Merging a business but retaining a flair for the creative

Fuller's Pride

by Heather Gibson

En Passant meets with Simon Emeny, Managing Director, Fuller’s Inns in order to talk about the pubs sector, and about the future direction of a growing business, whose rich heritage dates back over 100 years.

There are few things in life which generate as much spontaneous debate, passion and opinion as the local British pub. Sports, perhaps? Or possibly politics.As Managing Director of Fuller’s Inns, responsible for an estate comprising 364 sites, Simon Emeny is likely to be the recipient of more unsolicited feedback and enthusiastic viewpoints from friends, family and customers than other MD’s. It is a fact of life which he clearly relishes
and, as Fuller’s has evolved with the rapidly changing times of pub retailing, something which clearly drives the business in every facet of its operations.

Having undergone significant legislative changes with regards to licensing, and now with the forthcoming smoking ban coming into effect in July this year, the pub landscape is vastly different to days gone by. En Passant met with Simon in April 2007 in order to talk about the market and the vision for Fuller Smith & Turner plc.

Pubs have a rich history in Britain, with the Romans credited with bringing the first kind of public bar to the country two thousand years ago. Times have changed considerably since then, and the UK pub industry is presently undergoing a period of evolution, largely driven by somemajor regulatory changes to the Licensing Act. I am interested to learn what Simon’s viewpoint is on the state of the market at present.

“The pub landscape has seen unprecedented change in the past five years, culminating in changes to the Licensing Act where we have now had sixteen months working with these revised regulations.These changes have really set the scene for reshaping our business.There is far more emphasis on the food provision - and in our case it is fresh food - setting exemplary standards of service, and serving only quality beers and fine wines.”

England’s smoking ban will come into effect on 1 July 2007, and there is much speculation about the potential impact of these changes for pubs. However, the impact of the ban in Scotland - which came into effect in the spring of 2006 - has provided some useful perspective on this debate, and Simon is entirely pragmatic in the approach taken by Fuller’s.

“This is the next wave of major change for the industry, and the smoking ban will reshape pubs forever - it will redefine their operations. In my view, it will be a similar situation to the time when smoking was banned on the London Underground or the buses. I mean, can you imagine if that were to happen now? It’s unthinkable.And I think that is what you will see with pubs; in five years we will looking back and asking ourselves ‘can you remember when we used to smoke in pubs?’

Long-term benefit...

I think that the smoking ban will be good for the long-term benefit of the industry. Undoubtedly, there will be some potential issues in the shorter term, although this will not be felt initially as the ban comes into effect in the summer.You need to remember though, that some 56% of women do not go to pubs because they believe they are too smoky, and this will start to change as the smoking ban comes into effect.

We set up something called the 500 Day Steering Group which is made up of a group of managers from both our managed and tenanted pubs.The aim of this group is to ensure we develop individual smoking solutions for each pub.We have invested between £3-4 million in our estate to address the requirements of the smoking ban.To put it in perspective though, other countries have already implemented the smoking ban, and we have benefited for the experience in Scotland, so we are actually ahead of the game.”

Fuller’s is as well known for its locally produced ales as for their pubs; the company was founded as a brewing company in 1845. In addition to being the cornerstone of Fuller’s heritage, this business model provides additional competitive advantages. Simon comments that “we are a vertically integrated business, and I think that this has allowed us to grow without losing control or a commitment to our culture.”With the company’s first acquisition in 100 years completed with George Gale and Co in November 2005 - a Hampshire based, family owned brewer with a chain of 111 pubs - for £92 million, Fuller’s is poised to realise further success in the market, and is confident in its approach to growth. The deal itself was completed offmarket, and Simon believes that the whole experience has been of huge benefit.

“We worked very hard to ensure that the managers and tenants felt part of the new business.Gales was a family run company and the two businesses had similar values, so it was important for us to ensure that people met our Directors straight away, and got a sense of belief in where we were coming from. In my view we are now perfectly integrated and the deal has really raised our game - there is huge momentum in the business.”

Quality not quantity...

As a family owned business listed on the stock exchange, Fuller’s is considering opportunities for further expansion, provided that the opportunity is right for the business. For Simon, this is a question of quality, not quantity.“We would rather have one great pub, than a whole group if we believed that that one had the best fit with our business, in terms of value set and quality provision.We invest heavily in market research, and take time to consider opportunities.” I comment that there has been much written and debated about the increasingly short-term outlook within some UK businesses, who often find it difficult to look more than six months to one year ahead, owing to onerous financial accountabilities. Simon is slightly surprised by this, and comments that for Fuller’s “we have had a long-term view for the past 160 years which we need to ensure is appropriate for the short-term.We are looking at controlled, organic growth and will not do anything to compromise the standards we have in the business.”

The customer experience in pubs has altered greatly in recent times, and expectations changed considerably. One key example of this is in the area of eating out, where it is estimated that people eat out at least once a week on average.As the industry has grown, the pressure on pubs has been to compete effectively with highstreet restaurants and attract different markets in order to widen their appeal. Pubs undoubtedly remain one of the key focal points for eating out and social activities, and I am interested to learn Simon’s view on how Fuller’s has responded to these changes.

“People come to pubs for different reasons; family occasions, business, coffee, breakfast - they are far more multi-faceted now than in previous years, and in some ways are similar to the operations of a hotel.

We try to think outside of the box from a service perspective.We look at what companies like Lush or Prêt a Manger are doing, and we have also adapted our approach to the recruitment of new staff. For Fuller’s, it’s more important that people can demonstrate they have the personality and personal value set that we are seeking - we can train them in the skills.”

Food, in particular, is a real focal point for Fuller’s.“30% of the turnover in our managed pubs is from food and this is growing rapidly.However, in reality food probably directly and indirectly accounts for about 70% of turnover as an increasing proportion of our customers opt to purchase a nice wine with their meal.”Fuller’s vision is to provide fresh food, in all pubs where possible, prepared on-site by a trained chef.The company has invested £100,000 in a development kitchen, and launched an in-house programme for chefs to complete technical training - at varying levels - and support the business plans for taking its food offering to a different level.“I am not saying we don’t have our challenges with recruiting and retaining chefs, but the fact is that our staff turnover is the lowest it’s ever been and that is a real indicator.”

An emotional business...

Fuller’s goal is to set the benchmark for quality in brewery and pub operations.With a focus on being the best - not the biggest - the company is firmly committed to preserving its vibrant heritage as part of its future growth. I ask Simon if he finds it hard to balance the demands of his role as MD with the desire to be part of that ongoing and spontaneous conversation this country has about its pubs.Without hesitation he replies that “pubs are an emotional business. I never try to take a step back from it and even when I’m on holiday or with my family, I’m keen to see new operations and learn more about them.That’s a major part of our approach at Fuller’s.”

As Fuller’s approaches the new era in pub retailing the stage appears to be set for the business to progressively grow and attain further strength within the market-place. Yet, this is underpinned by a far clearer eye on the vision for the business, a commitment to its unique heritage and to setting out a new benchmark for quality in our locals.

Photo credit: Joanne Aldridge

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