It started out as a bit of fun, but it's become one of the most influential gastropub operations in the industry. And Peach is still fun, too. Managing director Hamish Stoddart wouldn't have it any other way, as he tells Phil Mellows.
Six years ago Hamish Stoddart was watching Ocean's Eleven when it gave him a brilliant idea. The company needed a growth plan. Why not call it Peach's 11 and go from six pubs to 11? It worked, and now there's a new plan — Peach's 22.
It makes you wonder what might have happened if he'd gone to see 101 Dalmations. There would be Peach pubs all over, doing what Peach, arguably, does better than any other pubco — serve high-quality restaurant-style food in a bright and relaxed pub atmosphere.
But with 13 pubs, plus "one I can't tell you about", Stoddart is comfortable with getting to 22 within the next three years, and sticking to the patch he knows, in the relatively well-off shires between Warwickshire and Surrey.
Strange, though, that less than a decade ago, when he bought his first pub to form Peach Pub Company with rising young chef Lee Cash, he was only "looking for a bit of fun".
Stoddart, after working as an accountant in the City, had been
the fourth generation to go into the family foodservice business of Cearns & Brown.
"I expected to spend the rest of my life in it, but we weren't big enough and we couldn't buy cheap enough to compete. We lost £3m in our last year."
So, along with the other nine cousins who owned the company, he sold it to Brake Brothers, coming away with enough cash for two projects. Most of it went into Virtual FD, a venture that hired out trouble-shooting financial expertise. The remainder, £20,000, he invested in the Rose & Crown in Warwick.
"I didn't see it as a career move at the time and I didn't take it seriously. But I was really enjoying the practical side of it, and after six months we had a fantastically successful pub. I thought 'this is bizarre — let's try and do it again'."
From being a non-executive director, Stoddart threw himself into Peach full time as managing director. What did he know about running pubs?
"I knew it was about getting the service and the product right, and that's my business passion. I like growing businesses and I read books on service management for pleasure. It was a question of turning that to hospitality stuff."
Keeping customers happy
Among the books he read was The Ultimate Question by Frederick F Reichheld. The Ultimate Question, asked of the customer, is: "Have you recommended us to other people?" From that follows service systems geared to improving consistency
and getting more 'yes' answers — in the terminology, a higher Net Promoter score.
"We were an early adopter of the system here, and now Mitchells & Butlers has caught up with us," says Stoddart. "It was a service measure that was used worldwide, but restaurants weren't doing it.
"Peach has a Net Promoter score of 75%, which means 75% of our customers actually recommend us. The next best in the industry only score about 60%, I think."
The other idea Peach introduced to the pub industry was its partnership structure. Alongside Stoddart and Cash there are now four partners — a fifth is required, if you're interested — each of whom have invested in the business and look after a geographical 'pod' of two, three or four houses. If that sounds like being an area manager, it isn't.
"Area manager is a crap job," says Stoddart. "Our partners can do the fun things you do as a caterer, they can get the pleasure you get from making people happy. They are the kind of people who want to be there on a Friday night pulling pints. They must feel it's their place and guests know them as the owner."
The recent appointment of a fi-nancial controller has freed up Stoddart himself to do more of that sort of thing. Despite being an accountant he doesn't seem to like it very much. "I enjoy the craic you get from a pub. I'm not doing it just to make money".
And it's unlikely that an accountant would hire people before they've actually got a position for them, but that's what Peach does.
"We've done well in winning awards and good people come to us because of the career opportunities. We'll take people on as they come up rather than waiting for the vacancy. It makes it easier when we expand."
You always feel there's a danger with Peach that they're all having just a little too much fun to make money, certainly with the way things are going in the economy.
"It's hard, but we're doing okay,
up by 2% this year," says Stoddart. "But the costs! They're rising fast and I can only see them rising faster. I've read that meat prices are going up 20% next year, and we've higher VAT and the possibility of a new slump. It's going to be warfare in the restaurant business and independents are going to be squeezed."
He knows Peach can't compete head-on with the major players. Instead it takes up an interesting position, between the food-led pub chains and the top restaurants.
A food business
Despite the addition a year ago of the group's first wet-led pub, the James Figg in Thame, Oxfordshire, which Stoddart bought to prevent a gastropub opening in competition with his own Thatch up the road, across the estate the take is split 55% in favour of food.
"So they're not restaurants, but it's definitely a food business. Our customers are looking for food. Wet-led is a tough place to be, but eating out will continue to grow despite Tesco.
"Big managed operations are good at delivering cheap food, well presented. They can change the concept, move things around. But they've got more capital than us. We can't afford it," he says, perhaps remembering the fate of Cearns & Brown. "With Peach we have gone for something that will endure, that's built to last. Pubs are not fashion-led. They're institutions.
"Sales increases are hard to get and we are having to work harder to get them — by doing things better, by continuously raising standards. We've learned to get every bit of the day working. Some of our pubs are as busy 10am to 11am as they are noon till 1pm.
"We try to be the best place in town, for service, for food. We may not be the biggest, we may not be the busiest, but people will get the best experience."
Expansion is another part the plan, of course. What about Ocean's, sorry, Peach's 22?
"It's a number at which we know the shared ownership model works. I don't know how much further we can grow beyond that, but we all feel 22 would be okay. Our systems are robust. The only question is, can we find pubs at the right price?
"It's becoming increasingly hard to find the right sites. Some think it's easy at the moment, that prices are cheap. But there's a reason why some sites are bargains. Other operators are spending too much. I don't see where they're going to get the returns. But perhaps their economics are different.
"We've grown quite slowly over the years — then we did three last year in three weeks. That may have been an error. We did it because the opportunity was there. But it was bloody hard. Suddenly we had three more teams to recruit, to train. I wouldn't recommend it. But we survived."
There are, perhaps, even bigger challenges ahead for Stoddart and Peach. But he's confident quality will win out. "It's going to be hard for us, but it's going to be just as hard for the competition," he maintains.
My kind of pub
"Where I live, in the Cotswolds, it's great to go into a pub that cares about how they serve a pint and deliver a sandwich.
"There's the Falkland Arms at Great Tew, or the Deddington Arms, a good village pub where you'll find the craic at 6 o'clock on a Friday. It's full of pub people and I can go in there and talk about pubs. I'm a monomaniac!"
Key dates
• 1983 — Hamish Stoddart graduates from Cambridge and joins accountancy giant PricewaterhouseCoopers
• 1989 — Moves to City office of Lonrho
• 1992 — Joins the family firm, foodservice wholesaler Cearns & Brown|||