The Benefits of Training to Pub Retailers: A Study for the Punch Pub Company

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This paper reports on a research project that evaluated the impact of training prevision for tenants and lessees of the Punch Pub Company. Training provision by the company aims to support new tenants and lessees who are taking on one of the company's pubs for the first time, or who are in receipt of an investment grant from the company, or who are developing marketing skills. The research involved 100 telephone interviews from 563 participants on four programs, and who were also "operators in situ". In these cases it was possible to explore changes in operational performance after the operator in situ had attended the program. The research confirmed that on all four programs' business performance improved after the programs. A substantial majority of interviewees reported that sales and profits had grown as a result of actions they had taken afterwards. The paper suggests both individual tenants and lessees, and the company gained from these programs.

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The Punch Pub Company is undertaking a substantial investment in the training and development of tenants and lessees of pub and bar properties in the company's estate. The following reports on a research project that explored the impact of these programs on business performance in the participating pubs.

This research builds on an earlier project that explored the benefits of training programs aimed at new tenant/ lessees and existing tenant/lessees in receipt of an investment grant (Lashley, Lincoln, & Rowson, 2001). The report is also informed by research projects undertaken for the Hospitality Training Foundation (HTF, 2001a; 2001b; 2002), and the North West Tourism Network (Lashley, Thomas, & Rowson, 2002). These prior studies show that business benefits do flow from an investment in training and development. Unfortunately firms are not always able to appreciate the benefits from training activities, because they use narrow measures of performance appraisal that fail to capture the full array of benefits from training to retailers, staff and customers (Brander-Brown & McDonnell, 1995).

Within the Punch Pub Company context this situation is further complicated because many of the tenants and lessees are in effect small independent firms, and many of the smallest firms are highly reluctant to invests time and other resources in training (Thomas et al., 2000). Earlier studies have shown that "lifestyle" businesses constitute a significant proportion of small firms operating in the sector and these are less likely to recognise training and development needs (Beaver & Lashley, 1998). Furthermore, a number of studies show that while salaried managers and small firm owners are able to identify skill shortages and skills gaps in recruits and existing employees, few reflect on their own management development needs (Department for Education and Employment; DfEE, 1999, 2000a, 2000b; Lashley et al., 2002). Yet management skills are at the root of many of the industry's problems and difficulties. One report stated:

   Without a more skilled managerial cadre it is hard
   to envisage how any effort aimed at systemic
   improvement and upgrading in the strategic managerial
   capacity of the sector can succeed.
   The ability of management to analyse, develop
   coherent long-term plans and offer the practical
   and strategic leadership needed to promote and
   manage the transition to a higher quality, higher
   value added approach to competition is a prerequisite
   for creating a world class sector (DfEE
   1999, p. 43).

Any ambition to grow sales volumes, and improve business value through increased retail activity within the Punch business is likely to be critically dependent on the skills, abilities, talents and motivations of the tenants and lessees who operate their pubs. This report investigates the outcomes of attempts to improve tenant and lessee management skills and abilities through four programs. The Modern Licensee Retailer (MLR) is a 10-day residential program and is aimed at tenants and lessees new to Punch pub properties. This research explores two cohorts who undertook the program in 2000-2001 (MLR1), and 2001-2002 (MLR2). The Customer Focus (CF) program is a 5-day residential program aimed at existing tenants and lessees who are in receipt of a development grant from the company. Both the Modern Licensed Retailer program and the Customer Focus programs are compulsory. The X-factor program is a relatively new program aimed at developing selling and marketing skills.

The research produced a simple checklist to note the benefits of training and development for participants on four business development programs; and developed a qualitative picture of the benefits of training and development in a sample of retail operators.

The Franchise Relationship

The Punch Pub Company has a franchise relationship with tenants and lessees (Lashley & Rowson, 2002). Although the relationship involves a less rigid operating system than might be the case in a more traditional franchise arrangement, the pub company allows the franchisees (tenants/lessees) to operate pub properties in exchange for a rental and a exclusive supply of "wet" product. Each franchisee is a nominally independent firm operating as the company's "agent" (Taylor, 2000). Each small firm, is in principle, in a position to develop that property because they have close knowledge of the needs of that business and have entrepreneurial incentive to grow sales, reduce costs and improve profitability.

From the franchisee's perspective, a pub tenancy or lease allows the "entrepreneur" to operate a business with low barriers to entry because the "in-going fee" requires much less capital than an outright pub purchase. The relationship with Punch also allows the small firm to gain from the expertise and support provided by the company. Unlike more independent small firms the tenants and lessees running these pubs are able to access the management resources of the Punch Pub Company.

While there are clearly benefits to both tenants and lessees, and Punch, there are also important tensions that are a by-product of the relationship (Lashley & Lincoln, 2000). The company's key sources of revenue through rental income and earnings from wet product supplies represent key cost areas to tenants and lessees. The support available to tenants and lessees from the company through business development managers (BDM) is a cost to the company, and the span of control of each BDM will have an impact on the level of support to individual tenants and lessees. For Punch, the agency relationship with operators involves an indirect form of control of the company's ability to operate as a leisure retailer. The ability to grow sales and increase the value of its property portfolio is dependent on the collective performance of the small firms operating the pubs and bars in the estate.

Small Firms

Although ambitions for business growth and development are a key feature of a retail focus, not all tenants and lessees are driven by classic entrepreneurial motives, Previous research suggests that only one in eight small firms in this sector have primary business growth aims. The majority of tenants and lessees are to varying degrees, operating for lifestyle reasons. The motives of tenants and lessees are likely to vary between two extremes--those who are growth and profit maximisation driven at one end, and those who are running pubs because they "like the life" at the other (Thomas et al., 2000). The business motives of tenants and lessees are important because they impact on the awareness and perception of their own development needs. Beaver and Lashley (1998) suggest that growth orientated operators are more receptive to management development. Lifestyle business owners on the other hand tend to give their own development needs lower priority, except when a crisis looms. The consequence of these variations in motives for Punch is that reactions to compulsory programs, prior to taking on a pub or prior to an investment grant, are likely to get a mixed reaction. Some are bound to feel that the programs are an imposition and of no relevance to themselves.

Measuring the Benefits

Attempts to measure an investment in management development, and the benefits flowing from it, are difficult to establish. Training costs can be estimated and measured; however, the precise financial yield from a training investment is much more complex. The linkages between an independent variable factor like the level of training activity and dependent variables, such as business benefits, are hard to establish because successful business performance is frequently due to a cluster of factors. These may vary between organisations and service types. Even where a linkage can be established, say between the level of training activity and the level of staff turnover, it is not certain in which direction the relationship flows (Geanuracos & Meiklejohn, 1993).

That said, earlier research projects show that there are benefits to be gained, and that a model developed by the author can be applied across a wide range of hospitality retail operations (Eaglen, Lashley & Thomas, 2000b). Essentially the approach recognises that benefits from training are not always effectively captured by narrow financial measures. For example, traditional financial measures fail to measure the costs of staff turnover, and ignore the costs of not training that flow from reduced productivity and lost …