Propel Morning Briefing

Brexit presents opportunity for pub sector, says banking director

Steve Crosswell, commercial banking director for hospitality and leisure at Metro Bank, has said Brexit presents an opportunity for the pub sector.

Crosswell told Specialist Banking the pub market was in “robust health” and while uncertainty was often characterised as a negative, it presented an opportunity – especially to pub operators – to “focus on differentiating their position and providing even higher levels of customer service”.

He said: “Although leisure sub-sectors – such as the casual dining market – face headwinds, the pub market appears to be in robust health if the number of transactions, investor appetite and general operator confidence are anything to go by. The large pub companies remain active, with Greene King acquiring Spirit in 2015 and Heineken/Patron absorbing Punch. These larger transactions have created a secondary market, which generates additional activity and an opportunity for smaller, independent operators to acquire and build their estates. Geographically there remains a strong bias towards some areas with London continuing to appeal to institutional investors, who in some cases are accepting lower yields in lieu of the future capital value upside. We saw the newly formed – and Stellex-backed – Dominion Hospitality acquire the Chapman Group and some of the long-established family brewers have also been targeting ‘golden bricks’ assets in London, which further fuels price rises. Looking at the broader market, the industry appears to have shrugged off concerns about the Market Rent Only option. The sales mix has significantly changed, resulting in an improvement in the quality of pubs being sold and an increase in the average sale price. Encouragingly, 62% of pubs sold remained as pubs, a sharp increase compared with the 48% to 52% seen in the previous eight years. The market continues to keep everyone on their toes. However, the pub operators we speak to remain ‘cautiously confident’, while being aware of the constant need to ensure their products and services evolve and remain relevant to consumers in what can only be described as a volatile environment.”

 

Want to find out more?

Ask how Intelligent Business Systems can help you today!

For more information about our products, services and solutions contact us on 0845 340 4541 or e-mail us below.

Ask your question here