Six steps to becoming a multiple pub operator

Multiple pub operators are the lifeblood of a great industry. These days, more than ever, they are the focus of much of the energy and innovation that goes into the trade, raising the bar on standards at every step along the way.

They have proved they can not only run one good pub but repeat the trick over and over again. They are the people managed pubcos look to for fresh ideas. And they are, increasingly, the people leased and tenanted companies look to when they need a reliable operator for their pubs.

Yet, for every multiple that has succeeded, there is at least one other that has failed. There’s been many an independent publican who, having tried to make the jump from one pub to two, has fallen flat on their face — and often at the cost of both businesses.

So, what does it take to become a good multiple operator? Until recently, little systematic thought has been given to how the chances of these fledgling companies might be improved. But now, Scottish & Newcastle Pub Company (S&NPC) — which has experienced a 30% increase in the number of its pubs run as part of a multi-site business — has made a study of the problem, and it’s come up with some fascinating conclusions.

“We’ve been poring over what’s worked and what hasn’t in our own estate and drawn out the key elements for success,” says Chris Sladen, S&NPC’s head of business support. “Firstly, you have to be good at recruiting and inspiring staff. You can’t serve everyone yourself, so you have to be skilled in developing and motivating people.”

You must also have a focus on standards, says Sladen. Not only by being passionate about them yourself, but by making others passionate too. “And you need the judgement as to when to step back from a business, and when to dive in and sort out a problem when you need to,” he advises.

Six essentials for a multiple operator​

• Always recruit and inspire good staff
• Focus on standards
• Impose strong financial controls
• Make sure you have cash low and capital — at least £20,000 per new pub
• Concentrate on the style of pub you’re good at
• Expand within a manageable geography

Financial controls are also more important when you’re further away from a business, in particular when you’re monitoring profit & loss and stock checks. “You’ve got to control your costs and be able to see where the issues are as soon as they arise. It’s crucial, and we’re working on a package that
will help our multiples to do that,” explains Sladen.

“Some people think they can fund expansion out of their cash flow, but our evidence suggests otherwise. We calculate that you typically need £20,000 to £30,000 to put into your second or third business or you’ve no buffer when an operational problem arises.”

Stick with what you know, too, says Sladen. Your second pub doesn’t have to be identical to your first, but don’t try to run a young person’s venue, a gastropub and a sports bar, because it’s unlikely you’ll be good at all three.

Finally, there’s the geography to consider. “Stay within a manageable area,” he adds. “We had one lessee who was successful in Durham, but when they opened a pub in Newcastle, half an hour away, it all went pear-shaped.”

Of course, taking on a second pub isn’t for everyone. If the success of your current outlet relies on you being on the premises for much of the time, it will be difficult to replicate that across two sites. “But if you’ve been successful because you’ve recruited good staff and you’ve got good controls in the business then you’ve a great chance of success,” suggests Sladen.

On the flip side, perhaps the worst reason for going multiple is believing it will solve a money problem by making you some cash. “When people say they want lots of pubs but only aim to make £200 a week in each, alarm bells ring with us,” says Sladen. “All you need is a failure at one or two of those pubs and you’ve got problems.

“We’ve come to take the view that if there isn’t at least £40,000 profit a year in a pub, it’s not suitable for a multiple. You need that to pay a manager and create a financial buffer,” he adds.

For anyone looking to expand, it seems that the key advice is not to run before you can walk. Take one step at a time and secure your foothold before moving on. After all, it’s better to have one profitable pub than five that never make any money.