Comments on: The Inevitability of Chains

By: Phil

Phil — Wed, 03 Oct 2012 08:35:34 +0000

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.

By: Bailey

Bailey — Wed, 03 Oct 2012 07:22:51 +0000

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.

By: Martyn Cornell

Martyn Cornell — Wed, 03 Oct 2012 01:13:18 +0000

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.

By: Des de Moor

Des de Moor — Tue, 02 Oct 2012 21:29:35 +0000

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.

By: Cookie

Cookie — Tue, 02 Oct 2012 14:29:42 +0000

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!

By: Phil

Phil — Tue, 02 Oct 2012 11:09:19 +0000

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.

By: py0

py0 — Tue, 02 Oct 2012 10:44:00 +0000

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.

By: Bailey

Bailey — Tue, 02 Oct 2012 09:54:37 +0000

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.

By: Dan

Dan — Tue, 02 Oct 2012 09:48:19 +0000

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.

By: Bailey

Bailey — Tue, 02 Oct 2012 08:39:08 +0000

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.