ALMRAwards2006Final

ALMR Operations Manager Awards, 2006

Gez McCormickBusiness Development Manager

Union Pub CompanyThe Brewery

Shobnall RoadBurton upon Trent

DE14 2BW

01283 50744407768 257388

[email protected]

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ALMR Operations Manager Awards, 2006Gez McCormickBusiness Development ManagerUnion Pub Company

CONTENTS;

Question 1

a) An overview of the area of responsibilityb) Company structure & optimisation of resources

Question 2

a) Description of a recent capital investmentc) Time managementd) Current law

Question 3

a) Responsible retailingb) Sales mix

Question 4

a) Qualities and skills of a leader b) Development and application of business skills.

Appendix 1 – Business Development Brochure

Appendix 2 – Structure to a Call

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Operations Q1a. An overview of current responsibilities;

I currently have 50 public houses across central Derbyshire, incorporating;North – BakewellEast – HeanorSouth – DerbyWest – AshbourneI live in north Derby and therefore perfectly placed for the patch.

The pubs are on the following Agreements;58% / 29 x leases (21 years)18% / 9 x TAWs awaiting lease completion24% / 12 x tenancies (3 years)The provision of the lease has enabled me to market the businesses in a more strategic manner whilst attracting a higher calibre of applicant, willing to inject their own capital, in tandem with ourselves.

The pubs can be segmented as follows;22% x Food led42% x Wet led with food offering32% x Wet only/Traditional community28% x Town Centre outlets26% x Sky dependent22% x Separate no smoking areas35% x DDA compliant car parking facilitiesThe smoking and DDA percentages are poor and represent a clear growth angle for the area in the New Year. There is a good blend of businesses across the area with several examples of almost identical pubs trading at different ends of the success scale, largely due to the publicans themselves.

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Operations Q1b. Company’s Management, Support and Admin structures;

I report directly to an Operations Controller (6 x OCs nationally) who in turn reports to the Sales Director who sits on the Divisional Board headed by the Union Pub Company Managing Director. The MD also sits on the main Wolverhampton and Dudley Board.

I work closely with the OC (via monthly analysis meetings and Trade Visits), and the SD where appropriate to manage the business from a macro perspective which helps dovetail with the micro detail which dominates the BDM role. During the past year, I have been responsible for the team during short periods which has broadened my horizons and improved my general perspective.

The OC generally has 6 x BDMs, 3 x Property Surveyors, 1 x Regional Estates Manager, 1 x Regional Management Accountant and 1 x Team Secretary.

I am fortunate to be apart of a warm, cohesive team where we all share the burden of workload when the situation dictates i.e. the implementation of the new Licensing Act. With my fellow BDMs we help each other through difficult experiences and cover responsibilities whilst away from our areas.

The Property Surveyors are crucial to the success of the area as organic growth is rarely enough to ensure consistent year on year/budget growth or top company performance charts. Regular meetings, consultations and daily contact are the norm of the BDM – PS relationship. It is important to bounce ideas between each other in order to plan the correct development path for each property within the area.

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The Regional Management Accountant helps manage the Operating Statement (OpStat) for the whole team and it is prudent to have regular communication to analyse profit and volume performance and control cost lines such as management agency fees and bad debts. The Regional Estate Manager helps to prepare for agreement changes, handles leases and acquisitions. With my lease programme and past acquisition work (four acquisitions in three years), good communication and trust are essential.

The Team Secretary helps to make our administration system tick whilst providing extensive Change of Tenancy documentation, often at very late notice! I only utilise this resource when absolutely necessary, but do send several ‘information’ letters to all pubs on the area, so a supportive secretary is much appreciated.

