Although he doesn’t say it in as many words, Beds & Bars co-founder and chief executive Keith Knowles OBE, agrees the pub trade has an image problem that must be tackled, especially if it is to thrive following Brexit next year and other problems besetting the sector.
Knowles is so busy working on his employee of the month certificates when I knock at his office door that he doesn’t hear or see me until his spaniel Ted, roused by my presence, starts fussing.
It is immediately obvious the pubco boss takes great pride in his staff, who are spread across Beds & Bars sites all over Europe.
Almost as if proving this point, after a short greeting, he quickly thrusts the certificates he’s been working on into my hands, saying each one has a personal note from him to the deserving team member.
But, why highlight this tiny detail? It is important because it is an example of how Beds & Bars as a company is run. “We’re investors in people and ranked as ‘platinum’ for the support we give to our staff,” says Knowles.
‘Employee of the month’
“One of the things that we do at Beds & Bars is train people properly and when I read through the employee of the month nominations, I see a lot of people pushing to take on the training and development. This isn’t an industry that’s simply selling beers and burgers, it’s a serious business.”
Yet, there are several issues impacting the future success of the trade which, like many in his position, Knowles is familiar with and keen to overcome.
One of the biggest, which has worsened since the vote to leave the European Union, is an increasing lack of staff.
There are 84 nationalities working in the pubco’s 24 sites which span nine countries. Staff turnover was at a low of 8% until the Brexit vote came in and now stands at 24%.
Currently, there are 44 vacancies at various levels from cleaners to managers, says Knowles. Some 40 of these positions are in the UK, while four are on the Continent.
“We go around apologising for Brexit,” he explains. “My late wife was Dutch and my children are half Dutch. We’ve got businesses in nine countries and we’re proud of being a European business – we’ve been a part of that culture and made the best of it we can.
“I do not celebrate us leaving the EU in any shape or description and I found myself in grief over the vote.”
Perception issues
Not only has the vote caused perception issues, it has also sparked questions about the future of the organisation and where Knowles will be putting the 50-plus-year-old business’s money.
“I have the likes of our bank dropping us a line every now and then asking what our plans for Brexit are and until we know the concrete parameters of what we should be planning for, I’m not sure how we can make those plans,” he says.
Though things like Brexit are causing some uncertainties, one thing Knowles has assurances about are the company’s finances. The business is in rude health, with impressive sales week on week and year on year.
When asked about the financial success of Beds & Bars, Knowles dives for his desk, rummages around, and pulls out the latest sales figures.
“Last week really speaks for itself. We’re 9% up year on year for the period and £90,000 ahead of our budget and we finished £238,000 ahead on the period. So, really fantastic results coming out,” he says, clearly thrilled.
Few people could argue that the pubco’s finances are not in good shape, with Knowles attributing the success to the beds side of the business.
“Across our business, our beds are running at 92% to 94% occupancy, which we’ll be looking to maintain when we open our new sites later.
People see our venues as vibrant, fresh and safe,” he continues, highlighting the company’s four principles of safe, secure, value and fun. “Across all of our sites, we have about 4,500 beds and that’s about 1.5m customers a year.”
The vibe of the venues
It’s important to note that the vast majority of the company’s beds serve backpackers and the likes, but business people are also attracted to the vibe of the venues, he adds.
And all of this success comes in spite of the challenges Knowles has no control over, such as business rates and Government’s perception of the pub and bar trade.
“Sometimes it’s difficult to justify the environment you work in, he says. “In the UK a year ago, my business rates were £1m across all of our sites here, but now they’re £1.7m, which means we’ve had a 70% increase.”
Many of the stresses imposed on pubs and bars by Government are down to a lack of understanding of what we do as a sector. Hospitality is one of the largest employers in the UK, yet can often be treated as substandard.
“You’ve got business rates increases on one hand, but then you’re not getting anything in return with the other hand,” laments Knowles. “The business rates increase we had in Europe, as a total, was 2%. We get them here and we have so many other costs too.”
Other costs include the likes of doormen, he says, explaining that in some areas where Beds & Bars operates in the UK, the company’s doormen are almost policing the streets.
“The Government is creating an environment where costs and prices go up, but aren’t supporting the businesses themselves,” he explains.
“Just to put it into perspective, the business rates on the Flying Horse in Broadgate increased by 404%.”
Plans up his sleeve
But Knowles isn’t the sort to sit tight and allow such problems to continue and has a few plans up his sleeve. “If you can’t beat them, then join them,” he says. “We’re looking at moving our booking engine offshore.
“We currently fill about 50% of our beds through our own channels. Our bed income is worth about £25m and we’re looking to add to that substantially.
But if we put our website and the intellectual property that runs the bookings in an offshore site, then we will pay no VAT,” he says. “Those are the sorts of things that we’re going to have to look at because of difficult Government charges.
“It’s going wrong. It’s wrong that you can get a pub closed down that’s paying £40,000 in business rates and then a Tesco takes over the site and it’s paying £10,000 and sells alcohol below cost as a marketing incentive to get people to use the shop.”
However, this needn’t be the case. If the Government would just consider the sector as the serious entity that it is, things could be far more harmonious. Working in a pub or for a pub chain is fraught with negative connotations, as Knowles has already outlined.
But what are businesses such as Beds & Bars doing that are so dissimilar to those in other sectors? The answer is, very little and also much more. “We’re training our staff to run businesses, not just pubs,” he says.
“The whole industry needs to make a big push to show why it’s great to work in. I’d like to see any politician come and work in this sector and see exactly what goes on and why it shouldn’t be ignored.
“If you look at the iconic people in the trade like Ian Payne from Stonegate who started work at ground zero and now runs an incredibly successful business, it’s a great sector to be in,” Knowles continues.
‘Change our image’
“We need to change our image from being a sector where jobs are low-paid, with long hours and no real prospects, because it’s not like that.
It’s a viable sector that offers a lot of progression and we’ve got lots of examples of people who are running businesses and are on great salaries and bonus schemes.
We should be looked on as a sector with brilliant career prospects, because that is the truth.”
Knowles does, however, believe the pub and bar trade will get where it needs to be in terms of business rates and how it is perceived by Government and job seekers – though that’s not something he can put a date on.
One thing he is sure of, though, is the opening of three new sites in the next 12 months; one in Vienna, another in Lisbon and a third in Berlin.
“We’ve also just invested in our Bath site and in Camden,” says Knowles. “London Bridge and Greenwich have also seen investment and we’re pretty much doing a completely new site in Edinburgh.”
With this kind of activity – investment in the UK sites and growth abroad – Knowles hopes to see continued financial growth.
Success stories such as Beds & Bars’ will only help in the turning of people’s perceptions about the trade, with the hope that, one day, the words pub and job will conjure positive connotations.