Laurel poised for administration
Laurel Pub Company is poised to enter a controlled administration after opting to close another 60 high street pubs.
The move means the company has called time on 89 loss-making sites, which continue to have an estimated weekly rent roll of around £150,000. Chief executive Paul Symonds told staff that negotiations with its banks are in their "final stages" and the plan was to create a new pub and restaurant business. Kroll, the insolvency specialist, is expected to be formally appointed at the end of March.
Laurel's owner Robert Tchenguiz would then seek to buy the viable parts of Laurel out of insolvency, leaving loss-making leaseholds behind. The move to shut 60 sites follows the closure of 24 pubs in February. It means the company will only have five pubs from the group of 95 it put on the market still trading. The pubs are expected to trade until next Tuesday - and then get shuttered up.
A spokesman said: "This is a logical but regrettable decision." The spokesman said the decision had been taken because they were costing more to run than they are making. A large number of closed sites are Yates bars, which made up 42 of the 95 pubs on the market. It also includes a number of Litten Trees and Hog's Heads. The spokesman for Laurel said there would be redundancies but every effort would be made to keep these to a minimum.
Symonds e-mailed staff to say that the company had been "unable to find any suitable purchasers" for the sites, which have been on the market for a few weeks with Colliers CRE. The closure of another large group of Laurel sites comes as the company adds 10p to the average price of drinks in the wake of duty increases last week. Sources also indicate that Laurel has stopped selling Carling at all but around 30 venues, with Foster's now the leading lager product. Robert Tchenguiz has spent a total of £560m plus costs buying the constituent parts of Laurel. It is unclear how much Tchenguiz will lose personally when Laurel is placed in administration. Laurel is an operating company with its freeholds - just over 100 of them - removed to a seperate company.
In December, the Morning Advertiser revealed that Laurel made a pre-tax loss of £12.26m in the year to 25 February 2007 on a turnover of £186.8m. The company added the La Tasca tapas restaurant business in April last year.
MA Opinion
The decision to close another 60 high street pubs so soon after they went on the market will surprise a number of people. The move effectively scraps any goodwill value the sites carried based on existing trade. It also indicates the course of action now most likely at Laurel - an administration. The on-going rental obligations of around £8m a year mean that the company now needs to cleanse itself of these sites through the administration process. At the heart of Laurel lies a very good business based around a food-led future. This part of the company includes Slug & Lettuce, Ha Ha, and La Tasca. Unfortunately, just under 25% of Laurel's sites seem to be unviable, including a large swathe of the Yates business. Laurel is blaming the smoking ban for turning so much of its high street loss-making. Some will wonder why so much of Yates no longer has a future and the industry rumour mill has been suggesting issues like lack of investment. Nevertheless, the planned administration of Laurel is the most dramatic reduction in high street capacity since SFI Group went into administration in 2005.
