Spirit Pub Revenue Advances on Food Sales With Buoyant Christmas

Spirit Pub Co. (SPRT) said it continues to perform ahead of the market after the company with more than 1,200 U.K. pubs benefited from a “particularly buoyant” Christmas period and increased food sales.

Like-for-like sales rose 4.3 percent in the 20 weeks to Jan. 4 as food revenue on that basis climbed 4.2 percent, the Burton-upon-Trent, England-based company said in a statement today. Sales over Christmas advanced 7 percent.

“The distinction of many years ago between a pub and a restaurant is very little now,” Chief Executive Officer Mike Tye said today in a phone interview. “A lot of people now see us as a casual dining outlet as much as a drinking place.”

Net income from landlord-run establishments “stabilized” amid a plan to dispose of unprofitable leased pubs. The company has sold 90 and will dispose of another 10, Tye said. The owner of John Barras and Flaming Grill pub chains will start buying more pubs in the second half of the fiscal year, according to the statement.

Spirit fell 0.6 percent to 84.25 pence at 11:31 a.m. in London trading, paring the advance to 25 percent in a year and giving the company a market value of about 556 million pounds ($913 million).

“We’ll keep investing in our properties because, with the amount of choice available, no consumer will go to a place that’s not in great shape,” Tye said.

Intense Competition

With more than 50,000 pubs in the U.K., and another 50,000 restaurants or coffee shops trading in same leisure space, the competition is intense, Tye said. It’s “inevitable” that more small pubs will close, while new, bigger ones will open, he said.

“We have very carefully positioned each of our brands to make the most of the areas where we think there is a real consumer upside,” Tye said. “I’m absolutely convinced we’re doing the right things.”

Spirit is trying out a digital loyalty program this year, hoping to boost sales by better targeting customers’ preferences and spending habits. The loyalty card, which has been rolled out only to the Fayre & Square brand, spanning 150 pubs, will allow the pub company to keep track of what its guests buy and how often they visit.

“Most people in the U.K. have a loyalty card, whether that be for one of the big supermarkets or department stores, and we see a very similar role for loyalty cards in our business,” Tye said. “So far we’ve been pleased with the results, and if that continues, we’ll roll it out to some of the other brands.”

Spirit operates about 800 managed pubs and rents 470 bars to licensees and entrepreneurs, a spokeswoman for the company said today.

The number of pubs fell by 11 percent in the U.K. from 2007 to 2011, to about 50,400, according to the British Beer & Pub Association. Beer consumption has dropped since a smoking ban began in 2007, and as the financial crisis combined with rising taxes led people to drink at home. The duty on beer rose about 40 percent in that period.

To contact the reporter on this story: Morgane Lapeyre in London at mlapeyre@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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