Looking After A Family Firm For Generations To Come

As the first non-family CEO of Charles Wells, Justin Phillimore looks back on his first year in the job and to the future challenges and opportunities. It has been almost half a decade since Pub & Bar first ventured to Bedfordshire to visit Charles Wells and talk to then managing director Peter Wells. Back then he spoke about the importance of retaining tenants and lessees through a bespoke system of support and investment within an estate segmented four ways. Five years later and we’re back, talking to new CEO Justin Phillimore. Last January, Phillimore took over as CEO, becoming the first chief executive of the company not to be ‘one of the family’.

While he acknowledges the custodial implications of looking after a family business for generations to come and the inevitable influence that comes from outgoing CEO Paul Wells still being chairman, Phillimore is making his own decisions on how to shape the business. To that end, he has looked to develop investment and training for tenants further and wider.

“The key development we’ve been pushing has been support for our tenants, from marketing through social media, and that realisation that they need training,” he explains. “It isn’t just that big five-day burst that we give to start with where we cram people with tons of information. It’s how we deliver that ongoing development for them in a way that is manageable.”

Phillimore wants a more hands-on approach to his estate. While he understands the importance of letting people run their own business, he doesn’t want to simply leave them to it without a few nudges and helping hands. The management to tenant ratio, with each regional development manager (RDM) looking after 33 pubs, means they are able to get around to each regularly, assessing progress and offering guidance within each venue.

“In the past, we would have said: ‘You’ve got a plan, great. Let’s go,’ and then never come back to it,” he explains. “Whereas now I think it’s about: ‘That was your plan, what worked, what didn’t work? What’s your plan for the coming year and how can we form that plan? What do you need from a development and training perspective to enable you to do it?’ It’s their business and we just want to help them make the greatest success of it that they can. And there are areas of the business that we know we can support. We’re much more proactive than we’ve ever been because the world’s a more difficult place than it’s ever been.”

In addition, Charles Wells has a service desk behind the RDMs, with experts in subjects like property, insurance, legal and maintenance. It appointed an in-house training manager in 2016, who visits pubs and develops the skills of licensees and staff without them having to take time and money out of their business going to a training day in Bedford. For Phillimore, the key change in the last year has been that RDMs no longer just score highly on getting around and visiting the pubs.

There has been a determined focus now on making sure that they are adding value to every business they visit.

“We were probably ahead of the game in terms of our support and service a year or so ago, and we rested on our laurels to a certain degree,” admits Phillimore. “But now the competition has caught up, so we are stepping on the gas and ratcheting it up again.”

Managing Managed

However, while Phillimore sees the leased and tenanted estate, within which Charles Wells has almost 200 pubs in the UK, as a core part of the business, it has been the managed sector that has seen considerable focus in 2016.

One of Phillimore’s first decisions upon becoming CEO was to invest £3m improving the brewery and a further £4m on the pub estate, of which over £3.7m has already been spent.

Around £1.5m is being spent on the company’s leased and tenanted estate, the rest went into buying and refurbishing managed houses in France and the UK. The Apostrophe brand, which currently consists of three pubs, is not something that can be easily rolled out, given the scale of these sites. The first of them – d’Parys in the heart of Bedford – won the Bedfordshire Pub of the Year in the National Pub & Bar Awards and is Charles Wells’ flagship site, with food, drink and accommodation on offer. So Phillimore started looking for smaller, simpler offers with which to build a managed estate. Thus Pizzas, Pots and Pints (PPP) was born in The Salisbury Arms in Cambridge.

“The big managed establishments are getting harder and harder to find,” he explains. “If we’ve got the ambition to grow that sector of the business we’re going to be stuck looking for those large places. These smaller, simpler pub operations enable us to use creativity. We get that right then it’s a much more straightforward operation to roll out, providing you get it in the right place. It doesn’t have the complexity of big food operations at a time when everybody is struggling for chefs.”

There will be more Apostrophes appearing, with two new openings – in Olney and Harpenden – in the pipeline, but the PPP concept has the greater potential in Phillimore’s eyes, with its smaller footprint offering more opportunities for acquisition and two income streams bringing in profit.

The company has even taken out a few leases to expand the brand more quickly without the capital cost. It is in managed houses that Charles Wells will grow its business and its estate. However, while Phillimore considers the opportunity for growth to be in the managed sector, he has no intentions of doing so at the expense of the leased and tenanted estate.

