Suburban Style Bar Company goes down wet-led route for £4.5m

West Yorkshire-based Suburban Style Bar Company has shelled out £4.5m on 10 wet-led pubs, effectively trebling the size of its North of England estate to 15 sites.

Backed by its bankers Allied Irish Bank, wine bar operator Suburban has moved into the wet-led pub sector as part of a deliberate strategy to broaden the group's offer, according to managing director Andy Longman.

In buying the eight free-of-tie freehold pubs and two free-of-tie leasehold pubs, Longman believes there is "huge, untapped potential" in wet-led businesses.

"These are community boozers, the kind of pubs that are recession resilient. The sorts of customers these pubs attract haven't heard of the credit crunch - few of them have credit anyway," he said.

Longman doesn't envisage getting into a price war with the sites' competitors such as JD Wetherspoon, "but £1.99 a pint versus £2 makes a difference when it comes to getting people into the pub", he added.

Bought from a Bradford-based property company, the 10 pubs will see between £20,000 and £40,000 spent on them to smarten them up, said Longman. "They've been missing some details, like smoking solutions, and we'll be making up for that."

The new sites for Suburban take the group into South Yorkshire and Greater Manchester for the first time.

The group's strategy is drive up gross profit margins in the pubs from a current 50 per cent to nearer 65 per cent, by adjusting the sales mix and offering more back shelf and wine products.

Longman said he was positive about the wet-led pub model going forward.

"We are speaking with a number of brewers and believe we can get some serious barrelage going through these sites.

"Even with all the issues surrounding the trader at the moment people spend a lot of time in the pub.

"We've been trading two of the pubs since before Christmas and we've raised the gross profit by 10 per cent simply through our buying power capabilities," said Longman.

"We can digest these pubs without any increase in costs, other than servicing the debt," he added.

Suburban expects to increase its annual turnover from £3m to £5.3m following the integration of the acquired pubs, Longman said.