Fuller’s has reported like-for-like sales growth in its managed estate of 4.8% during the year to 26 March, while its tenanted pubs saw like-for-like profits rise 2%.
Total beer and cider volumes were down by 1% during the year, with profits level.
In the first 10 weeks of the current financial year like-for-like sales are up 2.7% in managed and like-for-like profits down 2% in tenanted.
The group said cider and pizza concept the Stable continued to perform well and as a result it had acquired a further 25% of the business – taking its stake to 76%.
Group revenue rose 9% to £350.5m during the year, with EBITDA up 11% to £65m and adjusted profit before tax up 12% to £40.9m.
Total revenue in the managed division grew by 12% to £238.4m. The group said growth had been driven by a rise in like-for-like food sales of 6.9%, while like for like drinks sales had grown by 4.3%.
Fuller’s chief executive Simon Emeny said in a bid to remain competitive in its food offer, the company had continued to invest in its Chefs’ Guild programme and had also enhanced the contracts of its chefs.
He said it was clear that consumers were increasingly seeking more balanced, lighter dishes and recent successes had included the Cornish Orchards cured and smoked sea trout and the tea and hop-smoked haddock. Fulelr’s has also developed a range of bespoke ice-creams with Laverstoke Park Farm.
However, Emeny said there was still room for improvement with recent research showing that only one in four people associated Fuller’s with food, despite an 80% Net Promoter Score for food overall.
Emeny said: “This demonstrates the potential opportunity we have to entice more customers to our pubs to try the dishes that are being invented, freshly prepared and served in our kitchens.”
The company stressed that the rise in food sales was accompanied by growth in premium wine and coffee. Wine sales rose across the board, but of particular note is Sancerre – where sales have risen by 40% in the year – and New Zealand Sauvignon Blanc, where sales are up in the managed estate by 49%. Its DOCG Prosecco was also up by 36%. In addition, Fuller’s sold 1.4 million cups of Brewer Street Coffee, a blend of coffee that is available only at Fuller’s.
While Fuller’s did not add any bedrooms to the estate during the year, it upgraded 99 of them.
Total revenue for the Tenanted Inns was maintained at £31.5m (2015: £31.4 million). Average EBITDA per pub increased by 2% to £83,000. Total operating profit before exceptional items was flat – mainly due to the move of some high volume sites to the managed estate in recent years.
Six new The Stable sites were opened during the year – Plymouth, Winchester, Southampton, Birmingham, Cheltenham and Cardiff. The Bath restaurant was also relocated to a higher profile site, which the company said had increased customer numbers significantly. Emeny said the new sites also had less exposure to the seasonality that impacts on The Stable’s heartland sites in the West Country. He described the recent opening of the brand’s first London restaurant, in Whitechapel, as “a very exciting development for what is still a fledgling restaurant brand”.
Despite many of the new sites opening in the third quarter of the year, total revenue for the year has more than doubled, which Fuller’s said showed underlying growth in the more mature sites.
Expansion and investment
During the year the company added five new pubs for a total of £11.1m. This included Fuller’s only pub in the London borough of Lewisham, The Lord Northbrook in Lee and The Great Northern Railway Tavern in Hornsey, North London - another area where Emeny said Fuller’s is currently under-represented.
Emeny said: “We hope these footholds will pave the way to further appropriate acquisitions in these growing neighbourhoods.”
The other three pubs purchased were The Queen’s Head in Kingston, The King’s Head in Earl’s Court and The Sutton Arms in Barbican.
Fuller’s also opened new build pub The Sail Loft in Greenwich Reach and acquired three freeholds of existing businesses - The Blackbird in Earl’s Court, The Barrowboy and Banker on London Bridge and The Stable in Poole.
At the end of the financial year the estate stood at 191 managed sites and 200 tenanted.
The company spent £20m on 18 significant projects and a number of smaller schemes, resulting in 121 weeks of closures – up from 108 in the prior year. The group it anticipated that number being higher still next year.
The group said its partnership with FlyPay was working well. In November 2014, contactless transactions made up less than 25% of card transactions and only represented 11% of value. Volumes have grown every month and today, contactless payments account for more than 50% of all of card transactions and 33% of value.
Emeny stressed that investing staff remained a priority for Fuller’s with staff undertaking the equivalent of 14,000 days of training during the year (compared to 3,000 in 2012).
’Brewery is the beating heart’
Emeny said: “It has been another outstanding year for the company and I am delighted to be reporting an excellent set of results, particularly in the largest part of our business – our Managed Pubs and Hotels. We are seeing the rewards of our continued investment programme and the emphasis we have placed on recruiting, developing, rewarding and promoting the best people. We do this to ensure that across the business we are giving industry-leading service.
“Our long-term approach is underpinned by a consistent strategy, but we continue to seek new, exciting opportunities to build our business further – keeping the Brewery as our beating heart. We have purchased pubs in geographical areas where we have previously lacked a presence, introduced new premium brands that the consumers of today and tomorrow are seeking out and continued to develop our pub designs and the quality and creativity of our menus.
“The economy is difficult to read with the European referendum imminent, but while it is important to be aware of the external environment, we will continue with the exciting plans we have in place and our long-term perspective gives us the flexibility to react accordingly.
“As we look forward to the year ahead, we know that our long-term strategy, combined with the vision to address the needs of our customers and consumers of the future, will keep Fuller’s on the path of growth. By continuing to invest in our assets, our brands and, most importantly, our employees, we will continue to build a Fuller’s that delivers outstanding service to our customers, excellent careers for our people and good returns for our shareholders.”