Stonegate ready to spend and evolve pub and guest experience

Talking to The Morning Advertiser​, the former BrewDog chief operating officer who joined the UK’s largest pub business in early 2023, McDowall admitted he felt optimistic for the future.

“We’ve seen some pretty encouraging trends,” he said. “It’s still occasionally volatile but many parts of our business are trading pretty consistently.

“We’re pleased with Be At One, which is our premium cocktail concept, that’s doing really, really well. The evolution of Slug & Lettuce is proving really popular.

“Our big success, I would say over the past 12 to 18 months, has been the strength of performance in our leased & tenanted business, which is 60% of the profit pool of Stonegate and that’s growing.

“We’re really pleased with the continued growth of Craft Union, which has gone from 500 to over 600 sites in just over a year.

“So despite the ongoing list of challenges that we all face in hospitality, I feel pretty good about it.”

McDowall added Stonegate has “loads of exciting stuff in the pipeline”, which is about “continuing to further evolve and elevate the pub and guest experience”.

Although he said the business has a big list of things it needs to do in front of it, Stonegate is well-placed to “relentlessly continue to drive this thing forward”.

Pubs are less volatile

The pubco reported a strong first half for its financial year with “decent sales and profit growth across all parts of our business and we did that in what is still a challenging economic and trading environment at times”.

McDowall stated he was particularly proud of the trade achieved during the Euros and added: “We were one of the businesses that really got their fair share of it. Our team is very good at delivering great sports viewing experiences.”

Despite economic pressures, he said pubs feel less volatile currently than other aspects of the hospitality sector.

On recent results, he cited Stonegate’s pub partners’ businesses are in “rude health” with its operator-led pub model Craft Union continuing to grow while its expansionary capex programme and managed business is driving “really strong results”.

“It’s hard work and everyone in the sector would say it’s hard work but I feel fortunate to be running a pub business, a wet-led pub business,” McDowall admitted. “Most importantly, I feel fortunate to have a really talented group of people helping us navigate it.”

Looking at the short term, he said Stonegate is trying to drive a reasonable amount of change in strategy and has been doing so for the past 18 months or so. However, McDowall said when a business does that, there’s always a danger of losing focus on what really adds value day in and day out.

He continued: “That’s why we built a new mission, strategic pillars and values for the business a year or so ago and that’s about having a road map and a framework through which we make all of our decisions and that’s been hugely helpful in keeping us focused and helping our team decide where they should allocate their time, resources and energy.

“We’re really lucky the diversity of the estate is a real superpower for us and that allows us to react pretty quickly to different ways that people are socialising, things that are happening in the macro environment and one of our strategic powers is to always position every site for success.

“That means putting the right pub in the right business model in the right place – crucially with the right manager or publican or operator running it for us.

“And over the past 12 months, that strategy has been really successful – and there’s more to come.”

He also said guest loyalty is a key factor and the pubco is 10 months into its MiXR guest loyalty app, which has surpassed 1m users and is a “really important pillar of our guest engagement strategy and that’s how we’re trying to use digital and technology to amplify and augment the hospitality experience”.

Different reasons to visit

Of course, he is aware of people still being cautious with how they spend their money and the impact that’s having on the whole sector.

But, he said: “That is forcing us, in a healthy way, to think about the level of experience we offer guests and the types of experience that we offer guests in creating different reasons to visit our pubs, bars and venues.

“We’ll look back and see this time as important in the evolution of what pubs and bars venues really are but right now, we still feel a bit of a hangover from that.

“The way that people socialise is fundamentally changing, so particularly things like the time that people go out. We have many businesses that would have been busier post 10pm that are now busier in the early evening or late afternoon on a Saturday for example, particularly on high streets.

“Our job is to react to that shift in behaviour and that’s had a very significant impact on us and the industry as a whole.

“As a result of that, we are creating some really interesting bits of innovation in terms of how we respond to that but that has been that has been something that we’ve had to think very carefully about.”

On the new Government, McDowall explained: “It’s really important we try to find a way for the sector to work closely with the Government and find a way for the sector to be heard and, crucially, supported and recognised for the role pubs, bars and venues play in towns and cities up and down the country.

“I’ve long thought [a hospitality minister] would be a positive but I think there needs to be a broader willingness to engage the sector in a meaningful way and, it’s early doors with the new Government so let’s see where that goes.

“It’s important for the Government to demonstrate a real understanding of the importance of these assets and, in the short term, we got some stuff on their ‘to-do’ list that they need to resolve for us. Front of mind for me is reforming the business rates regime and extending that 75% rates relief that’s so important for individual pub operators and other small hospitality businesses up and down the country as well.”