Regent steers course away from high street

Regent Inns has been at the eye of the high-street storm since the new licensing regime commenced in November 2005. The company has had to gird its loins and ensure every aspect of its high-street operation complies with best practice.

One painful but necessary outcome has been turning away 5,000 customers a week who have been unable to prove their age. The new regime has also seen customers arriving later at weekends and, in some cases, not turning up during the week with their local open. These were major factors in a 21% fall in its first-half operating profit - and a 9% drop in underlying earnings.

The company must have been delighted when the first anniversary of the new regime came around three months ago because its like-for-likes were finally washed through and comparable with lower post-reform trading figures.

What's clear is how hard Regent has been working to broaden its Walkabout business given how tough life has become on the high street. It's been working on a project called "Sun up, Sun down" that aims to get Walkabout trading better throughout its day-parts. It's introduced a £3.50 to £4.50 menu that has helped drive food volume growth by 15%. And cheaper food has also boosted liquor sales during the day - by 8% between midday and 8pm on Monday to Friday. AWP income has also picked up and other initiatives are in the pipeline. Regent is also planning to up-grade its sound and lighting and create zoning with soft seating areas.

Likewise at its Jongleurs comedy clubs, there's also been operational innovation. There's been a push, for example, towards "premiumising" Christmas. Capacities have been reduced and food-inclusive packages introduced, pushing the average ticket price from £23 to £32. Total income growth was up by 12.3% over the crucial festive period.

What is intriguing about Regent is how determined it appears to be to diversify away from the high street. The acquisition of the 31-strong Old Orleans chain from Punch and the £500,000 investment in the up-market Asha Indian food restaurant in Birmingham means that it now has four highly-differentiated brands, two very firmly food-led. It's performance at the Old Orleans will be the key to whether Regent will begin to be re-rated in line with restaurant stocks.

In the first five months under Regent, management sales have been stabilised and venues have been plugged into Regent back-office systems. The company exited its transitional services agreement with Punch ahead of schedule on 20 January. Customer focus group feedback has hammered home one abiding message: "The theme is great, it is just the service and the food that is the problem."

The key to progress at Old Orleans is providing "authenticity, quality and freshness" in the food offering, via a better service. A crucial new menu for Old Orleans is launched on Monday 5 March and is backed by training initiatives and improved cocktails and drinks presentation.

Regent management has noted a wide performance disparity between different Old Orleans venues. It concludes that "there is significant upside in a number of poorer performances". The other possibility, of course, is that under-performing Old Orleans have been located in the wrong sites.

By the time of Regent's full-year results, shareholders will have a good idea of whether Old Orleans can become a cash-generative fast-casual dining brand with growth potential.

Likewise, six months hence and shareholders will know whether - with the Asha franchise - they have a second major fast-casual brand that can be replicated across the country.