Punch Pubs & Co backer Fortress Investment Group supports the company’s plan to invest and buy more sites, CEO Clive Chesser says.
“We have an eye on M&A,” he told the Mail on Sunday. “Although we’re in a vulnerable sector, Fortress has acquired us for a reason, which is that they’ve got real confidence in our growth trajectory.”
Last year Punch bought 56 sites from Young’s. Any new investment spend will be “considered and circumspect”.
Punch’s property assets are worth £895million, according to a Savills valuation, but with almost 70% of debt.
“Pubs are an affordable treat and will continue to do well. But the pressures on consumer spending are very real,” Chesser says. “Then there are some big macro factors, such as beer duty, where we’re looking for the Government to give us some clarity and support.”
The pub boss has been lobbying the government seeking relief on the huge tax burden on pubs. His wish-list also includes a new visa system to help with labour shortages and further help with energy bills once the relief scheme ends in March. Energy prices at his pubs have doubled or, in some cases, tripled since September.
Prices had become “unsustainable and untenable”, Chesser says. “The Government was absolutely right to step in. But it is too short term.”
The long-term trend for pubs, he says, is that people will go out less frequently but will buy premium food and beer as pub trips become more of an occasion.
Led by Punch Pubs’ sister business, craft beer and pub business Laine Pub Company, he plans to tempt people off their sofas – and win over a generation of younger drinkers – through providing more events and entertainment.
Customers looking to use his pubs as offices, and cut their home energy bills, are welcomed – the new trend known as ‘Working from Pub’.
He says: “We can provide a great environment where we pay the energy bill and we have good coffee and wi-fi in a comfortable environment. We want the communities to feel like stakeholders in their local pub.”
The most recent financial update for Punch Pubs showed it made pre-tax profits of £20.7 million over the year to August 14, on £284m of revenue. Chesser says: “We’re trading ahead of 2019, but profit is more challenging because of the cost impacts.”
Around 50 Punch pubs each year are switching to the management partnerships model. Under this agreement, Punch pays the running costs for the pub and the operators hire the staff and pay their wages out of an agreed share of overall profits.
“Our ambition is to be a modern and progressive pub company, supporting innovative entrepreneurs,” Chesser says. “I take my hat off to our publicans every day, because they’ve set up their own business.
“They’re brave enough to do that, and they throw their heart and soul into running a business.”
