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Tue 24th Jan 2023 - Update: City Pub Group and Marston’s
City Pub Group reports 7.8% Q4 lfls growth, Toby Smith to step down as COO: City Pub Group, the owner and operator of 44 premium pubs across southern England and Wales, has reported its trading in its fourth quarter delivered accelerated like-for-like sales growth compared with 2019 of 7.8%. The business said its performance, which was a result of improved planning to maximise revenues from events such as the World Cup and Christmas, would have been even better had it not been for the rail strikes, which it said cost it in the region £750,000 (circa 3.5% of revenue for Q4) in estimated lost revenue. The company said it was pleased that the performance of its core estate for 2022 was in line with market expectations. Annual turnover increased from £35.4m (2021) to £57.6m (2022), an increase of 63% from prior year, which it said was a reflection of a mostly normalised trading environment and a largely restriction free year. Like-for-like sales compared to 2019 were 3% up. It said: “While the comparative period in 2022 was impacted by Omicron, trading in the first four weeks of 2023 has begun well with like-for-like sales against 2022 up 25% and above expectations. At the same time, the business announced that Toby Smith, chief operating officer, has notified the company of his intention to resign and steps down from the board and will leave the business on 27 January. The company said: “The board would like to thank Toby for his hard work and contribution to the business over the last two years, particularly in the preparation of the estate as the business emerged from the covid lockdowns. The board are delighted to announce that Rupert Clark, currently group managing director and a member of the board, will take on the role. Rupert has been an executive director of the business for nearly ten years and previously for the group’s forerunner, Capital Pub Company. He has vast industry operational experience and a real passion for the City Pub Group. Rupert has been instrumental in overseeing some of our most complex projects and successes including the major refurbishments of the Tivoli in Cambridge and Aragon House in Parsons Green. Rupert has a keen desire to further premiumise the offer across all our pubs. The board is also pleased to appoint Chris Merriman, group financial controller, as company secretary, with immediate effect.” The group said it had been offered a number of acquisition opportunities over the past three months, but particularly at this stage in the cycle, it has “very strict criteria for acquiring pubs as we expect pub prices to continue to soften”. Since its last trading statement on 21 September 2022, the group has acquired two “excellent pubs”: Potters, Newport (freehold), and The Bridge, Barnes, SW13 (leasehold). It said its net debt has been reduced to £5m at the end of 2022 (2021: £13.8m) as a result of “rationalisation of the pub estate announced in March 2022 and careful cash management”. On energy costs, the business said: “In 2022, and in common with many pub operators, our energy costs rose substantially. However, since the start of this year, these costs have started to reduce, although they are still high by historical standards. Following various mitigating strategies including hedging up to 40% of our energy cost from April 2023 until March 2025, coupled with ongoing energy reduction initiatives, we expect to achieve in excess of a 10% saving on the company’s 2022 energy bill in this financial year.” The company said it has emerged from the past three years in “good shape to take advantage of future opportunities”. It said: “The group has a low-geared balance sheet, a high quality and well invested premium pub estate which will benefit from the sales momentum experienced in Q4 of last year. City Pub Group remains ambitious for the future and is well placed to take advantage of opportunities as they present themselves. The board is confident of further progress in 2023.” Clive Watson, chairman of City Pub Group, added: “Despite challenges that our industry faces, CPG has always been flexible and adaptable and ready to take advantage of change. We have emerged from the pandemic in a position of strength. We are ready both financially with a very strong balance sheet, and operationally with a team that is experienced yet ambitious, to take advantage of both organic opportunities as we further premiumise and on building the estate through acquisition, albeit only at the right valuations which we expect to continue to soften. Trading has begun better than expected in 2023 and we look forward to an improving economic outlook as the year progresses.”
Host of hotel operators to join updated Premium Database of Multi-Site Companies: A host of hotel operators are among the 51 new multi-site companies being added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday (27 January), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, features Lester Hotels Group, which operates the Ramada Resort Cwrt Bleddyn Hotel & Spa and Nant Ddu Lodge & Spa in Wales. Also added this month is Exclusive Hotels and Venues, which has a six-strong estate of luxury hotels across the south of England. In addition, Strathmore Hotels, a privately-owned and family run group of eight hotels across Scotland will be featured. Meanwhile, Latona Leisure, which has a portfolio of four hotels in Somerset, Wiltshire and Avon, is included. Premium subscribers will also receive a 3,200-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database now features 2,769 companies. Premium subscribers will also receive the next edition of the New Openings Database on Friday, 3 February, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 12,000-word report on the new additions to the database. Premium subscribers also receive access to three other databases – the Propel Turnover & Profits Blue Book, the UK Food and Beverage Franchisor Database, and the Who’s Who of UK Food and Beverage, which was sent to Premium subscribers for the first time this week. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.
