According to new research from business advisory firm BDO, the number of merger and acquisition transactions relating to pubs, bars and restaurants looks set to rise significantly next year.(Reports the Business Sale Report)
Head of restaurant and bars at BDO, David Campbell, told The Financial Times, “Eating out has been relatively unaffected in the consumer downturn and we see casual dining continuing to grow.
“With banks looking to offload pub assets and a number of profitable restaurant chains approaching the point where we would expect an ownership change, the market is ripe for M&A activity,” added Mr Campbell.
The firm also predicted that popular high-street chains such as Pizza Express and Jamie’s Italian could be acquired by new owners in 2012 as private equity companies look to cash in on the lucrative dining sector.
Mr Campbell added, “Companies will be investing in 2012 in anticipation of consumer pressure easing in 2013 as wage inflation supersedes cost inflation.”
The firm reported that as many as 5,000 pubs currently up for sale will see some sort of movement next year, with giants such as Greene King and Punch Taverns offloading less successful pubs and banks disposing of repossessed assets.
A Falkirk Pub Serves 2000 meals a week since joint investment with Punch Taverns.
Gary and Wendy Horne have been running the Coppertop in the town since 2009. The couple has invested around £120,000 in the pub with Punch Taverns making an investment of £230,000. The joint investment has transformed the business into a busy food-led business – it has a 75/25 trading split. The Coppertop is so busy at weekends that it has to turn away as many as 300 to 500 customers.
The food offer is focused on good-value traditional British food such as steak pies and fish and chips, with the average dinner spend of £8 per head.
Among the eye-catching features introduced during the refurbishment, there is a £10,000 five-food long LED screen that looks like a real fire.
Gary Horne, who previously ran a Punch pub a decade ago, said: “Punch is a totally different company to the one I knew a decade ago. It’s been brilliant to me in the last couple of years – very supportive. It’s given me the opportunity to make decent money here. If I can find another Punch pub that’s the right pub in the right location, I’d be delighted to take on another one.”
The Coppertop faces fierce local competition in Falkirk, including a nearby Beefeater and a new build restaurant. But Horne says that being customer-focused and offering value is the key. “I think Punch has recognized the potential in a lot of their pubs if they can get the right people to do the job – and I think you have to do food if you want to stick around.”
A pub landlord says he may be forced to leave his business because the pub owners have hiked his rent up by 60 per cent, according to Bakewell Today.
Dave Mountford, who has run the Rising Sun in Middleton-by-Wirksworth for four years, said the increase by Punch Taverns, the biggest pub company in the UK, would leave him with less than £10,000 per year to look after his family.
Punch has asked for a rent increase from £15,000 to £25,000 in June next year.
Over the past three years, Mr Mountford said he had tripled drinks sales at the pub.
He added: “They now make £85,000 per annum from the pub while we make £20,000.“I was stunned when Punch announced an increase of 60 per cent.
“If the rent increases we will be left with around £10,000 a year to live on.
“I sat down and looked carefully at the figures they have provided and came to the conclusion they are inaccurate.
“We would not be able to stay if the rent went up. It would not be viable.”
Mr Mountford believes Punch has over-valued what he earns and had not included waste costs.
He contacted a list of 18 comparable pubs in the area provided by Punch.
“I phoned up these pubs and they nearly all said they are going out of business. A couple had just received eviction notices. The data showed they are paying much too much rent.”
Trade union GMB now plan to undertake a major survey of pub rents, incomes and costs.
A spokesperson from Punch Taverns said: “We have a Code of Practice that clearly outlines our ways of working and commitments to our licensees and explains what to expect when leasing a pub with Punch.
“The terms we have presented to Mr Mountford are in accordance with our Code of Practice and follow the Royal Institute of Chartered Surveyors’ guidelines. If we are unable to reach agreement with Mr Mountford, we will follow the provisions set out in our Code of Practice for dispute resolution.”
Major pub chain Punch Taverns has claimed the brewer of Tennent’s lager is pushing prices up sharply reports BBC News.
Punch, which has 311 leased pubs in Scotland, has told landlords they should look to alternative lager suppliers.
It said it will absorb the increased price from 1 November, but only until early in the New Year.
After that, it said it would review supply prices and warned of increases to customers.
In a letter to publicans, Punch wrote: “We will limit (the rise) to whatever extent we can, but we expect the price for Tennent’s lager to increase substantially following the review.
“To protect your profitability, we strongly recommend that you act now and take the opportunity to revise and extend your draught lager portfolio before the Punch wholesale price review takes effect.”
John Healy, from Punch Taverns, told publicans other major national suppliers would be pleased to discuss options on other draught lagers.
He added: “We expect these alternatives to be competitively priced and well supported with promotional activity.”
Spirit Pub Co reported a 17 percent rise in full-year pretax profit, at the top end of expectations, while Punch Taverns , from which it demerged earlier this year, said full-year profit fell.
“We have made a good start to the new financial year and, while we expect the consumer environment to be more challenging, we are well positioned to move forward,” Ian Dyson, chief executive of managed-pub operator Spirit, said on Thursday.
Sales at pubs open more than a year were up 4.8 percent in the eight weeks since Aug. 20, helped by recent good weather, said Spirit, which owns over 800 pubs in Britain including the Chef & Brewer chain.
Major pub chains such as Burton-based Marston’s and Punch Taverns have come under fire for the way they treat landlords.It is claimed landlords are forced into a ‘beer tie’ which forces them to pay skyhigh prices for alcohol from the pub companies.
An influential parliamentary committee recently came down on the side of landlords by claiming pub companies were out of control and needed Government regulation.
It is understood the pub companies have been given one final chance to reform and treat landlords more fairly or be hit with new legislation.
The British Beer and Pub Association (BBPA), which represents pub companies, previously said the committee’s recommendations, if adopted, would be disastrous for the industry and would cause more pub closures.
The parliamentary committee said pub industries should be regulated by a statutory body, like Ofsted or Ofgem, with powers to punish those which stepped out of line.
The measure is backed by the Campaign for Real Ale (CAMRA), which said in a statement: “A group of powerful MPs on the Business Select Committee has backed CAMRA’s call for the large pub companies to provide genuine free-of-tie options and guest beer rights to their lessees, and to comply with a legally enforceable code of practice backed by an adjudicator.
“The Government has previously promised to back the committee’s findings and so we are getting close to meaningful action to rein in the conduct of the large pub companies.”
It continued: “This will result in better pubs, better value for money and fewer pub closures. These reforms are crucial to ensure small brewers can get their beers into local pubs.
“Nine out of the 14 pubs closing each week are tied pubs and new research from the Institute for Public Policy research think tank has found that tied pubs are much more likely to be facing financial difficulties.”
The Rodbourne Arms in Swindon has faced flagging fortunes in recent years, and now has a date with the wrecking ball after the council’s planning committee gave the go-ahead for it to be replaced by a frozen food store.
Farmfoods bought the pub from Punch Taverns earlier in the year and has now been given the go-ahead to get to work.
There was a mood of resignation at the council meeting on Tuesday night, with many agreeing that it was a sad loss, but there was little alternative.
Planning officer David Dewart told the committee the building, now derelict, had become a “dangerous structure”, and the Adver reported in April how the owners had been forced to seal it after thieves raided it. “The building has been allowed to deteriorate into just an eyesore, and it’s beyond economical repair now.”