Christie & Co: Pubs, restaurants and hotel saw prices rise in 2016: Average business property prices once again increased across pubs, restaurants and hotels in 2016, according to the latest report by specialist business property adviser, Christie & Co. In their Business Outlook 2017 report Christie & Co indentifies 2016’s main trends to be an increase in interest in UK markets from overseas buyers – particularly those from China and wider parts of Asia – notably in the care, hotels, childcare and pubs sectors. This is partially due to the Brexit vote, which led to improved exchange rates for foreign purchasers. However, as 90% of UK business property sales are still to buyers within the same geographic area, this has meant that Brexit has had little impact on domestic transactions thus far. However it remains to be seen what the longer term effect will be on the wider market ahead of the triggering of Article 50. Despite this, average prices across all the sectors in which Christie & Co specialises increased further in 2016. These are as follows: Pubs: + 4.4%; restaurants: +14.1%; and hotels: + 6.0%. Simon Chaplin, head of restaurants at Christie & Co, said: “With the UK’s dining-out sector worth over £87bn, and over 331,000 outlets serving food, the level of competition for restaurant sites has grown significantly. We saw a 94% increase in restaurants for sale in 2016 on the previous year, but with the pressure of rising costs starting to impact on the casual dining sector, we may be reaching a peak where rents are at a point where they cannot be sustained. Established brands are increasingly facing stiff competition from new ‘on trend’ operators. Late in 2016 we saw the fall of Ed’s Easy Diner and we expect one, maybe even two, other chains to go the same way in 2017. Indeed, the recent news of Jamie’s Italian closing six restaurants indicates that established brands are struggling. It is estimated that 40% of the average UK individual’s leisure spend now goes on eating out, with 31% of the population choosing to eat out at least once a week at any time of the day, and it’s safe to say that this will continue. However, if the market becomes tighter and the Brexit effect hits hard, we might see those towns that have been “revived” by restaurant chains suddenly experiencing empty patches as operators leave and others fall out causing the circuit to become less attractive. In 2016, we saw private equity invest in a number of smaller brands as they look to find the next big thing and this is likely to continue in 2017. They are up against the Instagram generation seeking the hottest trends and “fashion food” – a good social media presence and a different idea is good enough to drive footfall but sustaining this brings more challenges which operators need to find ways to combat.” Neil Morgan, managing director – pubs at Christie & Co said: “The difficulties faced by the sector caused a drop in the number of pubs coming to the market in 2016, but values continued to rise by 4.4% on the previous year. The ALMR Christie & Co Benchmarking Report, released in September 2016 found that the average costs of running a pub are at a seven-year high, with payroll costs accounting for almost 30% of turnover with additional costs coming in due to the increase in National Living Wage next year. This, along with Brexit and the introduction of the Pubs Code with the Market Rent Only (MRO) legislation, has subdued the marketplace but with a lot of the uncertainty over by the second half of 2016, momentum picked up and we expect this to continue into 2017. The high interest shown by PE groups may trigger some other Pubcos and multiple operators to review their estates in 2017 and provide further opportunities for consolidation. Therefore, despite general economic uncertainty and pressures on operational costs, confidence in the sector remains. This has been made evident by the announcement of the potential acquisition of Punch by Heineken and Patron Capital and we predict further major M&A to take place in 2017.” David Rugg, chairman at Christie & Co added: “2016 was a complex series of twists and turns on the economic front and saw operators having to adapt to a raft of new legislation, all of which have taken their toll on businesses across the UK. However, we are pleased to say that the sectors in which Christie & Co deal have longevity, and will remain a focus for operators and investors for the foreseeable future. We will continue to assist with all elements in the lifecycle of business property ownership and operation including funding and business cover through Christie & Co’s sister companies including Christie Finance and Christie Insurance and advice through our Consultancy services.”

M&B reports 4.7% like-for-likes over Christmas: Mitchells & Butlers has reported like-for-like sales growth for the 15 weeks to 7 January 2017 has increased to 1.7%, continuing to build on the progress reported earlier in the year. Trading over the festive period was particularly strong across all brands, with like-for-like sales growth of 4.7% for the four weeks to 7 January 2017. Total sales have increased by 2.3% in the year-to-date. As previously advised, increased cost pressure is expected to lead to margins being lower than last year. The company have opened one new site and completed 69 conversions and remodels in the financial year to date. It expects to complete around 300 remodels and conversions in the full year. Phil Urban, chief executive, said: “This is an encouraging performance, building on positive momentum from earlier in the year. We are starting to benefit from the many initiatives we continue to put in place, which gives us confidence in successfully delivering our strategic priorities going into the new year and a performance in line with the board’s expectations.”