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Pub companies face £60m bill as credit crunch bites

16 July 2008
Pub companies face £60m bill as credit crunch bites

Pub owners are facing a £60m bill during the coming year as they step up aid for struggling tenants, according to a market analyst.

Mark Brumby, leisure analyst at Blue Oar Securities, said the cost of helping tenants through a fall in sales combined with rising costs for energy and food, could leave the likes of Punch Taverns and Enterprises Inns nursing a multimillion-pound hangover.

Brumby said: "We are not bonkers and nor do we believe are we being unduly pessimistic. If there is a silver lining to falling revenues and margins and rising costs then it has eluded us.

"Helping the tenants through this will cost [pub companies] a lot of money," he said.

Brumby added that companies such as Punch and Enterprise should avoid maximising rents and dig deep to help tenants with limited resources.

He added that regional brewers would be better placed to "weather the coming storm".

The research assumes that a pub with average sales per year of £306,000 will see turnover fall to just over £289,000 in the coming year.

The impact of its costs rising from approximately £123,000 to £136,000 per year will lead to profits falling from £32,850 a year to £3,259 in the year ahead, some 90%.

Pubs must battle back as sales fall and costs rise >>

Cost of running a pub continues to rise, says ALMR >>

Adnams warns trading conditions for UK pubs are deteriorating >>

Food inflation news and features round up >>

By Chris Walton

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