Pubs Market Enjoys Bouyant Summer
September 10, 2013
Pubs and beer gardens up and down the country are extremely busy in the summer months as publicans take advantage of the prolonged spells of good weather we have enjoyed this year – a far cry from our traditional British summers! In contrast, the pubs market is traditionally very quiet.
This year, however, has been very different.
We have been busier than ever before completing a swathe of deals including The Endurance on Berwick Street, Soho, The Castle in Walthamstow, The Phene Arms, Chelsea and the Nellie Dean on Dean Street, Soho . In addition, we have seen our appointments rise by 12% over recent months, which – as well as numerous individual sites – includes the instruction by Stonegate Pub Company to find sites throughout London and the Home Counties to expand its Slug & Lettuce brand.
It is difficult to put your finger on the reason for this bounce in the market. It appears to stem from the confidence that has been emerging in the economy. This has buoyed the wider property sector to become more active, which has, in turn, filtered down into the pubs market. Both new and established operators are now actively looking for opportunities to buy or dispose of assets.
This increase in confidence and activity has created an extremely exciting market place. We now regularly experience competitive multiple bidding for a wide range of opportunities . Leasehold premiums on pubs in the Capital have climbed by over 20% in the last 3 months. We are even experiencing unprecedented interest in closed units, generating premiums on sites that, in some cases, havent been operational for over a year.
So who is driving this market?
We have seen a marked increase in the number of first time operators who, having learnt the pub trade working on the operations side, now have the confidence to make the investment in their own establishment. Often they have private financial backing and can now take the plunge with a degree of certainty that their backers will see a return.
Established operators too have realised the opportunities the market presents. Some are keen to build a brands popularity or add to an existing portfolio in a rising market. Others are looking to dispose of less profitable units or ones that dont correlate with the companys wider strategy.
There have also been in some cases like Draft House and Grand Union – where operators, which already own a number of sites, have secured financial backing and are eagerly looking to use this extra capital to expand their operation.
Our experience completely contradicts the doom-and-gloom stories in the media about pub closures. Most landlords and operators are capitalising on the increasingly active social scene by evolving and diversifying their offers. This ensures they remain competitive, continue to attract customers and therefore – most importantly – make money. The Coffer Peach Tracker backs up our assessment of the market, having reported that managed pub groups saw collective like-for-likes up 2.9% while wet-led pubs saw like-for-like sales jump 5.7% in July.
So, as the summer comes to an end and the weather inevitably cools down, the pubs market only seems to be getting hotter.