Pub chain Punch Taverns seeks new solutions to huge losses
Oct 15 2009 by Jon Griffin, Birmingham Post
Staffordshire pub firm Punch Taverns has turned to wi-fi and mother and toddler clubs to boost revenues after a year of mammoth losses.
The UK’s biggest pubs group, which itself has plunged to annual losses of £405.7 million, said new “income streams” were key to a successful pub in today’s increasingly competitive market.
The blueprint for potential success was revealed as the Burton-on-Trent based group announced the huge bottom-line losses after slashing £663 million from the value of its estate.
Punch, which has more than 7,600 leased and tenanted pubs, cut the value of its estate to £5.4 billion following the impact of the recession and falling property prices.
But Punch regional operations manager Mick Howard said: “Pubs should be constantly looking for new opportunities in the marketplace despite the current tough challenging conditions.
“We have got everything from people opening up rooms to local mother and toddler groups to church groups and to others.
“We are in times we have never faced before, with the recession, the smoking ban and legislation, and Punch has been extremely proactive in reacting to that.
“Gone are the days when a pub just sold beer. We have got over 1,000 pubs which have taken us up with new food offers and wi-fi offers.
“More and more people’s gadgets, such as phones and iPods, are wi-fi linked. We are trying to make sure that our pubs are at the forefront of that and we are encouraging our licensees to take the offer up.”
Mr Howard said the wi-fi facility offer was being rolled out in Punch pubs in conjunction with multi-national provider The Cloud.
Meanwhile, chief executive Giles Thorley warned: “The continuing challenging market in which we operate makes forecasting difficult.”
Despite the huge losses, Punch strengthened its balance sheet by cutting its debt pile by more than £1 billion to £3.5 billion during the year.
Its self-help steps included £375 million fundraising with shareholders in order to prevent it being forced into disposing of core parts of its pub estate.
Punch said current trading was in line with management expectations but results had been hit by a combination of weaker beer sales, lower rental income and higher levels of support to its struggling licensees – running at around £1.6 million a month throughout the year.
Punch also pleaded with the Government to protect the industry after recent blows such as alcohol duty hikes last year.
Punch is awaiting the results of the latest competition inquiry into the “beer-tie” model which forces tenants to buy beer from pub company owners. It follows a complaint to the Office of Fair Trading by real ale campaigner Camra in July.
“Whilst we do not believe that it is necessary for the sector to be investigated by the competition authorities again, we continue to cooperate with the OFT and await the outcome of their review,” the firm added.
