The Inevitability of Chains

Brewdog’s string of bars, The Craft Beer Company and the Pivovar empire are all expanding at a rate of knots. Every day, it seems, brings a launch party or details of a future opening. And every time a new bar opens, it seems to fill up, so why wouldn’t they keep opening more?

‘Decent beer pubs’ (diplomatic turn of phrase…) have often been part of, or turned into, chains. There was CAMRA Investments, in 1975; and, in 1979, the Goose and Firkin brewpub was such a huge success that David Bruce would have been daft not to open another, and then another, until, in 1995, there were more than forty Firkins around the country. Even JD Wetherspoon began life as a single pub in North London, also in 1979, making it to seven pubs by 1983 — growing at about the same rate as the ‘craft beer’ chains we’ve mentioned above.

Is it always bad news when a pub becomes a chain? We’re optimists and believe it is possible for a small chain to retain whatever magic it was that made the ‘seed pub’ successful. Often, however, it is the personality of one person (or perhaps a couple of people) that makes a business what it is, and that can easily be spread too thinly.

And, with chains, the temptation to compromise seems inevitable. CAMRA Investments was cut loose and became ‘Midsummer Inns’, under the leadership of former CAMRA chairman Chris Hutt; in 1981, he came under attack for disregarding CAMRA’s ideals when the pubs in the chain began to sell lager and keg bitter, and introduced fruit machines and juke boxes. Sounding rather like those he had laid into in his book The Death of the English Pub in 1973, Hutt defended this decision on the grounds of ‘customer choice’ — it was what the punters wanted, he argued.

Then there is an even bigger temptation: why not sell the whole bundle off, perhaps to Whitbread or Mitchells and Butlers, and take a well-earned early retirement? How long does the ‘decent beer’ last under new ownership? In what peculiar ways is the ‘brand extended’?

There’s another risk, too, as David Bruce discovered when Whitbread launched their own ‘fake Firkin’ brewpubs in the early eighties: chains are easy to imitate, at least superficially. Did anyone else notice the spate of ‘gourmet burger’ chains that sprang up in London c.2005, often with worse burgers, chips and beer, but at the same price?

16 thoughts on “The Inevitability of Chains”

  1. The problem with chains is that whatever the principle, people are always prepared to take the money and run. There isn’t much high mindedness about when someone waves the dosh.

    Of course, you could also argue that the managed estates of breweries are chains. I would.

    1. Certainly hard to tell St Austell’s managed pubs apart from Wetherspoons at first glance: same chairs, same tables, same carpets, same menu… perfectly fine, but not anything to get excited about.

  2. There’s more of this about than I’d realised. Thinking about my locals, you’ve got

    1 x Spoons
    1 x Enterprise Inns
    3 x solo free house
    2 x ‘chain’ (two bars, each of which has two ‘sister’ bars)
    1 x tied (bar with two ‘sister’ bars, tied to a brewery)

    Beer Orders innit. Chains are the new estates. I think Marble (for it is they) are quite unusual among the newer breweries in having as many as three bars.

    1. That’s about right, which is fine as long as you haven’t made ‘no compromise’ the cornerstone of your brand…

  3. phil – you either live in rare area and are damned lucky or miscounted. thats a v high % of solo free houses. sadly most pubs ive loved and thought of as independants turned out to be other. companys like enterprise can basically be viewed as a franshise deal and as a chain just lacking any unifying charactoristics (or is enterprises ‘theme’ that they have a stressed landlord living in poverty :-( ) . id love to get on my high horse about chains – sweet jesus we used to moan about firkins! but so few indies to champion small chains i guess need celebrating. market town taverns and york brewery’s chains = my current favs. seeing some chains out there i have horrible fear in 20 years we will look back with real fondness on wetherspoons.

    1. One of the three is owned by the “Hoi Polloi Pub Co”. That sounds a bit chain-ish, but I haven’t been able to find out any more about them – except that they were incorporated a few months before buying the pub in question, so presumably it was their first. The other two seem to be genuine one-bar outfits.

