Star boss optimistic about consumer confidence returning

Speaking to The Morning Advertiser,​ Lawson Mountstevens, managing director of Star Pubs & Bars, said they were seeing signs of optimism returning.

“If you look at the December, [we were] sort of closed down by stealth into January, [which was] hugely challenging and if we were having this conversation three weeks ago, I would have said we're looking at a very challenging outlook.

“But we've seen is confidence come back week by week, and we've seen trade filled week by week.”

He said the support Star put in place over the two years affected by the pandemic, rent concessions and various initiatives, were a big factor in helping pubs to bounce back.

“We opened with confidence, [and] that's playing through now, in terms of the fact we've got high numbers of pubs reopened, and reopening very close to the March 2020 levels that we were at, which is really, really pleasing," the Star boss added.

“The whole point was we put the support in to enable people to continue on with their business into the future and that was a leap of faith and that that has come through now.

“Recruitment levels and applications for pubs look pretty strong. And our capex programme is motoring along - slightly delayed but coming along.”

Star had previously received criticism about its rent levels and the pubco boss moved to defend the firm’s stance.

“We start from the premise of we want a fair rent in place that motivates the operator of that pub, and assures us that the correct divisible balances are all fairly set,” Mountstevens said.

“That is all fair. It’s set through a transparent process, it’s driven by our estates team, and it is a mutual negotiation between both parties.

“There is ongoing work, in a year where costs in an outlet look like they could be volatile, to make sure we are putting the right cost basis into those pubs to ensure that we are driving a transparent and fair rent process.”

Looking to the trade-wide issue of rising costs, Mountstevens was cautious about how this could impact the industry.

Ongoing challenges

He said: “It's something that we need to be very aware of because at the end of the day, pubs are in the disposable income game, but we are hopefully an affordable treat.

“But there's no doubt if you look at the media coverage [there’s] increased energy costs, we've got National Insurance increases going through, people's disposable income is potentially squeezed.

“There are two factors for me that we don't know. There's insight that says people have saved money over the pandemic - so let's hope they enjoy spending a bit of that in great pubs up and down the country.

“Secondly, pubs need to be good, they need to be good in their offer – we are an affordable treat, but it needs to be a really good treat.”

Delving into current challenges deeper, Mountstevens outlined the issues ahead as we look to a post-pandemic trading landscape.

“I don’t really feel we've really felt the transition to Brexit [and] a lot of that's been masked by Covid," he said.

“We know there's challenges in terms of building supply chain availability, materials, availability, labour and cost. There's a lot to work through and for certain operators in certain geographies labour remains an issue and attracting and retaining good staff, particularly kitchen staff and chefs, is going to be an ongoing challenge.

“[When it comes to Bexit] I would hope as we step out of Covid there's concerted energy from the people in Government to transition correctly so that we can continue to trade in a frictionless manner.”

He reflected on the £1.8bn deal to acquire 1,900 Punch pubs into the Star estate​, a deal that in 2017 more than doubled the Star estate and the impacts the pandemic have had on that.

Mountstevens added: “Now we're very much one business, we had the full integration back in March 2018.

“[But] operationally, we've only really had 18 months running at this in terms of full proper ownership business as usual because of Covid.

“We’re very much one business now in terms of culture within the teams. It is the Star Pubs & Bars business - one group of pubs, albeit with the complexities of old agreements, Punch agreements and Star agreements. We’ve still to work through those because obviously, we've got to respect those and work our way through and review them, and we'll transition them on to our core agreements when it’s right and when legally right to do so.”

When it comes to further expansion, Mountstevens said the business was focusing on the estate it has currently.

Big learning

He added: “The challenge there is for us to deliver what we said we wanted to do and work brilliantly with these 2,400 pubs. We are fifth in the Licensee Index.

“We challenge ourselves to move up that index, we want to be better, we want to do better in the support cut through, and it's good that there's that level of competition across the different pub businesses.

“We still have a significant investment programme to work through the next three, four years in this pub estate so [it’s a case of] consolidation for now.”

He added improving and strengthening relations with tenants was a key for the company moving forward.

“It has been a big learning for us. You go from running 1,000/1,100 pubs, you can be a lot closer to that – smaller teams, simpler agreement types, really running the business,” he said.

“This is a big integration [with] a lot of complexity in terms of harmonising that and bringing it all together.

“That's taken time and it's been challenging. We'll continue to work our way through it because the core of what we do is very good.”

While it has dropped down the Licensee Index rating, the company has also fallen foul of the PCA, receiving a £2m fine​ - something the company is taking seriously.

He said: “It's an area of real focus. If you wind it back, obviously, we did have the PCA investigation, and we're working through the vast majority of those recommendations, collaboratively and sharing that with the PCA as we work our way through it.

“We do fundamentally disagree with the core of it and the outcome of that and we will work our way through that through the appeal process.

“We've changed our structure within Star, in terms of the formal appointment of a co-compliance officer that reports directly to me, to dial up compliance and that visibility within the piece.

“But we also recognise you've got to keep working at this to be clear about our agreements, be clear about what it means to work with Star, what we will do and what we won't do.

“We also recognise we've had a very, very difficult service platform over the back end of last year, there's definitely affected and challenged some of our relationships across the piece.”

Looking ahead, Mountstevens was optimistic about the future of Star as well as the pub trade.

He said: “I'm feeling pretty confident [about the future] actually I think Covid has proven people's love for the pub, and I think they've realised what they've missed.

“It's really dialled up, particularly pubs in suburban areas, community areas, just how important those are.

“Everything tells me the consumer is keen to get back and enjoy it and so there may be some bumps in the road over inflationary cost pressures, but fundamentally, we're a great place to enjoy and socialise with friends and family.”