Marston’s reports that snow and exceptionally cold weather throughout the UK in the three months to the end of March inevitably affected trading across its pub estate and it therefore expects to report operating profit for the first half slightly below that of last year. However, expectations for the overall trading performance for the full year remain unchanged.
Operating costs
As part of the operational restructuring (see below) and the ongoing focus on minimising costs, Marston’s expects to reduce operating costs by around £3m per year, with about half of this amount benefitting the results for the second half of this year.
Trading
Trading has started well in the second half and the company expects to benefit from less challenging sales comparatives for the remainder of the financial year. Nine new pub restaurants have opened in the financial year to date, with at least 20 anticipated to open by the end of the year which, combined with the rollover benefit of the back-ended 2012 programme, will generate additional profit in the second half.
Restructuring
In the 2012 preliminary results it was highlighted that the pubs businesses are now operated within a single division, in order to better align the pubs to their specific consumer offer rather than the business model under which they operate.
As a consequence, in the Interim Results for the 26 weeks ended 30 March 2013 the segmentation of the reporting of the pub businesses will be changed as described below. This will provide a better understanding of the performance of the pubs from a consumer segmentation perspective, and of the impact of capital allocation decisions.
Destination and Premium
Destination will include those pubs where the food sales mix is high and the primary reason for a consumer visit is to dine.
This group of pubs includes all of the new-build investments in recent years and is intended to be the key focus of investment and driver of future growth, increasing by 20-25 pubs a year. All of these are operated as managed pubs.
Premium includes pubs operating as Pitcher and Piano or Revere and will grow principally through the gradual conversion of selected existing sites.
Destination and Premium currently comprises 301 Destination Pub Restaurants, including all of the new-build investments and 38 pubs operating as either Pitcher and Piano or Revere.
Taverns
Taverns will include the well-situated high quality community pubs, operated through managed, franchised and tenanted business models.
In these pubs, the drinks sales mix is high although food sales are increasing in importance. From a consumer perspective the success of these pubs is achieved through a combination of great licensees, offers, entertainment and amenities appropriate for local consumers. The intention is to increase the number of pubs operating under franchise agreements over time, initially through converting tenanted pubs and then a number of managed pubs.
Taverns currently comprises 156 community managed pubs and 1,242 tenanted and franchised pubs, including 379 pubs identified for disposal.
Leased
The leased model is well-suited to high quality distinctive pubs which benefit from a higher degree of independence and committed entrepreneurial licensees. Currently, 391 pubs operate under this model.
These changes to the pub segmentation analysis have no impact on the reporting of Marston’s Beer Company (‘Brewing’) performance or the Group results overall.