Marston's plays down Living Wage effects

22 July 2015 by Neil Gerrard

Pub group Marston's has played down the effects of the introduction of a National Minimum Wage, as it unveiled a modest increase in sales across its business.

The company issued a trading update for the 41 weeks to 18 July 2015 this morning, in which it revealed that like-for-like sales in its destination and premium pubs was 1.7% ahead of last year, including like-for-like food and wet sales both up 1.6%. In the last 10 weeks of the period, like-for-likes were up 2%. It plans to build another 25 pub-restaurants in the current financial year.

It was a similar story in its taverns division, where like-for-like sales were up 1.7% in the 41-week period, and up 2% in the last 10 weeks. It said its franchise business continued to perform "strongly" and now operates in around 550 pubs.

In its leased division, profits for the 41-week period were "in line" with last year. Average profit per pub was up 4%.

Meanwhile, Marston's said that the government's plans to introduce a mandatory Living Wage by 2020 were "consistent with our expectation that the gap between the National Minimum Wage and the Living Wage would be closed over time".

It added: "The additional cost of meeting the higher target of £9 per hour by 2020 will mean that wage costs will be modestly greater than we had expected, but the impact compared to our plans is mitigated by the fact that we had anticipated increases above the rate of inflation, and the lower rate of corporation tax from 2017. Our view remains that government should prioritise taxation and business rate reductions to reduce the cost of doing business and increase consumer confidence."

Its opinions on the government's move appear to differ to those of Tim Martin, the chairman of managed pub giant JD Wetherspoon. Speaking earlier this month, Martin said the introduction of a National Living Wage added "considerable uncertainty" to the future financial performance of the pub industry.

Commenting on his company's trading update, Ralph Findlay, chief executive officer of Marston's, said: "Our investment in new-build pub-restaurants and premium pubs is in line with our plans and we have seen some of our most successful openings to date this year. We have also opened three lodges, and expect this rate of development to increase in 2016. We have good visibility over our site pipeline and remain focused on securing further good sites for our future growth. These investments, together with the disposal of smaller wet-led pubs and the growth of franchises, have successfully transformed our business over the last three years.

"In brewing, the post-acquisition integration of Thwaites' brewing business is now complete and has gone well. Our strategy is well suited to leveraging market growth in local, premium and craft beers, and the increasing importance of the off-trade."

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