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Morning Briefing for pub, restaurant and food wervice operators

Wed 22nd Jul 2015 - Marston's – government should prioritise taxation and business rate reductions
Marston’s – government should prioritise taxation and business rate reductions: Brewer and retailer Marston’s has argued that the government should prioritise taxation and business rate reductions in an official response to news of the introduction of a National Living Wage. In a trading update for the 41 weeks to 18 July, it stated: “The recently announced government plans to introduce a mandatory Living Wage by 2020 are consistent with our expectation that the gap between the National Minimum Wage and the Living Wage would be closed over time. The additional cost of meeting the higher target of £9 per hour by 2020 will mean that wage costs will be modestly greater than we had expected, but the impact compared to our plans is mitigated by the fact that we had anticipated increases above the rate of inflation, and the lower rate of corporation tax from 2017. Our view remains that government should prioritise taxation and business rate reductions to reduce the cost of doing business and increase consumer confidence.” Meanwhile Marston’s reported it continued to make profitable progress in line with our expectations. It said: “In Destination and Premium, like-for-like sales for the 41 week period were 1.7% ahead of last year, including like-for-like food sales growth of 1.6% and like-for-like wet sales growth of 1.6%. In the last ten weeks of the period, like-for-like sales are up 2.0%. Operating margin is slightly above last year and we remain on track to complete 25 new-build pub restaurants in the current financial year. In Taverns, like-for-like sales for the 41 week period were 1.7% ahead of last year and in the last ten weeks of the period, like-for-like sales were up 2.0%. Our franchise business continues to perform strongly and now operates in around 550 pubs. In Leased, profits for the 41 week period are estimated to be in line with last year. Average profit per pub was up 4%, reflecting our higher quality leased estate. In Brewing, own-brewed beer volumes, excluding Thwaites, were up around 4% compared to last year. Including Thwaites, own-brewed beer volumes are up 10%. Net debt and cash flow are in line with expectations.” Chief executive Ralph Findlay added: “Our investment in new-build pub-restaurants and premium pubs is in line with our plans and we have seen some of our most successful openings to date this year. We have also opened three lodges, and expect this rate of development to increase in 2016. We have good visibility over our site pipeline and remain focused on securing further good sites for our future growth. These investments, together with the disposal of smaller wet-led pubs and the growth of franchises, have successfully transformed our business over the last three years. In brewing, the post-acquisition integration of Thwaites’ brewing business is now complete and has gone well. Our strategy is well-suited to leveraging market growth in local, premium and craft beers, and the increasing importance of the off-trade.”

Land Securities – London rental values are rising: Property landlord Land Securities has reported London property rents are rising. In a First Quarter trading update, chief executive Robert Noel said: “Following our strong annual results, Land Securities is maintaining good momentum and has started the year well. In London take-up is healthy, vacancy rates are low, and rental values are rising. We have good interest in our well-timed schemes and of the 1.1m sq ft remaining to let in our speculative development programme at 31 March, 322,000 sq ft has been let or is in solicitors’ hands. We remain confident in the prospects for the remaining space. In Retail, the transformation of our portfolio is continuing to pay off. By focusing on assets which offer customers an excellent experience, while either being dominant in their catchment or highly convenient, we have seen footfall up 2.5%, same store sales up 3.8% and same centre sales up 5.4% on the same quarter last year. The redevelopment of Westgate, Oxford is progressing to plan with good leasing interest in the scheme which is now 35.4% pre-let or in solicitors’ hands two years before opening.”

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