Marston's changes tack on its new-build pubs

By Hamish Champ

- Last updated on GMT

Related tags: New pubs, Real estate, Marston

The current state of the UK property market is forcing Marston's, the Midlands brewer, to change tack when it comes to deciding where to build its...

The current state of the UK property market is forcing Marston's, the Midlands brewer, to change tack when it comes to deciding where to build its new pubs.

Marston's said recently it was on course to open 15 newly built pubs in the current financial year and unveil a further 45 new pubs by the end of 2012.

Prior to the credit crunch the brewer had focused on building and opening new managed pubs within newly-built residential estates, but since the financial crisis the demand for such estates has slumped.

Pete Dalzell, operations director at Marston's managed pub estate, said the shift in the dynamics of the housing market had caused the brewer to look again at where it sited its new pubs, such as areas peripheral to residential estates and large roundabouts on main roads.

Opportunities for new-build pubs are still there, added Dalzell's colleague, Andrew Andrea, Marston's finance director.

"There has been a dip in the residential market but we're seeing an emergence of retail parks dominated by large, well-known outlets and leisure facilities and we're looking at those," said Andrea.

The group is required to build 60 new pubs by the end of 2012 to fulfil the conditions of last year's £176m rights issue, he added, but it plans to keep building as demand dictates.

Andrea said Marston's has identified 80 sites across the UK from Pembroke in South Wales to Dover in Kent on which to build new pubs.

Typical build costs, which are fixed for two years, are £1.8m for a 280-cover site and £1.5m for a smaller, 180-cover pub. While food-led, the pubs would be as much a pub as a restaurant facility, Dalzell said. Targeted EBITDA multiples are a shade below seven per cent.

With industry consolidation on people's minds, Dalzell believed new-build pubs represented better economic value than buying existing pubs from rival operators.

"You can locate it where you want it and you have more certainty as regards the investment and the likely return, as well as branding and staffing issues," he said.

Related topics: Property law

Property of the week

Hawthorne

£ 1,750 - Tenancy

Could you run this Warrington pub? The Hawthorne is a thriving community sports pub in Warrington, showing live sport each day, along with live music every...

Follow us

Pub Trade Guides

View more