Geoff Newton: An industry made of sterner stuff
After a very quiet summer everyone is now back at work and in recent weeks we have had some interesting trading statements from Greene King, Punch and JD Wetherspoon.
While most of them reported a difficult summer's trading on the back of a combination of atrocious weather and the smoking ban, the overall message seems to be pretty positive.
Greene King has shown steady growth (two per cent in the managed division and one per cent in the tenanted arm) in like-for-like sales across the summer months with beer volumes up substantially (10 per cent).
The Loch Fyne acquisition seems to have gone through almost unnoticed and, at around £68m, is not cheap - but is certainly a radical shift in strategy for the industry. Who's to say that this will not be the start of a number of large pub companies investing in other parts of the leisure industry?
Punch Taverns has had another good year with like-for-likes up 2.7 per cent in their leased estate and up 3.5 per cent in the managed division. Speculation that the 900-odd managed pubs might be set for a sale will no doubt generate significant interest in the market.
It was interesting to see the announcement of Robert McDonald's retirement as group finance director. Like many, I have known Robert for a number of years and he has done a tremendous job for Punch. I wish him a well-deserved retirement - until he re-emerges in the sector again, as most do these days!
JD Wetherspoon arguably produced the best set of results with like-for-like growth of 5.6 per cent. Interestingly, numbers were up 5.3 per cent in a very wet July and only 1.1 per cent in August.With other operators due to report shortly we will get a better steer on recent and current trading patterns but one thing is pretty certain.
The pubs hit hardest by the poor weather and flooding, any consumer slowdown in spending and the smoking ban will be the ones that struggle - namely the freetrade and the bottom end of the tenanted industry. Inclement weather is not good for anyone, particularly those who have invested heavily in outside drinking areas and beer gardens.
Certainly some people who visit pubs still wish to smoke and, given the poor weather and with winter looming, it is conceivable that many will abstain from visiting the pub altogether.
Additionally, a recent survey by the Royal Institute of Chartered Surveyors (RICS) highlighted the fact that mortgage payments now account for the largest percentage of take-home pay for 17 years and we are unlikely to see this figure fall in the short term, given that thousands of fixed rate mortgages are due to mature in the next couple of months and mortgagees will almost certainly have to switch to variable rates.
It is also said that first-time buyers are now having to put down a deposit five times bigger than they did a decade ago just to get on the housing ladder.It shouldn't all be doom and gloom though, given the numbers highlighted above.
Food sales across the industry are up, soft drink sales are higher and more families are eating out.
Sure, the next six months will be tough as the full impact of the smoking ban is felt, but don't be surprised to see this most resilient of industries come out on top.
Geoff Newton is relationship director for UK Licensed Trade, Barclays
