City Diary: 26 March
Britain gets a new pub hero
Strong support for the pub as a cultural lynchpin comes from an unlikely source — actor Rhys Ifans.
In fact, Ifans makes one of the most lyrical speeches in support of the humble boozer City Diary has ever read: "The pub is the internet. It's where information is gathered, collated and addressed. People are looser in a pub and everyone's got a story.
"Even as a kid I used to stand under the extractor vent in the winter outside the pub and feel the warm air, smell the beer, smell the Woodbines and hear all those wonderful voices laughing and telling stories. A pub can be a magical place. It's socially crucial to the whole of Britain. In fact, the pub is like a watering hole. You'll see all the animals standing around a lake and getting on because they want a drink; you take them away from the lake and they kick the s*** out of each other or worse. Every species has its pub."
Shame he's got a successful acting career because Ifans would a passionate and articulate British Beer & Pub Association boss.
Globe takes dive in past quarter
A report by ratings agency Fitch indicates just how badly the performance of Robert Tchenguiz's tenanted company Globe has declined. Ebitda in the latest quarter to 28 February 2009 is £4.1m. This will lead to a debt service cover ratio over the last two quarters of 1.08x, breaching the financial covenant of 1.25x. Fitch says it "considers it remote that the sponsors will cure this breach. The latest quarterly Ebitda declined 38% year on year, a marked acceleration in performance decline".
Marston's closed figures stick at 35
More good news from the front line. Marston's boss Ralph Findlay reports the company only has around 35 closed pubs, a figure that has stayed pretty stable over the past six months. He suggests this may well be linked to the long-term objective of "sustainable rents" at Marston's — the average is a "relatively low" £26,000 per annum.
City Diary also hears that Marston's most recent batch of 50 or so managed-to-tenanted conversions is 99% complete. Good work, chaps.
Odds against a summer washout
Greene King boss Rooney Anand was addressing a select audience of City types
at a Numis Securities conference last Wednesday. He admitted that he thought the economy would get "substantially worse before it gets better".
But he also thinks the law of averages could ride to the sector's assistance. "We can't possibly have a third crap summer."
Maverick voices at Greene King
The tenanted side at Greene King placed 400 struggling pubs into a
new division called Independence towards the end of last year. Here, there's total agreement flexibility and even options for licensees to purchase their pub. The move is
a response to a growing tail of pubs and problems of recruitment and retention. Turns out there's a nifty nickname for it internally — the Maverick Pub Company.
No place for a slack bladder
Boss of nightclub company Luminar, Stephen Thomas believes he may have found the daftest drinks offer in the on-trade. There's a nightclub in Preston, he says, that is offering customers the chance to drink as much as they can until somebody in the nightclub has to go to the toilet. Thomas reports that recently somebody walked in and went straight to the toilet, getting "roughed up" by disgruntled fellow customers as a direct result. Nice.
Nightclubs now going for a song
More evidence of rapidly deflating property prices. Nightclub company Luminar claims there are only eight nightclubs in the entire UK that it would contemplate buying.
One of them, reports boss Steve Thomas, was buyable a while ago for £2.7m.
"Today, the owner will do a deal for under £500,000," he reports.
Domino's delivers
Remember those snowy days in February? They weren't bad news for everyone. Chris Moore, chief executive of Domino's Pizza, reports that like-for-like sales rose by 45%. But was the average delivery time of 23 minutes affected by the bad weather? "It was under 25 minutes," he says. "We slid along quite happily by ourselves on the roads — there was nobody else around."
They say cheese, but is it cheese?
Product quality is the key to Domino's franchisees achieving an average of £14,000 per week sales across its 500 UK outlets, boss Chris Moore told an audience at a Numis Securities conference last week. There's a competitor out there, though, says Moore, where a whole 25% of the mozzarella cheese is potato starch. "A very big competitor indeed," he added. Who can he mean?
Flames again for Greene King
Greene King's terrible run with fires in the tenanted division continues. Fires have destroyed two of Greene King's busiest tenanted pubs in recent times — the Hawley Arms in Camden and d'Arry's in Cambridge. Now the Berkshire House pub, in Abingdon Road, south Oxford, will be closed for around four months after a fire destroyed the kitchen and three ground-floor rooms.
Pubs opt for part-time closures
Pub market research firm CGA Strategy has spotted the emergence of a new trend — the part-time pub. A whole 9% of pubs that used to trade on a Monday are now closed with the figure the same for Tuesdays. The figure for Wednesday drops to 8.5%. "In a bid to hold off death, licensees are attempting amputation first," says boss Jon Collins. He claims other venues are considering action on the part-time closure front because it allows a reduction in costs without the perception of failing.
