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Bottoms up for one of AIM’s top stocks With history going back to 1831, Young & Co is one of AIM’s super-established investment grade companies. Formed in Wandsworth, south London, Young’s remains a southern England pub company, with its most northerly property being ‘The Bell at Stow’ in the Cotswolds. Second most northerly is the famous King’s Arms pub, situated a stone’s throw of some of Oxford’s most significant university sites.

Managed pubs receive some criticism Having disposed of its brewery operations in 2011, Young & Co is now exclusively a pub operator. Young’s runs three divisions: Ram Pub Company, Geronimo and the managed Young’s estate. At the end of March 2015, the group was operating 129 Young’s, 37 Geronimo and 80 Ram Pub Company sites.

Geronimo is positioned firmly in the gastro pub sector, with only one pub outside the M25, ‘The Red Barn’ at Lingfield. The fact that The Red Barn has a wine list, an afternoon tea menu and a £24.50 steak option says much about the type of clientele that Geronimo is seeking. As always when looking at pub shares, we need to see the split between tenanted and managed properties. In a managed pub, all staff members are just that and will be paid a salary/wage by the pub operator. Managed pubs receive some criticism, as the pub company (PubCo) has complete control, the result can be a lack of differentiation between managed pubs from the choice of drinks to the décor. Second, the staff in a managed pub have little financial

Geronimo is Young’s premium gastro pub group chain

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interest in its success, which can lead to a poor customer experience. A tenanted pub typically involves a licensee paying an upfront fee to the pub company, followed by a regular rent. The licensee is then tied to a supply arrangement with the pub company but is permitted a guest ale. Managed operations are typically preferable to the pub company, whereas the entrepreneurial motivations of a tenant can lead to more innovation and an individual pub vibe. Handling the managed/tenanted conundrum is crucial to a pub company like Young’s. The company’s track record suggests that this is just one of a number of key decisions that Young’s has been getting dead right for a sustained period of time. Ram Pub Company is Young’s tenanted estate. 34 of these are London venues, including City and West End locations. This includes a collection of pretty cool Grand Union named pubs, where the tenant is showcasing a format that appears to mesh pub, restaurant and bar into a single venue. With pubs closing across the UK at an alarming rate, you may wonder www.aimprospector.co.uk

May 2016 AIM Prospector  
May 2016 AIM Prospector  

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