MA SWOT team expert Ali Carter gives the George, in Higher Bebington on the Wirral, the benefit
of her industry
know-how
There's not much to go on in Adam's letter, and when I arrive at the George my instant reaction is, "Why have you called me here?"
I am met by a smart exterior and well-written chalkboards promoting everything: forthcoming events, bowls of steaming hot soup, desserts, children's menu offers, food specials and jugs of beer; the back-bar display and fridges are immaculately merchandised and every thing is spick and span.
The pub itself is a rangy building, beautifully zoned into four distinct trading areas which don't encroach on each other - there are even two sets of loos, one at either end.
Judging by the three pool tables, massive TV screens, darts board and cabinet jammed full of trophies this outlet has a very strong sports following. This is confirmed by Adam, who as well as having pool and darts teams, gives backing to a couple of football teams and a poker league team.
In addition, he runs two quiz nights a week (a national interactive quiz), live music every Saturday night, regular themed evenings and events such as "family fun days".
"I've been at the George for 57 weeks," he tells me, "and this is my first pub."
I can't help but be impressed. During our conversation he reveals his background as a Luminar manager in health and fitness clubs, snooker and pool bars, 10-pin bowling clubs, nightclubs, restaurants and themed bars.
This background has clearly given him some sound business disciplines and operational ideas which he has put to good use in his first pub - an Enterprise Inns 18-year lease.
Symptoms
With a healthy turnover of nearly £500,000 (including VAT) in his first year, things should be looking rosy for Adam and his wife, Nicola, but like so many licensees they are struggling with cashflow.
He puts this problem down to being under-funded at the start and because he has ploughed every penny taken back into the business - building a fantastic external decked area for smokers and for the summer trade that never happened.
This has left him with a £30,000 loss in his first year.
Adam's key questions:
l How can I target new customers?
l How can I increase food sales? (Food currently accounts for less than 5% of turnover.)
l How can I improve customer loyalty and the pub's reputation?
l Also, with the prospect of being on an Enterprise emergency-rescue package for the next three months to help with cash flow, I suggest we also look at making more of the
existing customer base.
Diagnosis
Adam and Nicola are clearly doing a great many things right and have a laudable attitude to their customers, where nothing is too much trouble.
Adam is on the ball with cutting costs, having already replaced all 75 light bulbs with low-energy ones; installed a water-management system in the gents' urinals (with a Government scheme he can claim the money back); reduced his refuse collections and introduced bottle banks to save £2,000 a year.
There is still more that can be done - a quick look at his credit-card machine rates show he is currently paying 1.95% - this could definitely be reduced by using a buying group such as Pelican (a BII member) to secure a better rate.
The years spent as a Luminar manager means he runs a very tight ship - he has regular stocktakes which show at least a 99.5% yield, and has firm disciplines with regard to stock/dispense and wastage.
With good operators such as Adam and Nicola it is, at first glance, difficult to see what can be done to improve their fortunes.
The answer is some fine tuning and attention to detail.
Target new customers
The George has a very male-dominated bias to its regular customer base. This means Adam and Nicky have the potential to double their customers if they can attract women.
The pub easily lends itself to being a very female-friendly environment - with two entrances (one into the sports bar and one straight into the cosy "lounge" bar) and trading areas that are very separate, as well as a welcoming log fire in the snug.
It may be a good idea to move the three AWP machines away from the entrance to this area to make it less of a noisy bar and more of a comfy lounge.
To get the ladies through the door for that tricky first time I suggest he gets the local Weight Watchers to hold a regular meeting and make little changes to let women know the George is now a female-friendly venue. The main thing is to sell the next visit when they venture in for the first time. (See box.)
Nicola is already in the process of putting together a "lite bites" menu and I suggest they dust off their unused coffee machine.
In addition, I ask Adam to re-evaluate his position with regard to the school opposite; currently the mums clog up his car park at 9am and 3.30pm when they drop the kids off and pick them up, and it clearly annoys him. But why not welcome the mums? They present an opportunity to fill in the quiet periods - why not sell them a cup of coffee and a pastry and maybe a squash for the toddler - all high-margin products?
Existing customers
A database is a great way of evaluating your existing customer base. Simple database packages such as Microsoft Access give you plenty of fields to customise your information and (with their permission) you can reach all your existing customers via email to inform them of forthcoming events.
You could send birthday greetings to your regulars, or messages to lapsed customers. In this case it could be a way of tapping into the female market - most of their male customer base have wives and girlfriends who can be reached in this way.
To set up a database is hard work and may require an incentive such as a free prize draw to encourage customers to part with their details. Once established it is easy to update with information from customer feedback cards.
Adam currently works to a gross profit margin of 48-49% on draught and 51-54% on wines, spirits and minerals. Ever conscious that he is in a price sensitive area he has held the price of Carling at £2.40 through two price increases.
This is always a tempting thing to do, particularly when you sell 1,100 pints of it a week, but a quick calculation shows that his margin has slipped to 43%, and he discounts it by a further 45p a pint in happy hour every night. This is costing him a lot of profit - a huge £7,000 a year.
He says he is prepared to stop the happy hour straight away, but needs to put the price of Carling up without losing his regulars. I suggest introducing a loyalty scheme at the same time as he increases the price.
Basically, this is a sweetener to accepting a price hike - put the price of Carling up by, say, 20p but offer a 5% discount scheme to regular Carling drinkers, taking the price for them back down to £2.47 but putting another 3% on Adam's GP margin to regulars on the loyalty scheme and 8% to non-scheme members.
Food sales
The current pub menu uses entirely pre-prepared frozen meals. This is ideal for Adam and Nicola. The frozen menu means they keep waste to a minimum and generate a 35% to 40% margin.
With more than 20 items, the scale of the menu is large with money tied up in stock holding. With the new "lite bites" menu on its way the main menu can be scaled down to five or six main courses. I ask Nicola to analyse all dishes sold over the next four weeks - if it only sells one or two in a month, strike it off. Aberdeen Angus burger is by far their top seller and I suggest they make it their signature dish.
The menu is properly costed to show the desired margin, but this leaves some pretty random price points. I suggest they even out their prices - currently dishes such as mushroom stroganoff at £4.89, BLT at £4.75, and steak and ale pudding at £4.79 could all