'Pubs for nice people' do nicely

INVESTMENT COLUMN

It is hard to imagine why anyone would want to drink in a place marketed under the sign "Unspoilt pubs for nice people" but the rapid growth of Tom Cobleigh, the Yorkshire and East Midlands pub operator, suggests the company's food-focused, family offering is pulling the customers in.

Very much a child of the Beer Orders' transformation of the British pub market, Tom Cobleigh is coming to the market next month with a placing to raise about pounds 22m. It has grown fast since foundation only three years ago, and now boasts 46 managed pubs, under the Tom Cobleigh brand and 36 tenanted sites, trading as The Nice Pub Company.

Typically large, out-of-town sites with large car parks, the pubs are based on the premise that food sells beer and they generate more than a third of turnover from the sale of meals, well above the average for Britain's 63,000 pubs. An ambitious opening programme should see up to 18 pubs a year added for the foreseeable future.

Rapid growth has been reflected in fast-growing profits, which have grown from a pounds 52,000 loss in the year to March 1993 to a profit of pounds 1.6m from sales of pounds 14.8m in the latest full year. In the six months to the end of September, profits jumped again to pounds 1.04m from sales of pounds 9.5m.

The company sets great store by staff training and has an imaginative approach to motivation, including cash bonuses for appropriate responses to staff observers dropping into other pubs posing as customers. The success of the formula is reflected in strong growth in turnover per pub and return on capital.

If Cobleigh is half as successful as JD Wetherspoon and Regent Inns, shareholders will be well rewarded. It is encouraging that EAC, the venture capital backer which will own 50 per cent of the shares after flotation, is holding onto its stake after first dealings on 23 November. Worth looking at when the price is announced.