The rise and fall of the managed pub company

Punch Taverns' acquisition late last year of Spirit Group and its 1,800 or so pubs and the ongoing pursuit by Robert Tchenguiz's R20 of Mitchells & Butlers' 2,000-strong estate has got many people, myself included, wondering about the future of the large managed pub estate.

It was interesting to hear Peter Hansen of PC Hansen speaking about the future of the pub industry at the recent Association of Licensed Multiple Retailers' AGM. I sat, like many I am sure, listening intently to Peter's portrait and predictions for the next five years.

As he spoke, I thought that his assessment of where the industry was heading meant that, far from having all that much to fear, the sector should rather be facing the future with confidence, self belief and quiet optimism.

Two things struck me during Peter's opine on the industry's future structure:

There will be fewer managed houses and more leased pubs in the future, and following on from this,

There will be strong demand for good operators who can manage big pubs.

We are already seeing a shift from managed to leased in the industry. Wolverhampton & Dudley Breweries has an active conversion programme under way, with its move to shift nearly 100 pubs from the Pathfinder Pub Company over to the leased/tenanted Union Pub business; Thwaites is transferring around a quarter of its managed houses and whilst Alan Bowes might be more interested in growing his Swallow Hotel business, London & Edinburgh Inns continues to look to convert suitable managed houses into the tenanted/leased model.

Most of the industry is watching Punch Taverns very closely. The group's acquisition of the Spirit business got my vote for deal of the year. Some commentators seem to think that Punch might have bitten off more than it can chew.

Having identified 750 or so pubs as suitable for conversion to leases, they have set about finding suitable tenants for some very sizeable properties that will certainly attract some very sizeable rents!

Getting away the initial tranche of 200-odd sites appears to be progressing well and I am sure Giles Thorley's team will once again demonstrate how adept they are at integration into their core business.

That will still leave 1,000 or so pubs left as managed units and while one can see a possible disposal here who's to say that Punch cannot successfully run a managed operation?

Peter's second point fascinates me. Out of all this consolidation and restructuring will surely emerge some exciting and interesting opportunities for entrepreneurs.

In recent times, no-one has really come forward and taken a group of pubs from one of the big operators and run them on a tenanted/leased basis. Indeed Ted Tuppen remarked the other day that only 1,800 units in the Enterprise estate are run by multiple operators, the majority only owning a couple of sites.

With some 300 Enterprise outlets run by 19 multiple operators one feels there is scope for plenty of entrepreneurs to take up the challenge.