Lease is more

David Goodman, an experienced restaurateur with an entrepreneurial streak, had a dream: he wanted to open a restaurant with a separate bar. As always, the problem was finding the right location and the funding.

Like a modern-day fairy godmother, Vanguard Lease came to the rescue. The company offered Goodman the lease of the Centuria pub on St Pauls Road in London's trendy Islington.

For Goodman, the benefits were straightforward: the right location complete with a rent concession, an injection of capital and £50,000 in refurbishment costs paid by Vanguard. "From a financial point of view, we would have paid a premium to have bought these premises," he says of the Centuria.

Of course, Vanguard, the leasing arm of leisure and brewery giant Allied Domecq, also stands to gain. Its aim is equally straightforward: to increase food operations in its pubs.

While Allied Domecq's managed estate has established its branded pub food, leased pubs have traditionally been local boozers bringing in wet revenue of about £2,000-£3,000 a week. Adding food means a doubling or tripling of this amount. "For our leased sites we are looking for new entrepreneurs, not necessarily those already in the pub market. Hoteliers and restaurateurs can come and look at leased retailing and the amount of money to be made," says Matt Brown, marketing executive for Vanguard Lease.

Goodman approached Vanguard when looking at another site. When it proved to be unavailable, he was offered the site where the Centuria now stands by Tim Tempest, who was recently employed by Vanguard as food marketing manager to find the entrepreneurs Brown is talking about.

Goodman had already decided that food in a pub was a good idea, and he wanted to develop the Italian food he was doing in his first restaurant alongside the opportunity to drink away from the dining area. "I wanted to do this because I like the idea that people can have a drink then a meal then another drink," he says, motioning between the bar and his restaurant. "It becomes a whole evening for the customer and not just a meal."

He opened his bar in late July, with the restaurant following in early September, and has set a target of 67-70% gross profit for food. In the first week of operation, he brought in £7,000 for wet and dry, which he estimates was divided evenly between the two. Previously, the pub took about £3,000-£4,000 in wet sales and £1,200 a week in dry goods, mostly snacks.

Looking for food-minded entrepreneurs is how Vanguard is adapting its leased pubs to the ever-changing demands of the customer. In many cases, the demographics of an area have changed completely and what was once the local boozer is now out of touch with consumer needs.

The Lord Stanley in Kentish Town exemplifies this. Lessees and business partners Winston Haddaway and Margaret Angus believe the pub has given the largely white, middle-class community a focus, with neighbours meeting for the first time on the old leather sofas in the cosy but spacious pub, which seats 60. Vanguard invested £10,000-£12,000 in refurbishing the pub.

Pubs such as the Lord Stanley could also benefit from Vanguard's desire to provide independents with the advantages of a large company's buying power. "We want to offer support to add value to the business," says Brown.

As part of this support, Brown and Tempest want to set up a buying consortium for some of the pubs that would otherwise go to the nearest cash and carry. This will not always work, and will depend on the style of food being served.

Haddaway, for example, could benefit from some dry goods being bought through Vanguard. He acknowledges that the deal on the wet side is difficult to refuse, although he does deal with an individual wine supplier.

But other pubs may find it worthwhile to rely on Vanguard's buying power and expertise in cost areas such as utilities. "On gas, we have preferential terms with Midlands Gas, and we are looking to try and get a similar arrangement with an electricity company," says Tempest. "We also try to make sure the lessees are paying the right tariff."

In addition, the company is constantly carrying out market research, vital for those entrepreneurs who want further sites. Brown says: "The individual operator is where we can offer market support. With places such as this, we can supply the research into the market and look at what is happening."

He is not blind to the irony of individuals having to work side-by-side with one of the industry giants. "There are many people who say they would not be caught dead working for a big company, but we have the sites. The entrepreneur has the concepts but he doesn't have the sites," he says.

In some cases the lessees approach Vanguard to get started, but they are not bound to take pubs only from Vanguard for future development. Tony Carson, owner of the Oriental theme bar/restaurant Jim Thompson's, in Chelsea and another outlet in Croydon, is looking for a third site. Jim Thompson's, leased from Vanguard, has an annual turnover of £2m and, with a financial link to the lease, Vanguard's interest in providing this third site is clear.

Vanguard has found a site it wants Carson to take, but he is keeping his options open at the moment.

Carson is ambitious and hopes this will be one of a planned nine outlets, with predicted revenue of £20,000 a week per unit. He is ready to spend £250,000-£300,000 investing in each new site.

Carson is investing his own capital, and has put £250,000 into the Chelsea site. Vanguard offered rent concessions worth £25,000 for the first two years, and when Carson's refurbishment work revealed that £9,000-worth of building repairs were necessary, Vanguard paid for it.

It would seem that Vanguard is offering remarkable flexibility and adaptability for the entrepreneur ready to settle for the trade-off of working with the big boys. "I think we are the first [of the majors] to say we are not afraid of the individual concept," says Brown.