Food and families come good for Marston's

By This Is Money
Updated: 07:26 EDT, 2 December 2010

Pub company Marston's 'F-Plan' to focus on 'food, families, females and forty/fifty-somethings' seems to have paid off with a 4.6% rise in profits to £73.5m.

Pub grub: Selling more food is one way of making money for watering holes

The Pitcher & Piano and Tavern Table operator, which runs around 2,000 pubs, has seen food become more popular in its pubs in the wake of the smoking ban and now accounts for 40% of sales.

Its 489 managed pubs sold 24m meals in the year, a 5% increase on the previous year, with sales of drinks up 1.4%. The strong performance of the division contributed to a 0.9% rise in sales to £650.7m in the year to October 2.

Its tenanted and leased pubs still struggled, with operating profits down 3.7%, but Marston's said their performance had improved throughout the year.

The Wolverhampton-based company signed 100 new agreements with tenant landlords that gave them more incentives to grow their business and plans to sign up 500 more.

These pubs will eventually come under Marston's management from October 2011, doubling the size of its more profitable managed division.

Sales of Marston's-brewed beer, which includes Pedigree, Hobgoblin and Brakspear, were up 4.5% to £106.1m as the company pushed local and premium cask ales.

In the eight weeks to 27 November, Marston's said like-for-like sales in its managed pubs were up 3% with profits down 1.5% in its leased estate and own-brewed beer sales ahead of last year.

Marston's said it built 15 pub-restaurants in the past year, often in locations such as retail parks where customers are more likely to eat. Food sales accounted for about 60% of customers' spend.

It plans to build a further 20 pubs next year and 25 a year in the future. Meanwhile, it sold 45 of its less profitable tenanted pubs in the year, generating £17.5m and will offload a further 60 in the next 18 months.

The company also announced a management shake-up that will come into effect in October 2011. Alistair Darby, currently managing director of Marston's leased and tenanted division, will be promoted to chief operating officer, while Stephen Oliver, managing director of the brewery, will take over Mr Darby's role in addition to his current responsibilities.

Peter Dalzell, currently operations director of the leased and tenanted division, will become managing director of the managed estate, replacing Derek Andrew who will step down to become an external adviser.

Analysts at Numis estimate that the leased and tenanted division will move into profits growth within two years and have a 'buy' notice on the shares, which were up 4% to 104.2p following today's results. Pub chain and brewer Greene King will report half-year results tomorrow.