The Capital Pub Company launched as an EIS in 2000 and was sold to pub company Greene King last July. The original investors received £2.43, including dividends, for every £1 invested before any tax relief. Co-founders David Bruce and Clive Watson are now looking to repeat the strategy, but with more focus on pubs outside London.
They see London as a crowded and expensive market so are looking to run unbranded and unthemed pubs in cities and major towns mainly outside London,
Investors’ capital will be split equally between the City Pub Company East and City Pub Company West. The City Pub Company East will focus on drink-led pubs targeting young professionals. They will provide a range of ales that are not available in most other pubs in their local market. They will also provide beer festivals and traditional pub food.
The City Pub Company West will have more of a focus on food, offering meals that are cooked from scratch with locally produced produce. These pubs will typically be more family-orientated and sales will typically be 60 per cent drink and 40 per cent food.
All pubs will have their own local identity as an alternative to pub chains that dominate the high street. The retention of key staff is seen as important, so staff will be incentivised financially and in other ways, such as giving chefs a choice of menu rather than head office imposing a generic menu on them.
Bruce and Watson believe that having a clear business plan and exit for investors is crucial. They will be looking to sell the companies in five to six years and may consider a flotation. Investors who want to exit sooner may be able to do so through a matched bargain facility.
Investors may take comfort from the co-founders’ experience track record of having made money from a similar strategy, and of the asset backing that pub investment brings. However, there are no guarantees and opportunities for investors to exit early will depend on the presence of buyers for their shares.