‘London is leading the way’ says Young’s pub boss as customers keep spending
After work drinkers in London and visitors travelling to the capital helped pub group Young’s to a record full-year profit in the year to 1 April.
Chief executive Simon Dodd told Morning Wire that when it comes to growth across the business, “London is leading the way.” However, the group has also seen strong trading across the rest of its portfolio, mainly located in the south of England.
Young’s has defied concerns about the state of the hospitality industry and bucked the trend in the wider pub sector.
According to an analysis of official figures by property consultancy Altus Group, 80 pubs disappear across England and Wales each month, an increase of 56 per cent from last year’s levels.
However, Young’s bought a total of 60 new pubs last year, having “accelerated its growth” from the six to eight pubs it usually adds to its estate each year.
Dodd said the group had recorded strong trading across all of its portfolio in the past year, and “Fridays have become the second biggest trading day” of the week, a return to the pattern seen pre-pandemic.
Overnight stays have also become a major part of the group’s offering. Young’s ended the year with just over 1,000 rooms, following the acquisition of The City Pub Group.
A little over two-thirds of overnight stays are now leisure, up from just under a third before the pandemic.
“There’s been a real change post pandemic,” Dodd said. Business travel has declined, and leisure stays have jumped.
Leisure customers tend to stay two nights and usually pick up extra services, such as breakfast and dinner. Demand for bed and breakfast deals has jumped 34 per cent over the past year.
A core part of Young’s offering is quality, and that’s something the firm spent heavily on last year.
The group spent a total of £48m on sprucing up pubs, something Dodd said was essential. “We want to stick with the premium offering,” he said and that meant the pub group had to take some “bold decisions.”
That’s something Young’s has been able to do thanks to its strong balance sheet and robust cash flow. Its financial position means “we’re able to take a long-term view to make sure pubs are very premium,” Dodd explained.
It seems as if customers are willing to pay for premium product. Dodd was at pains to explain that Young’s has tried to keep its prices as low as possible (with many pints held below the £6 mark in London).
Nonetheless, consumers have paid up for premium products such as rose wine and cocktails. Beer volumes rose 2.5 per cent last year, and beer revenue jumped eight per cent, suggesting consumers have not pushed back against higher prices.
Wine and cocktail sales have also risen, the latter up 14 per cent in the last year. “People are happy to pay a bit more for that premium experience”, Dodd said.
Despite the challenges of the past five years, Dodd said he’s confident the Young’s can continue to grow and build on what it’s already accomplished. “We will keep evolving,” the boss said. “We want to be the best pub company we can be, and what we’ve done shows you can be successful,” Dodd added.
“The sector will evolve, it will continue to evolve and grow,” he summarised.