Up, Upham Away

Up, Upham Away

It was a chance encounter that brought Upham Group into existence. Two friends from the City, Charles Goode and John McMillan, had bought a farm in Hampshire and discovered that its barn had a brewing licence. After brewing on a small scale from 2009, they soon saw sales increasing and realised that they would need to bring people in to make the brewery work.

Those people were Chris Phillips and David Butcher. Both have been in the industry for decades and were looking to get back into pubs, having sensed a change in the market. Once they had taken on the brewery, the pair decided to follow the well trodden path of developing a brewery pub estate. With pubs for sale that had never before been on the market, both could see that there was a gilt-edged opportunity and they intended to take full advantage of it.

“It smelled like the right time to be getting back in,” explains Butcher. “There were a lot of pubs that had been broken really through lack of investment. That was the opportunity that we thought was there – to take on these sites and reinvigorate them and reinvest in them and reinvest in the people in them.”

Growing the herd

On 23 March 2012, director Butcher and chief executive Phillips bought their first pub – The Winning Post – and immediately closed it for a full refurbishment, opening it a month later. The property, located in Winkfield, near Ascot, received an investment of around £300,000.

From that first purchase, Upham Pub Company now owns 10 properties, with the latest acquisition – The Peat Spade – completed on 1 September. Almost every one was either failing, in administration or closed when Upham took them on. The company would close the pub and it would undergo a full refurbishment. Many were gutted and redeveloped and all had their kitchens renovated to a high standard.

“The engine of the pub nowadays is the kitchen,” explains Butcher. “We typically invested around £100,000 sorting the kitchens out. There’s nothing worse than a kitchen that can’t cope with the business you need to be doing in order to be successful.”

One may well ask how Butcher and Phillips were able to fund these sizeable refurbishments at a time when the on-trade is finding banks increasingly wary about lending to them, especially in an estate that has acquired 10 pubs in under two years.

“We raised our money through an Enterprise Investment Scheme and kept just one, so the brewery and all the pubs sit in the same company,” explains Butcher.

“We got the money through high net worth individuals and friends, family and wherever we could.”

As it currently stands, they have raised nearly £16m and expect to have close to £20m by the end of the year. Butcher puts this down to their background in the pub industry. Phillips, having started out in the early 80s with Slug & Lettuce, built up an estate of some 17 pubs called Front Page Pubs, which he ran successfully for around 20 years, before selling out in 2007. Butcher worked with MARR Taverns in 1992, helping them build the estate up to 800 pubs, before moving onto Hampshire brewer Gales and running their property and tenanted estate.

“Chris and I have a lot of background of pubs in this area and it’s an area we know well,” adds Butcher. “We’re not going to do anything that we both haven’t done before. I think that gave the investors a lot of confidence and certainly the success of the first few always encourages further investment.”

What Upham’s after

The Upham Brewery is now eight times bigger than when they started and is running at full capacity. In addition to looking for another, larger brewery site, Butcher and Phillips’ ambition is to acquire another 30 to 40 pubs over the next three to four years and they will be looking at over 100 pubs in a year, expecting to settle on seven or eight that they believe have the potential to succeed within the Upham model.

“We’ve got to believe that they can do enough business,” says Butcher. “That’s the principle of everything we do and not all sites will work. It is being very focused on what we believe we can do and what we understand. I think we have to maintain that discipline otherwise we’ll make mistakes.”

The model pub that Butcher and Phillips are looking for can house a kitchen big enough to generate significant revenue, but also located in an area that makes it a locals’ pub as well as a destination venue.

Bringing a local touch to proceedings is extremely important to Upham and the brewery binds the pubs together. Butcher sees the estate running down from Oxford to Southampton with a little bit either side. In addition, Upham encourages their pub managers to source their food as locally as possible.

“Everything for us was all about being genuinely local, not just showing the face of being local,” comments Butcher. “We want them to use local produce where they can. We’re members of Hampshire Fare and we work with them to provide access for local producers into our pubs.”

Rider for each horse

Upham has focused on giving each manager a significant degree of autonomy in running his or her pub. As far as Butcher is concerned, the manager is closer to their community and the business itself than head office and is therefore better placed to make the right decisions.

“We talk about micro markets, which is a bit too grown up,” he states. “They talk about communities. The way they service and communicate with those communities is very different. Each manager is in tune with their community.”

In addition, the style of management that Upham is keen to engender is built around professional business and entrepreneurial spirit. By loosening the shackles on Upham’s managers, Butcher believes that he and Phillips can unleash their business creativity to create a range of unique and truly successful pubs. While Upham funds the pubs, the managers run each of them like it’s their own.

“We’re trying to run all the pubs individually, so while there’s some central buying, we want entrepreneurial managers who run their own businesses and chefs who use local food suppliers and aren’t driven by central menus,” he explains. “We’re very much about the people we employ and making that whole unit gel.”

Finding the right manager to take on the right pub is thus one of the most important facets of the business, with some managers having some input into how their pub might be renovated. As the estate has grown, Upham has been able to give their impressive assistant managers their own pub to run.

“It’s great to see those people grow,” says Butcher. “The hardest part of anything we do is finding the right people to do the right job and giving them the tools to make the business as successful as possible. We’re here to help them thrive rather than give strict guidelines as to how things should be done.”

These tools include training, whether it’s plugging a few gaps in a manager’s knowledge or bringing new staff members up to a recognised standard. Butcher is keen to stress the personal care and involvement that Upham has with its managers and intends to have even as its operation gets ever larger.

“A lot of training goes on in terms of product knowledge and how the systems work and what expectations are,” he says. “We have been looking at whether we can develop a qualification for staff, so that once they’ve been with us for a year, they’ve been trained how to run a bar, run a cellar, trained in health and safety. Then it would mean something if they went elsewhere.”

The modern operator inhabits a different world from the one where Butcher and Phillips cut their teeth. As the customer has become more aware and more demanding, so operators have needed to approach their operation in a more businesslike way. For Upham, the growth of the brewery and the growth of the pub estate will continue to change apace and, for Butcher, exceeding customer expectations is the key to success.

“Modern operators are far more professional about what they do – whether it’s how they market their business or how they define good service,” concludes Butcher. “The three pillars are food, people and environment. They’re the three things that dictate success. If you get them all right, I think there’s lots of opportunity for success coming out.”