BIG INTERVIEW: Great value key in next year says Jowsey

In this Big Interview​ with The Morning Advertiser​, he explains how the pubco is constantly evolving and has strong ethics on inclusivity, diversity and sustainability.

Jowsey also gives his shopping list to the Government ahead of the postponed Autumn Statement on Thursday 17 November, saying the trade doesn’t want handouts but wants a properly enforced energy price cap for businesses, the introduction and growth of a draught duty beer decrease and reform of the unfair business rates system.

He began working at Admiral Taverns in July 2019 and says: “I wasn’t looking for another role because I was quite happy where I was but I had a couple of phone calls from people I respect, who said you should have a look at this [opportunity] because it’s a really interesting role and an interesting company – so I did and the rest is history.

“Day to day, my job is to lead the business, make sure we’re going in the right strategic direction, make sure we are delivering services to our licensees and making sure we live the values that we set ourselves and the standards we set ourselves. If we do that, and we all work together collaboratively, we can have a really successful business, both licensees and ourselves.”

Having overseen the acquisition of the Hawthorn estate in 2021​, which comprised 674 sites, Jowsey admits his previous experience has been a big help in what he has done and can do for Admiral.

“I had 18 years-plus with both Heineken in the UK and Scottish & Newcastle,” he says. “Some of that time was working in pubs directly, so I ran Star Pubs & Bars for about four years and when I finished with Heineken, I was the director of the on-trade, so I sat on the Heineken board but was responsible for looking after everything that went on with their business in the on-premise.

“I guess I’ve got a pretty broad perspective of brewing, sales and marketing, pubs and, hopefully, bringing all that together to the advantage of licensees at Admiral.”

Admiral operates just under 1,600 pubs with the vast majority of them being leased and tenanted, which is a model where the pubco owns the freehold of the pub, recruits a licensee, who goes in and operates their own business while buying their beers and most of the wines and spirits from Admiral.

Some of the innovation we saw during the pandemic was unbelievable. Most licensees can’t sit still, they’re not that kind of people so being told you can’t open and trade was horrendous.”

“Our job is to support them to make sure they can build a really great local business, embrace their local community and deliver a service that everybody wants,” Jowsey explains. “That’s the vast majority of our pubs. We also have 170 pubs, which are community, managed, wet-led operator pubs called Proper Pubs. In that scenario, we contract with a management company, and that management company operates the pub on our behalf. The management company takes a percentage of the turnover. They employ their own staff and operate the pub but we have more control over the retail offer and the way that pub is operated.

“I love leased and tenanted because there are so many innovative people out there who want to service their own community and build their own great business locally. You get a group of people who are really attuned to what their community needs.”

He says most of the Proper Pubs model are wet-led with some serving a lot of food but about 80% of those are wet-led.

The Admiral chief says of Covid times: “It was really interesting in the pandemic because we were very open and explicit about making sure our operators and tenants came out of the pandemic, ideally, debt-free.

“I didn’t want them to feel burdened by the pub and I didn’t want them to be working for me, paying off a debt to Admiral Taverns. We worked very hard to make sure that happened and they brought all that entrepreneurship, drive and motivation to their businesses when they were allowed to reopen.

“Some of the innovation we saw during the pandemic was unbelievable. Most licensees can’t sit still, they’re not that kind of people so being told you can’t open and trade was horrendous. They renovated their pubs internally and did some amazing things with their outside areas.

“When they did reopen, they were desperate to see their customers again because they’re really sociable people. They created these wonderful spaces for people to go back to so I’m not surprised most of our pubs bounced back really, really strongly after each pandemic closure period. And they’ve traded pretty strongly ever since. It’s probably only in the past month or so the things have gone relatively quiet, for all the obvious reasons like cost-of-living increases.”

Reaching 2019 levels

He says during the 18-month period from early April 2021 until the beginning of October 2022 most of the pub company’s licensees were performing at least to 2019 levels, in terms of volume, and probably generating more turnover because, inevitably, pubs had to put their prices up.

Jowsey admits trade has gone slightly quieter since the beginning of October but says that’s not surprising when energy bills at home have gone up significantly and inflation is running at around 10%.

“I’m not surprised it’s not as buoyant as it was but most of our licensees are still performing well. Whichever way you look at it, the next 12 months are going to be tough. The economic climate won’t be great but if you’re running a community pub then the good news is a lot of people will trade down from going out for a meal to having a few drinks and a lot of people will resist going into city centres where prices tend to be higher, and they’ll resist paying for taxis.

“Having a local community pub is probably the best place to be in the industry, particularly if you’re wet-led. There’s no doubt the cost-of-living squeeze on consumers will inevitably have an impact and, those of us that are old enough to remember, previous recessions will tell you the troughs tend to be lower but the peaks are higher. This is because people go less frequently but when they do, they want value and they want to have really enjoyed themselves.”

Jowsey believes Christmas could be a strong period, certainly for wet-led pubs in the two-week period before Christmas and the week between Christmas and new year but he expects the beginning of November will be very quiet with January the same.

