Specialist
Former director at Stonegate Pub Co Ltd
Agenda
- Stonegate’s like-for-like growth outlook, highlighting footfall trends and pricing dynamics amid cost of living crisis
- Industry cost pressures, highlighting Stonegate’s exposure through its L&T (leased and tenanted) and wet- vs dry-led estate
- Stonegate estate review and disposal opportunities, highlighting potential acquirers and market share implications
- Competitive landscape update, including Punch Pubs, Greene King (LON: GNK), Marston’s (LON: MARS) and JD Wetherspoon (LON: JDW)
Questions
1.
What is your updated overview of the demand environment for the pub industry over the past few months or Q1 2023?
2.
How should we think about customer behaviour in Q1 2023, particularly around footfall, frequency of visits and other demand metrics?
3.
How should we think about Q1 2023 in terms of outlook for sector like-for-likes? Are you expecting the January momentum to continue throughout March and into Q2?
4.
Could you elaborate on elasticity and the dynamic where beer price is obviously rising? How should we think about the value-for-money proposition on the lower end of the spectrum or more broadly? Which players are more challenged in passing costs on to consumers?
5.
How should we think about Stonegate’s performance relative to the market over the next 6-12 months?
6.
Would you expect a higher churn in the L&T [leased and tenanted] estate given today’s environment? Would you expect a higher churn of tenants from L&T publicans?
7.
Should we consider Stonegate’s skew towards wet-led as a competitive advantage in today’s environment? How does that play out for the company specifically?
8.
How should we think about the level of retail pricing across the estate? What have you been observing around price increases to consumers and how that might develop?
9.
Would you expect Stonegate to have a better chance at managing pricing and the elasticity compared to other pub operators?
10.
You indicated Stonegate’s L&T estate as a potential weakness in terms of its sheer magnitude. What kind of support might we see moving forwards for publicans? How is inflation impacting the L&T estate?
11.
How should we think about the magnitude of inflation for Stonegate’s managed and operator-led portfolio?
12.
Stonegate has spoken about inflation mitigation programmes and cost inflation mitigation aims. How successful do you think the company can be, aside from leveraging its scale and procurement? How successful has it been historically?
13.
How do you see the labour situation evolving? What’s the magnitude of shortages today? Presumably this is more relevant for the managed and operator-led estate.
14.
Would you have a rough estimate for where wage inflation sits today, relative to the situation you’re seeing? How should we factor in the upcoming increase in the UK’s National Living Wage?
15.
Would you expect wet-led pubs to potentially be better off in terms of managing staffing challenges and the increase in National Living Wage?
16.
What is Stonegate or the industry’s progress in terms of automation and reduction of labour in the pub model? Did a lot of that happen throughout coronavirus, or do you think there is still a long way to go when it comes to optimising the labour force?
17.
What’s your take on Stonegate’s estate and pub disposals? The company is looking to sell quite a hefty number of pubs. What part of the estate would make the most sense to let go?
18.
What are your thoughts on valuations and Stonegate getting the value for an estate in today’s environment? When might the actual sale go through?
19.
I appreciate that the 1,000 pubs portfolio is a hefty amount vs what Stonegate has been selling so far, but has it been difficult for pubcos disposing of individual assets or smaller groups of pubs? Would you consider that normal market churn, as opposed to cost-cutting measures, in terms of that individual activity vs the 1,000 portfolio we’re seeing now?
20.
Assuming there’s a buyer and the 1,000 pubs are disposed of, how do you think this might impact the synergies that you mentioned in terms of the group benefiting from procurement and anything else?
21.
How should we think about the disposal of the portfolio in the context of accelerating the conversion programme? Is there an expectation there?
22.
Would you expect any further consolidation across other operators? What about a potential sale of Stonegate?
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