by Real Business - Thursday, 30th August 2007

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The legendary pub entrepreneur and creator of the Firkin chain has another surprise in store...

David Bruce breezes into the room, a smile on his face and an investment banker on his arm. Britain’s most prolific pub entrepreneur has got his money, he’s got the new concept and he’s ready to roll.

Except that the man who created the Firkin chain and built up the Slug & Lettuce brand (for Grosvenor Inns) isn’t going his traditional roll-out route this time. The man who’s synonymous with branded, themed leasehold pubs is upsetting the apple cart once more by creating (with a record-breaking £15.5m, from 600 investors, raised under the Enterprise Investment scheme) a chain of unbranded, unthemed traditional freehold local boozers.

“Whenever I’ve made any money, I’ve tried to be counter-cyclical,” laughs the 55-year-old, his voice still carrying a slight country burr. “You could go into any of our pubs now and not know who owned them – and we’re proud of that.”

David Bruce doesn’t wear his heart on his sleeve; he wears heart, soul and a whole bunch of other organs, too. His career (he’d probably reject the word) has risen, fallen, got sidetracked, risen again, experimented in the US, until this latest venture, The Capital Pub Company.

And he’s happy to share every alleyway of his history with anyone who’s interested. This interview took place at the 2003 Smarter Business Exhibition at Earls Court, where Bruce had gamely – and typically – stepped in at the last minute to fill a speaker slot. After 90 minutes of candour and humour on stage, he was besieged by an assortment of budding businesspeople, financiers and consultants. Although he had a lunch appointment with Patrick Booth-Clibborn of Noble & Co (the aforementioned investment banker), he happily dispensed advice and business cards until all were satisfied.

The absence of airs and graces probably dates back to Bruce’s nine-month period on the dole in the seventies. After a 12-year stint as a brewer and a pub manager, he discovered a startling fact about himself: he couldn’t be an employee. “I was unbelievably disrespectful and rude about my bosses,” he says. “The only way I felt I could assert myself was to go on the dole and explore opportunities.”

He didn’t really know what he was looking for, but he knew he’d found it as soon as he discovered the dilapidated old Truman pub in south London’s deeply inauspicious Elephant and Castle in 1979. “I saw the enormous cellar with good ceiling height [that’s the experienced pub manager speaking] and it came to me in a flash – I’ll set up a pub with its own brewery.” He raised £23,000 from a variety of sources – remortgaging his house, borrowing a few bob from brewers Charringtons and Shepherd Neame and the rest from what he calls negative working capital – “not paying my creditors on time!”

And thus was born the Firkin brew-pub phenomenon. Nine years later, he sold the no-jukebox, good food, floorboards rather than vomit-proof carpet, ale-brewed-on-the-premises pub chain to European Leisure (it was subsequently sold to Allied Domecq and became the drinks group’s most successful retail brand and, for the record, featured in the Guinness Book of Records for the longest pub name, The Ferret and Firkin in the Balloon up the Creek).

It could so easily not have happened. “I took the original Firkin business plan to the Listening Bank,” Bruce recalls. “They said, ‘if it’s such a good idea, why hasn’t someone else thought of it?’ After that, I showed it to a top brewing analyst, a real expert in the industry. He scrawled on the front of my plan – and I’ve still got this in a drawer – ‘this project has absolutely no chance of succeeding. I suggest you abandon it immediately’. What did I learn from this? Never listen to the experts.”

Not that Bruce is faultless, as he will very readily admit. He announces, almost proudly, that he is “one of the few guys who’s lost 500,000 in dollars and sterling in one week!” This chastening experience – which he recounts with great humour – took place when a joint venture with Brakspears went under on a Wednesday and his Brew Moon venture in Boston, US, went into Chapter 11 on the Saturday.

But he’s positive about the impact of failure. (He also admits to losing a large sum on a venture that redeveloped grade II listed tithe barns.) “I never make the same mistakes twice, just a whole load of new ones,” he guffaws. In fact, the collapse of the Honeypot Inns joint venture with Brakspears led directly to his new pub chain concept and the tie-up with Noble & Co. “So out of one failure came what I hope will be the next success.”

He also discovered that joint ventures just don’t suit him. “Unless I’ve got my own balls on the block, it doesn’t seem to work for me,” he says. “I need to be hands-on. The original idea needs to come from within one’s own heart.”

Learning from his mistakes – and the honesty to acknowledge them – is a big Bruce feature. He recalls the early days of the Firkin chain, when he had four pubs and turnover was at the £1.5m mark. “It was 1981 and my lawyers couldn’t even get into my pubs; they could see the success we were having. So they assumed that I must be generating some sort of personal tax problem. They introduced me to a guy at Touche Ross, who introduced me to one of his corporate finance colleagues. He told me, ‘I don’t think you’ve got a tax problem, you’ve got a survival problem’.”

Bruce was basically running a £1.5m business with almost no bookkeeping. All his focus was on getting new sites. But he was actually losing money, big-time. “And I was blissfully unaware of it.” Ever since, he has never gone into a venture without a hard-nosed, operational FD/chartered accountant sidekick. (At the new venture it’s former Regent Inns’ FD, Clive Watson.) Bruce’s only caveat: that the FD must have some entrepreneurial blood in his veins – “otherwise they’ll be like that banker and brewing analyst and always err on the side of caution.”

His latest venture, the Capital Pub Company, is born of that long-fermented brewer’s hunch. “There’s a consumer reaction to brands in the booze industry,” he insists. The high streets are chocker with ridiculously themed bars flogging mega-pricey booze – and you even have to run the gauntlet of bouncers on the door to get a drink. At the same time, rent reviews are crippling the bar chains themselves, leading to a succession of profits warnings. The only people in pocket are the landlords.

Bruce’s response is to go the freehold route (itself not a cheap option with decent London freeholds going for £1m-£3m) and not to go in for any branding. “Consumers want something nostalgic and evocative,” he says. “The security of the brand is also the blandness of the brand. Our pubs feel like locals. You’ll get a great welcome, wonderful food in a good honest boozer. Funnily enough, our most profitable pub, in Clapham Common, is surrounded by brands.” In the first 18 months, the group has 11 pubs, sales of £8m and is delivering, he says, a return on capital of around 15-18 per cent.

And no debt. Bruce has been scrupulous in securing a strong equity base for the new venture, hence the three rounds of funding and the £15.5m. “I’m very cautious about gearing,” he stresses.

To Bruce-watchers – and he has many admirers in the pub and leisure world – it may seem strange to hear such words from this self-confessed maverick. Maybe the man who started his career brewing Old Peculiar is just a little bit more sober these days.

Matthew Rock is editor of Real Business.

BLOOMING

On non-executives
“I really value good, strong, diverse non-execs. But avoid ones who are imposed on you by investors. Some of those guys can really spoil the fun. So much of this is chemistry. The last thing you need is a nervous non-exec.”

On recruiting people
“We seldom take people who have experience in the big companies in the industry. We want people who just like the industry and it doesn’t matter if they have a degree in leisure management.”

On venture capitalists
“I want this to be a £25m-£30m company, but I know that if I had VCs on board, they’d be ringing up their mates asking if they want to buy a pub company.”

The sign above the old Firkin pubs
“Usque ad mortem bibendum” – to drink until death.

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