Pub closures in wake of smoking ban "inevitable", says Enterprise boss

By Hamish Champ

- Last updated on GMT

Enterprise Inns chief executive Ted Tuppen said while most of his group's pubs were coping with the smoking ban, closures across the industry in the...

Enterprise Inns chief executive Ted Tuppen said while most of his group's pubs were coping with the smoking ban, closures across the industry in the coming months were inevitable.

"The majority of our 7,700-plus estate is now well positioned to manage the risks and opportunities that the ban has created, although we envisage that the ban will lead to a number of pub closures across the industry, particularly amongst lower quality wet-led outlets," he said.

Announcing Enterprise's annual results today, which saw turnover down 5.3 per cent at £921m and pre-tax pre-exceptional profits down 4.7 per cent at £301m, Tuppen said the operator had worked closely with its licensees "to create effective smoking solutions, sometimes through investment and always with encouragement, advice and support".

Turnover slipped in part due to the sale of 769 pubs to Admiral Taverns earlier in the year, although disposals helped push average pub EBITDA up 6.2 per cent to £68,200. "Some pubs will have done really well, and others will have done badly," Tuppen said.

Prompted by the ban, food sales across the Enterprise estate had risen by 13 per cent during the year, with such sales accounting "at least" 20 per cent of average pub turnover.

However Tuppen warned against chasing food sales for the sake of it.

"With standards of pub food constantly improving, there is a risk that the market place for 'value for money' food may become overcrowded, so our advice to licensees tends towards 'do it really well or not at all', focusing above all on the key strengths of each individual pub, and always trying to make sure that their pub is the best in each locality.

"The coming year will be difficult for some pubs and we remain cautious about the next six to nine months," said Tuppen, who noted that 96 Enterprise pubs had been identified for sale as alternative use.

"However, we are confident of a positive outcome as the smoking ban becomes an accepted part of pub-going and licensees and customers alike enjoy the benefits of the more pleasant, healthier, smoke free regime."

Issues such as the poor summer had hit pubs, and Tuppen paid tribute to those licensee who had "rolled up their sleeves and got on with sorting out and reopening their pubs".

Meanwhile shaky consumer confidence was affecting sentiment going forward.

"Consumer confidence is a real issue going forward. It is difficult to tell how things like price increases will impact on consumer behaviour over the next year, but caution would seem to be the watchword," he said.

Tuppen meanwhile called on supermarkets to play their part in responsible alcohol retailing.

"One must question the pricing policies of the major supermarkets and some other off trade outlets which sell alcohol, which is generally consumed in an unregulated environment, at very low prices.

"Not only do they, on occasion, sell alcohol at prices below cost but they have cheap alcohol at the heart of promotions policies, particularly in the run up to Christmas.

"When it comes to the important issue of tackling irresponsible drinking, it is up to all stakeholders to face up to their share of responsibility."

Tuppen meanwhile said Enterprise's discussions with the tax authorities concerning the possibility of becoming a real estate investment trust were "ongoing".

Enterprise's results at a glance:

Turnover down 5.3 per cent to £921m

Like-for-like pro-forma EBITDA up 3.7 per cent to £525m

Pre tax and pre exceptional profits down 4.7 per cent to £301m

Earnings per share up 15.8 per cent to 39.6p

Dividend per share up 15.6 per cent to 15.6

Related topics: Ei Group

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