Anand: credit crunch has changed customer behaviour

There has been a consumer flight to value in the wake of the credit crunch, Greene King chief executive Rooney Anand told the Numis Securities conference.

The company's managed division had set about optimising value, service and quality. Its destination pubs had seen a 5.9% reduction in the average price of a main meal, a 4.6% reduction in the average spend per head and a 16% increase in average covers per pub.

Current customer satisfaction score were industry-leading — it had been mid-table among its competitors a few years ago.

The company's Hungry Horse brand had 14% like-for-like sales growth with 66 Hungry Horse sites evolved.

The company was spending £400,000 a site on a further 11 new Hungry Horse developments in the first half of its financial year.

"There are quite a lot of internal growth opportunities — we've only done half the Hungry Horse estate," he said.

Anand said that it used to be the case that the cellar was the engine of the pub — now it's the kitchen that's the engine.

He said that the company was undertaking local sparkles with £45,000 spent per site at 108 pubs producing an average sales uplift of 7.2%.

Overall, the managed division currently had the best like-for-like sales growth at 5% and the second-best margins behind the Young's London estate.

Anand argued that his tenanted division has "structural advantages" over competitors with 80% of pubs let on short rolling tenancies.

Greene King therefore had control over the three key things — the people running its tenanted pubs, the pub itself (as opposed to pubs on long leases) and the offer.

He said the division had re-balanced profits for licensee stability and its "Crunch Time" initiative had helped licensees deliver value.

He argued that there was a "little bit of clear light" now with improving performance from the tenanted division.