UK chains give pub market food for thought

What should Irish punters expect from three chains known to be sniffing round the Irish, and in particular the Dublin, pub market?

When it emerged last week that British pub chains are eyeing up the Irish market, an anonymous Facebook petition was started to warn off the foreign invaders. Aimed at the chain that has already bought two Dublin pubs, it is called Feck Off Wetherspoons.

Two other UK chains are also circling for sites here.

With 2,300 "likes", the Wetherspoon protest is so far modestly sized but shrill in its opposition to the "soulless" British chains threatening independent Irish pubs.

It has also attracted supportive comments predicting the entry of UK chains to the Dublin market will drive down the price of drink. The success of Aldi and Lidl shows Irish consumers can be as hard-headed as any other.

With the pub trade in turmoil and many outlets going bust, some publicans are also concerned about the impact of new entrants.


Open-plan pubs
John Clarke has been a victim of the turmoil in the sector. His family ran a Ringsend pub for 80 years before it was seized last year by receivers acting on behalf of Bank of Scotland (Ireland). His sons have since reopened a new Clarke's pub near Dublin's south docks.

Clarke said he expected any British chains that enter the Irish market to compete heavily on price. “They will be looking for your customers,” he warned other publicans.

What should Irish punters expect from three chains known to be sniffing round the Irish, and in particular the Dublin, pub market?

JD Wetherspoon is known in the UK for a preponderance of large, open-plan pubs among its near 900-strong estate. Music is frowned upon, with a focus instead on food and ales. It sometimes plumps for unconventional buildings, such as converted cinemas.

When Wetherspoon acquires a new pub, its strategy is often to blend the premises in to the local area. It has been known to retain local historians to provide colour about a community’s past, which can be reflected in the name chosen to hang over the door.

The Robert Peel near Manchester is named after a local mill owner whose son became UK prime minister, for example, while the Tuesday Bell in Lisburn is named after a weekly bell that started a local market.

The FTSE 250-listed group is understood to have been working on its Irish strategy for eight months. Local agents have scouted scores of Dublin pubs for the group. Its chairman and founder, Tim Martin, says it could open up to 30 outlets in Ireland.

It has already indicated that its initial target will be to take a slice of whatever disposable income remains in trendy parts of south Dublin. Wetherspoon has agreed to buy Tonic in Blackrock and the 40 Foot in Dún Laoghaire for a combined €1.8 million.

The game has changed significantly regarding pub prices in recent years. Towards the tail end of the boom, sources said 40 Foot attracted a rent of €400,000 and its owners had an €8 million mortgage with Anglo Irish Bank.

Greene King, which operates almost 1,000 pubs with half of them unbranded, is seeking large suburban Dublin pubs with car parks.

Despite an approach via an intermediary to Charlie Chawke regarding his south Dublin pubs, it will not focus solely on affluent areas. Some of the earthier parts of Dublin's densely-populated north and west are apparently on its radar.

Nick Batram, an analyst in London with Peel Hunt, believes Greene King has the “wherewithal” to crack the Irish market. “It has the balance sheet and it is a fantastic retail operator,” he said.

Speculation within the trade about the third UK chain looking at Ireland has settled around Mitchell & Butler (M&B), whose brands include the cool All Bar One chain.

When asked this week about rumours it is considering an entry into the Irish market, M&B declined to comment on “market rumour or speculation”.

It already knows this country well enough. M&B brewery merged with Bass in the 1960s, and it entered the Irish pub market in the mid-1980s with its Toby Inn brand.


Disapproval
It acquired a handful of Irish pubs including the Step Inn and the Mount Merrion House in south Dublin and the Coachman's Inn near Dublin Airport.

“It concentrated on food. The Step Inn was successful, people were complimentary about it. But as pubs go, they weren’t up to the same experience as Irish pubs,” said Clarke.

The Bass group owned about 7,000 pubs by 1989 but the UK government’s Beer Orders, which limited the retail arms of breweries on competition grounds, forced it to retrench and it then took the decision to abandon its foray into Ireland.

Over the next 25 years the group expanded. The pubs division was listed separately a decade ago, reviving the M&B name. Its shareholders include JP McManus and John Magnier, who own a 22 per cent stake worth €385 million – more local intelligence for M&B should it place an order for some Irish pubs.

If it does come here, M&B’s All Bar One chain could bring a more urbane feel than either Wetherspoon or Greene King. That could meet less disapproval from city drinkers than the more generic Wetherspoon and Greene King outlets, seen by some as the antithesis of a craic-filled Irish pub.

Bill Morrissey, a Dublin auctioneer active in the pubs market, said the brewer Whitbread, which owns the Costa Coffee chain, also looked at the Irish market several years ago, but chose instead to expand further in the UK.

The most intriguing part of having big British chains sniffing around the Irish market is the impact it could have on the effective draught beer distribution duopoly of Diageo and Heineken.

Wetherspoon, Greene King and M&B have bulk-buying power of which Irish publicans can only dream. Some observers believe they could rattle the big distributors with their purchasing might.

It was reported four years ago that Diageo agreed to slash the cost of Guinness for Compass Catering group at the Aviva stadium to prevent the caterer from importing Guinness from the UK at discounts of up to one-third on a barrel.

Sources recalled this week that this had bemused some higher volume publicans in Dublin, whose large orders of the stout from Diageo hadn’t yielded the same discount.


'Astute businesses'
Despite all the noise about new entrants from abroad, Morrissey says the number of pubs changing hands is still low. Of Dublin's more than 800 pubs, the historical average was for "four or five per cent", or up to 40 properties, to change hands annually. "This year nine pubs have sold so far in the Dublin market."

UK pub chains are “astute businesses”, Morrissey says, that will focus heavily on price in Ireland. “Having dealt with them, I know they are also capable of stepping out of their own culture.”

Their chances of success here may depend upon a similar capability emerging among Irish pub goers.