Punch boss: I hope MRO will encourage investment

There’s a jovial, convivial air to the new top man at Punch, a sense of “hail fellow well met” but, scratch the surface of that bonhomie and you’ll catch glimpses of a hard edge of realism running through Duncan Garrood.

That hospitable, welcoming exterior is perfectly suited to a career in the pub sector, but Garrood is no wide-eyed innocent. This is a man who’s travelled and worked extensively across the international food and retail sectors. He’s even brewed his own beer — finally, as he puts it, finding a use for his Ph.D in biochemistry from Imperial College, London, while stranded in the dry, literally, deserts of the Middle East.

He says that shift from heading up major Middle-Eastern franchise operation MH Alshaya to taking on the helm of one of the UK’s largest pub companies allows him to bring a fresh perspective to a sector that some would argue needs a fresh start.

“I said at my interview that having been overseas was a huge advantage — there’s nothing like a fresh pair of eyes; coming back in you do see things in a different perspective,” he says, pointing out that when the call came to join Punch, he leapt at the chance.

“Somebody gave me a call and said ‘how about coming back and joining the pub industry?’. I didn’t think twice about it. I’ve always been a traditional British guy at heart. I love British culture and heritage and, for me, the British pub is iconic. I couldn’t resist.”

Certainly, he’s keen to use that fresh mentality to draw something of a line under the more toxic aspects of the pub sector’s history, and Punch’s role in that, although he does obliquely acknowledge the mistakes of the past.

“Punch has been through a lot of difficult, introspective times with its refinancing and, clearly, the business was focused on its financial security and future — now there’s an opportunity to set a new future.”

He’s heard plenty of anecdotal references to issues of the past, but he’s avoided going into detail on the history — referring to issues of the former era as a process of evolution.

His focus is firmly on the future, and it’s a future he sees as a partnership, both with tenants, and those with wider interests in the pub sector.

“I would say that when Punch was first formed, it was primarily a property company but, in latter years, it has been very focused on its partnerships. A huge amount of very good work has been done and going forward we want to be jointly focused on pub customers.”

He said the company is keen to work with its tenant partners to create things that appeal to the consumer. “We want to construct offers that make consumers want to come back more often, spend more time in the pub and vote with their feet.”

He feels that, in the past, Punch has buried its light to a certain extent — not highlighting the strength of its offer to tenants in terms of the support it offers: “We need to be more vocal about the value we can add and demonstrate that as well.” He wants to reposition Punch as a “constructive partner” to its tenants.

He remains bullish when it comes to the market rent-only option (MRO) and the idea that Punch is disposing of pubs that have announced their intentions to head down that route, describing the allegation as “nonsense”.

“I can categorically say the accusation that we sold pubs because of potential MRO threat is absolutely untrue. The reason for that is crystal clear because we don’t know the nature of the MRO legislation, or how it will work, so I would be, frankly, an irresponsible chief executive if I was to make a commercial decision to dispose of a property on the basis of legislation and an outcome that I don’t understand.”

While the situation around MRO remains unclear, Garrood says Punch will continue to reserve its position on how it will react to the secondary legislation. He has gone on the record to express concern about how this uncertainty is hampering investment, and remains firm that Punch will not be committing to any long-term projects until there is clarity.

For some, the lack of clarity and confusion surrounding the legislative changes would be a source of frustration, but Garrood is philosophical, pointing out that he came into the job knowing the legislation was in the pipeline.

“You can look at such legislation in two ways, a hindrance or a catalyst for change.”

Where he will get frustrated is when it comes to investment stimulus: “I certainly hope it will encourage investment — if it doesn’t, I’ll be frustrated and quite vocal, but I don’t believe that will be the outcome — I cannot believe that.”

He’s adamant that Punch is acting responsibly when it comes to tenant selection — putting distance between itself and the accusations of past “churning” of tenants. “For every 100 people that apply to us to run a pub we end up working with four.”

The company invests in a rigorous process of selection, he says, and aims to ensure prospective tenants have a good grasp of the commercial realities.

“It costs us more than £50,000 every time a publican fails.

"The notion that we would actively seek to have publicans fail is absurd. We want publicans to be highly successful.”

He says that since Punch began the process of selection, failure rates have halved and are now “better than average for small to medium-sized enterprises”. While he recognises they’ll never get to zero, he has a policy of continuous improvement to help tenants maintain their business.

However, he’s not blind to the realities of the trade, and while Punch is very much in the business of keeping pubs open, the reality remains that some pubs are simply unviable — a fact he doesn’t shy away from.

“Punch wants to see as many pubs open and thriving as possible. But there are realities that in some communities where the demographics have changed pubs are now spread among a thinner population. It’s a commercial reality that, where you have such a situation, consolidation of pubs is inevitable.”

He says in those cases, it’s better to have fewer, well-invested pubs with a good offer, rather than spreading a thinning business over a number of under-invested struggling pubs.

“It’s a conundrum. No one wishes to close a pub, but the commercial reality is that if there’s not sufficient population to support them, we have to do something about it.”
It’s no easy task that awaits him, but from the heat of the Middle East to the equally hot political cauldron of the British pub trade, Garrood is keen to make his mark and take his company into a positive future.

My kind of pub

As part of his induction, Garrood spent a number of days in a pub, pulling pints, mopping floors, washing glasses and cleaning the toilets.

It left quite a mark: “I would say the Blacksmith Arms in Branston, Derbyshire, is the epitome of the perfect local. The publican there, Maria, although I now call her boss, is, for me, one of those people that epitomises what great publicans are like, offering hospitality beyond what anybody can expect.

“This pub is a great example of where really well-developed hospitality, making people feel at home, individual and special, giving them an experience above and beyond what they’d get at their own house, draws people into the pub. That is why that pub is thriving, it’s the perfect example of what a pub should be.”

Garrood on food: ‘Grasp the opportunity’

The pub sector has a lot to learn from its competitors, particularly in the casual-dining sector, says Garood, and it ignores that at its peril.

“One of the things that I encourage everyone to do is to look outside the doors of their pubs to look at the choice customers have. Anywhere that consumers want to spend time socialising or doing business, where they meet over food or beverage, to me is competition.”

He points to the success of casual dining, and the fact the sector’s growth is outstripping pubs, all of which he says is down to the work it’s doing in quality, innovation and consistency.

“They’ve put offers together that match consumer desires. Pubs should be in that position.”

The success in casual dining makes him optimistic for the pub sector because it shows there’s a strong demand for people to go out and enjoy themselves in a “quality environment”, and he feels pubs should tap into that.

“I see nothing but opportunity for publicans to take some of the business that has gone to those alternative places.”

This is no declaration of war on casual dining, he insists, pointing out there’s plenty of room for all, but says there’s a big opportunity for pubs to offer more when it comes to food and enjoy some of the growth its more restaurant-focused cousins are enjoying.

CV

• 1983-1993:​ Starting out as a management trainee with Unilever, Garrood climbed the ranks through a range of roles within the business ranging across production and sales
• 1993-1995:​ Strategic and customer marketing director — Unilever
• 1995-1998:​ General manager, southern China, Unilever
• 1998-2002:​ Regional managing director, north Asia, Unilever
• 2002-2004:​ Regional director, Asia Pacific, Johnson Diversey
• 2004-2009: ​Commercial director, BAA
• 2009-2015:​ President of the Food Division, MH Alshaya