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Thu 28th Nov 2013 - Breaking News - Marston's to operate 500 fewer pubs by 2016
Marston’s to operate 500 fewer pubs by 2016: Marston’s plans to evolve its pub estate so it’s operating 500 fewer pubs by 2016, with estate size shrinking from 2,050 sites to 1,550, finance director Andrew Andrea has told Propel. The company will operate just 20% of its estate within the traditional leased and tenanted model by 2016. Andrea said the company planned 430 destination and premium pubs (349 now), 800 managed pubs or pubs operated or franchised (1,316 now) and just 320 pubs operating as leased pubs by 2016 (385 now). Andrea said that this morning’s disposal of 202 pubs to NewRiver Retail had allowed the company to achieve a much better multiple than a straight-forward disposal would have allowed. “It was quite innovative in that it is difficult to achieve the appropriate multiple with a straight disposal – it’s very much a property play and in the realms of the income yield for a Real Estate Investment Trust.” The company expects to have a further 90 new-build pubs within the estate by 2016 but is guiding on a Return of Investment of 16.5% compared to the current level of 17%. Andrea told Propel: “Going forward, a third of the (new-build) sites will be in the south of England and we are seeing a slight stretch in the range of returns. Our Wales estate (of new-builds) is performing very strongly and we are seeing very similar returns in Scotland. We plan 25 pubs in Scotland within the next five years.” The two most recent new-build openings, in Maidenbower, Crawley, West Sussex and Lichfield, Staffordshire have both opened strongly with takings of over £30,000 per week net of VAT. Andrew said the company’s Revere Pub Company premium sites – a seventh opened recently at the White Lion, Tenterden, Kent – had been performing well with another eight sites planned to open this financial year. Andrea also reported Pitcher & Piano, with average weekly sales of £26,000 per site, had achieved 2.5% like-for-like sales growth in the most recent financial year and the first new opening in five years, in Hitchen, Hertfordshire, had opened strongly. New sites are being sought with a view to opening one or two a year from 2015-2016 onwards. “It’s about finding iconic, high footfall sites,” he said. 90% of the company’s capital allocation is going to its Destination and Premium pubs, which are producing average operating profit of £207,000 per pub. A total of £170m will be spent on opening 60 new-build pubs in 2014 and 2015. It is targeting the growth of: Two for One to 200 sites – it currently has 138 producing average Ebitda of £250,000 per pub; and Milestone to 200 pubs – it currently has 82 of these producing an average of £290,000 Ebitda per pub. The company also sees lodges as an “incremental opportunity”. It operates three at the moment and has 15 sites with lodge capability. Marston’s also told City analysts it is considering opening a new-build Revere premium pub at some point in the future.
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