Say 'cheers' to Fuller, Smith and Turner

True, rising costs may be on their way in the pubs sector with the new national living wage and higher business rates, but Fuller, Smith & Turner, whose estate is split between 190 tenanted pubs and 198 managed pubs and hotels, looks well placed to withstand these. It has continued to increase revenue, up 12 per cent at the last set of full-year results to £392m, with pre-tax profit up 5 per cent to £42.9m. Like-for-like sales improved by 3.7 per cent at the managed pubs and hotels, and the brewery division saw revenue rise 17 per cent to £148m on the back of the acquisition of craft brewer Nectar.

In late July chief executive Simon Emeny said Fuller's had made a good start to the financial year. Sales in managed pubs and hotels were up 6.6 per cent while comparable profits at the tenanted inns were up 5 per cent. The Fuller's Beer Company saw beer and cider volumes improve by 5 per cent. That said, Fuller’s talked of the “perfect summer weather” being “instrumental in enticing people to come out to our pubs”, but August’s weather many have forced a change to that view.

Management is looking to build a leaner cost base by investing in a “comprehensive, far-reaching enterprise resource planning system” and improving efficiencies by going digital. Fuller’s sources most of its ingredients from UK farms and so weak sterling has limited effect on costs. A new foods recipe, margin and stock-control system was recently introduced with the aim of improving profit margins on food and to ensure consistency across locations. While Fuller’s is known for the beers brewed at its London brewery it has also expanded the selection of wines to appeal to a wider audience.

UK consumers may be feeling a squeeze on their wages, but smaller luxuries, such as going for a pint, are more resilient to belt-tightening. Besides, weaker sterling may also encourage more Brits to opt for a staycation, perhaps at one of Fuller’s hotels, and encourage more foreign tourists into the UK now that their currency will go further. Its premium position in the pubs sector should allow Fuller’s to take advantage of consumers’ growing interest in premium alcohol and food options.