Propel Newsletter Archive Page

Young’s reports profit boost, buys Smiths of Smithfield: Premium pub operator Young’s has reported total revenue up 6.0% to £144.1 million in the 26 weeks ended 2 October. Its managed houses delivered a 6.8% increase in total revenue and a 4.6% rise in like-for-like sales. Adjusted profit before tax was £24.9m (2016: 22.4m). Ram Pub Company (tenanted division) outperformed the market with like-for-like sales up 1.6%; total tenanted sales were impacted by a number of transfers to our managed house division. It made an Investment of £14.3 million into a number of significant redevelopments in the estate as well as the additions of the Bull (Bracknell) and the Chequers (Hanham Mills). It bought the iconic Smiths of Smithfield site, and its sister venue in Cannon Street, this week. It also reported strong trading in the first six weeks of the second half, with managed house revenue up 7.0% in total and 4.9% like-for-like, Patrick Dardis, chief executive of Young’s, said: “We are very pleased with our excellent performance during the period, which once again underlines the strength and effectiveness of a consistent, premium strategy and customer-focussed approach. The pub is still the go-to place in Britain for drinking and eating out and, while much has been written about the challenges facing the pub industry, we believe that providing customers with well-invested pubs, a quality offer and outstanding customer service is key to our success. Despite the continuing unpredictability of our trading environment, we have made a strong start to the second half of the year. We are delighted to have acquired the iconic Smiths of Smithfield, which sits in the heart of the City, as well as its sister venue in Cannon Street, since the period end. Both sites are a fantastic fit with our portfolio of premium managed sites, with their focus on world class steaks, breakfasts, craft beer and quality drinks and we are very excited about the potential for us to build upon their existing offer going forward. Our expectations for the full year remain unchanged and we are confident about our long-term prospects thanks to our premium offer, well-invested and prime located pubs, and the talented teams we have in place across our business.” Of its managed pubs performance, Dardis added: “Over many years now, we have outperformed the market with consistently strong like-for-like sales and profit growth. Our managed estate, which comprises 177 pubs (including 23 hotels), again outperformed the sector, with revenue up 6.8% and up 4.6% on a like-for-like basis, resulting in adjusted operating profit growth of 11.1%. During these six months, we benefitted from very warm early summer weather in June but, predictably, poor weather followed in August and September. These swings are not unusual and, overall, the British summer of 2017 was fairly typical and simply a reverse of 2016 when warmer conditions in August and September made up for a wetter June and July. This summer, London was tragically affected by terror attacks. Once again though, Londoners and visitors to our capital showed their resilience in the face of such adversity. As a nation, we stand together to oppose such acts and our spirit remains undented. Similarly, our staff, some of whom found themselves caught up in the attack at London Bridge, remained steadfast in their responsibility to our customers and each other, and I am immensely proud of each and every one of them. Overall, drink sales were up 7.5% in total and 4.6% on a like-for-like basis during the period. Our “Great Hop Expedition” initiative, which saw us team up with global and local craft brewers to challenge customers to be daring with their beer choices, helped sales of keg ales increase by 28.3%. We also saw huge growth in rosé wines up 31.9% and cocktails which were up 56.1%, the latter being driven by the ongoing enthusiasm of our Cocktail Collective offer which ensures we maintain a complete range of the most popular cocktails, served perfectly every time. Food sales increased by 5.3% in total and 4.1% on a like-for-like basis and they now represent 30% of our revenue mix. Despite cost pressures on food, we’ve worked hard with our local suppliers to source the finest quality ingredients. Our highly talented and skilled kitchen teams are always learning through the power of our “Vegucation” programme, where we aim to bring unusual and lesser known ingredients to the fore each month, challenging chefs to use and interpret ingredients in their own style on their respective menus to ensure that our dishes remain authentic, fresh, natural and seasonal. In recent years our hotel division has grown significantly and now stands at 486 rooms with over half of these now being boutique standard. The hotel estate, which has benefited from refurbishments completed in the previous year, delivered a strong performance that saw average room rates rise 5.7% from £81.19 to £85.85 while maintaining a consistent level of occupancy. As a result, our RevPAR increased by an impressive 6.6% to £68.01. Further growth opportunities for Young’s hotels have been identified and are planned in the years to come. We added four pubs to our managed house portfolio during the six month period. We acquired the Chequers (Hanham Mills) in July, transferred the Hope and Anchor (Brixton) and the King’s Arms (Wandsworth) from our tenanted division, the Ram Pub Company, and, in conjunction with a £240 million regeneration of Bracknell town centre, opened the Bull, a grade II listed landmark that dates back to the 15th century. The heritage of the Bull has been restored and we’ve tastefully combined old and new elements, including a large south-facing terrace and a contemporary glass fronted extension to the rear. Including new sites, we invested £12.0 million during the first six months of the year, a slight reduction on the previous year due to the timing of major developments with greater capital spend planned for the remainder of the year. During the period, we redeveloped the Alexander Pope (Twickenham), Duke of Clarence (Chelsea), Elgin (Ladbroke Grove), Mitre (Bayswater) and the Princess of Wales (Clapton). We also gave the Spotted Horse (Putney) a new vibrant lease of life with a botanical feel throughout and a completely new rooftop bar, the “Juniper Terrace”. It is equally pleasing to see that some of our longer-term investments are progressing as planned: the Nine Elms Tavern, which opened in 2015, is a great example and should flourish even further when the American Embassy opens shortly in Battersea. I was very pleased for Young’s to gain “employer provider” status which enables us to be an official training provider for apprentices. Being 186 years old, training our own staff is nothing new to us, but the role we play in society in providing careers and nurturing talent is now formally recognised. Our in-house training team will now deliver two exciting new chef academy programmes to 70 apprentices over the next 18 months whilst being able to draw down on the funds created by April’s introduction of the Apprenticeship Levy. For us, the levy is an opportunity to help fund the growth of our own talent pool. Young’s On Tap, our own app, is growing in both its popularity and functionality and we’ve now had over 60,000 downloads. Its users are able to do everything from book tables and stays in our hotels to pay their bills and even request their favourite song.”