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The pubs may be reopening but investors have little to drink to

Pubs were generally poor investments before the lockdown. Nothing has changed
The pubs may be reopening but investors have little to drink to

Pubs and bars were struggling to make decent profits before the coronavirus arrived. It may be even harder for them to do so when they are allowed to open their doors again.

There are few long-term success stories from the UK-listed pub sector. Pub groups with a large exposure to the more affluent areas within the M25 motorway, such as Fuller, Smith & Turner (FSTA) and Young & Co’s (YNGA) have done a reasonable job for investors, while JD Wetherspoon’s (JDW) business model based on cheap drinks and cheap food could also be counted as a success until a few months ago.

For most of the time over the past 20 years the sector has been fighting battles on several fronts. These range from the threats from cheap supermarket booze and rising labour costs to the smoking ban, which have made pubs seem more expensive and less inviting places to be.

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