The pubs sector has not had a good few years. Having been hit hard by Covid-19 measures, operators are now contending with severe inflationary pressures and the cost of living crisis. The chief executive of the British Beer and Pub Association, Emma McClarkin, points out that more than 150 pubs closed in England and Wales in the first quarter of 2023; evidence, she says, that “extortionate costs [are] wiping out profits and closing pubs at a faster rate than the pandemic”.
- Trading ahead of pre-pandemic levels
- Modest share rating
- Relatively low debt
- Investing more than peers
- Cost of living pressures could hit sales
- Margins have fallen
But despite continuing headwinds, there are signs that things may have started to turn a corner. The outlook for the listed pubs operators has improved on the back of better-than-expected consumer demand and relatively modest share ratings. There are even some rays of light emerging from behind the dark clouds of energy and food costs. And while sales volumes remain down against pre-pandemic levels, these are now moving in the right direction. Analysts at HSBC said in a recent note on the sector that “demand is coming back more strongly than we had anticipated and the like-for-like sales outlook is above our prior expectations”.