the estate
• November 2002:​ Laurel makes its first acquisition - the four-pub Contemporary Bar Company
• December 2002:​ A sale-and-leaseback deal sees 280 Laurel pub freeholds sold to London & Regional Properties
• January 2003:​ Laurel is named as a potential bidder for the Tom Cobleigh chain
• May 2003:​ Laurel confirms to the City that it has considered making an offer for the Mitchells & Butlers business, newly-demerged from Six Continents, but will not be proceeding
• June 2003:​ Laurel signals continued expansion plans, buying a 10-pub package from JD Wetherspoon
• October 2003:​ Spirit Group sees off Laurel and other bidders to win the £2.5bn auction of the Scottish & Newcastle Retail managed estate. The 1,400 managed pubs would have given Laurel the critical mass for expansion
• April 2004:​ Laurel invites bids for its 432-pub community estate
• May 2004:​ Laurel is reported to have made the shortlist for the sale of the Wizard Inns estate,
  ultimately sold to W&DB
• June 2004:​ Laurel considers, and quickly drops, plans for a counterbid for Yates Group, which has agreed an MBO
• July 2004:​ Greene King agrees a £654m deal to acquire the Laurel community operation, leaving Laurel with 177 town centre outlets.