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Spirit could convert 200 leased sites to franchises

By John Harrington, M&C Report , 27-Apr-2012

Spirit Pub Company, the managed and leased operator, could convert 200 of its leased sites to franchises, M&C Report has learnt.

Chief financial officer Paddy Gallagher told M&C Report that “maybe” 200 pubs from its 530-strong leased business could be converted.
The plan is to use Spirit’s existing brands. Gallagher said his “gut feeling” is that its community pub concepts Flaming Grill and John Barras would be suitable.
Gallagher said: “The reasons some [pubs] won’t be franchises is that we’ve got some really high-end operators in the leased estate running gastropubs, and we can’t help them do that better. They will stay leased and they are great pubs.
“So at the high end people won’t be interested in the franchise model, and at the low end we wouldn’t be interested. It’s the middle ground where we think we can add value.”
A franchise trial is set to begin in June. “The managed estate is driving forward so it’s not a crisis position we are in,” Gallagher added. “We can take our time. How long it takes it takes. We just want to make the best decision.”
He said the franchise pubs would have the benefit of Spirit’s brands structure and procedures including logistics and recycling processes as well as products and marketing.
Last week Spirit reported a 4.5% decline in like-for-like sales across its leased estate for the 28 weeks to 3 March, with EBITDA down 9% to £21m, which was put down to the timing of cyclical rent reviews.
Like-for-likes in its 800-strong managed estate increased by 5.6%. Overall pre-tax profits were up 7% to £20m, with revenue at £393.6m (H1 2010: £378.1m).

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