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Morning Briefing for pub, restaurant and food wervice operators

Wed 17th Jul 2013 - Breaking News - Tenanted pubs see unprecedented 4.69% sales jump
Tenanted pubs see unprecedented 4.69% sales jump: A recent six week period saw a large jump in sales across the board for 432 largely tenanted pubs, hailing from all parts of the UK, whose accounts are handled by Roslyns Accounting Company. The sales increases are likely to have carried on in the eleven days since the end of the reporting period as the weather has grown warmer. Average like-for-like sales increases have been 4.69%, an unprecedented across-the board increase in sales as pubs benefit from the warm weather. Around 95% of the pubs in the sample are leased and tenanted with a large proportion among the estates of large companies such as Punch, Enterprise and Star Pubs & Bars, with around 5% of them being freehold. The sales data covers the three weeks prior to the hot spell (27 May until 15 June 2013) and the current three weeks of balmy weather (16 June until 6 July 2013). Roslyns managing director Martin Roslyn said: “Wet-only pubs have seen the biggest increase of 5.02% whilst closely behind pubs selling food have shown an increase of 3.6%. We’ve seen increases sales like these in particular regions in the past, but never across the board.” Billy Buchanan, chief executive of LT Pub Management, the sector’s largest out-sourced management company operating more than 1,000 sites, including a large number of pubs, said: “Some of the sales spikes we’ve been seeing in the estate in recent weeks have been incredible.”

Geof Collyer – unusually hot weather provides (big) scope to upgrade Mitchells & Butlers: Deutsche Bank leisure analyst Geof Collyer has raised his price target from 300p to 435p on Mitchells & Butlers ahead on its third quarter results on 25 July. Collyer said: “The 2013 financial year looks like being a year of two halves with exceptional weather disrupting the first half significantly, and boosting the second half by possibly more than we could have hoped for back in March when the temperature was 50% below the long term average. We have upgraded our EBITA forecasts by +4% and raised our price target from 300p to 435p. This is driven by the forecast changes, rolling the base year to FY’14E and removing the corporate governance discount. The dividend reinstatement remains dependent upon the deficit funding agreement with the pension trustees, but M&B is arguably our preferred pub retail name behind Greene King (Buy). Management guidance was unchanged at the 33-week stage; however, we see the unusually hot weather and better than expected H1 performance as providing scope to upgrade. Our new forecasts are 2% above Reuters consensus for the 2013 full year. We estimate that a 1% increase in sales is worth around 3% on EBITA and 5% on earnings for M&B. To temper this enthusiasm though, we do believe that there is a requirement for upgrades at M&B to soften any potential negative impact from the current pension discussions, which are preventing the reinstatement of the dividend that is also hampering the total returns profile. We see the dividend reappearance as potentially a second half of 2014 event at the earliest. The uncertainty means we have not yet put it into our forecasts.” 

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