Marston’s 16-week lfls up 4.5% on pre-pandemic levels, key festive dates up 12.9% on 2019/20: Marston’s has reported 16-week like-for-like sales up 4.5% on pre-pandemic levels, with sales on key festive dates also up 12.9% on 2019/20. Its trading update for the 16-weeks to 21 January 2023 revealed comparative like-for-like figures up 4.5% against the same period in FY2020. Like-for-like sales in the first eight weeks to 26 November 2022 were 5.0% up, as previously reported, while in the following eight weeks, they were up 4.1% versus FY2020. Like-for-like sales rose 12.9% on FY2022 levels, which was affected by the Omicrom variant in December 2021 and January 2022. Like-for-like sales in the first eight weeks of the 16-weeks to 26 November 2022 were up 6.8%, as previously reported, while in the following eight weeks, they were up 19.2% versus FY2022. For the five key festive days (Christmas Eve, Christmas Day, Boxing Day, New Years Eve and New Year’s Day), like-for-like sales were up 12.9% on the pre-pandemic 2019/20 festive period and up 26% on FY2022. Total retail sales in the group’s managed and franchised pubs were up 14.0% on last year and up 7.3% versus FY2020. The company said drink sales have continued to outperform food sales, “once again reinforcing the steadfast trading resilience of our predominantly community pub estate”. The group’s electricity costs are now hedged for the entirety of FY2023 until the end of September 2023, with no change to earnings guidance, and its gas price is fixed until the end of March 2025, with no additional incremental spend anticipated. Marston’s chief executive Andrew Andrea said: “We have continued to see positive sales momentum through the festive season and into the New Year, with particularly strong demand on the key Christmas and New Year trading days. While we still have certain cost challenges to navigate in 2023, we are well-positioned to continue to progress our strategy and are encouraged by the level of consumer resilience experienced to date. The pub clearly remains an affordable treat which is attractive to consumers, and we continue to see good traction from those sites within our portfolio which have been converted to our Signature format. Marston’s pub estate is well-invested, and our geography and proposition lends itself to benefit from underlying consumer trends. While still early in the new year, trading momentum continues to build and our primary focus remains to meet our strategic goals of achieving £1bn sales and reducing our debt to below £1bn, with all the subsequent benefits that both of those milestones will bring to our shareholders.”

Disposable income fall is affecting everybody in the UK: Britons cut back on shopping in the final three months of the year, according to new figures that suggest all regions of the UK are facing similar pressures on the cost of living. The Times reports Asda’s latest income tracker recorded a drop in household income levels throughout the country in the fourth quarter of last year in a fifth consecutive quarter of annual decline. Disposable income, a measure of spending power after essentials such as food, taxes and bills are paid for, fell by 11.4% during the fourth quarter to an average of £209 a week, compared with £236 a week over the same period in 2021. Britain has been in grip of double-digit inflation since September, with price growth sticking above 10% in December, a period comparable only to the runaway inflation of the early 1980s. People are having to pay far higher electricity bills after the prices of gas and oil surged because of the war in Ukraine. The prices of food, transport and services also have contributed to higher inflation in recent months. Asda’s tracker found that the south east, one of the nine statistical regions of England and an area with higher prosperity rates than the rest of the UK, suffered the biggest weekly fall in disposable income, of £44 to £186, in the fourth quarter, down by 24% year-on-year. Consumers in Northern Ireland saw disposable income levels drop to a seven-year low of £93 a week, a 28% decline. “Annual declines in the income tracker have been witnessed across all regions, reflecting the geographically indiscriminate nature of living cost pressures,” Asda said. “Scotland has shown the most resilience of any region, though discretionary incomes there are still down by more than £23 per week year-on-year.” Consumer spending was better than expected in the run-up to the Christmas period, but it is still far below pre-pandemic levels.
Cloudwater Brewery boss – every month since 2020 I’ve considered closing: Paul Jones, co-founder of the Cloudwater Brewery in Manchester, has said he has considered closing the business every month since the pandemic. Founded in 2014 and independently owned, Cloudwater operates tap rooms in Manchester and London as well as a brewery and a pub in Manchester. In 2019, it was ranked second-best brewery in the world by RateBeer, whose annual awards are based on scores from drinkers around the world. But Jones said the cost pressures of the last few years feel like a “never-ending nightmare” and he remains downbeat about business prospects in 2023. He said his company has been in survival mode since March 2020, with high costs, debt, low consumer confidence and post-Brexit trading problems all bearing down on the business. “The cost to me has been pretty bleak,” he told the BBC. “I have a heart condition from stress, and I feel constantly on the edge of what I can personally cope with.” Jones said his thoughts have turned to closing his business “probably once a month since 2020”. He added: “I feel like continuing is either not possible or not worth it, but we’re going to keep going, what else can we do?” Julie Palmer, partner at Begbies Traynor, said it was receiving an increasing number of calls from businesses owners like Jones who were concerned over whether they could carry on. Begbies Traynor said the number of companies in critical financial distress jumped by 36% in the last three months of 2022 and it expects this number to rise due to higher costs and consumers cutting back their spending. Palmer said that up until now, low interest rates and loans had helped firms, while covid loans and a longer time to pay taxes had provided support during the pandemic. “The support all seems to be coming to an end at the same time, with nothing really on the horizon in terms of what might replace them,” she said. Palmer added that a backlog in the insolvency courts due to covid has delayed some company collapses, but those cases are now being pushed through.

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