The company’s chairman Hamish Elder told the PMA that the new strategy was being driven by Government plans to introduce a statutory code and adjudicator for the pub sector, and the additional compliance costs they will cause.
He said a new subsidiary Sussex Hospitality Services Ltd has been set up to accommodate the new business, which he expects to employ 50 people by year end, including staff working at the first two managed houses, The Lamb in Eastbourne and The Old Dunnings Mill in East Grinstead.
“The introduction of the statutory code is driving us reluctantly into pub management. It is now our strategy to have more directly managed pubs, and to do away with tenancies,” he said. “We will convert some pubs as tenancies expire, and in the long run expect at least half of our 48 pubs to be directly managed.
“We will have two pubs under management by the end of the month, two more by the end of the year, and another three next year.
“We’re new into pub management, and we won’t pretend it is going to be easy. But we have reason to be optimistic.”
Legislation
Elder said that it was an ironic result of the law of unintended consequences that legislation designed to help pub tenants was likely to reduce their opportunities to run pubs, and predicted that many thousands of the 20,000 UK pub tenancies will be lost from the market in due course as pub companies start to find the sector increasingly unattractive.
Harveys is taking back the Old Dunnings Mill from eight-strong multiple operator Whiting & Hammond on 29 September following negotiations that “were not as amicable as we’d have liked”.
Elder said: “Our plan at the pub is much of the same. We are full of admiration for what Brian [Whiting] has achieved there – he is an outstanding operator.
“His 10 year agreement came to an end, and sadly we couldn’t reach agreement on another term. It was a broken pub a decade ago, and the original deal reflected that. Now it’s not. So I suppose you could say that he’s become a victim of his own success – but we weren’t going to remain loss-making on the asset.”