Specialist
Former C-Suite at Stonegate PubCo 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’s estate 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.
Could you share an overview of the trading environment over the past 3-4 months? How has pub demand fared throughout Q2 2023 so far?
2.
When you talk about like-for-likes, are we using 2019 or 2022 as a reference?
3.
Have you observed any change in consumer behaviour, trends around footfall and frequency of visits that we should be aware of?
4.
You mentioned a drop in frequency. Does that translate into higher spend per cover on a per-visit basis, or are we not seeing an offset there?
5.
What is your sector-wide outlook for like-for-likes for the rest of Q2 2023, so June, and looking into the summer trading period?
6.
How would you expect Stonegate’s like-for-likes to perform relative to market over the next 6-12 months? Are there any areas that you think might perform better than others?
7.
A big performance driver until now has been price. How are you expecting like-for-likes to balance across volume and price, bearing in mind the events you’ve just mentioned?
8.
How do you think Stonegate’s skew towards wet-led is likely to impact the company’s price competitiveness or positioning in the market right now?
9.
Could you walk us through how you’d expect Stonegate to have responded to inflationary pressures over the past few months? Do you think there is any room to push pricing, or are there any other strategies to further protect margins?
10.
Do you think we’re likely to see further rounds of price increases? You mentioned Stonegate sitting in the mid-tier-to-value end of the market. Is that a restriction on additional pricing? How should we think about it?
11.
Do you think we’re likely to see any discounting or increased promotional activity from Stonegate to drive footfall and then upsell consumers?
12.
You mentioned Stonegate’s L&T [leased and tenanted] portfolio. How should we think about the individual owners or operators in the current climate? How do you think inflationary costs are affecting overall margins and profitability vs the managed estate?
13.
Do you think Stonegate is in a position to support its L&Ts further? Is there anything at the pubco level that you think might happen?
14.
You’ve mentioned labour and energy prices. Could you recap for us, aside from food inflation, what other areas we are watching out for currently? How are these trending and what are your expectations for these cost lines?
15.
How do you expect the upcoming Beer Duty to impact the macro environment? At a pubco level, what impact is it going to have?
16.
In terms of what you’ve outlined so far, especially the challenges around L&T estates, we’ve seen a number of operators set out on JVs and managed partnership-type models. Do you expect any proliferation of this kind of business model in favour of L&T, or any movement in terms of independents looking to join pub groups in a more solid or established way?
17.
What’s your outlook for operating margins in Q2 and Q3 2023? Is there anything that you think Stonegate can do to protect those, aside from any pricing action?
18.
Based on your point around CAPEX, with margins under pressure and an uncertain environment, would you expect any delays or holdback in terms of CAPEX on that L&T conversion programme? You’ve mentioned it’s well-invested estate, but might there be any delays there?
19.
Could you walk us through what part of the estate you think it would make most sense for Stonegate to let go of? Do you have any thoughts on how this would potentially impact the company’s competitiveness in the pub market?
20.
On a unit basis, you’ve talked about valuations. How should we think about valuations in today’s environment, when it comes to a pub? Are there any challenges around here, or would you expect any challenges in that valuation process in the event of a sale?
21.
Do you see any challenges based on the fact that profitability on an individual basis is under pressure right now? Does that then impact Stonegate’s potential to raise the cash it needs?
22.
If Stonegate were to go ahead with a sale of 800-1,000 pubs, how do you see the competitive environment shaping up? If we took a mid-to-long-term outlook, what is the implication of losing such a sizeable part of the estate for the company?
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