Marston’s new pub restaurant in Lichfield, the Saxon Penny, opened this week and follows recent openings in Walsall and Coventry.
Marston's Plc is growing it's estate in terms of quality, if not in absolute numbers. The firm has been adding around 10-15 new pub restaurants to it's estate every year recently, and it has it's own unique approach to doing it.
So while the firm plans to close 400 locals which have fallen out of favour with consumers in the next two years, it is investing as much as £2.5 million in each of it's new ones. And it has recently doubled it's new build programme.
Ed Hancock, director of property developments at Marston’s, said “We have a target to build between 55 and 60 pubs nationwide over the next two years.
“We are expanding into geographies where we aren’t represented at the moment. We are a Midlands company, and in Scotland we had no representation until very recently.
“We have opened three already, and we plan to open between 40 and 50 pubs in Scotland over the next five years. We see a real opportunity to expand geographically.”
With new pubs earning a 16% return on capital invested they make good financial sense for Marston’s, which has raised £150 million through annuity funds to fund the property development programme. At some sites it is adding a budget hotel as well, similar to the Whitbread developments.
Mr Hancock said rivals Greene King and Mitchells & Butlers have started to operate similar operations following Marston’s lead but he believes the heavy debt loads carried by some of the firm’s rivals hold them back from similar innovation.
The firm is looking for prominent sites of 0.5 - 1.5 acres, on a freehold or long lease basis, located adjacent to supermarkets larger than c. 30,000 sqft, retail parks or new residential developments of more than 500 homes. Typically they will be in towns and suburbs with a population of 10,000 upwards.
Mr Hancock added: “We started building pubs in 2003 so we have now come to our 10th year and in that time we have built more than 100 pubs in the UK."
“We are quite unusual in the retail sector in that we build our own sites. We do everything from identifying the site in the first place to opening the doors at the end."
To make each pub viable for the company they must have space for 180 covers and more than 50 car-parking spaces. They construct two different sized buildings, one of 6,250 square feet and the other of 9,500 square feet. Both are roughly square in size and both require outside south-facing garden space. The firm pays generous finders fees to agents and landowners bringing suitable sites to it's attention, if it goes on to buy them.