MANY pubs leased from Greene King are ‘no longer competitive and cannot sustain enough profit’, the company has revealed.
The Bury St Edmunds brewing giant has admitted landlords in its tenanted and leased Pub Partners are struggling and is offering short term financial support such as rent concessions and wholesale discounts. In the long term it is looking to ‘dispose’ of some pubs, invest in others, and boost the retail skills of its licensees.
The moves were announced on Friday as Greene King announced yet another set of healthy profits in its interim statement for the 24 weeks to October 17.
Chairman Tim Bridge, in the statement, said: “There are still significant issues for the existing tenanted and leased model, with many sub-optimal locations, licensees and offers, beer offers in permanent decline and rising cost pressures. Many tenanted and leased pubs are no longer competitive with either managed pubs or the off-trade and cannot sustain enough profit for both licensee and landlord.”
The period saw seven of its 1,355 Pub Partners pubs close and 14 sold. Revenue dropped by 1.2 per cent while its operating profit dipped by £300,000 to £30.6 million. Despite this the firm says the actual profits per pub was up 2.1 per cent. It has invested while £5.3 million was invested in maintenance, repairs, and expansion.
Overall, Greene King’s operating profits rose to £110 million from £103.3 million, while its revenue went up from £484.1 million to £464.5 million. Its Brewing Company division saw a profit growth of 3.1 per cent, retail like for like sales went up 3.8 per cent, while Belhaven, its Scottish based business saw a record performance with a profit rise of 10.1 per cent.
Chief executive Rooney Anand, said: “This has been a successful first half for Greene King.
“Current trading remains strong, with Christmas bookings comfortably ahead of last year. Although we expect more challenging conditions in 2011, we are confident that we will continue to trade well.”