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Wed 2nd Dec 2015 - Greene King set out its focus brands, plans £40-50m per annum incremental investment
Greene King set out its focus brands, plans £40-50m per annum incremental investment: Greene King has set out the brands it will focus on within its enlarged estate in the wake of its Spirit acquisition. The brands, which include Chef & Brewer, Hungry Horse and Flaming Grill, will see an incremental investment of between £40m and £50m per annum over three years as it repositions as many as 400 pubs within the drive brands. Meanwhile, Greene King has reported managed division like-for-like sales up 2.0% in the 24 weeks to 18 October, with Spirit managed like-for-like sales up 1.2%. Its Pub Partners tenanted division saw like-for-like net income +2.4% with Brewing & Brands own-brewed volume up 3.6%. It reported record customer satisfaction in Greene King Retail – its average Net Promoter Score (NPS) grew 7.1% points. It reported completed the integration of Spirit Pub Company is ahead of plan and that it expects to outperform initial cost synergy guidance – target has been raised to £35m. Rooney Anand, Greene King chief executive, said: “It has been a strong first half, with the Greene King business strengthening and significant progress made in the Spirit integration. Like-for-like sales growth in Greene King Retail improved during the half and both Pub Partners and Brewing & Brands delivered profit growth and margin expansion. We completed the acquisition of Spirit Pub Company and, by combining the best of both companies, made good progress in capturing value from the acquisition and creating the UK’s leading pub hospitality company. We believe we have the best portfolio of retail pub brands, the best pub assets and the most talented team which, when combined with the strong contribution from synergies and the benefits of our enlarged scale, will ensure we continue delivering value to our customers and our shareholders.” Of brand optimisation plans, he said: “We anticipate there will be material benefits from the optimisation of the combined brand portfolio. Our vision is to operate a smaller number of brands and formats across the enlarged estate, creating a platform for long-term growth and value creation. We acquired a strong portfolio of brands and formats with Spirit – one that would have been very difficult to replicate organically – and optimising the brands from both businesses will provide an exciting growth opportunity over the next few years. In order to select the growth brands and formats to invest in, we looked at the consumer relevance of each brand, the long-term opportunities to grow and expand, the financial performance and the proximity to other sites within the combined group. Currently, the combined business has around 20 brands and formats and we anticipate halving this number in the future. There is significant potential profit upside from investment in between 300 and 400 sites to reposition them into the growth brands over the next three years. These growth brands are: Hungry Horse, Flaming Grill, Farmhouse Inns, Chef & Brewer and Metropolitan, our premium London estate. We will also continue to develop a strong Local Pubs estate, our hotels and Loch Fyne Seafood & Grill. This portfolio of growth brands and formats will cover a wide range of consumer occasions. Hungry Horse and Flaming Grill will cater for different customer occasions within the value segment, Farmhouse Inns is our carvery offer spanning both value and mainstream occasions, Chef & Brewer will be our drive mainstream brand, while we will use Metropolitan to grow our presence in the premium end of the sector. We estimate that these growth brands will account for up to around 950 sites from the current estate, while the Local Pubs estate will be around 800 sites. This brand and format optimisation programme will be funded from a combination of internally generated cash and, where appropriate, disposals. Initial estimates suggest incremental capital investment in the region of £40-50m per annum over a three year period, commencing in 2016/2017.”


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