‘Food pubs are not dead’ says Shepherd Neame boss
According to the Kent-based brewer and pubco boss, recent closures in the casual-dining sector are symptomatic of brands focusing too hard on one area of business, he told The Morning Advertiser after publishing strong half-year results for the 26 weeks to 23 December.
“The best pubs cater for all people and they are trading in all parts of the day and, if possible, with an accommodation offer too,” he said.
“I think the weaknesses of some parts of casual dining [is where some operators] have put all of their eggs in one basket and if you go for certain areas of products then you’re reliant on that one piece of innovation only.”
This was in contrast to pubs, which are able to flex their offers to whatever the trends are at the time.
Neame’s view on the casual-dining market follows strong results for his business, including a 6.3% increase in turnover to £84.1m and underlying operating profit up 3.8% to £7.9m. Beer sales, driven by strong uptake in the off-trade, rose by 4.2%.
Asahi Super Dry license
Following the conclusion of the Asahi Super Dry licence, Shepherd Neame has lost 20% in volume sales, which the businesses was not looking to replace.
Quick look results:
- Turnover increased by +6.3% to £84.1m (2016: £79.2m)
- Underlying EBITDA increased by +4.6% to £12.1m (2016: £11.6m)
- Underlying operating profit up +3.8% to £7.9m (2016: £7.6m)
- Underlying profit before tax up +2.6% to £5.8m (2016: £5.7m)
- Statutory profit before tax was £5.5m - down on the preceding year, primarily due to an exceptional charge of £1.5m following reorganisation of the brewing and brands business
- Underlying basic earnings per ordinary share up +4.0% to 31.2p (2016: 30.0p)
- Net assets per share increased by +3.3% since December 2016 to £13.11 and proposed interim dividend per share rose +2.3% to 5.75p (2016: 5.62p)
“We’re not trying to make up the Asahi difference, but we are streamlining the business and focusing on key areas of [beer] strength like grocery.”
Though off-trade beer sales are strong for Shepherd Neame, the chief executive explained that on-trade beer sales had performed slightly better than food sales.
Food sales in the managed business had slowed, he added, however not at a worrying rate and because of exceptional performances in the past.
Meanwhile, there were plans to add to the 322 pubs in the estate, with the company in talks to acquire two more sites this year.
Some 248 of Shepherd Neame’s sites are tenanted or leased and 66 managed. Last year £4.4m was pumped into improving the look and feel of the sites and a further £1.3m was used to repair or redecorate venues.
In the second half of this year, £3m would be pumped into three outlets, with a predicted overall capital expenditure of £10m set aside for investment this year.
Leased or managed?
When asked whether tenanted and leased or managed sites were offered the most business potential, Neame said: “I’m very attracted to both tenanted and leased and managed because they have different characteristics.
“The obvious attraction to managed is you can control the offer, but we have some outstanding licensees and often the good ideas in the trade come from these entrepreneurial operators.”
Meanwhile, in a statement outlining Shepherd Neame’s results today, chairman Miles Templeman said: “Whilst the recent weather and trading conditions have been more challenging than in the prior period – at a time when we have to contend with significant cost inflation and political and economic uncertainty – we have achieved satisfactory growth.
“We have made the necessary changes to our brewing and brands business to ensure it is well positioned for the future and, in the second half, we have some exciting pub developments.
“The year ahead will continue to present challenges and uncertainty. We remain focused on our core objectives and on making investments for the long term benefit of shareholders.”