The undermentioned all provide excellent BDM support in a variety of ways;

Customer Services Advisor (CSA) Deal with all customer queriesBeer Quality Technician (BQT) Covers quality in all areas of beer Business Opportunities – Offer recruitment supportTenanted Administration – Helps with cash allocation and paymentsMachines Controller – Deals with various AWP suppliers and incomeCatering Development Manager- Offers advice on all things foodMarketing Manager – Both Trade and Brand marketing supportEstates Department – Deal with property boundaries/sales/acquisitions

The new Union Pub Company offices are fully open plan therefore making personal communication with all of the support functions simple and direct. Although I only tend to go into the office twice per month, having the facility to see everyone under the same roof is brilliant in terms of making the most of each relationship. Mobiles and emails are fine, but personal interaction is more effective in my experience.

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Talent and Skills Q2 a. Description of a business initiative.

In early January 2005, it became clear that a recent UPC acquisition called the Ketch at Kniveton, Ashbourne would need a small capital investment to help consolidate its position as a destination food house, whilst protecting the interests of both the lessee and the Company insofar as the profitability of the business.

A lovely traditional public house with a 60 x cover capacity, along with substantial outside seating, children’s play area and camp site, the Ketch had become very popular under local free traders. After a couple of short term tenants, the existing lessees took control of the business yet have struggled to make an impact.

The principle concern regarding any form of investment was the painful fact that the business was not meeting the performance levels detailed in the vendors’ accounts and therefore not meeting the stringent financial expectations required by the W&DB board for making the provision to initially buy the Ketch.

After discussions with the OC and UPC Board Members, it was agreed to make a defensive investment spend of £35,000 which would help ‘smarten and polish’ the pub, giving the business the boost required after several months in the doldrums;

- The interior was painted, a studded wall provided to shield the toilet entrances. The inside was looking tired despite having a warm feel.- The car park was resurfaced and white lined including disabled parking bays. A fence was erected to safely separate the car park and the extensive gardens, providing comfort all particularly young families. - The signage was updated again (new signage was installed immediately after acquisition in October 2003) to capitalise on the popularity of the Marston’s brand in the vicinity. - External lighting was also improved to make sure this isolated gem was lit up like the proverbial Christmas tree during dark evenings.

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The trade during the first year of business was so poor it was felt rent abatements were necessary to overcome initial difficulties, thus preserving the status of the lessees and protecting the long term rent line budgeted for this acquisition.

Despite encouraging signs of growth, the business still lags some way behind trade expectation to the great disappointment of all parties, however I still feel the investment to be prudent in the circumstances and it certainly has contributed to recent improvements.

Throughout this process, the lessees have been firing on all cylinders to become successful, if at times heavily despondent at the lack of a regular customer base. Advertising, new menus for both food and wine, charity participation – everything has been brought to bear to inject life into the business. I am satisfied in the quality of the operators and the standard of their offering and although frustration does bite at times.

Such is the instability of the business, the lessees are strongly considering placing their lease on the market and whilst I have continuously suggested this action as a viable alternative to operating a business they are not fully committed to, it would jeopardise the great strides both sides have made to make the business a success.

The issue of lease assignments is a reasonably new phenomenon at the UPC with many of our original lessees now entering their third year entitling them to assign without penalty. I now have several lessees all eager to sell their business’s and despite the initial lease benefits of incentivised operators and improved properties, some licensees are perhaps understandably lacking their original sparkle and I face the prospect of having little leverage over who actually replaces them in what I treat as ‘my’ pub.

My sincere hope is the existing operators of the Ketch persevere and don’t allow someone else to profit from their hard work by assigning prematurely.

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Talent and Skills Q2d Time Management

My firm belief is that even if I were able to work seven days a week, the job would never be fully done and standards could always be higher.It is against this back drop that makes time management for Operations Managers of all descriptions so difficult – at times all consuming.

In the past my determination to please everyone and strive for perfection has resulted in me trying too hard, and subsequently failing to manage the expectation of others. This is something I have long recognised and certainly since the quagmire of licensing hit in August 2005, I have become much better at operating remotely i.e. using phone, email, and letter to communicate in lieu of personal contact. I also maximise the luxury of having several support functions, as detailed in Operations Q1b.

