New look, new Laurel?

Laurel Pub Company has subjected itself to a major restructuring exercise. Hamish Champ spoke to chief executive Julian Sargeson about the changes.

Arriving a few minutes late for his meeting with The Publican, Julian Sargeson wears the look of a man who has just completed a marathon. Sitting down in a recently refurbished branch of Slug & Lettuce in the City, the chief executive of Laurel Pub Company could be forgiven for appearing frazzled - and not simply because he'd been stuck in one of the all-too-familiar traffic snarl-ups that regularly bring parts of the Square Mile to a virtual standstill.

Last week Laurel announced details of a major restructuring exercise which saw the integration under one roof of the various brands, including Yates's, Slug & Lettuce and Hog's Head, bought last year by the group's owner, Robert Tchenguiz's R20 vehicle.

Mr Sargeson is set to reveal the full details of the new-look Laurel to an audience of the group's 400-plus pub managers at a "three-line whip" conference to be held in Birmingham next month.

In putting together a sizeable pub and bar empire in less than a year, Mr Sargeson and his team have undertaken a complex - one might argue "marathon-esque" - mix 'n' fit operation in almost record time.

It is an exercise on which much is being pinned. Bearish observers wonder whether the company will succeed, given the vicissitudes of inner city drinking circuits and some of the brands involved. While parts of the estate have glowing reputations for service and their food offering - notably Ha! Ha! Bar & Canteen - others are deemed jaded and in need of an overhaul.

This latter task is just one on Mr Sargeson's "must do" list. Overseeing the bringing together of Laurel's disparate parts into a cohesive whole, he expects - as do his backers - the group to be capable of delivering new customers and winning back those some of its branded bars have lost in recent years.

Doing the research​

Addressing back office and supply issues, the integration saw the closure of one head office, the creation of three new divisions and the appointment of managing directors to run them, as well as the input of focus group research via consultants OC&C. Costing hundreds of thousands of pounds, this programme saw panels of regular pub-goers asked about what they thought made a great bar experience, while staff were quizzed on how they believed they could do their jobs better.

It is worth noting that while canvassing the views of consumers is perfectly acceptable, especially when looking at day-to-day operational issues such as standards of service at the bar and the state of the ladies' loos, converting focus group findings into a long-term commercial policy is a tricky business.

Still, with the research out of the way and the new-look organisation - covering youth-oriented, food-led and community local pubs - in place, Mr Sargeson relishes directing his energies towards operating a 400-plus pub estate with what he describes as a "heavyweight team".

The grand plan​

The executives charged with leading the three new divisions - Jez Smith, Gary Morse and Mary Sharp - are homegrown management with considerable experience of the business. Each will have under them area managers, a marketeer, a food specialist, a training person, property and finance personnel and individuals charged with taking care of a division's entertainment requirements. In the case of Jez Smith, the scale of his responsibilities - looking after 200 sites under the Circuit banner - means he will have two regional area managers, covering the North and South, reporting to him.

But crucially it is the much publicised return of Ian Payne, one of the group's founding figures, that is the clearest signal Laurel means business.

Mr Payne's reputation as a deal-maker confirms Laurel is serious about adding to its portfolio, a point Mr Sargeson confirms. "The next two years will be as crazy as 2005," he says, when asked about acquisition strategy. "There will be no let-up."

Mr Payne's arrival, replacing Chris Hutt, with whom Mr Sargeson has worked over the past eight years, confirms R20 wants to beef up the group's senior management.

Some have questioned whether Mr Sargeson has the weight to carry through the expansion of Laurel and whether he can work with the more experienced industry figure.

He counters by pointing out he built up an excellent working relationship with Mr Hutt, first at Wizard Inns and latterly with Laurel, and remains confident his relationship with the new executive chairman will be as fruitful.

Hitting the high streets?​

While a shift in management is expected to drive the new-look Laurel's assault on the country's high streets, the company will have its work cut out, even with its proposed strategy of buying up suitable assets.

The integration and buying-power benefits have shaken out more than £16m worth of cost savings, but the market is ruthlessly unforgiving of those unable to keep up with - or unable to forge - consumer trends.

One established Laurel name, Hog's Head, while not being struck out, has been folded into the group's new Town Local division, where it may be allowed to quietly fade away, possibly being rebranded under one of the group's more successful ventures.

The long-term viability of a number of the group's key brands, most notably the Yates's chain, is also under the microscope. Mr Sargeson rejects the notion that Yates's is a waning concept, insisting instead that there is plenty of room left for development. He accepts there have been problems, noting that while work had been done to improve the customer areas, levels of service behind the bar might have been overlooked. But this is being rectified, he says.

Mr Sargeson has meanwhile described the £40m refurbishment scheme being rolled out to more than 200 of the group's venues as the "highest current investment programme in the sector". It will see significant refurbishment to the current estate, with additional cash available to acquire when and where necessary.

And when Laurel does come to buy, Mr Sargeson insists the group will not be limited to the high street. This is a familiar claim made by other bar operators such as Regent Inns, which is looking to diversify where such a move is deemed viable.

But while the track record of a number of high street operators in finding sites or small packages of pubs beyond their natural market is not great, Mr Sargeson remains bullish.

"Our new structure will work well to mop up whatever comes our way that we are able to bolt on," he says. Such acquisitions would allow for "organic corporate growth", he believes. "It could be in the food sector, big community pubs, or roadside urban. We would be stupid to limit ourselves to the high street."

The new structure is meanwhile "correct for the current challenges, enabling us to flex up for the future", he adds.

Key to Laurel's progress is the back-up the group receives from its owner as well as the wider financial sector. "We've an equity partner in R20 that is supportive, plus we have that [same support] in the lending community," says Mr Sargeson.

"There have been distractions while we have undergone this process but what we've got now gives us plenty of potential."

With the revamp now out of the way, the market will be watching intently to see whether Laurel succeeds in making its stretch of the high street work.

One suspects the jury, while wishing to find eventually in its favour, may be out for some time.