Spirit packs more punch than former stablemate

The contrasting fortunes of pubs operators Punch Taverns and Spirit Group were illustrated yesterday in the pair’s first trading updates since they were de-merged over the summer.

Punch, which leases its pubs to landlords, posted a 5 per cent fall in gross profit at its 5,000 tenanted pubs during the past three months, although the decline was slower at its core pubs, which are not being sold off.

In contrast, Spirit – which runs pubs under brands including Chef & Brewer, Fayre & Square and Taylor Walker – reported a 3.8 per cent rise in like-for-like sales at its managed pubs over the same period.

Managed pubs have generally performed better than tenanted pubs during the economic downturn as they have more control over pricing and promotional activity.

Spirit said growth at its 803 managed pubs was driven by a 7.2 per cent increase in food sales. Serving meals has become a lifeline for many pubs in the wake of smoking bans in the UK.

Drink sales at Spirit edged up by 1.2 per cent in the three months to 20 August as the company came up against tough comparisons with last year’s World Cup and poorer weather.

Sales were also affected by the riots that rocked England last month, forcing the closure of 30 to 40 sites over the worst days.

Punch is reducing its tenanted business from its current estate of 5,080 to a core of 3,000 pubs by selling off premises over the next five years.

The firm said it was making progress with the disposals, which has resulted in growth in average net income per pub of 0.9 per cent. Peel Hunt analyst Paul Hickman noted there were 398 disposals in the past year at an average price of £270,000.

Punch chief executive Roger Whiteside said: “Having completed the demerger, we have a clear operational and strategic plan.”

Douglas Jack, an analyst at Numis Securities, said Punch was on course to show an improvement, as it took advantage of increase beer prices, investment in renovations and increasing its food offering.