THE AGENTS

Graham Allman

Managing Director

GA-Select

With the smoking ban set for next summer and the festive season upon us, now's the time to consider the impact of food on the valuation of your business.

M&B has proclaimed its confidence in its prospects after seeing its emphasis on food deliver a 7% like-for-like increase against a 2% decline in wet sales. Good-value, imaginative, well-presented food has always been crucial to both freehouses and leased operators, and should never be underestimated. As a regional director for Bass 23 years ago, managing a food division, I had difficulty convincing the board to invest in food operation developments at wet-driven outlets. How things have changed.

The skills of operators and their chefs can add many thousands to a business's valuation. The ability of a new owner to maintain high standards, keep margins up and remain innovative, is also important. In tied-lease estates, lessees should develop good food offerings (which will increase their reliance on beer discounts) to provide bottom-line profits, and make the tie almost irrelevant.

Freehouses have always been the stronghold of food excellence, but are less profitable than they could be.

Gordon Ramsay's Kitchen Nightmares gave an excellent insight into the commercial food sector, highlighting the need for food operators to move forward continually and embrace change - you can't live on past glories and accolades.

Consumers are looking for better value, which doesn't mean cheap prices. Offering good value will build a loyal client base for forward-looking catering publicans. This will add value to businesses when you want to move on.

But avoid the temptation to over-personalise the business or over-complicate the service when considering your exit plan. The motto must be: "good food served well at a price that's affordable more than once a month."

The festive season leads into other business opportunities, from Burns Night to Mother's and Valentine's Days, keeping your pub busy while prospective buyers look it over.

I don't believe that the smoking ban will be totally detrimental to wet-led pubs, as there are some excellent solutions in progress. Nevertheless, you can't escape the fact that food sales are growing, with no sign of a slow-down in the demand for pubs with good food, not only by consumers, but also by potential pub purchasers.