Everything about Ian Payne, the chief executive of pub chain Laurel, smacks of a publican. His easy-going manner, the endless stories, his appearance - no tie, short sleeves, and sporting a gold chain. Even his looks, a slightly disturbing mix of Tony Soprano on a good day and Barry from EastEnders, fit the part. By the time he sits down, he has already handed out, for one reason or another, five pints to surprised but grateful customers in a City branch of the Laurel-owned hog's head. All in all, your stereotypical pub landlord.
It is not, however, what you would expect from the chief executive of a 635-strong pub chain that has serious growth ambitions and is a hopeful purchaser of brewer Scottish & Newcastle's £2.3bn retail estate, which includes Chef & Brewer and Bar 38. Bidding with Japanese bank Nomura - which is providing the debt finance - Laurel will find out if it goes through to the next stage of the auction in the next couple of weeks. The deal would transform the company into the UK's biggest managed pub business, with an estate of more than 2,000 houses. It would be an ideal move for Laurel, accelerating its growth plans and ensuring that its owner, Morgan Grenfell Private Equity, could get out of the business on a high note.
It is a lot for any chief executive to have on his plate but if Payne, 50, appears unfazed, that's because he's an enthusiast. "The thing about pubs is they are one of the few places you can walk out of feeling better than you did when you walked in. If you don't, it's a bad pub. I still love going into new pubs and seeing what people are doing. I have always loved pubs."
Practising what he preaches, Payne started his career as a 19-year-old barman in Maidstone, Kent, before going on to work for Guinness and then Bass (the precursor to Six Continents, which earlier this year split into InterContinental Hotels and pubs business Mitchells & Butlers). He had various roles at Bass, including managing director of the tenanted pubs division. Payne diversified, and at one point ran Hilton's casino business. But pubs won out when Morgan Grenfell hired him to run Laurel just over two years ago.
Recently, however, times have been tough in the pub trade, with high-street sites in particular suffering from too may choices and too few customers. Even the recent spell of hot weather, says Payne, has not been enough to tempt people in. "It's been fantastic for neighbourhood pubs and it's been really great for anything on the coast. But the high street is still tough."
Around half of Laurel's pubs are on high streets, but Payne wants less emphasis on this part of the business as the estate grows. The original plan was to build up to around 800 pubs, and by that stage, ideally only around 25 per cent would be on the high street.
Laurel's main offering in this camp is the 100-strong hog's head chain, which is now being revamped with the introduction of new features. These include pool, table service and pictures of eyes behind the bar to remind staff to make eye contact and, in theory at least, cut down time spent at the bar desperately trying to get served. The product range has been expanded, and the chain now sells Dom Perignon champagne in London and other affluent areas. All of this, argues Payne, is crucial if hog's head is going to stand out against its many rivals and beat the high-street blues.
"There was an explosion of pubs about 1999-2000. A lot of people thought it was a licence to print money - and that's come home to roost," he says. "You go into one high-street bar and you wouldn't know whose chain you were in. It got out of control and the consumers have voted with their feet." Yet Payne also holds no illusions: "We're investing in the hog's head but I think it's going to be tough getting that market back in the next year to 18 months."
The good news is that the unbranded neighbourhood pubs - the places people flock to after escaping sweltering city centres and the unpleasant commute home - have shone during the heatwave. During Cowes week, for example, Laurel's Isle of Wight pubs "broke all records".
Around 300 of these neighbourhood outlets, dubbed "champion pubs" internally, have a strong sports bent - either playing it or watching it on big screens. "That's very much a chain we're investing in heavily," says Payne. "We think there's huge potential."
Laurel has also been dipping its toe in the more trendy end of the market. Current venues include Bed, in London's rejuvenated Smithfield meat market, and the recently opened Prohibition in Leeds.
Growing the estate has not been easy, though. Since its formation out of the old Whitbread pub empire - Morgan Grenfell paid £1.6bn to buy the nearly 3,000-strong estate before selling off the tenanted pubs to Enterprise - the group has been looking to expand organically and through acquisitions. In June this year, for example, it snapped up 17 JD Wetherspoon outlets for around £10m. But, as Payne points out, while Laurel has looked at "hundreds" of pubs over the past year, it has only bought 23.
Before Scottish & Newcastle's estate was put up for sale, the group had been interested in buying Mitchells & Butlers, but they disagreed over the valuation. While Payne preferred something just shy of £3bn, M&B "was adamant that if the price didn't have a three in front of it, they wouldn't take it to shareholders". M&B floated at the end of March and its market value is currently around £1.9bn; including debt, that still leaves it around the £3bn mark. "That's a very full valuation for the company," says Payne. "On that level, we would not be prepared to pay a bid premium."
Which leaves little else other than S&N. "We will be very disappointed if we don't get it," concedes Payne, though he adds: "We would go and lick our wounds and get to 800 by other methods."
Morgan Grenfell remains supportive, though the firm is known to be keen on selling down its current investments and there is no evidence to suggest Laurel will escape that fate. While there are unlikely to be many trade buyers on the look-out for an estate of over 2,000 pubs, some - perhaps even M&B - might be interested in one of around 600.
Yet Payne remains undaunted, and should he and Laurel part company for any reason, the first thing he would do is buy back into the business. Not just the one pub either - "I'd get bored" - but around 100. In the meantime, he has got other things to worry about. There's his family, his football season ticket at Aston Villa, the fortunes of Kent County Cricket Club, and Coral's Laurel, a four-year-old racehorse which he co-owns with the chief executive of bookmaker Coral Eurobet, Bob Scott, and which they bought for €52,000 (£36,500).
And then there's the huskies. Introduced to racing the dogs by his partner, Kim, he keeps five huskies, one of which weighs a staggering eight stone, in runs behind his home in north Hertfordshire. Payne, however, insists his pet dog, a Jack Russell bitch, is "the boss".
And if a terrier's in charge, that's a good sign for a former barman who's taking on the big beasts of brewing in an attempt to turn his love of pubs into one of the country's biggest businesses.Reuse content