Landlords Chew On This: Pubs Start To Grow But Top Restaurants Make Big Losses
The owners of retail and leisure properties have been trying for a while now to increase the number of food and beverage outlets within their assets and portfolios. But two sets of data this month will give them plenty to ponder when it comes to how to do this.
The decline of the pub has been a constant theme of the 21st century, with the classic British boozer hit by changing consumer tastes and regulation like the 2007 smoking ban. But for the first time in a decade, the number of British pubs has grown in 2019.
According to the Office for National Statistics, there has been a net gain of 320 pubs in 2019, compared to an average loss of 732 pubs each year since 2010. Large pubs with a turnover of more than £500K saw the biggest increase.
This revival chimes with a growing interest in the pub sector from traditional property investors. Earlier this year, CK Asset Holdings, the property company of Hong Kong real estate grandee Li-Ka Sing, paid £2.7B for Greene King, one of the UK’s largest pub companies.
In 2017 Patron Capital teamed up with Heineken to buy Punch Taverns for £1.8B. Other significant investors in the sector include NewRiver and Aprirose.
While this is a drop of good news for the pub sector, things continue to be tough for restaurant trade, even among the biggest companies.
The UK’s 100 largest restaurant companies made a combined £93M loss in the 12 months to October, according to an analysis by UHY Hacker Young. The average household now spends £967.20 per year on dining out, down from £988 the previous year. But that relatively small drop masks a huge fall in profits for big restaurant chains. In the 12 months to 2018 the top 100 firms made a £37M profit, and the year before that it was a combined £191M profit.
“There are now few restaurant chains that aren’t either considering a strategic restructuring or a reduction of their branch networks,” UHY Hacker Young partner Peter Kubik said. The growth of less profitable home delivery and a rise in the cost of imported goods because of the weaker pound were big reasons for the fall in profits.