Pub sector 'appears to have stabilised' as operators look to boost revenue

By M&C Report

- Last updated on GMT

Related tags: Debt, Public house

Despite rising costs and more at-home drinking, the pub sector “appears to have stabilised, with most of the weaker businesses having fallen by the wayside already”, says a new report from KPMG.

“However, as a caveat to that, ‘on-trade’ drinking is in decline with more consumers drinking at home and drinking low to moderate levels in pubs," according to the report, Sector Foresight - The UK leisure market​.
The report says that pub operators are looking to maximise returns from all aspects of operations and to increase overall revenue against a rising cost base and significant tax impacts.
Substantial numbers of operators are having to service relatively high levels of debt. But KPMG pointed out, most of this is in the form of securitised loans and bonds and therefore “relatively efficient forms of leverage”.
“There will continue to be issues arising from poor loan-to-value ratios for operations using property for security and continued reliance on tied contracts with major brewers to increase cash flow and optimise costs,” KPMG said.
“Although the demographics of each pub’s territory typically override other factors, the specific efforts made by local pub managers to achieve a differentiating focus are also a key determinant of whether revenue will increase, decrease or plateau.”

Meanwhile, consumers are becoming “professional bargain and discount hunters” when eating out, with four in 10 now making their choice based on offers and discounts available, KPMG said.

Related topics: Other operators