M&C Report talks to Stephen Goodyear and Peter Whitehead, chief executive and finance director of Young’s about the group’s trading performance, food mix, expansion and investment opportunities, plus new “on the go” site The Curious Pig.
Investments
Goodyear said he had taken interest in other group’s investing in complimentary businesses, such as Fullers taking a stake in The Stable, and the “coffee revolution” but believed that there was still plenty of growth to be achieved through existing opportunities. However, he told M&C Report that the group is set to stretch its traditional model next year with the opening of a new Geronimo site adjacent to its Betjeman Arms site in St Pancras station. He said: “The Curious Pig will have a more grab and go feel to it, but without taking anything away from our core principles. We think it will work well in that environment.”
The company invested £20.4m across its managed house estate in the first half of the year: £7.2m in Young’s hotels including the Fox & Anchor, £9.9m in Young’s pubs and £3.3m in Geronimo pubs.
Whitehead said that the group expects to invest a similar number if the second half of the year, with half of that figure already invested in the £10.4m acquisition of the four-strong 508 Ltd.
Food
Food sales were up 7.9% in total and 7.3% on a like-for-like basis. Aided by the company’s ongoing pub investment programme, food sale continue to outperform drink and now represent 29.5% of its revenue mix. Goodyear said: “Our pubs have become food destinations of choice with broad appeal, offering both quality and value. We can see that sales mix eventually edging up to around 35% on the food side and we would be comfortable with that. However, it has taken us a while to get to the ratio we are at now, so we are in no hurry.”
He also revealed that the group’s Christmas lunch and party bookings were running 10% ahead of last year’s.
Acquisition opportunities
Goodyear admitted that London was “particularly competitive” when it comes to adding to the group’s estate. The company has c 40 pubs outside the M25, including a parcel of pubs in the West Country, but London’s remains its main concentration and that there was a lot more “to shoot at” in terms of new sites in the capital.
However, he admitted that due to the increasing competition that the group was looking at towns outside London for further growth opportunities. He said: “This is very bold for us, we bought a pub in Guildford, The Boatman from Heartstone Inns, which has performed heroically, so that’s given us encouragement.
“Further impetus in the current year will come from the four pubs acquired through 580 Ltd and the Bull and Gate (Kentish Town), the long-awaited opening of which is set for late winter. Looking further out, the two sites being developed in partnership with Berkeley Homes are likely to open in the late summer next year.”
Legislation
On the back of the vote to end the beer tie, Goodyear said that the group remained “committed to the traditional tenanted model, working with our tenants to provide them with mainly three or five year arrangements where we provide the financial support for trade building investments, operational and marketing expertise and in turn harness the entrepreneurial drive of our tenant”.
He said: “With 245 pubs (managed and tenanted combined) we are well below the 500 pub level at which the intended legislation is targeted. Our tenanted operation delivered just 5.5% of the group’s revenue in the half year. The legislation is highly disruptive to the industry and unfortunate and unnecessary.”