“We’re not wanting to dip in and pick out all the great pubs from our estate and turn them into managed houses,” assures Phillimore. “A vibrant and viable tenanted estate has to have those good houses that attract good tenants and give our other tenants somewhere to move up into. There will be one or two that we’ll take out, but we won’t be raiding the leased and tenanted estate for our managed estate growth.”

International Flavour

For a company set right in the heart of England and a beer that screams St George in Bombardier, Charles Wells is perhaps one of the most international regional breweries. With its oversized brewery needing to be filled, it has taken on brewing responsibilities for companies around the world, as well as exporting its beer to around 40 countries. While it has five managed houses in the UK, over the English Channel, its estate in France currently stands at 13, and Phillimore knows there is room for growth.

“We’re starting to think about going beyond France, but there’s still lots of room in it,” he says. “There’s no reason why we couldn’t have a fourth or even fifth pub in Bordeaux and there’s no doubt that we could do 10 or 12 in Paris quite easily. There are at least 10 or 12 cities we haven’t been to yet that could do at least a couple of pubs.”

The French estate is clustered around five cities – Bordeaux, Paris, Lyon, Toulouse and Montpellier – and this clustering is important not just from an operational and economical perspective. In a foreign city, the more venues in one place, the more one can learn about that place. The customer base is predominantly French and in a relatively uncrowded market the style is modelled on the ‘French idea of an English pub’, a style which occasionally needs to be reinforced by the executive team that runs them.

“If we leave them for too long, saucissons and steak tartare start creeping onto the menu,” he says. “We’re then saying: ‘Non non, get back to sausages and pies’. It’s important to get that French idea of Englishness because that is its USP.”

Talking about France leads us seamlessly into a conversation about the biggest thing to happen during Phillimore’s first year at the top: Brexit. With a business earning Euros in France and one of the largest export businesses in the UK drinks trade, Charles Wells is relatively well placed. However, the uncertainty surrounding the market, coupled with cost increases, is a concern that Phillimore sees as a challenge in an increasingly competitive market. But it is also an opportunity.

“There is no doubt that whatever happens there will be massive uncertainty for a considerable length of time,” says Phillimore. “There are so many forces that are pushing up prices and competition that we’ll see a few people struggle in the next couple of years, which is hopefully a great opportunity for us.”

The Years Ahead

Phillimore has been at Charles Wells for nine years and in his opinion more has happened within the industry in that time than in the last 500. For example, while the four-way split of the Charles Wells estate – Traditional Community, Destination Community, Town Centre and Destination Food – remains, the place of the community wet-led pub has been challenged. In the last decade, Charles Wells has disposed of around 35% of its pubs, most of which were small, rural venues that were no longer viable for the company. The smoking ban, drink driving, the growing cost of beer – all have contributed to difficulties in the traditional wet-led pub, but there are ways for these pubs to thrive.

“There is clearly a place for community wet-led pubs, but the economics of that are changing,” he explains. “The wet-led boozer will disappear and replacing that is going to be something with a broader appeal. It will need to be flexible. That means coffee in the morning, becoming that community space that people use throughout the day. Then it becomes a question of size and scale really.”

The brewery remains Charles Wells’ primary challenge for the future, but its difficulties can serve as a metaphor for the on-trade itself. Both operate in an increasingly congested and competitive market, with new entrants challenging the status quo. But just as brewers are starting to look to more sessionable beers rather than extremes, so too is the on-trade seeking ways to retain fickle customers in their venues, whether that’s through the offer of food and accommodation, or through good value, choice and quality.

And while choice remains a key point of difference for many operators and customers, for Phillimore, it is the quality of the offer that will determine whether people will return, whether that’s coming from the cellar or the kitchen. To this end, he has sought to grow the managed estate, produce more premium beers that appeal to the younger market and maintain and improve standards within his tenanted and leased estate. In his first year, he has prepared for that and laid the groundwork.

“Now it’s execution time,” concludes Phillimore. “It’s about the task rather than the strategy – the detail rather than the big brush strokes.”

Having set out plans for his tenancies, leaseholds and managed pubs that will give customers the choice they want, his primary role now is to ensure that they are consistently delivering on that more intangible but more valuable desire – a quality experience.

This article was first published on Pub & Bar Magazine. It has been reproduced with the permission of their editor Tristan O'Hara. For more information, visit the website here