Why private equity has a lot to answer for

As the M&C Report, now renamed MCA, celebrates its 200th edition, the co-founder of the industry newsletter, Peter Martin, reflects on the driving forces behind the creation of the title and what has changed over the past two decades

As the M&C Report, now renamed MCA, celebrates its 200th edition, the co-founder of the industry newsletter, Peter Martin, reflects on the driving forces behind the creation of the title and what has changed over the past two decades

You can blame it on the moneymen. It’s always their fault. If it wasn’t for the financial community starting to take a shine to the pub and restaurant sector, there simply wouldn’t be an M&C Report.

The fact that investors, and private equity types in particular, continue to see attractive returns from eating and drinking-out probably also explains why this august journal is still going strong – and now celebrating its 200 edition.

Twenty years ago, the market we know today was beginning to take shape, driven by a growth in eating-out and the emergence of fledgling casual dining brands. But more significantly, it was the continuing repercussions of the Monopolies & Mergers Commission investigation into the brewing industry and the subsequent Beer Orders, which in turn had prompted pub sell-offs by the big brewers and the birth of all manner of entrepreneurial managed pub groups that was shaking things up.

Not that all this just happened in 1996. Pub and bar groups like Regent Inns, Grosvenor, Surrey Free Inns, Tom Cobleigh and Luminar were up and running and JD Wetherspoon was even then a force to be reckoned with. Pizza Express was already 30 years and with more than 100 sites across the land.

But the money was starting to appear, and growth and roll-outs were top of board agendas. I seem to remember we tracked estate expansions in those early issues with lots of neat little maps of various brands’ target towns.

Founding fellows

So why did Peter Coulson, my fellow founder, and I decide to launch what was the first, and still only, financial and business-focused newsletter for what we then defined as the licensed retail and leisure market?

Oh yes, M&C then stood for Martin & Coulson, although we would claim not to be complete self-promoting, ego-maniacs as we also liked the fact that if you said it quickly enough M&C sounded a bit like MMC – not a great joke I admit. Best forget that.

It wasn’t just that the market was attracting new, more sophisticated investors and was in growth – as one of our front-page stories in issue one highlighted, the number of on-licences in Britain was on the increase back then. We also had a nudge or two.

Peter Coulson was already running a successful, specialist newsletter, Licensing Review, so we knew the format worked. But perhaps more fortuitously I had run into one Jon Moulton, who had just joined Apax Partners from Schroders, and fancied “doing something in the pub sector”. Yes, private equity was most certainly there at the start.

I had been introduced to him as someone who supposedly knew the market, and could potentially help him. One of the outcomes was to publish a newsletter for Apax – and that quickly turned into a commercial proposition in the form of M&C Report.

Moulton, on his way to becoming one of Britain’s most high profile venture capitalists, continued to play an important role not just in this market but in M&C Report – down-the-road becoming an investor in the publication too.

Our objective was to bring more hard intelligence and thoughtful analysis to the market and in particular its business leaders and their backers – setting it apart from the established trade press.

Critically, we were the first to look at pubs, restaurants, coffee bars as a single market – perhaps operationally different at site level, but at corporate level facing many of the same challenges and issues, and importantly competing with each other.

Must-read product

I remember considering in one early comment piece the logic of Pizza Express and Wetherspoon’s merging. Pretty leftfield then, but today the idea of restaurant groups owning pubs and vice versa is mainstream thinking.

The first M&C seemed to hit a chord, and the fact that Peter Hansen, then at NatWest, became the first subscriber showed that there was a demand among those increasingly ubiquitous moneymen too.

Publication was initially six times a year, as we simply couldn’t afford a higher frequency. This was a real entrepreneurial (or more accurately seat-of-pants) venture run out of a spare bedroom.

Luckily, M&C quickly became the boardroom ‘must read’ it remains today.

So what has changed since 1996? The fact that the lead story in the launch issue was all about the European Commission and the Beer Tie says much about how little has altered, and how that thorny issue will likely be around for another generation, Brexit or no Brexit.

Licensing reform was then, and also remains now, another contentious topic.

The focus two decades ago may have been rather more on ambitious pub groups than casual dining, but entrepreneurialism was to the fore. Our introduction talked of a sector that had “never been more competitive or demanding”. Sounds familiar.

That launch issue also featured a ‘Ones to watch’ story on the companies we thought were setting the pace, and the result of a straw poll of senior executives to find the operators they most admired, titled ‘Retailers’ retailer’. How that has stuck. The winner, by the way, was Yates’s, with Wetherspoon runner-up.

The development of food and eating-out was a central theme of those first publications. Hard data was thinner on the ground, but one survey we analysed highlighted the changing tastes of teenagers, 42% of whom had eaten out in the last week, with fast food, cafes and takeaways high on their preference lists. Those teenagers will now be in their mid-thirties – possibly doing similar things now.

But it was the deals that were the backbone of M&C, as the investment community first looked for value in property (remember securitization) and then in brands. Who was the sale? Who was acquisitive? Which corporate was ripe for break-up?

Now flourishing

Perhaps the most insightful observation back at the start came from our guest columnist, the legendary pub entrepreneur Chris Hutt, who when pondering the challenges of our biggest retailer of the time Bass, suggested: “If I were Sir Ian Prosser [the then CEO], I would call in six of my smartest and hungriest operators, give them 50 pubs each and tell them to go away and grow the business with a board place promised to the most successful in two years time. I would make them work from home and forbid them from visiting the brewery, home of politics, bureaucracy and comfy offices. I think the results would be interesting, liberating and worthwhile.”


Now there’s a thought.

Twenty years ago we took a punt, as did all those moneymen. It seems to have paid off. So, well done to the teams that have kept it going and flourishing.


Peter Martin is now vice-president of CGA Peach

This article first appeared in the September 2016 issue of MCA

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