He says: “Pubs will have to tailor their activity to that sort of pattern. At Admiral, we talk a lot about being a critical friend to our licensees – so if I’ve only got a few quid in my pocket and I’m going to spend it, I want to get value for that few quid so you’ve got to be the best offer in the locality so that whenever people do go out and spend money they go to our pubs rather than somebody else’s.”

The Newcastle man says if anyone is spending money now on a leisure pursuit, it’s got to be really top quality. “Now that doesn’t necessarily mean really upmarket, it just means really good quality and value for money. If I go to my local pub, I don’t expect to have all the frills I might get in an upmarket city centre bar but I want fantastic hospitality.

“I want to be recognised and thanked for my custom. I want people to talk to me when I’m there. I want to have a really social experience and I want to walk out with a with a thank you and a goodbye so I feel the money I’ve spent in there was well worth it.”

We’re hopeful that, on average, we’ll save licensees in excess of £2,000 a year in terms of their energy bills and all of that benefit will flow directly to our licensees.”

Admiral Taverns pubs can deliver “fantastic hospitality and make people feel really special without having to have all the upmarket twists and curves you get at a fancy cocktail bar in central London”.

Sustainability is a big focus for the Chester-based business. Jowsey says the business has recently published its strategy for the next five years, which are based around five core pillars of sustainability, with the one that’s probably the most relevant currently is around the energy-saving equipment the pubco is installing in its pubs’ cellars.

“We’ve partnered with Technik2 and we’re rolling out equipment that control cellar cooling better, manages the remote coolers and the fridges behind the bar,” Jowsey says. “And we’re hopeful that, on average, we’ll save licensees in excess of £2,000 a year in terms of their energy bills and all of that benefit will flow directly to our licensees.

“We’re hoping we can hit about 500 to 600 pubs in the next 12 months with that technology and if we can go any faster, we will because obviously it’s a huge benefit to licensees in the current climate.

It’s also for the planet. It should save about 1,500 tonnes of carbon as well so although it’s a relatively small contribution, we want to make the contribution that we can, to help in terms of sustainability overall.”

Energy cap plea

He explains there is a collective energy deal for its managed Proper Pubs estate and explains all 170 sites are on a deal where Admiral has gone directly to the market having bypassed wholesalers and has bought in advance. He says: “However, it’s not without its risk either and we’ve got to be really careful in the way that we manage that.

“To help all of our licensees, we’ve engaged with three different brokers to offer them some expert advice. We’ve been really active in terms of trying to influence Government – we were leading the charge along with the British Beer & Pub Association, UKHospitality and others, to say there needs to be an energy price cap for business. There was one introduced for consumers but there was nothing for business and it’s a double whammy for most of our licensees because they tend to live above the ‘shop’ because the business supply is also their domestic supply but they don’t get the protection that most domestic consumers would get so that energy price cap was really, really important.”

He explains Admiral has done a lot of work around this subject and is still feeding information to the various Government departments on it. “I’m hopeful we might see something in the in the Budget [this week] because my nervousness is there is an energy price cap that only covers the commodity prices for the gas and the electricity, it doesn’t cover the entirety of the bill,” explains Jowsey.

“Without getting too technical, I’m slightly nervous that some of the other aspects of those bills are being increased by the wholesalers to their benefit rather than to licensees’ benefits. We need to make sure that cap applies across the board to all businesses, certainly small businesses, and applies to the entire part of the bill otherwise we’re going to have situations where pubs are facing not just a doubling in their energy prices but sometimes three or four times what it used to be. That’s just unacceptable in the current climate. We can’t have some industries taking advantage of people like pubs in the hospitality industry going forward.”

We’re planning, in the current financial year, to spend £22m capex on our pubs so that would be £50m over two years.”

On the future, Jowsey says: “We’ve doubled in size over the past three years and I think there are dis-economies of scale with pub groups, as well as economies of scale. We needed to be big enough but I think the sweet spot for Admiral Taverns is probably somewhere between 1,500 and 2,000 sustainable community pubs so, right now, we’re not looking to grow that number.

“We do have very supportive investors and lenders and at some point the time may be right to go again and acquire some more pubs that fit our model. We’d be very interested in good community pubs – that’s what we tend to focus on but there are no plans currently.

“What we are doing, though, is building on our capex plans. Last year, we spent around £28m on capex on our existing pubs. We’re planning, in the current financial year, to spend £22m on those so that would be £50m over two years so, wherever we can, we are looking to enhance the sustainability and the profitability of our pubs by investing in them.

“That’s keeping us really busy currently but, clearly, there’s a confidence issue there as well. Not just ourselves but licensees need to believe that investing currently would generate a return for them and it’s pretty tough at the minute without the kind of certainty or at least some certainty around cost of living, inflation, etc. We’ll continue to look for those opportunities but it is getting harder to persuade everybody that now’s the time to invest.”