Gastro versus Boozer

Many years ago I worked at a London investment bank which churned out company and market reports on a weekly basis. The guys who wrote the reports were seriously bright. However, like everyone they occasionally screwed up and, when they did, it was a very big deal.

Like the time an analyst wrote a glowing report concluding with a “buy” recommendation for a company which, on the day the report was published, issued a profit warning and fired their CEO.

The poor chap was ridiculed by the city press and one paper even published his photo. I saw him sitting in the canteen while it was all kicking off with an uneaten lunch in front of him, but he didn’t see me. At least I don’t think he did. He sort of looked through me into the mid-distance. He stayed like that for about 3 hours.

Anyway, the result was I decided it wasn’t worth reading company and market reports anymore.

However, a couple of weeks ago I chanced upon a report by Deutsche analyst Geoff Collyer which confirms the pub sector is in the “best shape for decades”. Having survived a “perfect storm” of above-inflation excise beer duty increases, the recession and the smoking ban, he believes the sector has emerged in a much better shape.

One of the reasons is the shift from beer sales to food sales. The report states that whereas beer volumes have decreased 45% in the last 15 years, the UK eating out sector has increased in all but 6 quarters since the Office of National Statistics began their records in 1964.

We are seeing evidence on the ground of this shift towards food, especially with clients buying pubs with a view to building the business through an attractive food offering. Many of our clients have received specialist culinary training and several have won awards. It is therefore little surprise to see them doing so well.

However, we definitely don’t see this as the end of the traditional boozer. We have numerous clients who run successful, wet-led pubs with loyal and abundant clients. Location is important because, for obvious reasons, people can’t drive a few miles to sink a few pints (or at least they can’t drive home) but in the right areas with a suitable demographic they work exceptionally well.

So, perhaps I will start reading company and market reports again. There is no question in our mind that the pub industry is in great shape and the increased emphasis on food is a major reason. However, at Ortus we will always love the traditional boozer too.

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