Mitchells & Butlers (M&B) is likely to sell between 10 and 15% of its estate — 200 to 300 wet-led pubs — to fund investment in growing key food-led brands.
One analyst estimated this would release around £350 to £400m of capital for expansion — chairman John Lovering said that the company would look to earn a blended return of around 20% on the capital it re-deploys.
Lovering said the company would like to double its six key drive brands in less than five years. "We're striving to move considerably faster than that," he said.
Lovering said that brands that were not capable of getting to 100 sites or producing £10m profit a year or produce the right return on investment would be candidates for disposal.
He said, though, that the company was "more interested in making money than being consistent".
Lovering said the company would create an internal market whereby the operating company would be measured on return achieved against its freehold property assets.
He insisted, however, that the company's freehold property would not be moved into a new legal entity — there would be no property company/operating company division as proposed when Robert Tchenguiz's R20 held a 23% stake in the company.
He said: "It just creates fees for lawyers and everyone would assume it was the forerunner to something more radical.
"We don't need to move the property into a new legal entity to get the management behaviour we want."
High street trials
M&B wants to trial Harvester and Toby Carvery on the high street and these trials would be likely to start by the end of the calendar year.
Lovering told analysts that nothing had been spent on its latest review — a reference to the £12m that was spent on a review in Spring 2008.
He said the review had been done internally at no cost rather "than enrich our friends in the advisory industry".
He did, however, acknowledge that non-executive directors would be better paid than in the past.
"We can't expect people (to do the job) for love," said Lovering, who will be paid £350,000 in shares per annum — the previous chairman earned £200,000.
The Guardian claimed that non-executives would see current per annum pay of £40,000 double.