28/06/2024 10:30:00
At pub industry events, as I'm sure others do, I ask people how things are and how they find the market. For the last few years, (rightly or wrongly), in a small way this has been a kind of truth test. If the answer is "Yes, it's all brilliant, really busy, never better", then the cynic in me emerges and every comment made by that person thereafter may be filed in my mind under 'Dubious, consider the comment and sense check'.
I think it's becoming different now. The daily industry news is no longer doom and gloom, food inflation is slowing, utility costs have settled, top line sales are growing as is the bottom line. We have seen M&A activity with Punch acquiring 24 of the Wear Inns sites, Admiral buying 37 from Fullers and Red Oak picking up another 19 tied and tenanted pubs from Marstons. Interest rates may start to come down in late summer, there's the Euro where England could do well, as well as the Olympics and summer holidays to look forward to. Conversations with smaller multiple operators are significantly more positive with talk of becoming acquisitive, even the 'P' word (premium) has been used.
There is also a shift in market focus with demand for leaseholds growing. I recently read that Clive Watson has joined Inda Pubs as a non-exec Chairman to help with their growth plans and said leaseholds are "very attractive right now". Urban Pubs and Bars is the template for many and are aggressively expanding their estate which stands at over 42 pubs, bars and restaurants across London, all with their own individual style and concept and is a wholly leasehold estate. Glendola Leisure are keen to acquire more quality leasehold sites in London, as are Market Taverns. There are some excellent operators seeking opportunities and they all want to acquire a pub with potential, invest and make it great.
Market challenges remain however, where there's a shortage of good opportunities, operators that know what they are doing will not overpay for potential, cash remains expensive and banks remain cautious, consumer demand is uncertain with leisure habits evolving, and who really knows what will happen after the election and in the wider world/supply chain? I think it's fair to surmise if the opportunity is good and the pricing realistic then market demand will likely follow.
I am now going to have to alter my truth test. Maybe I will ask for feedback on the recent weather...