Clearly the best way to drive the success of a patch is to be out and about within the pubs and their local vicinities, understanding issues and putting development measures into place. However the tenant expectation of regular personal contact can often result in the administration side of the job suffering under the avalanche of information that cascades daily from the phone/email/post.

Good journey planning and the ability to stick to a call routine whatever trouble comes your way is the best remedy for ensuring effective call coverage. Unlike in previous roles within the company, the UPC does not monitor callage rates, but it remains central to the job of the BDM to administer quality and direct support. I do make it clear to everyone that they will always have my best efforts and my aim is always to offer a consistent and fair level of consultation.

This can often be difficult due to the 80/20 rule where the majority of time is spent looking after a minority of the estate. Whilst this is true in many cases, particularly regarding revolving door tenancies where operators come and go in short spurts, it is far more rewarding to develop already successful publicans into more profitable, great publicans.

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Time management can be closely linked with most issues available under Question 2, especially regarding prioritisation and goal setting. It is all too easy to get lost in detail when dealing with queries/complaints on a day to day basis, and not to concentrate on the big picture.

Taking a strategic view and making well planned, far reaching decisions is crucial to the success as a BDM. Experience and the confidence that comes with improved knowledge help to make effective strategic decisions. The challenge is to strike the right balance between appreciating both short and long term goals whilst maintaining a healthy personal life.

It has taken four years of hard graft to reach what I perceive to be the right balance and the even greater challenge is to maintain the equilibrium in light of future reorganisations, legislation et cetera.

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Talent and Skills Q2f. Current Law

The main legislative issues that have affected the Operations Manager role are;

i - Licensing Actii - Disability Discrimination Act

i – Licensing Act.The whole process has become exhaustive and unnecessarily complicated for little gain or benefit for Pubcos or suppliers, and the level of bureaucracy has only served to delay rather than simplify. The new law has made genuine strides for basic freedoms, allowing retailers greater freedom to sell their wares and the public greater freedom to sample those wares. From a neutral viewpoint, this is truly fantastic news.

The challenge had been to ensure every public house and associated publican gained their ‘Grandfather Rights’ before 6.8.05. Many applications failed to meet this hurdle yet the whole division were fully licensed by the cut off date of the 24.11.05. This was achieved due to near total focus on the magnitude of the task at the expense of the normal duties expected of a Business Development Manager.

Volumes are disappointing, with many operators reporting depressed sales figures since the Second Appointed Date (24.11.05) and the majority of pubs within my area applied for the opening hours they already traded to, albeit illegally. The concerns over 24 hour binge drinking in the major conurbations have been unfounded due to the previous proliferation of staggered closing times via existing law such as the Public Entertainments and Supper Licenses.

The main benefit to the industry is the requirement for a minimum standard of proficiency by the operator of each business via the NCPLH (National Certificate for Public License Holders) qualification. This makes appointing short term tenants in the event of an emergency much more difficult for Operations Managers.

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However it remains an excellent step to making our industry more professional and the responsibilities under the new licensing act will also increase general accountability which will aid deterring binge drinking and promote responsible drinking.

As a company and individually, we are busy building up databases of those trusted publicans that hold a Personal License, with special consideration for those who have passed the latest NCPLH, such are the vast changes in legislation. Even with those publicans that sailed through the process on their old license, we are strongly suggesting they attend a new course to familiarise themselves with the new law.

I have recently been a Designated Premises Supervisor for a pub on my area, whose licensee struggled to pass her qualification. Although this can be viewed as an onerous responsibility, especially for pubs where trouble abounds, in exceptional circumstances it is important for there to be leadership from the front with due diligence fully considered.

ii – Disability Discrimination Act.As with the Licensing Act, in order to accurately assess the estate for new legislation, the Union Pub Company undertook a detailed DDA audit of every property within the estate, via the BDM. This aimed to highlight action points which would make each business more user friendly to all customers with generic disabilities.

