<p>Notes on call between Nigel Parsons and John Soden and Nick Curtis &ndash; 1 July 2020</p>

<p>&nbsp;</p>

<p>Nigel has worked for c. 30 years in the pub and hospitality sector.&nbsp;&nbsp; First at Innterpreneur Pub Company writing leases on their c. 2,000 pub estate to landlords (one of the leases was for the Harcourt).&nbsp;&nbsp; Followed by 20 years at Cannacord&nbsp; as sector analyst where he under took competitor analysis. Currently has his own company called Dryburgh Research.&nbsp; He is also a founding director of the MBO of London Taverns Pub Group <a href="https://www.markettaverns.co.uk/">https://www.markettaverns.co.uk/</a> which has 10 pubs in London.&nbsp; Recently bought 4 pubs from the Restaurant Group for bargain price.</p>

<p>Trading</p>

<ul>
	<li>Would be ok if pubs were not trading for the next 3 months up to Sept but thereafter we would start to lose longer term clients.</li>
	<li>We need to be well positioned for the Xmas trading period from Sept to Dec.</li>
	<li>Food is difficult and we would be best starting with a reduced menu offering and focusing more on bar food.&nbsp;&nbsp;</li>
	<li>Xmas is good for food and profitable as there is often a single reduced menu</li>
	<li>There are good staff on the market and we could pick up a pub chef for c&pound;60k p.a. (their exec chef who covers all their pubs earns &pound;60k)</li>
	<li>If you have a Head Chef &ndash; they need to work in one of the pubs &ndash; cannot just be overheads</li>
	<li>We need to have a different strategy for each pub as they will all behave differently.&nbsp;&nbsp; &nbsp;&nbsp;</li>
	<li>The 3 Cranes in the city would take time to get back to normal trading but the other assets in residential areas he was more optimistic.</li>
	<li>Next three months will be very difficult Market Taverns is assuming 50% of Revs and 95% costs.</li>
	<li>They will not reopen all their pubs immediately and where they do they will have a reduced drinks offering and simple food offering.</li>
</ul>

<p>General</p>

<ul>
	<li>Confirmed we had good assets but that we appeared to have overspent in many areas.&nbsp; Good pubs are always in demand but there was a danger if we appeared to be a distressed seller.</li>
	<li>Staff Wages are c. 27% of Turnover.</li>
	<li>EBIT Margin that Market Taverns makes is 15% (and should be higher if you own the assets).</li>
	<li>If you lease a pub the rent is 8 &ndash; 12% of Turnover</li>
	<li>Beware squatters &ndash; Market Taverns had had them and they had caused significant costs and time to evict.</li>
	<li>If you are going to sell you need to be speedy as you quickly lose your clients and staff.&nbsp;&nbsp; Should run a targeted discrete process</li>
	<li>A group of 6 pubs would find it hard to operate as a group and cover central overheads.&nbsp; You needed c. 15 pubs to reach scale and very tight control on costs.</li>
	<li>Market Taverns has central overhead costs of c. &pound;400k p.a.</li>
	<li>He would recommend Fleurets as a valuer (Graham Bartlett).</li>
</ul>