The chief executive of Mecca Bingo and Grosvenor Casinos-owner Rank Group, Henry Birch, is considering launching a new bingo brand, and returning to sports betting as part of a plan to grow the company.
Mr Birch, 45, is just over 100 days into his job, but he is faced with the very difficult task of how to breathe fresh life into the company, as the gambling industry faces new regulations and structural challenges.
The Rank Group owns three businesses: Mecca bingo, Grosvenor casinos and Enracha, a Spanish bingo business. It has a workforce of 11,000.
Mr Birch is hoping to reverse Mecca’s fortune.
Mr Birch was formerly a bookmaker. He believes that the 96 Mecca Bingo halls in the UK, and the 56 Grosvenor casinos, have a future in the UK, despite the industry suffering a severe decline, largely resulting from the smoking ban and the rise of internet gambling.
In 2005, there were nearly 600 bingo halls in Britain. However, that number has dwindled to 400. This decline is largely believed to be because of the smoking ban and the recession, as well as the rise in internet gambling.
Mr Birch, a father of four, is planning to re-acquire methods of bookmaking, in order to get punters back through the bingo hall doors, as well as to spend more online.
In an interview with the Daily Telegraph, Mr Birch announced that he is planning to launch a new bingo brand, and that he wants to also divest into sports-betting.
The task facing Mr Birch is a big one though. Indeed, the Rank Group’s full-year results – which were published last Thursday – demonstrate the challenge that faces the former chief executive of William Hill’s successful online business. The company’s revenue rose 14pc to £678.5 million; however, the pre-tax profits fell to £14.4m from £42.7m, following a large number of one-off exceptional costs. Total revenues were boosted by Rank’s acquisition last year of 19 casinos from its rival Gala in a £179m deal, however, like-for-like revenue at its existing venues fell 4pc.
One boost, however, is the treasury’s decision to halve the rate of bingo duty to 10pc in the budget earlier this year. Mr Birch says the duty cut puts the bingo industry “on a different footing”.
He said: “For the first time in a while everyone is feeling pretty positive in Mecca about the outlook for the business because of the shot in the arm from the duty reduction. The reduction translates to about £11 million – £12 million on an annualised basis.”
The Rank Group has said that it will pass on some of those savings to its bingo player, by raising the prizes up for grabs. It has also promised the Government that it will build three new bingo venues, which will be under a new brand, rather than Mecca. This is because they are hoping to attract custom away from pubs.
Indeed, the company are hoping to attract clients to their venues on the basis of food and drink available. The Group have already invested heavily into raising the standards of the food and drink available in their bingo halls and casinos. One offer the firm is particularly proud of is that players can eat a meal which is cooked on-site for less than £5. However, for many, Mecca is still seen as essentially a place to play bingo. Indeed, the average player spends £18 at its halls, of which only £2 is on food and drink – which is not even the price of a beer.
Mr Birch is hoping to reverse this, and wants to offer his punters a “more rounded experience” that will encourage people to choose their local bingo hall over going to a pub.
“The pub sector can be a little bit one directional because you are going in and have a meal and what do you then? You sit and drink but with us it’s entertainment as well,” he says.
The group have yet to announce when and where exactly they are planning to build their new venues. The company is keen to stress that it does not want to alienate any of its traditional customers, in Mr Birch’s attempt to try “something new”.
One key aspect to his strategy is called “multi-channel”. This term – which is used in most industries – in practice simply means encouraging your customers to spend money in more ways than one.
Mr Birch believes that, the Rank Group has a significant opportunity to take custom from bookies. “If you look at what we have got versus the bookmakers, the potential for multi-channel from a Rank point of view is significantly more,” he says. “First of all, when you go into a bookmaker, it is anonymous; it is a fairly underwhelming experience in terms of the overall atmosphere and what you get. There is limited engagement with staff, people are typically not there for that long, there is no tracking of behaviour, there is no loyalty – you can’t really class it as entertainment.”
The company are hoping to introduce a loyalty scheme at Mecca Bingo, where players who spend more than a particular amount will be rewarded with credit to play games online.
He also has not ruled out returning to sports-betting. Rank last year sold Blue Square, the online sports bookie it bought a decade ago for £65m, to Betfair for £5m. However, it the firm continues to offer sports-betting at some of its casino venues. And the Group have recently secured a licence to offer sports-betting within its Grosvenor Casino in Luton. Football fans are now driving growth in the betting sector and Mr Birch says that Rank will take another look at re-entering the sports-betting industry in a more significant way, if he can do so without repeating “the Blue Square scenario”.
“Would I like it that we had a successful sports-betting business as well? Yes. Would that help us drive some business to our digital casino business? Yes,” he says.
With a new Point of Consumption tax coming into force in December, Mr Birch is aware that action needs to be taken to reverse Rank’s fortune.
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