By the very nature of the self employed tenant, the reaction to new laws was mixed and it has been a challenge to persuade many to adopt simple measures to comply with the law such as disabled parking bays, coloured strips for step edges and handle bars in toilets.

In many ways, both Licensing and DDA are perceived as obstacles by the trade, not to mention an impending smoking ban, yet they should be viewed as tremendous opportunities to attract new customers and widen the appeal of the public house experience.

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The sheer number of potential customers that currently don’t spend much or any of their leisure time in pubs because either they cannot drink at a time to suit them; because they feel their disabilities are not catered for, or because of an unhealthy, smoky environment, is unquantifiable and likely to be staggering.

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Question 3a. Responsible Retailing

The principle point to make when considering the concerns raised by ‘binge drinking’ and social disorder is that they are minority issues against a huge landscape of responsible retailing by the majority of operators.

With 28% of my area operating within a town centre environment, only 10% can be classed as YPV (Young Persons Venues). It is these houses where binge drinking is an ingrained fact of life, where the threat of violence necessitates costly door supervisors and where the challenge is greatest to satisfy the ‘authorities’ under the new Licensing Act.

I am taking the following steps to help address these challenges particularly for my town centre pubs, but for every business within the estate, in some form or another;

- NCPLH courses for minimum of 2 x people per business- Encourage DPS in every business to provide ‘tuition’ to staff- ‘Challenge 21’ marketing to reinforce minimum age for alcohol- Availability of Proof of Age cards, via the Portman Group- Designated Driver (DES) support – making it more credible- Encouraging ‘driver’ rewards and incentives – showing respect- Utilising the deterrent effect of CCTV- Encouraging licensees to liaise transparently with all ‘authorities’

Reputation is everything to all self respecting business people. The old adage that it takes much time to develop a good reputation but only a moment for it to be lost, remains pertinent in an industry lacking unique selling points and heavily operator driven.

My best and most progressive tenants have often been proactive in ensuring the steps detailed above have been covered, and a mixture of consultation and support has meant the majority of the businesses on my area are ready to embrace future challenges head on.

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Question 3c. Sales Mix

The sales mix within my region has evolved dramatically during the past four years, with my budgeting success being inconsistent as a result. The shift from the ale and lager category to wines, spirits, and minerals has been interesting to track but damaging to area profitability, due to the reduced margins attainable from packaged products.

With the availability of fully tied agreements and the commercial advantage it brings, my packaged volume has grown considerably and this has been matched by a significant number of new lessees aiming for quality food trade, often at the expense of the traditional pint.

Of the circa 13,000 annual composite barrels sold on my area, the following categories apply in descending order;

- Fosters 2,700 bls- Pedigree 1,700 bls

- Minerals 1,500 bls - Mansfield Bitter 1,300 bls - Wines 1,100 bls

I operate in what W&DB Brands would identify as the ‘heartland’ for both Marston’s Pedigree and Mansfield Bitter, yet both are in decline against the growing power of minerals and wines, in annual growth of 7% and 9% respectively. Interestingly both Guinness and Stongbow are also showing good signs of growth and I attribute that to a distinct lack of same sector competition, in stark contrast to the majority of other brands.

The colossal volume attributed to Fosters has been consolidated and improved via their Super Chilled hybrid, and along with their competitors have been offering extra cold alternatives to house hold lager brands that have driven trade and captured strong consumer demand.

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Mineral growth is much down to the general shift to full tie and the rise in quality food outlets in a similar manner to wine growth. However the installation of draught wine cabinets in many of my pubs has led to exceptional growth, and a marked increase in customer appeal and satisfaction.

One important factor in the market growth of packaged products is the improvement to average gross profits (GP) from an operator’s perspective. The low margin available on ale and lager in poor socio-economic areas of the country when considering the tenanted business model makes a high level of profitability difficult to attain for small volume wet only outlets.

I have encouraged all of my tenants to market these brands clearly, to the right people and crucially at the right temperature. Our Partner Suppliers most notably Diageo and Constellation Wines providing quality support in this area, such as bottle cabinet planograms for various business styles.

