A little ray of sunshine
After months of doom and gloom, some pubcos are starting to talk optimistically, says Mark Stretton.
Only whisper it but the summer appears to be here. The clouds have cleared, the pub gardens are full of thirsty customers and the sun is shining.
Some, if not all, of the doom and gloom that has been hanging over retailers for the best part of a year also appears to be lifting. A few themes have emerged in recent weeks after a raft of company results. While the high street is clearly overloaded with pubs and trading in London remains tough, community pubs and food-led destinations are on the whole quietly content.
Pub companies and owner-operators are, believe it or not, starting to sound mildly positive about business and the levels of cash currently crossing the bar.
It is about time. A random list of woes from the past 12 months includes soaring costs and red tape, a dip in consumer spending, the uncertainty caused by war, job losses and fewer tourists visiting the UK.
So after a tough period for most operators is it about time we started talking things up?
"Sales are good at the moment," said Spirit Group chief executive Karen Jones. "I think it's a combination of the end of the war, the summer is on its way, the sun is shining - that's the macro stuff.
"I also think we as a company are running some good promotions and are seeing some very strong food sales. London is difficult but then again we have some food-led outlets and gastropubs there that are doing their best ever numbers."
Food sales are generally strong across the sector. Many say this is because people trade down from restaurants to pubs in a tougher economic climate, but it could just be because pub food is better than it has ever been, and often no different in quality than restaurants that have white table-cloths and French waiters.
A raft of operators from regional brewers like Hardys and Hansons to pub-restaurant specialist Whitbread have reported strong food sales.
But the beer is flowing too. "Trading is very strong at the moment," said Neil Gillis, managing director of Greene King's managed house business. "The weather is helping immensely."
Mr Gillis said he had been concerned that this year's summer figures would look tame compared to last year, which was bolstered by the Queen's Jubilee and the World Cup.
"Liquor sales are particularly strong at the moment," said Mr Gillis. "I think two things are driving this - consumer confidence is definitely back because people are out spending money and also the good weather means you get a share of other people's spend. People will go to the pub if it's a nice evening rather than the cinema."
Mr Gillis said Greene King was seeing strong sales on premium items such as Leffe and Budweiser Budvar. "These are big-ticket items, Leffe is over £3-a-pint," he said.
This could be a result of Greene King's predominantly South East geography but Wolverhampton & Dudley's customers, largely in the Black Country, are not likely to pay £3 for anything.
"People always spend a bit more when the sun comes out, when the sun shines we are all retailing heroes," said W&DB managed boss Derek Andrew.
"In Pathfinder Pubs like-for-like sales have been creeping up and that is a continuing trend. It's a steady improvement but nothing spectacular."
Mr Andrew said he believed there was not a lot in the economy to suggest people had more money but that a prolonged period of hot weather could do wonders for business.
"Everyone is a bit windy about pensions, National Insurance has just gone up and so on," he said. "But a few weeks of sun will give everyone a lift and last year we barely had a summer especially from June onwards."
Martin Perkins, who operates the Royal Standard, a Fuller's tenancy, just off the main drag in Croydon, is happy but by no means ecstatic. "Trade is holding up fairly well. We're not talking about growth but it is steady," he said.
Simon Emeny of Fuller's says that beyond London, where the impact of job losses and fewer tourists has been felt the most, life is okay. "I think outside of the City, trade has been really good and the last couple of weeks have been great," he said. "When the sun shines everyone feels better about life - it's a psychological thing. Good weather is good news."
London and the high street remains tough, but suburban pubs and food pubs seem to be enjoying a better time, aided by some much needed sun.
The pain of the high street
Those exposed to the high street are finding it less easy. Town centres across the UK are saturated with pubs and the industry has witnessed a number of casualties in the last year including Brannigans, Old Monk Company, Po Na Na and Porter Black to name a few.
"We can't really report an improvement," said JD Wetherspoon boss Tim Martin. "In our last statement we said that trading was positive but that we weren't really throwing our hats in the air and nothing has really changed."
The discount operator is still considered the yardstick for much of the managed house sector, especially those retailers in town centre locations. If Wetherspoon is good but not great it is fair to assume others have it a lot worse. "Good weather is great for some of our pubs and bad for others," added Mr Martin. "I imagine trading is very good for suburban and village pubs at the moment."
Yates unveiled results last week showing an overall like-for-like sales decline of 2.7 per cent. Directors describe the current refurbishment work as a "rebuilding" of the group. They said that weekday spending among its customers had definitely changed but said weekends, bank holidays and national sporting events remained "big nights out".
Eldridge Pope is expected to report losses because of its high street Toad chain and the silence from troubled SFI Group is deafening. There is undoubtedly more pain to come from the saturated high street as supply continues to vastly exceed demand.
The analyst's view
Geoff Collyer, head of the leisure research team at Deutsche Bank, said: "Nobody is exactly gung-ho and after what happened last year people are going to be pretty loathe to stick their heads above the parapet and say it's improving. The results season in the run up to Christmas will be key.
"I think we're seeing anecdotal evidence that London is improving. This view is expressed more by hoteliers and coffee-bar operators, but it must be encouraging for pub operators.
"There is still no market for underperforming leasehold sites and despite what the managed pub companies say, the people doing the best are the tenanted pub companies.
"It comes down to how you operate your business rather than the broader environment. You've got JD Wetherspoon reporting strong like-for-like sales and Mitchells & Butlers (M&B) down three per cent. But there should be upside for people who are getting their act together, like M&B."
The bank's view
The Royal Bank of Scotland (RBoS) is by far the biggest supporter of pub companies of all the banks. It owns pubs run by Scottish & Newcastle Pub Enterprises and has a leisure team devoted to smaller sized investments. But recently the group has pulled the plug on a number of companies including Old Monk Company and most recently Christian Arden's Po Na Na group. Rumours abound that certain directors within RBoS are nervous over the group's exposure to the pub sector.
Andy Tarbutt, head of RBoS Leisure, recently wrote in a performance report: "Leisure is struggling because the growth of supply has outstripped demand. I would expect businesses to stop or at least slow down potentially ruinous exp
