Pace of restaurant and pub closures means Suffolk group's competitors 'are declining'
PUBLISHED: 10:38 29 November 2018 | UPDATED: 10:38 29 November 2018
Pubs group Greene King's competitors in its main markets are reducing as the pace of UK restaurant and pub closures accelerates, it says.
In its interim report, the Bury St Edmunds-based firm, which also includes a brewing arm, cites a sector growth monitor which shows the annual rate of decline rising from 1.3% in March 2018 to 2.5% in June of this year as restaurants and pub numbers fall.
Restaurant numbers, which were up 11% in total for the five years from 2013-2018, declined by 1% in the second quarter of 2018, while pubs and bars declined by 1.3%, figures from the CGA & Alix Partners Market Growth Monitor suggest, as the drink-led sector continued to outperform the food-led operations.
Meanwhile, consumer confidence and leisure spending, which was boosted over the summer months, has been declining more recently, driven by negative sentiment around levels of personal debt and disposable income, a Deloitte UK Leisure Consumer survey for the third quarter of 2018 found.
Greene King, which employs around 39,000 people across the country and has around 2,900 pubs, restaurants and hotels across the UK, says it is outperforming the sector as a whole. It has been shedding some of its pubs, with around 1,722 pubs trading in this half, compared to 1,764 in the same period last year - a fall of 42.
It is planning to open around nine pubs, and dispose of 100 to 110 pubs, and expects to net around £60m to £70m from the sales in the full year, it said.
It is also looking to invest around £125m to £130m on maintaining and developing its remaining pubs to entice customers.
The company said it had disposed of 24 ‘non-core’ pubs during the six month period to October 2018, raising £25m. It has also completed one acquisition and invested £9m in the core estate.
Pub Company is made up of the pubs, restaurants and hotels that it manages and include brands such as Hungry Horse, Chef & Brewer, Farmhouse Inns and Flaming Grill, as well as its Greene King Local pubs. Through Pub Partners it supports around 1,200 licensees to tenant and lease properties on a long term or short term basis.
Within the company, Pub Partners gained four pubs via internal transfers from Pub Company while another four pubs were transferred to Pub Company, where Greene King hopes to generate better returns under its managed pub model, during the six months to October 2018.