Punch Taverns cautious about the smoking ban

Punch Taverns, the largest pub and bar operator in the UK, said business has been flat in the last quarter at its core estate of larger managed pubs against growth in the year to August of 3.5%.

The group, which has around 9,500 tenanted and managed pubs, said like-for-like growth in its leased pubs has slowed from 2.7% to 2.2%. The group reported 13% growth in pre-tax profits for the 12 months to 18 August to £282 million.

The slowdown is noticeable because Punch’s growth figures the previous year would have been far stronger but for a wipe-out in business in June and July when rainfall was triple the seasonal average and some pubs were closed due to the flooding.

The percentage of sales from food has increased from 32% to 38% in its core estate, verifying analysts’ concerns that drink sales in pubs have fallen by at least 10%. Many believe trade is drying up in British pubs.

The pub industry is challenging currently due to increasing agricultural prices putting the cost of beer and food up, smokers spending less time in the pub due to the ban imposed on July 1 and drink-related health warnings from the Government.

Giles Thorley, chief executive of Punch, said the outlook for the group remained good in the long-term but the smoking ban and possible downturn in consumer confidence could prove challenging so cautious is the word we are using for how we think 2008 will turn out.

Earlier this week, pub chain JD Wetherspoon posted a 1% decrease in like-for-like sales for the 13 weeks to 28 October. Shares fell 15.5p to 486.5p as the pub chain warned that the smoking ban had affected sales.

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