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Summer plus sport is the magic combination on the UK pub scene. Big events like Euro 2024 football are triggering a enthusiastic forecasts about a boost in sales in the country’s struggling pub sector. Pub owners will take all the help they can get. A report last week suggested 80 pubs closed a month in the first trimester.
The UK has lost almost 15,500 (or a quarter) of its pubs since 2000. The decline began long before the pandemic closed bars, when cheap supermarket booze drove away customers. More recently, lockdowns, skyrocketing energy and other costs have taken their toll. Still, it’s not all doom and gloom.
Independent businesses account for a larger proportion of closures, says Emma McClarkin, chief executive of trade body BBPA. Results from listed pub groups, including Young’s and Fuller, Smith & Turner, paint a less bleak picture.
Young’s, which owns more than 280 pubs and 1,000 rooms, this month posted a record adjusted annual pre-tax profit of £49.4m, a rise of 9 per cent.
At Fuller’s, full-year adjusted profits rose 61 per cent to more than £20m. JD Wetherspoon said in May that he expected its annual profits to be at the top end of market expectations, which at the time ranged between £67m and £75m. The high end would mark a 76 percent improvement from the previous year.
Pub groups have proven adept at adapting to changing consumer trends. Catering to coffee drinkersputting hotel rooms above pubs popular with tourists and upgrading their food to compete with restaurants.
This improvement is not always reflected in stock performance or valuations. Young’s net asset value is more than 45 percent higher than its share price, according to Peel Hunt. Similarly, Fuller’s net asset value is equivalent to about £14.30 per share. Its shares trade at less than half that figure, despite a 16 percent rise in the past 12 months, thanks to share buybacks.
Some cost pressures are easing, including food and energy bills. The Labor Party has pledged to reform business rates – a long-standing grievance in the pub industry – if it wins the UK general election on July 4. Other ideas like The scrapping of lower national minimum wages for younger workers, but the larger pub groups, as much as they like to complain about pay rises, manage to adapt, although that would do little to improve ratings.
The great British pub will live on, although increasingly its strength will lie in numbers.