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Tue 19th Nov 2013 - Breaking News - Enterprise Inns to explore managed division
Enterprise Inns to explore managed division: Simon Townsend, the chief executive designate at Enterprise Inns, told analysts today that the company was considering turning pubs towards the upper end of its estate into directly managed operations. Townsend, currently chief operating officer at Enterprise, who was announced today as the company's next CEO when Ted Tuppen steps down, said in a conference call for analysts that Enterprise bosses "continue to believe that the leased and tenanted model still provides the best alignment of the interests between the entrepreneurial flair, energy and enthusiasm of individual publicans and the experience, support and resources of a national company committed to the long-term ownership of pubs. This remains core for the majority of our pubs." However, he added: "We need to explore alternative methods of operating, which could require us to take more control of pubs, as we've done to a limited extent in the Beacon estate [Enterprise’s 'intensive care unit', which sees the company take greater operational control of the retail offer in some 250 to 300 pubs in return for bigger discounts]." Developing a managed division would mean developing "a greater back-office capability than we have traditionally provided through the leased and tenanted model." Townsend said the company is looking at "alternative income models, such as franchises, turnover-related rent, or even directly managed operations, particularly at the upper end of our estate." He warned that "continual campaigning by certain parties is at least raising the possibility of regulatory intervention, and may again make the leased model unattractive to the very best operators, particularly if it's likely to mean more pubs being operated under commercial leases, where the balance of risk and reward can be so much more onerous for the individual publican." By taking greater control of its pubs, Townsend said, "we are managing levels of business risk, where we know that greater levels of intervention give us greater control, and as a result we're more likely to be able to utilise our purchasing leverage to reduce some of the more significant pub operating costs, which includes utilities." Townsend’s remarks come as at least one well-known restaurant brand has been in talks with the company over how its offer could be rolled-out by Enterprise. Meanwhile, the company was already making big savings for its publicans through the Sports TV packages launched with Sky in May, which "have proved extremely valuable, saving on average around £3,000 a year for each pub, both existing subscribers and new subscribers," Townsend said, with 495 new pubs signed up to the service, and Enterprise now has a "market-leading" deal with BT Vision, "adding further variety and content options to our publicans". He also revealed that more than 1,500 publicans had signed up to Enterprise's free wi-fi offer, worth £500: "Easily accessible, high quality and completely free wi-fi is fast becoming an expectation among consumers, and our free wi-fi service, provided by Arqiva, is proving extremely popular." Townsend said Enterprise also offered the biggest selection of drinks products available in the UK, with beers from 489 brewers and more than 1,400 cask ales, "all of which can be ordered via one phonecall and delivered on one vehicle. And in the year ahead we will launch our new digital platform, which will enable on-line ordering, payment transactions and communications." Enterprise reported that the average cost of an individual pub failure to the company had reduced to £14,000 this year from £18,000 last year. The company is currently receiving 70 enquiries a week from would-be licensees, compared to 55 last year. This morning, Propel reported that Sapient Corporate Finance founder Peter Hansen told the recent Propel Multi Club Conference that he expected much more use of hybrid managed models among the top-end of the larger tenanted pub estates.

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