Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Propel's LinkedIn LinkPaul's Twitter Link Paul's X Link

McCain Banner
Morning Briefing for pub, restaurant and food wervice operators

Fri 2nd May 2014 - Breaking News - Greene King sets out 2020 strategy
Greene King sets out strategy for 2020: Greene King has set out its strategy for 2020 in an analyst’s day held at the Square Pig pub in High Holborn, Central London with a strong emphasis on the need to develop or acquire all-day trading concepts. The company’s Project 2020 five-year plan, set out by chief executive Rooney Anand and strategy director Mark Blythman, has identified the key consumer trends likely to have an impact on the sector, and the main growth areas by location, time and demographic. Greene King says that the UK population will grow by more than five million between now and 2015, an increase of 9%. Growth will be concentrated among those aged between 25 and 44 and those aged over 55. The eating-out market is estimated to grow from £21.8bn in value this year to £26.4bn, while the drinking out market is forecast to grow from £10.7bn to £12.2bn. Analysts were told that growth will differ by sub-sector. At £7.9bn, the coffee/sandwich/cafe segment is smaller than the full-service and casual dining market (worth £20.7bn in 2013) but is expected to show best growth, with a compound annual growth rate of 5.6% between 2013 and 2018. Other markets expected to show attractive growth are fast food (4.4%) and retail grab and go (4.9%). The company said it will be ready to implement changes in time for the 2016 financial year to ensure that the business is better aligned to long-term trends. Its managed division will add a minimum of 30 new sites a year and broaden usage occasions and day-time trading. There will also be a focus on “raising the hospitality bar” and generally increasing the exposure to eating out. Greene King also plans to acquire assets and brands that help to improve its alignment to trends. This includes an improved exposure to day-time trading and a reduction in exposure to alcohol and evenings/weekends, which will mean buying “all day” concepts or developing them. Areas of acquisitions being looked at include casual dining, fast casual and coffee/pub-cafe. The company produced a graph that showed coffee shops claim 73% of total spend between 8am and 10am against pubs’ 21% share and restaurants' 6%. The 10am to 12noon slot sees coffee shops claim 35% of spend – the same as pubs and bars, with restaurants on 31%. Meanwhile, Greene King will dispose of residual assets and use its analysis of consumer trends to simplify the estate and optimise growth and returns. Its brand propositions will be reviewed and improved. Greene King told analysts that it had secured half of its 2015 acquisitions already and it had a pipeline of 120 sites. It is also looking at transport hubs, where Propel has previously reported that the company has undertaken an assessment of the suitability of its Realpubs premium format. It has, however, rejected the idea of opening in the Irish Republic and at service stations. The company said it foresaw a stable tenanted division of 750 sites. Within the existing estate, Greene King told analysts, there is potential for both smaller and larger-format Hungry Horse sites. It set out the current rate of return for its key Hungry Horse and Farmhouse Inn brands across leasehold and freehold properties. Leasehold Hungry Horse pubs average £30,000 to £35,000 weekly turnover, producing ebitda of £260,000 to £280,000 on a rent of £140,000 to £150,000 a year after investment of £800,000 to £1m – ebitda ROI is 25%. The average new-build freehold Hungry Horse produces the same average weekly takings after a £2.6m to £2.8m investment, producing ebitda of £435,000 to £445,000, an average ebitda ROI of 16%. A new-build freehold Farmhouse Inn (the new name for the former Cloverleaf estate) produces average weekly turnover of £40,000 to £45,000 after an investment of £2.7m to £2.9m, and ebitda of £505,000 to £515,000, an ebitda ROI of 18%.

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Meaningful Vision Banner
Mccain Banner
Casual Dining Banner
Tabology Banner
Drinkaware Banner
Contract Furniture Group Banner
Alcumus Banner
Santa Maria Banner
Propel Banner
Christie & Co Banner
Sideways Banner
CACI Banner
Airship – Toggle Banner
Wireless Social Banner
Payments Managed Banner
Deliverect Banner
Zonal Banner
HGEM Banner
Nutritics Banner
Heinz Banner
Zonal Banner
Access Banner
Propel Banner
Tabology Banner