The First Restaurant Group began its Pub & Rooms model when it converted The Clerk & Well pub in Farringdon, London, between 2013 and 2014. With its new added revenue stream, the pub experienced immediate success, offering MD Mitch Tillman (pictured) and his business partner Oliver Etridge an alternative approach to pub operations in the capital.
Now, four years on, First Restaurant Group’s Pub & Rooms business is made up of three accomplished sites, all with unique, boutique rooms that offer a five-star hotel experience. While Pub & Bar is used to receiving news on how countryside pubs are thriving by adding accommodation to their operations, it’s quite rare that we hear of a multiple operator inside central London who is doing the same. Curious to find out more, Tristan O’Hana sat down with Tillman last month to chat about his inner city pubs with rooms approach.
P&B: Can you give us a brief history of the First Restaurant Group business?
MT: We took over a very disjointed group with an eclectic and diverse mix of units in 2006. We had fine dining, a couple of delis, a couple of pubs and then a nightclub. They were all different and doing pretty badly. We decided to sell off sites, pay off the bank and see what we were left with. We got down to three sites – The Waterway, The Summerhouse and The Clerk & Well, which was our only pub.
P&B: And that’s the pub you first added rooms to? What made you go in that direction?
MT: I was looking at The Clerk & Well and thinking about how much space we had upstairs in this 6,500 sq ft building. The roof had fallen in, there were pigeons living in there, and it was so frightening – we just closed the door and never went upstairs. It was like a horror movie. So we spent a few years building up the pub trade and getting it going, but it was crazy not doing anything with three floors above us. We put a new roof on, and put in six boutique rooms. We’d never done it before, but I’ve managed hotels in the past. We wanted people to feel like they were staying in a five-star hotel – great WiFi, free Netflix, Nespresso machines and a personal service.
We opened the rooms up and straight away we were 65-70% occupied at around £175 a night. The reviews were phenomenal online. We went up to eight bedrooms, which was great. The rooms mean there’s less pressure on the pub to be busy all the time, because these rooms are fairly easy to manage. The model started working really well, and we got to 85-90% average occupancy and it has just stayed there.
P&B: Did you immediately want to add to the Pub & Rooms estate?
MT: Yes, I wanted to do another one. We thought we could do another in the same area, and The One Tun came onto the market. It was another old pub that needed a lot of money spent on it, so we went back to HSBC, who have been very supportive of us.
The One Tun was horrific – it stunk of rotten floorboards. When we completed, we closed it and ripped it to pieces. We managed to reopen within three weeks and invested £750,000 in that project. It meant we could take money in the pub while we did the rooms and didn’t lose the momentum from the old customers. It also allowed us to promote within that bedrooms were going to be opened upstairs. We used the photos from The Clerk & Well to show what the rooms were going to look like, so we even managed to open bookings before it was finished. We built the rooms in six months, which was good going. We launched in October 2015, and again within six weeks, we were up to 70-75% occupancy, then 85-90% occupancy three months later.
P&B: Would you say this is the most successful operations model you’ve run in your career?
MT: Definitely, without a doubt. It’s a simple business model. I didn’t think it would pick up quite so quickly. Because of online booking platforms, we’re getting bookings that we would never have got back when I was previously in hotels. People are booking from all over the world. We’re getting reviews of 9.6/9.7 out of 10 on those platforms.
P&B: Are you surprised that a pub with rooms model can work in central London?
MT: Whenever I talk to people about what we’re doing with Pub & Rooms, everyone always asks: “Who is the customer?” They can’t get their head around who would want to stay above a London pub, but everybody stays here – from tourists to business people to celebrities. We’ve been lucky, as London has been booming for hotels in the past few years, and there has been a shortage of rooms.
P&B: Your third Pub & Rooms site is the most recent – The Grafton Arms in Fitzrovia. How is that going?
MT: We’ve opened some rooms, but we’re taking it to 11, which is the biggest yet, with an investment of circa £1m. I’m confident in the model now and I’m looking at sites every day. I’m negotiating on a site in Marylebone, and then we’ll move onto the next one. The aim is to do two a year now – we definitely think it could get up to 12, ideally all in London.
P&B: Finally, would you advise other city operators to add rooms to their sites?
MT: The first thing that might put people off is the level of investment needed. Secondly, I think we have got a style and expertise to how we do our bedrooms, in terms of the décor – I don’t think anyone can just do that. We do it all in-house and I think that’s part of the charm. Apart from Soho House, who I can’t criticise, as they’re geniuses with deep pockets, I’m not sure anyone can really compete with what we do in London. Out of London, there’s more space in buildings. Plus, building it and operating it are two completely different things.