The Duxton Pub Group has grand plans for community pubs, and look what they have achieved already
These three blokes walked into a pub – and saw what it meant for the community. They have revived city and country pubs, and have grand plans for more.
Lifestyle
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Three blokes are sitting in a pub, talking an equal mix of business and bulldust. Nothing unusual there. Except this trio and their backers own, not only the prominent establishment on Unley Rd where they are drinking, but a host of others like it.
And this is just the start, they say, as they battle to keep venues across the state in local hands and turn back rampaging hordes from interstate keen to pick up a relative bargain.
Not only do they back their financial clout and wide experience to breathe new life into floundering businesses, they believe these investments when handled correctly can reinvigorate whole towns and the surrounding communities.
Yes, of course they are doing all this to make money. No secrets there. But beyond the business of selling booze and feeding the masses, they believe they can use their scale to make a difference in areas such as introducing more sustainable packaging and even finding pathways for Ukrainian refugees to build new lives in South Australia.
It’s not just the raw numbers – between them they have more than 30 of the state’s 600-plus pubs on the books, with many more in the pipeline – but the prestige of these holdings and the visions they have for them.
Places like The Lion, The Highway, The Crafers, The Stirling and, yes, The Cremorne, where lunch is being served at a table in the reborn dining room.
As the afternoon unfolds and more bottles of wine are poured, they open up about the different backgrounds and attributes they bring to the partnership, as well as the unlikely circumstances that brought them together.
Martin Palmer and Brett Matthews both were born into families with strong pub backgrounds but pursued other careers before returning to the fold.
Ed Peter, on the other hand, is the Swiss-raised founder of a global agriculture investment company, who settled in South Australia with his then-wife Julie and fell into this business when… well, let him explain it.
“The Crafers Hotel is walking distance from my house and it was awful,” he says.
“It smelt to high heaven and was dark and dingy.”
He enlisted help from Matthews, who ran The Stirling down the road and was already in cahoots with Palmer.
“So, we bought the pub,” Peter continues, “and the first thing we did was wash the windows – nothing else – and the locals came in and said you’ve started renovations.
“Then, I did some research, and the more I looked at it, I found that pubs trade very well in an inflationary environment.
“If a pub is run well, in a financial crisis they do better, because the last thing people give up is their beer and their schnitty… their pint and their punt.
“Then, the more we looked at the financials, the more we saw little things we could do in creating scale…in terms of taking costs out, in terms of the logic of things, in terms of making things sing together.
“So, you could describe me as a silly ex-investment banker who accidentally got involved because he didn’t want to drive to find a good venue and found some great partners. Then, when he did some research, said ‘Holy sugar, I’ve got something that works’.”
Peter focused initially on the Hills with the Uraidla Hotel, which had been boarded up for years, and the Stanley Bridge Tavern at Verdun.
“Look at what Ed and Julie did in Uraidla,” Matthews says of his partner. “The pub was closed. The whole town was dying. Now you cannot get a tenancy there and property prices have gone through the roof.”
Peter had also invested in the city, buying the iconic bank building at the corner of North Terrace and King William St.
When he wanted to use the rooftop, a development many people said was impossible, he turned to Palmer whose ambitious vision for the space became the restaurant and bar 2KW.
Late in 2020, these varied partnerships became more formal when the trio teamed up to form the Duxton Pub Group (DPG), a multimillion-dollar pub investment fund, tapping into Peter’s financial experience and networks.
The group’s cornerstone purchase was The Lion in North Adelaide but they quickly bolstered this with a spread of venues from Port Augusta and Port Pirie in the north to the South-East towns of Penola, Naracoorte and Bordertown.
Many were small family businesses, lacking in capital – “a cottage industry” as Palmer describes it. Some also had two owners, one with freehold of the building, the other leasing the space, interests that were often competing.
DPG, on the other hand, will buy the property and has the capital to make improvements that often run to millions of dollars. And, unlike mum-and-dad operations, they don’t risk having to shut down if the chef walks out or the barman is sick. They can easily transfer staff from other venues.
Of course, they aren’t the only ones to see value in these establishments. Rival bids are pinging around and decisions must be made quickly – even during lunch apparently.
The spike in interest is welcome news for Ian Horne, chief executive of the Australian Hotels Association in SA.
“In the last 18 months to two years, there have been at least 50 hotels change hands and that is just unheard of,” he says.
“And the people coming in aren’t just purchasing – they are investing significant amounts of money in refits, upgrades and refurbishments. They have fresh ideas and energy… a vision for the future. It’s exciting for the wider community and also for the staff.”
“This is a dynamic time in the industry,” Matthews says. “It’s insane in a way. We are coming out of two years of hibernation. It has made people think about the future and where they want to be in life. I think it has made people make decisions.
“Hotel prices have lagged residential prices. We have seen the same thing in Sydney. We see value in what we are buying.
“We don’t want to shy away from the fact that we are entrepreneurial both in spirit and investment. We want to be smart in what we do. We have a lot of partners, and a lot of investors, and they want to see us develop a profitable business model.”
Some examples?
They cite the Woolshed Inn at Bordertown, where DPG is adding a complex of 22 rooms, the first new accommodation in the town for many years.
In Nairne, they have bought “the whole side of the street” surrounding the District Hotel, a project that, when finished, will be “one of the coolest, funkiest, most unbelievable places on the planet”, Peter says.
Elsewhere, the changes are more straightforward.
The Port Broughton Hotel, for instance, where the previous owners would close over summer because the fishing hotspot at the top of the Spencer Gulf would become too busy. DPG will be able to send a big team of kitchen and bar staff up there for the holiday season and pull in the revenue.
All three agree that they can’t adopt the “cookie cutter” model of hotels favoured by some of the other large groups.
“These properties all have their own heartbeat. You just need to find where that is,” says Peter.
“A pub has to be relevant to the people around it,” adds Palmer. “Whether that’s food, wine or other things. That’s the principle I work from.
“When I bought the Highway I sat in there for 12 months and watched how it worked before starting to reconfigure anything.
“We took an old suburban pub and turned it into a modern urban venue. It had become irrelevant to the people living around it because the demographic had changed.”
The partnership works in part because “the three musketeers”, as Peter calls them, all have different skill sets.
Matthews has a deep knowledge of pubs and what makes them tick, going back to working with his grandfather at his hotel in Whyalla. He also has a strong entrepreneurial streak and is the most flamboyant of the group.
Peter, of course, brings a rigorous financial and investment acumen. He has also led the way in the kind of big-picture thinking that now sees olive oil from Diana in McLaren Vale delivered in reusable aluminium kegs similar to those used for beer, cutting down on waste and work in the kitchen.
His current priority is finding a way that DPG can help bring refugees over from Ukraine, helping them settle in a new home at the same time as bolstering the workforce.
Palmer, meanwhile, has a passion for quality dining (hence his involvement in restaurants such as 2KW, Fishbank and Arkhe) and Peter marvels at the way he can intuitively assess an operation and improve its systems with something as simple as reducing the steps needed between different items.
He also enjoys the more imaginative side of the business in which design, theme and other factors must all be considered as a package.
“One of the great things about this industry is it has disciplines around finance and employment but it is also a very creative outlet,” Palmer says.
“These are all really theatres and every one in it is playing a part. It’s a performance and you do it every day. You open the curtain and it’s game on.”
Five top Australian chefs will explore the delicious possibilities of the pie at a Tasting Australia event at The Lion Hotel on Monday night. For details, go to tastingaustralia.com.au
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