Punch's progress

It's not to everybody's liking but Punch Taverns operations director Kevin Georgel claims to enjoy getting up in the morning. Given the state of today's pub industry that's no bad thing.

"There are certainly a lot of challenges in the pub market right now," Georgel says. "But there are some fantastic opportunities as well and that's what gets me out of bed every day; the challenge of getting hold of those opportunities."

As operations director of the 7,200 pub-strong leased pub business since making the move from overseeing its southern pubs in December 2007, Georgel is currently immersed in the task of changing the perception of Punch its lessees hold. That and getting the most out of every part of the business, from head office employee through to pub operator.

In his words, Georgel is "engaged in a far-reaching and comprehensive review of the business", but he says he doesn't feel he's been forced down such a path by outside influences.

"We've been doing this far in advance of anything that came out of the Business and Enterprise Committee (BEC) inquiry," he says.

Like its peers, Punch does not want to look like it has merely been reacting to the inquiry's highly critical report, published earlier this year. "BEC validated what we were doing anyway," Georgel argues.

Room for improvement

A conversation with the former Coors executive is peppered with nods towards the need to improve the landlord and lessee relationship. A lot of work in this area has been going on internally, he says, with the group's business relationship managers (BRMs) - those who bridge the gap between the company and the lessee - being urged to respond better to the needs of those running the group's pubs.

And despite Punch's BRMs scoring highly in a survey asking lessees if they'd recommend their own representative to another licensee, Georgel recognises the perception gap needs to close.

"We are building a feedback process into the way we're changing things and next spring we will be surveying our partners again on how they see their BRMs," he adds.

Georgel will this week brief BRMs on progress regarding the improved transparency and how best practice with lessees can and should work. "I want to empower our BRMs to work better with our pub partners," he says.

As well as the usual feedback procedures lessees will get their chance to let the company know what they think at a series of forums to be held towards the end of the year and into 2010.

Two-way process

It's not one-way traffic though. Georgel wants his lessees to work to the best of their ability to create the best environment their pubs can offer; those who show they want to work with the pubco and pull out all the stops will be looked upon positively.

"When I go out into the trade it's immediately clear how challenging it is for our partners, but positive things are happening out there," he says.

"I'm hugely respectful of those who seek to evolve their businesses. Those who have sat back [and not responded to the current market conditions] will find it very difficult."

Around 1,000 lessees are getting some form of financial support, says Georgel, while 1,000 are taking advantage of other support strategies, such as Table Top, the pubco's entry level food assistance programme. And yes, he says, there is "some crossover", with an unspecified number of pubs getting both types of help.

Meanwhile, Georgel says lessee complaints are being dealt with more quickly, and the pubco received fewer than 100 of what he describes as 'executive level complaints' in the last few months.

AWPs and rent

Georgel also outlines the benefits which have come from the move whereby lessee profits from AWP machines are not factored into a rent negotiation, an arrangement that will kick in at rent review time.

"The scope of the arrangement will obviously vary from pub to pub but it will make a significant difference to the finances of those pubs affected," he says, with the pubco taking the hit, said to be in the region of £2m, or around £13,000 per affected pub.

Over and above these changes Punch is also looking at the rent it actually charges for the machines themselves. "We want to consider market rates," says Georgel, "so that our pubs will be no worse off than if they went free of tie on machines."

That this is akin to the 'never knowingly undersold' approach taken by retailers such as John Lewis is not lost on Georgel.

Which predictably begs the question, would the group consider a similar move regarding the beer tie? Georgel won't be drawn, other than to outline the expansive range of beers available to his lessees as a result of the existing arrangement.

With the threat of a Competition Commission inquiry looming over the trade it may be a subject to which he and his colleagues publicly return in the not-too-distant future.