Specialist
Director at EI Group plc (Enterprise Inns plc)
Agenda
- UK government's new restrictions and impact on UK pubs
- Recovery rate and Q4 2020 outlook
- Competitive landscape – potential winners and losers
- Potential government support programmes and aid
- Medium-term industry outlook
Questions
1.
What is your assessment of the consumer trends and key consumption changes since pubs reopened in early July 2020 in the UK?
2.
To what degree are consumers returning to pubs and how is foot traffic comparing in urban and regional vs city centre pubs?
3.
How have track-and-trace procedures impacted consumers returning to pubs? Are a large percentage of customers being turned away? What do you think the future of track-and-trace will mean for the pub trade?
4.
Has consumer spend changed given how going to pubs is more of an event now, and less of a spontaneous hangout, as you said? Has average spend per head increased significantly since reopening?
5.
Were the positive numbers in August 2020 directly correlated to the Eat Out to Help Out Scheme?
6.
What are pub trading levels with the new restrictions – the six-person rule and 22:00 closing time? You mentioned down 22% last week of September. Do you think that is the new normal?
7.
What’s your estimate on indoor capacity given the new social-distancing measures and change in season and weather which probably limits or discourages outdoor capacity? There were estimates of pubs typically operating at roughly 60-70% capacity in August, September. How might this change?
8.
What are the typical pub trading levels in winter vs summer months? Could you provide some seasonality context?
9.
How would you estimate trading levels for Q4 2020 – what YoY decrease are you expecting? You suggested worse than 22% – could you elaborate on this?
10.
How do you think wet-led vs dry-led and food-led pubs will perform over Q4 2020? Presumably dry should be a bit more buoyant?
11.
Some post-lockdown price increases were reported, especially on the beer and beverage side. How sustainable do you think these price increases are and what is your longer-term outlook for market pricings?
12.
Do you still expect regional pubs to outperform urban and city pubs over the long run? City centre pubs are expected to remain very depressed because of work from home, but maybe pubs in more urban regions of the city have been doing slightly better.
13.
To what extent has government aid and the VAT payments and business rates helped mitigate the loss in revenue? Do you anticipate any continued government support and in what shape or form if so?
14.
Do you think there’s any possibility of a new form of Eat Out to Help Out Scheme given the tough times pubs are heading into for December, no cure on the horizon and then January to March being quieter months?
15.
Was there a lack of demand in consumers returning to pubs, or did capacity restrictions limit the demand?
16.
Could you outline the general split between fixed vs variable costs of a managed pub and if there’s anything to think about here?
17.
What are some of the key fixed costs as a percentage of total revenue? Could you expand on the utilities and essential costs, labour and rent, and maybe how that differs between a leased and tenanted vs managed pub?
18.
Do managers have much scope to really cut down on any costs? Besides the VAT and business-rates holiday, are there any easy wins to minimise the cost base?
19.
You indicated that leased and tenanted might have expected to fare a little better come July, but who do you think is faring better across the landscape now?
20.
Have there been any permanent increases in the cost base due to the pandemic? Has there been an increase in sanitisation or staff upskilling, or maybe via new apps and software spending?
21.
Do you expect labour expense increasing overall in hard-dollar terms? Presumably labour as a percentage of the cost base will have increased relative to the decline in sales.
22.
How are pubs managing their cash flows and working capital? Are they getting some relief from key suppliers? What levers would you be pulling and might be easy wins to help boost the cash flow profile?
23.
Essentially there’s no real big capital going in, meaning almost a balloon effect with payments and working capital coming under pressure in a few months’ time, when landlords decide to get their rent payment back. What does this mean for the industry in six months’ time? Do you expect a whole bunch of pubs to fall out of the industry with no consolidation? To what extent might pubs be lost to the industry and how might big players react to this?
24.
You’ve been in the industry a long time and you’ve seen the cycles, but what does a period of mass unemployment and global recession do to the pub industry in general? How might this overlay with the coronavirus restrictions maybe 6-12 months down the line?
25.
What Brexit implications do you expect to impact the pub group? Is there anything to say about supply impact or labour?
26.
How would you summarise and assess the potential key winners coming out of the pandemic? You gave some positive sentiment for food-led and leased and tenanted who are less focused on the city centre, more
urban and regional centres. Do you have anything to add here?
