Adnams, the Suffolk-based brewer and pub operator, has revealed that rent concessions for tenants have fallen in the past year, with its tenants now “back on the front foot”.
Own-beer volumes in Adnams’ tenanted pubs increased 4.5% in H1, with the tenanted estate enjoying a “rather better 2011” after a “difficult” 2010, the company revealed this morning.
Adnams chairman Jonathan Adnams cited the steps put forward by the company to help its tenants, including freezing beer prices for the past three years.
“We’ve put in a tremendous amount of support for tenants over the three years since the economic crash,” he told M&C Report. “Certainly the amount of rent concessions probably decreased in the past year and the estate is fully let.
“People seem to be back on the front foot going forward. Having said that, we all realise the economic conditions are pretty variable, but we’ve performed better in the last six months.”
One pub was sold in the period, the Dragon at Colchester. Adnams said the company’s strategy for acquisitions and disposals - selling off unviable bottom end sites and buying “iconic” pubs at the top end when they become available - remains unchanged. “It’s not a numbers game,” Adnams said.
He admitted that the company had looked at the idea of introducing the kind of franchise-style agreements currently being trialed or rolled out by a number of tenanted operators.
“We’ve been looking at those sort of things but there’s nothing in the pipeline at the moment.” Adnams said such agreements would be “more suitable” for companies with large managed estates and a bigger infrastructure.
Adnams also maintained that the target of opening another five or six of its Cellar & Kitchen stores in the next two or three years, with a long-term aim of operating 30 sites, remains. This is despite no new openings in H1.
He said the next opening is due in September in London, with another one or two planned by the end of the year. “We had hoped to get one open in the first half of this year but it slipped by a couple of months.”
Sales at its Cellar & Kitchen stores were 22% up on last year and 14% ahead on a like-for-like basis, although profits were slightly down due to increased staff numbers in preparation for expansion of the brand.
Overall, Adnams reported a “variable” first half of 2011 with operating profits at a similar level to 2010 — 2% down at £812,000. Adnams said it had witnessed a “rollercoaster” in consumer confidence with good weather in April.
Turnover was up 6% to £24.5m while profit before tax is slightly ahead — 9% at £700,000 — of last year but the company said it was “justified” in expressing caution to shareholders in May. It will pay an unchanged dividend of 65p per B share and 16.25p per A share.
It said it had suffered as a result of acquisitions of small pub groups by other brewers — namely Geronimo Inns to Young’s and Realpubs and Capital to Greene King, which meant Adnams is locked out of selling beer to those pubs. But its off-trade sales recovered from a tough 2010 to grow volumes by 17%. Overall own beer volumes grew 2.5% and Bitburger lager by 4.4%.
