City Diary — 1 April

Greene King: 'we run pubs'

Greene King chief executive Rooney Anand was mostly stressing the tremendous strides his managed division has made in recent years at last week's Numis Securities conference. But he also mentioned that his tenanted division has "structural advantages" over competitors with 80% of pubs let on short-ish rolling tenancies. Greene King, therefore, had control over the three key things — the person running its tenanted pubs, the pub itself (as opposed to pubs on long leases) and the offer. Asked about what would happen should the tie be abolished, he also had a slightly surprising answer: "We're an operating company, not a property company. We would decide whether to reverse transfer them to retail or put them on the market."

Analysts taken to task by M&B boss​

Let's hope Mitchells & Butlers (M&B) new chairman John Lovering isn't actually as insufferable as he appeared at last week's analyst briefing, when he was outlining the results of the latest strategy review. Showing a talent for wordiness, Lovering ticked off one analyst who kept referring to pubs as, er, pubs. "You keep talking about pubs — I want you to talk about licensed catering outlets." As analysts began to toe the line on Lovering's favoured terminology, he then relented: "You can call them pubs, I don't mind." Another analyst asked for figures on average site profitability at the six key expansion brands. Lovering declined, adding a mini-lecture: "Good analysts work out what they don't know from what they do. You don't always get the answer." For another analyst's two questions he had an even more terse response. "I wrote down 'yes' and 'yes', I didn't write down what they (the questions) were."

New arrivals and wise words​

Lovering was also asked a question about a raft of new senior staff set to arrive at M&B. There will be a new finance director, human resources director, commercial director, property director and one or two new "proven retailers" joining the middle management teams. Lovering said that part of this was normal moving on. Finance director Jeremy Townsend had "decided to go and become a rat catcher" (he's joining Rentokil) and human resources director Chris Edgar is "moving back into academia". But he also stressed the need to avoid becoming Marks & Spencer by recruiting fresh talent with fresh ideas in the middle ranks. Oh, and he was unapologetic about focusing management reward on results. He even had a bit of wisdom he said he'd picked up in the private equity world to explain how this works. "He who works well eats well; he who works the best, eats the best."

Laffin not laughin' at board battering​

One last word from ousted Mitchells & Butlers chairman Simon Laffin, who had a pretty rough time of it at the hands of activist shareholder Joe Lewis. Last month, he returned to the issue of corporate governance in an article in The Independent. There's consultation going on over the Revised UK Corporate Governance Code (formerly the Combined Code). Laffin sees nothing in there to cover an M&B-type situation. He muses: "Implicit in all this is an assumption that all shareholders are UK-based institutions playing by the rules, as laid down now in the stewardship code. The revised code lives in a gentle world of non-activist shareholders and boards that are left to get on and apply its guidelines. The panel is focusing on the protection of institutional shareholders talking to each other. These regulators have forgotten that there are shareholders out there who may not play by gentlemen's rules." Who can he mean?

Ex-Regent sites to refresh soon​

Punch Taverns had the keys to 13 sites dropped through its letter box when Regent Inns went bust last year. The sites — nine of which traded as Old Orleans — were loss-making, obviously.

Oh, and Punch was time-limited on how long it could trade them as Old Orleans. The clock is ticking down and the next couple of months will see them converted to fresh concepts. "There's quite a bit of up-side," managed division boss Mike Tye

told the Numis Conference last week.

Desperate for slice of Domino's action​

Domino's Pizza franchisees are one part of the food and drink market enjoying a pretty good recession. Average sales per site were up 8.5% to £14,089 in 2009 with earnings up 23.3% to £115,019. Now bearing in mind the average franchisee owns 4.5 Dominos outlets each, it means average franchisees earn a very handy £520,000 per annum. It costs a new franchisee around £200,000 to open a Domino's, which means pay-back takes less than two years. Says one insider: "Domino's franchisees are like rats in a cage — scrambling for new stores. There's a 4,000-strong database of people waiting to become franchisees."

Suffolk staycationers hand advantage to Adnams​

The staycation phenomenon of 2009 worked really well for Suffolk-based Adnams. Its two award-winning Southwold hotels hit record levels of profitability as the weak pound put Southwold on tourists' radars. And Adnams management is now flexing its retailing muscle. Last July, it took over the management of Fritton House, a restaurant with nine rooms. "It was being run by the estate who found it a bit of a struggle and approached us," chairman Jonathan Adnams tells City Diary. "Forward bookings for the summer are great and we've got wedding bookings going out three years."