Pub operator Greene King revealed today that it plans to halve the number of brands it operates.
Following the £800m acquisition of rival Spirit Pub Company earlier this year, the chain, which operates more than 3,000 sites, has been reviewing its combined brand portfolio.
Currently, it operates around 20 brands and formats, including Hungry Horse, Old English Inns, Farmhouse Inns and Chef & Brewer, but it said it anticipates slashing this by half in the future.
In order to select the growth brands and formats to invest in, the company has been assessing the consumer relevance of each brand, the long-term opportunities to grow and expand, the financial performance and the proximity to other sites within the combined group.
“Our vision is to operate a smaller number of brands and formats across the enlarged estate, creating a platform for long-term growth and value creation,” said CEO Rooney Anand today. “We acquired a strong portfolio of brands and formats with Spirit – one that would have been very difficult to replicate organically –and optimising the brands from both businesses will provide an exciting growth opportunity over the next few years.”
Greene King said there was significant potential profit upside from investment in between 300 and 400 sites to reposition them into what it calls its “growth brands” over the next three years. These growth brands include Hungry Horse, Flaming Grill, Farmhouse Inns, Chef & Brewer and Metropolitan. Anand promised that Greene King would continue to develop a strong Local Pubs estate, its hotels and Loch Fyne Seafood & Grill.
The portfolio of growth brands and formats will cover a wide range of consumer occasions. Hungry Horse and Flaming Grill will cater for different customer occasions within the value segment, Farmhouse Inns is its carvery offer spanning both value and mainstream occasions, Chef & Brewer will serve as its drive mainstream brand, while it will use Metropolitan to grow its presence in the premium end of the sector.
It estimates that these growth brands will account for up to around 950sites from the current estate, while the Local Pubs estate will be around 800 sites.
“This brand and format optimisation programme will be funded from a combination of internally generated cash and, where appropriate, disposals,” said Anand. “Initial estimates suggest incremental capital investment in the region of£40-50mper annum over a three year period, commencing in 2016/2017.”