Brewer and pub operator Marston’s today warned that its running costs will increase by around £12m over the next year, as the price of food, energy and brewing materials continues to escalate.
The warning came as the Pitcher & Piano owner unveiled a 2% rise in turnover for the year to 4 October during what it described as “very testing market conditions”.
In Marston's Inns and Taverns, the company’s managed pub division, like-for-like sales were 0.6% down (2007: 4.6% growth).
The company revealed that food sales now account for 36% of total retail sales and added that its value-for-money operating formats in particular had continued to perform strongly.
In Marston's Pub Company, the tenanted and leased pub division, like-for-like profit was 1.7% below last year including a decline of around 3% in the second half of the year.
The level of support offered to tenants and lessees of the division - including rent alleviations, discounts and assistance in reducing costs – increased to approximately £2m.
To alleviate the expected rise in costs, Marston’s hopes to negotiate better purchasing terms and implement efficiency measures, including an annual cost reduction of £4m following a reorganisation of head office support functions.
Looking ahead, Ralph Findlay, Marston’s chief executive, said: “Although we remain cautious about the immediate trading outlook we believe we are relatively well positioned for the current environment, with a focus on value for money in our managed pubs; a tenanted and leased business operated with a view to sustainability and shared risk and reward; and a great range of premium cask ales”.
Mark Brumby, leisure analyst at Blue Oar Securities, said: “Marston’s is resilient and has a robust business model. Food sales are pushing ahead and, though there is a margin cost in this mix-change, food is the future.
“The group’s managed houses are outperforming the market and its tenants are not over-rented and are getting the help that they need.”
Marston’s to spend £2m supporting tenants >>
Marston’s margins under pressure as beer sales slip >>
Marston’s pub sales stagnant in 'challenging market' >>
Marston’s fails to avoid UK’s poor summer weather >>
Marston’s fined after pub chef injured >>
By Daniel Thomas
E-mail your comments to Daniel Thomas here.
Caterersearch.com jobs
Looking for a new job? Find your next pub job here with Catererseach.com jobs
| | Newsletters
For the latest hospitality news, sign up for our e-mail newsletters. | |