• Wed. Nov 30th, 2022

Marston’s chooses to franchise pubs to pursue growth

ByStephanie M. Akbar

May 26, 2022

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The company began franchising in 2009, with the model now operating in over 600 of its pubs.

Marston’s recently piloted it in four of its new pubs, introducing the community wet menu, which has produced encouraging early results, with double-digit sales growth.

Speaking at an investor conference, Andrea the company was looking to expand its evolved franchise model – called Pillar – to 60 locations by the end of this year, and would then assess how it could scale further.

Its Pillar agreement allows franchisees to develop their own food offering, which is then put on Marston’s EPoS system.

Marston’s also converted some of the franchise pubs it took over from SA Brains into franchises.

Franchise conversion

the The companies reached a deal with Brains, in December 2020, which would see Marston take over management of its approximately 150 pubs under a combination of lease and management agreements.

Andrea described the “light capex acquisition” as successful – with Brains pubs actually outperforming Marston’s own Welsh estate.

“We’re converting to franchising and seeing growth,” he said. “One of the biggest challenges was the kitchens. We are in the process of deploying the Marston’s menu which represents an additional margin opportunity.

It converted several Brains sites to the franchise model in the first half of this year, with four conversions planned for next year, “and we have identified other opportunities for the future.”

He added that there were a few sites that Marston was originally only going to run on behalf of Brains for a few years, but he has now decided to take them on permanently.

“They will be going to Marston over the next two months or so,” Andrea said.

“As a framework for future mergers and acquisitions, so we have a platform where we have real estate partners who want full ownership and we’ll just be the pub operator driving the growth of EBIDTA (earnings before interest, amortization, taxation and amortization) in what concerns.

Asked about the numbers

Andrea said that following its latest results update, Marston’s has been challenged on its roadmap to achieve sales growth of £200m (overall sales of £1bn) and how it would be achieved.

“Essentially about half of this growth will come from repositioning the pub business, about a quarter will come from opportunities within franchise expansion and Brains, with these direct interventions what remains is a sales task which requires about 2% as- for comparable sales growth (lfl).

While Andrea said he accepts that the current consumer environment is difficult, he noted that many pubs emerged from the last financial crisis with 3% LFL sales, so “I don’t think it’s an overly demanding LFL target.”

He also reiterated that Marston is focused on LFL’s long-term growth rather than short-term gains. “Our strategy is focused on creating a simpler and more efficient business.”

After her half-year results last week, Andrea said sister post MCAwhy the company is scrapping its Two for One format and revamping its food menus after receiving poor customer feedback.

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