      Not that it matters greatly – I’m sure they’d expand by taking on other bars if it seemed like a good idea. (One of the small chains I mentioned was a one-bar outfit a few years ago.) If you’re running a pub or a bar these days, you’re running a business – it doesn’t mean you’re planning to raise a family over the shop and grow old behind the bar. But perhaps it never did, except in (some) tenancies – where somebody else was running the business and making the money.

      I think the key point is that economies of scale make a multi-pub/bar setup a good idea, and these days this is more likely to happen in the form of a chain of bars rather than a tied estate of pubs. Why that should be – why the newer breweries aren’t building estates of their own – is another question. I think the brewers’ reaction to the ending of the Beer Orders smashed the old system so badly it couldn’t be rebuilt.

  4. You missed out Antic.

    I think the answer to this is economics. It is expensive to upgrade a pub and cellar to the standard needed to keep a wide range of beers well.

    Let’s hope that the success of the chains you cite in raising the beer quality inspires independents to emulate rather than crowding them out.

    1. Re: Antic, that occured to us after we’d posted, and possibly indicates how successful they’ve been in not acting or looking like a chain.

      1. I was going to mention Antic too as they really do seem to be growing at a rate of knots. I don’t quite agree they don’t look like a chain — all that weird junk they put on the walls, and the distressed look, start to get a bit formulaic in some of their pubs, but other elements of consistency, like interesting beers and clearly knowledgeable, friendly, vivacious and motivated staff, are more welcome. My concern is that they are starting to look rather ripe for the plucking from a bigger chain or brewery, although I talked to one of their directors who assured me this is certainly not the intention.

        The other beer-friendly expanding mini chain you could mention is the Draft House, which opened its fifth branch in Fitzrovia last month.

        1. I guess the ‘uniformities’ start to become obvious after you’ve been to a few — we only really know the Red Lion in Leytonstone. No consistent naming policy (like the Taps) or logo/brand graphics (like the Craft Beer Company), though.

  5. I don’t necessarily think chains are inevitable, I just think there’s a bit of a gap in the market at the moment, as evidenced by the instant success of a lot of news bars selling a certain type of beer. The supernormal profits made by the likes of brewdog are supposed to be a signifier for other companies to move into the craft beer market and tap into some of this demand. At the moment the companies most switched on to this opportunity and in the best position to exploit it are the existing ones eg brewdogs and the various Taps. Eventually the market will be saturated, competition within cities will kick in, prices will come down, profits will come down and the situation will stabilise somewhat.

  6. Let the pub company classes tremble at a drinkers revolution. The proletarians have nothing to lose but their chains. They have a world to win. Drinkers of all countries, unite!

  7. The Firkins only really expanded after Allied Domecq acquired the chain – and David Bruce admitted when he sold the concern – to Midsummer Leisure, ironically – in 1988 that his liabilities at that time, around £2m, equalled or exceeded the money he made on the sale. It’s a very rare entrepreneur indeed (step forward T Martin) that can grow a concern from a start-up to a giant, and in the pubs/restaurants/hospitality business there are a fair number of successful “serial entrepreneurs”, of whom David Bruce is one, who like to grow chains up to 40 or 50 outlets and then, because at that point problems of scale start to kick in, sell up to a larger organisation that has the management infrastructure to expand the chain further.

    So it’s not just for the big cheque that people sell up: it’s because a different type of management is required to run a medium to large organisation compared to a small to medium one, and entrepreneurs often find either (1) they’re not enjoying running their now larger company and/or (2) they’re not good at it because they don’t have the required skills to run something bigger.

    1. I used to work for a financial services company which expanded enormously and then sold up. There was a rumour after the sale that they’d been expanding too far and too fast, going broke by going for revenue. Apparently, when the new owners got a proper look at the books they realised they’d paid huge amounts of money for something that was barely a going concern.

      Or so the story went – I’ve no idea if it was true.

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