Creative individuality combined with sound business sense make Orchid flourish. Chief executive Rufus Hall talks to Phil Mellows about the view from the box-car of the recession.
It's a good job he didn't say it in front of his bank manager, with whom he's just met. "I don't do this to make money," says Rufus Hall, with a shrug.
Only minutes before, the chief executive of Orchid Group had emerged from what, in different times, would have been a smoke-filled room at the back of his company's splendid Pacific Oriental bar-restaurant in the City of London, where he'd been negotiating with the bank.
The meeting had gone well. The bank is continuing to support Orchid's impressive expansion rate. But Hall would clearly have preferred to be doing something else.
"I'm not comfortable dealing with banks," he admits. "I'm a CEO with an operations background. I'm old school. I take a huge reflected pride in the business, in seeing people develop within it. But, for me, it's really not about the money."
It's been only four years since Hall set up Orchid, starting with the remnants of Noble House Leisure, and aiming to "create a different type of pubco". At first he intended to add 20 or 30 pubs a year to get to around 150. But almost immediately he got the opportunity to buy a package of "tired and distressed" pubs from Punch and his ambition took a leap.
Now, after scooping up prime additions such as Premium Bars & Restaurants and Bar Room Bar, plus individual pubs, the estate is just shy of 300 managed houses, and there are plans to add another 150 by the end of next year.
Quality over quantity
But for Hall it's quality as much as quantity that counts.
"We're going to get bigger. Growth is important for us. It's a positive thing in a company like this — it creates job opportunities for people within the business. But it's not growth at any cost.
"We could get to 500 pubs — that wouldn't be a bad size. But I have no desire to run a 2,000-strong pubco. It becomes a faceless corporation at 1,000 pubs, and I want to be able to know every one of my pub managers."
If it's not money, it's the success of Orchid as a people business that motivates Hall.
There was nothing that could have pleased him more than when The Sunday Times placed it among the top 25 companies to work for earlier this year, based on feedback from Orchid's own staff.
"We're the first pubco to achieve that, and we've done it not just by paying bonuses, but through personal recognition. We're not corporate. I know every manager and we involve them in key decisions.
"Orchid is a business that is built around people."
People such as the chap simply known as Benidorm Steve, who heads operations at the company's Free House Dining division, which consists of roadside pubs with value-for-money food aimed at working-class families. "He's an expert in that kind of pub; he's in complete tune with his market. It's an art form," says Hall, admiringly.
Each of Orchid's five divisions has its own operations team — all specialists in their field — whether it's the contemporary carveries Hall believes have helped make the carvery fashionable again, the posh community pubs, the Thai restaurants or the clubs, in the toughest market of all, but still seeing some positive results where investment has gone into them.
"Each division is a mini-business in its own right. They each have very different customer bases and very different cultures."
It is this semi-autonomous structure that sets Orchid apart from its competitors.
"It's not a tick-box set-up. Our people are free to think for themselves. It's a different way of doing things.
"Orchid is a broad church. Its style is diversity and we push individuality. I believe in localness.
The pub name is king. But behind that there are some strict operating disciplines."
So while most of the beer is bought centrally, managers can choose their own cask ales, and it's the same with food. Brakes is the main supplier but each pub sources its own specials locally.
To make that work, you've got to have the right people and you've got to keep them in the business — so Orchid has set up what it calls the Platinum Partners, a group of, currently, 66 managers who are engaged more closely with the running of the company, and invited by Hall to come up with new ideas for making it a success.
At pub level, community involvement is another important part of the formula, and all staff are encouraged to support local charities and "to re-establish pubs at the centre of the community".
While it's arguably the UK's most diverse pub chain, there are elements that give Orchid's houses a common identity — chiefly Hall's sharp understanding of the marketplace.
"It's all driven by women," he says, somewhat surprisingly. "Women notice six times more things than men, they are more in tune with trends, and they dictate where
everyone else goes. So we put a lot of thought into appealing to women with the design of the pub, with the menu."
Changing offer
Across the group, Orchid's take is driven by food, wine and coffee. It reflects Hall's view of the way the industry he loves is evolving. For some, it is a shocking vision, but it's a change he embraces.
"Look at petrol stations — in 1958 there were 45,000; now there are 8,000, each with a broad offer. Pubs will go the same way. There will still be some locals, but simple boozers will suffer. It's getting harder for them all the time because of lifestyle changes and the legislation they have to cope with. It's the pubs with a broad offer that will prosper.
"Overall we're positive about the future of the pub — it's just evolving," he adds. "You can't go to the pub on the internet; you can't socialise with food and drink online.
"It's a challenge, but I really believe big in pubs. They're the best place to drink alcohol. Running high-street businesses has opened my eyes to the problem of pre-loading. The supermarkets are irresponsible. We're 45% food but I feel strongly about the need to get back the local pub as a place to drink.
"We're realistic, though. Putting up VAT to 20% will be an issue, and the major challenge for us this year will be unemployment. We trade in Sunderland, Sheffield, places like that, and I don't think the scale of the cuts we're going to see has sunk in with much of the pub industry.
"With a lot of people out of work we are going to have to get our value proposition right. The problems will be regional. There's a difference between the south-east and the rest of the country.
"We're in the box car of the recovery here," he says, looking across the Pacific Oriental, filling up with after-work suits. "There was tumbleweed blowing through here in 2008.
"So we are cautious. But the reality is that there are a lot of pub businesses that can be snapped up. There are opportunities for us."
My kind of pub
"I like them all! Though a pub for me these days has got to have a food element to it.
My current favourite is the Living Room. Its fillet steak & chips is better than Gaucho's, and there's nothing better than sitting there listening to the
live piano with a bottle of Terra Alta."
Key dates
• 1982 — After graduating, Rufus Hall migrates from Australia to the UK where he lands a job with the Milk Marketing Board
• 1985 — Joins Scottish & Newcastle
• 1990 — Appointed operations director at S&N Retail
• 1998 — Moves to Rank Group as managing director of Tom Cobleigh pub chain
• 2000 — Appointed managing director of operations at Punch Taverns' managed arm
• 2001 — Became licensed retail specialist at management consultancy Procapita
• 2002 — Takes over from founder Amanda Wilmott as managing director of
Ha! Ha! Bar & Canteen
• 2006 — Financed by GI Partners, creates Orchid Group out of Noble House Leisure and 290 Punch pubs
• 2009 — Orchid becomes fifth-largest managed pubco with purchase of Premium Bars & Restaurants