Marston's bar chain predicts better-than-expected outlook

The British pub group has cut costs

Wed, 11 Oct, 2023 - 17:53

Radhika Anilkumar

British pub group Marston's has said its operating profitability should improve beyond its initial expectations after cutting costs.

The company, which operates 1,415 pubs and bars across England, Scotland, and Wales, said in a trading update it was aiming for its operating profit margin to improve over two to three years. Some of this has been achieved through cost reductions, including the cutting of headcount costs.

Marston's said it had fixed its energy costs for the coming financial period and has secured a significant portion of its food and drinks costs, giving it confidence about its financial outlook. In the past year, Marston's like-for-like sales rose by over 10%.

"We do have limited exposures to city centres and what the numbers show is that over the last year, (suburban) businesses are incredibly resilient," said chief executive Andrew Andrea.

The pub chain, which has not declared a dividend since 2020 due to tough economic conditions, raised its debt reduction target.

In 2023, Marston's disposed about £55m (€64m) of "non-core" pubs and expects around £50m in similar disposals in 2024.

Rival Wetherspoon, which prices its food and beverages lower than average pubs, said last week it had returned to annual profit, and pub group Mitchells & Butlers also reported a rise in sales helped by resilient demand.

Wetherspoon chairman Tim Martin told the Irish Examiner last week that the company in the Republic had traded profitably at pub level in 2023, but had spent a total of €49m on its premises at Keavan's Port Hotel on Camden St in Dublin, at South Strand close to Grand Canal Dock in Dublin, and at Wetherspoon in Waterford.

The latest results showed Wetherspoon was carrying cumulative gross tax losses in the Republic of £24.2m through its latest financial year, up from £18.4m in cumulative losses from prior years reported in 2022.