Look at you Punch Taverns! Fighting fit at last!
Writing that makes me feel like Alice must have felt when she fell down the rabbit hole.
But Punch has reported that trading is “in line” with expectations (the full results will come later). It has finished its programme of pub sales, brought in £83m from property and £53m from cutting ties with “non core” outlets. Chief executive Duncan Garrood was moved to describe the performance as “solid”.
That counts as quite the achievement for this business. “Godawful” has too frequently been the accurate way to describe its past performance.
No longer, it would seem. Punch is even accelerating the rollout of new outlets, and finding support for a new business model cooked up to replace the centuries-old beer tie that used to force pub tenants to buy from their landlords at above market rates in return for benefits (such as lower rents) until the Government did away with it.
The replacement “retail contract option” is a franchise-style arrangement and while it might sound about as exciting as a pint of Kaliber low alcohol lager on a wet weekend it appears to be getting some traction.
So, closing time on the story of Punch on the ropes? You might even wonder why you popped in for a pint in the first place. Here’s the point: The British pub is often said to struggled as a result of the supermarkets hawking cheap booze as a loss leader to draw in the punters. Pub company bosses have moaned long and loud about the practice.
In reality, pubs have suffered as much, in fact more, from pub company bosses’ addiction to debt, combined with a determination to squeeze staff, publicans, punters, tenants, old Uncle Tom Cobley and all, until the pips squeak just to keep up the mortgage repayments up and provide bit of froth for shareholders on top.
Trouble is if you squeeze too hard, your outlets start to suffer, your staff get fed up and leave the industry, the punters start to notice and instead of paying a premium for a pint in their friendly local pub, they hop off down to the nearest supermarket hawking cheap booze as a loss leader while executives are wining and dining with bankers in an attempt to renegotiate their loans.
Punch has a new model. Great. Like other pub companies, it has moved into food with some success. Its remaining outlets have shrugged off the disruption of Brexit, perhaps because those of us who shouted out for Remain have been drowning our sorrows and lamenting the state of the country.
However, if the industry fails to learn the lessons of the past its recent fizz will turn flat again and Punch and its pals will be back pouring their investors money down the drain like so much bad beer.
And it won't just be the industry's leaders that end up with a hangover.
