High street pubs flood the market
Increasing numbers of high street properties are hitting the market as pub companies reveal grim trading over the Christmas period.
Operators such as Luminar, SFI Group and Yates Group are continuing to suffer, reporting drops in turnover and like-for-like sales. The result is that many are halting their roll-out plans, refurbishing older sites and are putting underperforming units on the market.
Property agents have predicted that pub companies will continue to lose money on high street sites. Companies that have expanded too quickly and paid too much money for sites are finding it increasingly difficult to make any money out of the town centre market, they argue.
Fleurets annual survey revealed that London's high street sites had an average annual turnover of nearly £500,000 but the price achieved for the sites was only £126,000 - 26 per cent of turnover.
Christie & Co says that the rapid growth of outlets on the high street will lead to saturation in some major cities. Where some sites are over-rented and trading poorly, Christie & Co predicts that there will be more casualties on the high street this year following the failure of Old Monk and Mustard.
The bad trading over the Christmas period has highlighted the problems faced by operators on the high street and, although pub companies are always looking to sell outlets, many may be forced to off-load sites.
Colin Wellstead, director at Christie & Co, said: "It was a poor trading period over Christmas and I think it's happening to most people on the high street. Most are looking at their portfolios and looking to churn their underperforming outlets."
These predictions are already coming true and having a knock-on effect on the high street bar and pub property market.
Luminar Leisure, the bar and nightclub operator, has halted its expansion plans following disappointing results over the Christmas period. It blamed price discounting, weak consumer spending and fewer customers at its older units for a 4.2 per cent drop in like-for-like sales.
The company closed 25 clubs in November and is in the process of selling these sites. There could be more going on the market as its worst performing sites will be subject to a "rigorous review process".
The company will focus on refurbishing existing units and has earmarked £30m for the process which is up on its usual £19m budget.
Steve Thomas, Luminar founder and chief executive, admitted that the company had not been aggressive enough in disposing of some of the clubs it acquired from Northern Leisure.
Yates, the high street operator, has issued its second profits warning. It blamed its bad trading on 90 of its unrefurbished sites. The operator is finding it hard to compete with other branded operations on the high street and is being forced to accelerate its refurbishment programme.
SFI, the company which announced a £20m black-hole in its accounts last year, is rumoured to be valuing some of its sites for possible disposal through Christie & Co. The group owns the Bar Med, Litten Tree and Slug & Lettuce brands. Before Christmas it was rumoured the company was preparing to sell the entire Bar Med brand, with bids of £30m expected.
Po Na Na, the operator of bars and late-night venues, has seen its figures for Christmas marginally down because of some of the sites it has up for sale.
The company is on course to complete its disposals by the end of March and said it still expected to hit full-year figures. Hartford Group, the bar and restaurant operator, has cancelled two new openings for the coming year in order to concentrate on reducing its debt.
While, the Brannigans chain, which went into administration last year could be saved by a management buy-out.
Pictured: Luminar Leisure's Chicago Rock Cafe
Related articles:
Share values drop across the pub sector (22 January 2003)
Po Na Na shares tumble (22 January 2003)
Luminar adds to pub sector malaise (22 January 2003)
Yates: second profits warning in two months (20 January 2003)
