ALMR Benchmarking shows Government should Back Pubs for Growth
2 August 2013
7th Survey shows business confidence and performance KPIs all improving
- Investment in people, property and business significantly up
- Capex up by more than two thirds to pre-recession levels
- Positive like for likes across all trading styles – community locals outperform market
- Potential could be jeopardized by further unsustainable legislative costs
Britain’s pubs and bars have a firm platform from which to deliver economic growth and jobs. That’s the key message from the industry’s authoritative Benchmarking Report, launched today by leading trade body, the ALMR in association with Barclays.
The Report – which benchmarks operating costs, business performance and market trends –shows the first signs of positive growth across the full range of indices since the sector was hit by the perfect storm of smoking ban, consumer confidence crash and recession. It reveals a sector in robust health and well placed to capitalise on increasing consumer confidence and economic regeneration.
Last year’s survey showed investment back on track, this year’s Report showed capex up more than 66% as operators continue to invest in their estate, their offer and their people. The trend in like for like sales also continues to improve – up by 5.8% in the year to October 2012, with community locals and food led outlets outperforming the market.
Speaking at the publication of the results, Kate Nicholls, ALMR Strategic Affairs Director, said:
“Taken as a whole these findings reinforce our messages to government – we are an industry well able to generate jobs, invest in community facilities and play a full part in the Big Society. The fact that small, community operators are now out-performing the market in all these areas demonstrates in spades that we are the real engine of growth and the best barometer of business and consumer confidence. We have the potential; we need to be freed from red tape and punitive taxes to deliver that in full.”
The Survey reveals some inconsistency within the market, however. Whilst community local operators have seen a resurgence – comfortably outperforming the market with like for likes of 7.6% – those operating under tied leases in particular continue to struggle – reporting below average capex, margins and growth. For the second time, tied rents as a percentage of turnover were higher than rents for free of tie and commercial leases.
The Report does, however, sound a note of caution about factors which could yet derail this potential. For the first time in 4 years, the average cost of running the average pub has increased, to just under half of turnover – up 3% to 48% of turnover with an additional 10% for rent across the leased sector. The increases are fuelled by those cost centres driven by legislation – payroll and general operational matters.
“Cost control is a critical determinant of business profitability – particularly in the pub sector where it is a key variable in rent and valuation calculations. Operating costs as a percentage of turnover had stabilized over the past 3 years after peaking at 51% at the height of the recession. That cost control has come at a price, however, and the report shows that overall outlet net profit margins are extremely slim, meaning that the cushion to absorb additional charges from local authorities, Government or suppliers remains stretched.
“There is a strong warning to government in all of this. Whilst the sector is well placed for steady growth, it remains volatile and highly responsive to external pressures. Get it right and we will be able to capitalize on these positive indicators. Get it wrong and investment in jobs, outlets, high streets and communities could all too easily suffer.”
Notes for editors
- o The ALMR is the only national trade body solely dedicated to representing the interests of pub, club, bar and casual dining operators. Our members between them operate over 13,000 outlets and employ in excess of 350,000 people
- o The ALMR Benchmarking Survey has been carried out annually since 2007. This year’s report was published on 2 August and benchmarks costs, turnover composition, like for likes, margins, capex and rent as at October 2012. An executive summary of the report is available from the ALMR website.
- o The 2013 Report is published with the support of Barclays
- o Separate research by the Association reveals that, over the course of 2012, pubs and bars generated 1 in 8 of all new jobs and 1 in 6 for 16-24 year olds, and recorded the highest level of consumer expenditure
- o The report is approved by RICS, Parliament and Ministers and the Pub Industry Code of Practice for use in rent setting and valuations
Association of Licensed Multiple Retailers
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