Bright future

Its business has expanded by a third over the past year alone. John Porter learns the secret of Pubs 'n' Bars' success.

There's no point being in this business if you don't enjoy it, according to Pubs 'n' Bars chief executive Mel Belligero - a timely reminder that running pubs is supposed to be all about making people happier.

That's important to remember in the face of the drawn-out process of licensing reform, the general increase in the burden of regulation, and the current media assault on the trade as the government pushes for action on responsible drinking.

"It has got tougher," says Mel. "I can understand why some people would be feeling the pressure at the moment."

For the Pubs 'n' Bars team, led by Mel and chairman Mike Mealey, the picture looks rosier than perhaps it does for some other operators. The South London-based business has expanded by about a third over the past year and now operates just over 70 managed pubs and 25 tenancies.

The main reason for the growth is the innovative deal Pubs 'n' Bars agreed with Royal Bank of Scotland at the end of 2003. It acquired a 15 per cent stake in Community Taverns, a company set up by the bank to run 32 pubs bought from the receiver of Balaclava Pub Company.

At the same time, Pubs 'n' Bars entered a 10-year agreement with Community Taverns to operate and manage the pubs for a fixed annual fee per pub.

It was, says Mike Mealey, a route to expansion in a market where the right opportunities at the right price are increasingly hard to come by. "We won't over-pay," he says firmly. "That's a rule we've stuck to.

"When you see some of the deals being done in the market now, the prices seem very high. Wizard Inns is a good example, it's a great business, but Wolves have paid a full price for it."

The move paid off, with sales in the Community Taverns pubs running ahead of forecasts. Overall the business is trading well. Updating the market last month, the company said sales are in line with expectations, and the Euro 2004 tournament got the summer off to a good start, boosting like-for-like sales by six per cent.

The pubs are mainly community and suburban houses, what Mel describes as "old fashioned boozers", and are away from the excesses currently seen on the high street circuit. The company's food-led pubs have been transferred from management to tenancy over the past couple of years, a move which has proven beneficial for all concerned.

"In most cases, the pub manager successfully applied for the tenancy, which is great. With a food business, it needs that entrepreneurial touch," says Mel.

"In fact, most of our managers behave like tenants in terms of the ideas and enthusiasm they bring to their business. That's what we look for when we recruit, and our job is to make sure that enthusiasm is being channeled in the right direction."

In that spirit, marketing and promotional activity is closely co-ordinated at head office level, and there is also strong emphasis on staff training, part of an overall ethos that puts the focus on high service standards.

"Ultimately, that's what makes the difference in persuading customers to come out to the pub rather than stay at home," says Mel.

For the future, Pubs 'n' Bars hopes to extend this successful formula to more pubs. It will look at individual acquisitions as well as packages of pubs, and believes that the Community Taverns model can be duplicated with other businesses.

The company has said it hopes to build on the relationship established with Royal Bank of Scotland. "There are more opportunities out there," says Mike. "It's too early to say anything definite, but watch this space."

Pictured: Chief executive Mel Belligero and Chairman Mike Mealey​