Owning a brand is no guarantee of retail success, but unless you possess a well-defined concept capable of being rolled out forget trying to attract institutional investors. That simple maxim for stock market players continues to prove true.
Regent Inns' market recovery is based firmly on the focussed expansion of its Walkabout bar and, to a lesser extent, its Jongleurs comedy concepts. The sale of a dozen or more unbranded pubs will do little to hurt its cause. It continues to win 'buy' recommendations.
Inventive with its Revolution vodka bars has built-up a market following, and Old Monk has recently discovered a corner of City support, based on the perceived potential of its Springbok bar brand. It is now selling off 16 non-core sites to fund Springbok's leap forward.
This may or may not seem like good business sense, but it is the City game.
However, the flip-side of out-and-out brand expansion is no better demonstrated than in the coffee market. Both this weekend's Sunday Telegraph and Martin Information's own Guide to Coffee Shop Brands highlight the problems of a sector trying to make money.
The newspaper observes that Starbucks made a £5.9m loss in the UK last year, Coffee Republic is cutting back its expansion strategy and Costa, while making a 'positive return' for Whitbread, will in three years still only make a relatively modest £10m contribution. The only cause for optimism, says the paper, is an expected new round of fund-raising from Caffe Nero, which is seen as a possible bidder for McDonald's Aroma chain.
The problems for coffee brands include the size of the market and need for more consolidation to bring real economies of scale for the market leaders. Another factor is sites. Location is crucial for retail success, but the price has to be right.
Coffee chains are not alone in suffering from the burden of weighty high street rents on prime site leases bought at the top of the market. It is a problem that may come back to bite even the likes of Old Monk as it tries to sell expensive sites to fund its new growth. Who wants to buy them?
It is certainly a problem for McDonalds, which has seen its asking price for Aroma, for which it paid £10m two years ago, drop from £15m to £8m. It also seems one of the factors that has depressed the likely sale price of Whitbread's Pelican restaurant portfolio, which, if rumours are to be believed, is now as low as £30m.
If Old Monk does find similar difficulties, it could well find itself stuck. Its high gearing rules out more borrowing. It may find that a trade sale is the only way to give Springbok its legs and provide the best return for shareholders. Certainly, the current publicity can only help raise interest.
So another one for the "might change hands this year" list, and a possible reminder for managed pub chains such as Punch Retail and Laurel that seeking a stock market presence without a core well-understood concept or two is going to be difficult to explain to the City scribblers.
Not that that will worry the float prospects of Punch Pub Co, the leased pub operator. Like Enterprise Inns, the market sees that as a property play not a retail proposition. Different, but no less simplistic, rules apply.
• For details of Martin Information's Guide to Coffee Shop Brands contact Mark Walford on 020 8240 4479 or email mark@martin-information.com.
Regent Inns' market recovery is based firmly on the focussed expansion of its Walkabout bar and, to a lesser extent, its Jongleurs comedy concepts. The sale of a dozen or more unbranded pubs will do little to hurt its cause. It continues to win 'buy' recommendations.
Inventive with its Revolution vodka bars has built-up a market following, and Old Monk has recently discovered a corner of City support, based on the perceived potential of its Springbok bar brand. It is now selling off 16 non-core sites to fund Springbok's leap forward.
This may or may not seem like good business sense, but it is the City game.
However, the flip-side of out-and-out brand expansion is no better demonstrated than in the coffee market. Both this weekend's Sunday Telegraph and Martin Information's own Guide to Coffee Shop Brands highlight the problems of a sector trying to make money.
The newspaper observes that Starbucks made a £5.9m loss in the UK last year, Coffee Republic is cutting back its expansion strategy and Costa, while making a 'positive return' for Whitbread, will in three years still only make a relatively modest £10m contribution. The only cause for optimism, says the paper, is an expected new round of fund-raising from Caffe Nero, which is seen as a possible bidder for McDonald's Aroma chain.
The problems for coffee brands include the size of the market and need for more consolidation to bring real economies of scale for the market leaders. Another factor is sites. Location is crucial for retail success, but the price has to be right.
Coffee chains are not alone in suffering from the burden of weighty high street rents on prime site leases bought at the top of the market. It is a problem that may come back to bite even the likes of Old Monk as it tries to sell expensive sites to fund its new growth. Who wants to buy them?
It is certainly a problem for McDonalds, which has seen its asking price for Aroma, for which it paid £10m two years ago, drop from £15m to £8m. It also seems one of the factors that has depressed the likely sale price of Whitbread's Pelican restaurant portfolio, which, if rumours are to be believed, is now as low as £30m.
If Old Monk does find similar difficulties, it could well find itself stuck. Its high gearing rules out more borrowing. It may find that a trade sale is the only way to give Springbok its legs and provide the best return for shareholders. Certainly, the current publicity can only help raise interest.
So another one for the "might change hands this year" list, and a possible reminder for managed pub chains such as Punch Retail and Laurel that seeking a stock market presence without a core well-understood concept or two is going to be difficult to explain to the City scribblers.
Not that that will worry the float prospects of Punch Pub Co, the leased pub operator. Like Enterprise Inns, the market sees that as a property play not a retail proposition. Different, but no less simplistic, rules apply.
• For details of Martin Information's Guide to Coffee Shop Brands contact Mark Walford on 020 8240 4479 or email mark@martin-information.com.