In summary it has not just been a case of exploiting the changes in sales mix but more a case of understanding their impact on area profitability, which has remained strong largely to acquisition and tenant stability accorded via our Open House lease product. The changing drinking trends have a huge impact on the performance of the company, and the ability to forecast/budget accordingly is vital to minimise the consequences to production and profit.

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Question 4a. People

In terms of what personal qualities I use as a leader to get the best from my licensees, enthusiasm, positivity and empathy are all traits that have served me well during my career in addition to the high personal standards, integrity and humour. Getting people motivated and providing sound, measured advice is highly rewarding, especially when it is reciprocated by a keen operator.

A good relationship between BDM and Tenant is fundamental to the success of all involved but it is often difficult to achieve the right balance between consultant and enforcer, due to obligations required of the tenant under the contract between themselves and the Pub Company.

The beauty of the licensed trade is that every licensee is different and fascinating in their own right, because of their exalted position within the communities in which they operate. Dealing with such people can takegreat diplomacy and tact, whilst requiring strong nerve tomake often uncomfortable judgements.

By knowing the personalities involved, I have been able to make the right calls (and the odd howler) in terms of achieving the most favourable reactions from operators, irrespective of the situation. The licensed traderemains very much a peoples’ business and my enjoyment of people isevident in my satisfaction in the role of BDM.

In terms of the skills required for getting the best from my licensees, much revolves around the multitude of business development optionsopen to all operators and entirely their responsibility to either ignore oradopt. I created a Business Development Brochure upon joining theUnion Pub Company and have often used it to spark the motivationrequired to turn willing publicans into successful operators (see appendix 1). I have released to all recent incoming tenants, asking them to reviewand use where required, but also make suggestions to improve its content It is basically an encapsulated training course in just a few pages and isbased upon my trade experiences over the past ten years.

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I have also tried to develop my creative and negotiation skills in order to further the interests of my licensees. These vary and include being an active member of the steering group which produced Pedigree bitter in keg format, in addition to its more traditional cask and packaged varieties.

I have also actively encouraged Cask Marque accreditation across my area in an effort to reward those tenants who have a true pride in their craft, and promoted the Union Pub Company Awards as a conduit to gaining true recognition for the very best operators within my region.

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Question 4b. People.

In terms of what I have done over the last 12 months to develop my own business skills and to utilise them, the following applies;

- Recruitment activity has been vital to gaining ‘new blood’ in areas where we struggle to attract tenants and I helped arrange a specific day devoted to finding people within an area operated by a new BDM within the company. This helped me become more ruthless in viewing applicants and discerning in who I believe is the right blend of operator to run a particular style of pub.

- Gained excellent insight into the responsibilties of an Operations Controller by covering for my own line manager, and completing the process to applying for a vacant OC position. This has helped me to apply a more measured response to scenarios where I had previously been more blinkered, due to lack of experience.

- I have been acting as ‘mentor’ for new BDMs entering the UPC since the acquisition of Burtonwood and have relished the responsibility associated with guiding people through their first weeks in what can only be described as a terrifying role to the uninitiated (see appendix 2). As with the OC experience, this has helped hone my own skills and forced me to be introspective in the way I operate and make adjustments that possibly may never have been recognised without a fresh outlook.

- It has always been important for me to keep improving and not just settle for the status quo, which is why I place so much importance in joint trade visits with internal and external support partners ranging from a fellow BDM whose investment pedigree is faultless to our Leasing solicitors. Learning from successive line managers has often proved the most successful in terms of applying accumulated wisdom to best effect in call, hence my passion for operating at that level in the future.

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To summarise, the past year has been more arduous than most, due to the pressures of licensing on an already intense work load. It will always remain my intention to keep developing and learning new skills in order to offer the best possible advice to my tenants and to make good personal progress.

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Appendix 1

Business Development Brochure

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Appendix 2

Structure to a Call

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