Pub Partners is responsible for operating our tenanted, leased and franchised pubs across Britain and aims to be the preferred partner for the best operators in the industry.
- Standard tenancy agreement
- Scholarship tenancy agreement
- Standard lease agreement
- Meet & Eat franchise agreement
- Local Hero franchise-style agreement
- Turnover agreement
We have expanded our range of partner suppliers to include premium brands such as Italian cuisine-focused Barrel & Stone.
SHARE OF TOTAL REVENUE
REVENUE PER PUB
EBITDA PER PUB
LOCAL HERO FRANCHISE-STYLE SITE OPENED
In Pub Partners, our strategy is to be the preferred partner for the best operators in the industry. We will achieve this through the offer of the best retail partnerships, in flexible formats and in the best pubs. During the year, we made further significant progress with this, accelerated by the acquisition of Spirit, including its high quality tenanted and leased estate and talented operations team.
The integration of Pub Partners and Spirit Leased was successfully achieved ahead of schedule at the end of the first half.
Pub Partners traded well throughout the year and the combined estate delivered LFL net income growth of 2.7%. Average EBITDA per pub increased by 14.3%, reflecting the contribution of the Spirit pubs, ongoing improvements in the quality of the estate and synergy contribution.
The addition of 416 tenanted and leased pubs from Spirit led to growth in revenue and operating profit in the year of 54.1% and 58.0% respectively. Excluding Spirit, revenue declined 2.1% due to disposals, although the operating margin improved by 1.3%pts reflecting good cost control and higher estate quality. The combined Pub Partners operating margin increased by 1.1%pts and was positively impacted by the performance in the original Greene King estate, offset by the increased proportion of leaseholds following the Spirit acquisition. Average revenue per pub grew 13.8% in the combined estate.
Central to the successful execution of our strategy is the ability to offer licensees the best pubs in their location. During the year, we spent £21.1m on maintaining and developing our Pub Partners estate. We also continued to optimise the combined estate through the disposal of a further 48 pubs. These disposals included six that were required by the CMA.
Aiming to attract and retain the best licensees, we increased our focus on food to further support licensees to build sustainable, quality businesses and expanded our range of partner suppliers to include premium brands such as Italian cuisine-focused Barrel & Stone. We also continued to develop our range of attractive and innovative agreements. During the year, Local Hero, our franchise-style agreement built around local provenance, saw the opening of its 50th site while, together with Spirit, we refreshed our suite of turnover agreements.
Digital is a means through which we can further engage with current and prospective licensees and in the year we launched a new and improved online application process and expanded our use of social media. Overall, our number of Twitter followers increased by 75% and traffic to the Pub Partners website increased twelvefold.
Our teams are important in ensuring we are preferred partners and can attract the best operators. Training initiatives included a ‘Bury St Edmunds heritage experience’ for our Spirit teams and a continued focus on apprenticeships where we now have 154 qualified apprentices compared with 85 this time last year.
These initiatives have contributed to a consistently low proportion of bad debts in the estate and a stable average licensee tenure at around five years.
1. Excludes synergies in the existing Greene King business.
2. Includes Spirit acquisition fair value accounting adjustments, synergies and a 45-week contribution from Spirit.