Wet-led closures possible this winter
Pub closures are likely to increase during the winter as declining volumes and higher costs take their toll at some wet-led pubs, according to Panmure Gordon analyst Douglas Jack.
The current trading climate and the smoking ban is leading to polarisation of the industry occurring at an "unprecedented rate".
He said: "The industry has suffered circa 7% beer-volume decline in recent months, over 10% decline in AWP machine income and higher costs, yet the quoted operators appear to be currently trading in line, on average, with last year (aided by price inflation and higher food sales)."
This implies that more wet-led private businesses are suffering badly. Jack said: "This process should lead to a pick up in supply decline. The number of wet-led residential pubs fell by 638 (-2.1% annualised) in the first 10 months of this year versus 328 (-3.4%) in the bar sector and 223 (8.9%) in the nightclub market.
"The players in these sub-sectors should benefit from further supply declines during the winter months, followed by a more benign regulatory and like-for-like trading outlook in the summer."
A second analyst, Geof Collyer, of Deutsche Bank, has claimed tenants of bottom-end pubcos may be suffering because of over-ambitious rents.
He said: "If one looks at the results of all the pubcos, it would not surprise us to find instances of poorly performing collections of assets where the owners have tried to impose rents on the individual licensees based on what has been paid for the pubs, as opposed to working out what is fair operating pre-rent that is sustainable, and taking a sensible share as rent."
