Laurel to ditch 40 ailing pubs
The devastating effect of the smoking ban has forced Slug & Lettuce operator Laurel Pub Company to move towards the radical step of a “controlled administration” for loss-making sites.
Chief executive Paul Symonds has told staff that the smoking ban and cheap supermarket booze are the major problems for the pubco.
The company is in discussions with its banks over a plan that would allow it to ditch 40 or so poorly-performing leasehold sites, after putting as many as 250 pubs in administration.
The strategy has been a route followed by a number of companies in the sector in recent years – Yesteryear is the most recent example. Laurel is thought to have seen very poor trading at a number of its wet-led bars, particularly from November onwards.
The controlled administration route would allow the company to re-shape its estate radically.
One source said: “It reflects some fairly poor buying strategies in the first place. When nobody wants to buy leasehold sites that are losing a lot of money it leaves very few options.”
A second source said: “The company has a number of pretty toxic leases.”
Laurel is known to have had a number of poorly-performing leasehold sites on the market through Davis Coffer Lyons for more than a year.
Discussions have been underway with its bankers with a view to restructuring its debts, with a resolution hoped for before the end of next month.
It is thought that Laurel’s bankers may want the estate re-shaped as a pre-condition of further support.
A source close to Laurel said: “It’s a debate we are having with our banks at the moment. We are trying to refinance, which is tough in this market. We are trying to keep it as a whole.
“We have some leasehold pubs on the wet-led side that with the smoking ban are not performing well.”
Laurel lost £12.26m on a turnover of £186.8m in its most recent financial year to the end of February 2007 – observers believe the losses may have worsened this year.
One figure, who runs a major high-street bar company, told the Morning Advertiser: “The high-street market is down by between 5% and 10%. If you have no smoking solution, the swing can be minus 20%.
“What we’re seeing is the outcome of 15 years of unbridled high-street expansion.”
Laurel’s bottom-end leaseholds
Laurel’s plan to put part of the business in administration indicates the scale of its problems at the bottom-end leasehold sites it bought as part of its original Laurel, Yates’s and SFI acquisitions.
It is thought the problem sites come from all three companies. Many observers believe Laurel overpaid when it acquired 98 SFI sites for £80m.
The figure was an average of £816,000 per leasehold. The remainder of SFI sold for less than £2m. Inventive Leisure, for example, acquired sites in Sutton and Beaconsfield for a total of £25,000.
One bar operator said this week: “A high-street lease is a liability unless you have the unique product to put in it. Unless you have a firm idea of what the product is, how can you justify paying a big lease premium?”
To Comment: Login or Register