According to an analysis of Companies House data, collective growth for the top 50 pub companies ranked by turnover is twice that of GDP growth of 1.8% in 2016.
The results, published by London-based commercial lender Ortus Secured Finance, stack up well against the slowdown in consumer spending growth of just 0.1% in 2017’s second quarter.
Although merger and acquisition activity has been the biggest driver of turnover, the rising popularity of craft beer has been a factor noted in the increase. This is down to the higher margins on craft beer pushing up the average price of a pint – with lager hitting a record £3.58 per pint average in September.
Investing in premises
However, Ortus Finance explained that many pubs would be looking to continue their growth through acquisition, as demonstrated by deals involving bar and restaurant operator Drake & Morgan acquiring Corney & Barrow Wine Bars in July 2016, and Greene King acquiring the Spirit Pub Company for £770m in 2015.
Ortus also added that owners are likely to mitigate against the impact of broader issues - such as business rate and excise duty hikes, the rise of the ‘big night in’ and potential loss of European staff after Brexit - by investing in their premises to ensure they maintain and strengthen their appeal to clients.
Ortus managing director Jon Salisbury commented: “Continued growth in the pubs and bars sector reflects the underlying strength of the industry.
“Pubs and bars need to continue to invest in their premises to ensure they still attract large numbers of customers.”
“While larger pub companies often have access to the financing they need to make strategic acquisitions - as well as make considerable capital investments in their premises - this can be more of a struggle for pub companies at the smaller end of the market.”
“Alternative finance providers can help smaller businesses reach the next stage of their growth by completing acquisitions.”
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