Marston’s said today that its pubs will be categorised into three core trading formats in its food business to reflect changing consumer trends.
The company said the move – which is designed to reduce its exposure to a pure mainstream offer synonymous with discounting and a focus on price over experience – follows a detailed review of its 1,500-strong pub estate.
Conversion of the estate to these categories – which are called ‘Community’, ‘Signature’ and ‘Revere’ – will take place over the next four years, with the company stressing that consistency remains key across all formats.
Marston’s describes Community as “good value, local pubs at the heart of their community”. It has both food-led and wet-led pubs in this category, and is unlocking growth through zoning that clearly defines the bar and dining areas of the pub.
Where it has adopted this model, it has seen growth from increased drinks volume while continuing to deliver strong food sales.
With the Signature format, Marston’s will place an emphasis on a warm, timeless country-pub atmosphere with food and drink provenance at the fore.
It is targeting a frequency of 1-2 visits per month, in suburban towns and villages where quality of food, a friendly welcome and familiarity are key drivers.
Meanwhile, Revere is its most aspirational offer. Guests visiting these pubs have a higher level of disposable income, are well-travelled, eat out frequently and are willing to pay for an elevated experience.
In addition, a Signature guest will trade up to a Revere pub or bar for a special occasion.
Underpinning this is a ‘Make Capex Great’ programme, which will involve setting long term sales and profit aspirations for the pub and assessing the capex investment based on this rather than the incremental return on investment.
It will also include enhanced market support for the first 12 weeks after reopening for new launches and early identification of conversion sites to ensure all resourcing and marketing requirements are addressed prior to the capex investment.
25 conversion sites are planned for 2022 and 50 conversion sites have been identified for financial year 2023.
Marston’s intends to invest around £50-55m of capital over the next four years to complete the programme at a minimum target return of 30%.
Marston’s cited Bankfield Inn in Wolverhampton as a good example of the type of investments it is targeting.
The Bankfield was a carvery site previously known as White Rabbit with average net sales of £15,000 per week, comprising £4,000 of drink sales.
It converted the pub to Marston’s Community trading format in May 2021 with an investment of £250,000 and the pub is now consistently trading at £21,000 per week with drink sales of £10,000. The proforma EBITDA of the pub is targeted at £230,000 based on current sales.
Additionally, Marston’s confirmed that it will continue to roll out turnover-based agreements across its leased estate in a move to encourage kitchen creativity.
The progress to date has been restricted to pubs that can accommodate a Marston’s food menu and therefore implementation of such arrangements for a leased pub with an independent food offer has proved challenging.
But it recently introduced a new ‘Pillar’ franchise agreement which meets those challenges.
The Pillar agreement enables a partner to operate their own menu through our EPOS system. As with the franchise model, the operating costs of the pubs excluding labour are borne by Marston’s ensuring the pub is operating on national managed house cost terms.
Having successfully trialled the new agreement in 32 sites, it now plans to roll out this highly innovative agreement to at least another 30 pubs in 2022.
This unique model enables food entrepreneurs among its tenants and lessees to participate in the Marston’s franchise agreement without compromising their personal creativity.
Economically, the pilot has demonstrated that the combination of food entrepreneurial flair from the licensee, together with Marston’s drink expertise and cost efficiencies, drives a high level of outlet profit which is mutually beneficial to both parties.