Brewer, and pub and restaurant operator Greene King has announced plans to spend between £40m-£50m per year over the next three years on simplifying its brand portfolio.
The news came as the Bury St Edmunds-based business – whose brands include Hungry Horse, Chef & Brewer and Loch Fyne – revealed what it says were 'strong' interim results this morning. They were the first results the company has posted that take into account its purchase of Spirit Pub Company earlier this year, which added 791 managed pubs and 416 tenanted and leased pubs to its estate. The company revealed it had now successfully integrated the tenanted and leased Spirit pubs, which it purchased in May. However following the acquisition, it plans to halve its brand mix down from 20, focusing on key growth brands.
Greene King Retail like-for-like sales climbed by 2% in the 24 weeks to October 2015. Spirit Managed sales were up 1.2%, Pub Partners net income was up 2.4% and Brewing & Brands own-brewed volume climbing to 3.6%. Performance was augmented by the acquisition of Spirit, which was owned for 17 weeks of the period.
Total revenue grew 49.2% to £917.7m, including a £269.3m contribution from Spirit. Excluding Spirit, revenue increased 5.4% to £648.4m. Operating profit grew 46.1% to £180.2m, including a £51.4m contribution from Spirit and reflecting £2.1m of synergy achieved to date. Excluding Spirit and synergies, the Greene King business delivered 4.1% growth in operating profit to £128.3m.
As part of its trading statement, the company said: 'We acquired a strong portfolio of brands and formats with Spirit – one that would have been very difficult to replicate organically – and optimising the brands from both businesses will provide an exciting growth opportunity over the next few years.'
Around 300 to 400 pubs are set to be repositioned as part of the new strategy, which will focus on expanding the Hungry Horse, Flaming Grill, Farmhouse Inns, Chef & Brewer and Metropolitan brands, as well as the company’s premium London estate. The company said it also plans to continue to develop a strong Local Pubs estate, its hotel business, as well as the Loch Fyne Seafood & Grill chain. The transition will be funded by a combination of internally generated cash and disposals.
Rooney Anand, Greene King chief executive officer, said: 'It has been a strong first half, with the Greene King business strengthening and significant progress made in the Spirit integration. We completed the acquisition of Spirit Pub Company and, by combining the best of both companies, made good progress in capturing value from the acquisition and creating the UK’s leading pub hospitality company.
'We believe we have the best portfolio of retail pub brands, the best pub assets and the most talented team which, when combined with the strong contribution from synergies and the benefits of our enlarged scale, will ensure we continue delivering value to our customers and our shareholders.'
At the period-end, Greene King operated 3,069 pubs, restaurants and hotels across England, Wales and Scotland, of which 1,833 were retail pubs, restaurants and hotels, and 1,236 were tenanted, leased and franchised pubs. Around 83% of the estate is either freehold or long leasehold. It added ten managed pubs to the estate during the period.