Early in 2004, Bob Ivell, a veteran of the leisure sector, was asked to give his views at an industry conference on the dire state of the high street bars sector. Awash with over-capacity, operators were slashing prices (much to the delight of binge drinkers) and struggling to stay in business. The organisers asked him to be controversial, not to be shy or diplomatic about his views, in order to stoke a debate. He had just sold Scottish & Newcastle's pubs division, which he had run for 11 years, for £2.5bn and pocketed himself a huge bonus in the process, so had nothing to lose. And who did he predict would be one of the biggest names on the high street to collapse? Regent Inns, the owner of the Walkabout and Jongleurs brand and the company he now leads as executive chairman.
His prediction almost came true, and it could be argued that had he not been parachuted in when he was, when the company had sacked its top management and was in crisis talks with its banks, Regent would have been no more. Now, eight months on, he has the business back on its feet, sales are improving and its share price is something to cheer. Time to sell the business and move on, people might think. But not Mr Ivell. He is now planning to use Regent as a vehicle to mop up some of the other ailing bars on the high street to inject a new spirit into the sector.
"Little did I know when I made that speech that I would end up being asked to join Regent. After the S&N sale, I had many approaches from venture capital groups asking me to look at pub deals. But prices were then getting silly. It was clear the high street had over-expanded in terms of bars and pubs, and consolidation was needed to readjust that. So it came down to finding the right opportunity. I think Regent is that opportunity," says Mr Ivell, looking every inch the happy publican, with his open-neck shirt, hearty handshake, rounded stomach and amiable disposition.
He came aboard in October last year when Regent was in a state of chaos. 2004 had been dogged by profits warnings, leading to the eventual sacking of the chief executive and finance director. Then the company revealed it had discovered some accounting problems and was in breach of its banking covenants. Shares plummeted to 30p.
A number of unhappy shareholders approached Mr Ivell about coming on board, impressed by his reputation from S&N. Mr Ivell had turned a pretty shabby estate bought by S&N from Grand Metropolitan in 1992 into highly prized assets. He has applied the same "back-to-basics" rigours to Regent.
"My first job was to sort things out with the banks and reassure shareholders that the company wasn't about to fall over. After that, it was about sorting out what were quite obvious problems. For example, the bars stocked low-quality drinks. Instead of Smirnoff Ice and Stella Artois on sale, there were cheaper imitations with brands that no one had ever heard of. But Regent was still charging premium prices for its drinks. The customer isn't stupid - he is not going to pay for that when he can go next door and get a better quality drink. When the sales walked away, Regent over-reacted by applying every discount it could. That destroyed margins."
But wasn't the problem also that the Walkabout brand, and all its Australian paraphernalia, was a little jaded? Apparently not. "Believe it or not, the Australian theme is actually still very popular. People see it as old-fashioned, laid-back fun, based on beer and sport. The problem was that it had gone a little overboard on the Aussie factor - there were kangaroo burgers and crocodile sandwiches, when actually all customers wanted was a decent cheeseburger. We've sorted that out now," he says. Little wonder he knows a good burger, given his 30 years in the hospitality industry.
A graduate in hotel and catering administration, he joined Grand Metropolitan Hotel's trainee scheme in 1976. From here he went on to Whitbread, where he spent the 1980s building up its Beefeater restaurant chain. Under his leadership, Beefeater went from five outlets to 200. He was also the brain behind Whitbread's budget Travel Inns, now the biggest part of the Whitbread group. From Whitbread he went to S&N, and is now back eyeing up more deals from behind Regent's bar.
Ten years ago, all shareholders wanted to hear from pub owners was their expansion plans. More pubs meant more profits, they reckoned. So as Britain's town centres became ghost towns to out-of-town retail parks, pub entrepreneurs moved into previously unlicensed premises and every vacant bank/cinema/church became a bar. This led to major discounting as pubs battled to survive in a flooded market. Added to this have been rising utilities bills, minimum wage costs and insurance premiums. The high street managed bar sector has been in the grips of a bloodbath.
Thankfully, the Government crackdown on Britain's late-night anti-social drunken behaviour has forced bar operators to sober up to their reckless pricing policies. "I think all the attention on binge drinking, although overplayed, has made operators realise what they were doing was not sustainable," he says.
Although the bitter price war may have abated for a while, the new fear on the horizon is the slowdown in consumer spending. Rivals such as JD Wetherspoon have reported some pressure on sales, as retailers have admitted a dramatic slump in business. As Mr Ivell also sits on the board of the health and fitness club business Next Generation and The Restaurant Group, he sees a pretty broad spectrum of the consumer pound. "If you have the right brand and service levels, you will still attract customers. People will still go to the pub for a drink and eating out is part of everyday life for most people. We haven't seen any sign of a slowdown in our sales."
Still in a weakened position, however, speculation that Regent would be bought out has been rife since Mr Ivell joined. These rumours gathered pace when the property entrepreneur with a penchant for pubs, Robert Tchenguiz, took a 14 per cent stake in Regent. He has now reduced it to about 10 per cent. "He has done pretty well from buying and selling his shares when he did," Mr Ivell says, dismissing suggestion he would mount a takeover bid. "The Regent estate is mainly leasehold property, which isn't much of an attraction for a property investor."
Mr Tchenguiz now has his hands full with Yates, which he bought from the private equity group GI. But Mr Ivell believes there is still plenty more out there for Regent to swallow. "We have done about as much as we can now in terms of taking out costs at Regent. The future is not now about huge organic expansion. It is about consolidation and increasing scale. There are still a number of smaller chains, which each have their own high overhead costs. If these were consolidated, we could get rid of these costs and also have more purchasing power with brewers and drinks suppliers."
There is plenty on the market, from venues belonging to the nightclub and late bar businesses, Luminar and Urbium, to pubs groups like Barracuda and Spirit Group. Shareholders should expect Mr Ivell to start announcing deals over the coming months, marking a new round for Regent Inns and the high street pubs sector.
Age: Turns 53 next week.
Salary: His salary at Regent has not been disclosed, but he earned a bonus of £465,000 in his last year at S&N, taking his total pay to £640,000 in 2003.
Career: Started out as a graduate trainee for Grand Metropolitan Hotels in London in 1976. Joined Whitbread in 1978 as regional manager for its restaurants business, going on to become its managing director. 1992-2003 ran Scottish & Newcastle's pubs and restaurants business. 2004 to present, executive chairman, Regent Inns. Also on the board as a non-executive director of Next Generation and The Restaurant Group.
Family: Married with two teenage children. Lives in Huntingdon, Cambridgeshire.
Interests: Tennis, golf and wine-tasting.Reuse content