‘Motherhood and apple pie’ secret of Greene’s success

Greene King chief executive Rooney Anand hailed the virtues of “motherhood and apple pie” yesterday as his brewer and pub group broke the £1bn sales barrier for the first time.

The company said like-for-like food sales jumped by 8.1 per cent, driven by its Hungry Horse chain where sales rose by more than 10 per cent for the third year running.

Food related-sales accounted for 60 per cent of total revenues, which rose by 6 per cent to £1.04bn in the year to April.

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In Yorkshire, Greene King operates 93 pubs and restaurants and employs 1,386 people.

Mr Anand told the Yorkshire Post how Greene King managed to make money in such a difficult sector.

“To be honest, it’s motherhood and apple pie – give customers what they want, manage the cost base really tightly, hire good people and look after them.”

He added: “We have focused very heavily on retail. Within our three businesses, retail is our largest with 70 per cent of turnover, half the profits and it’s the fastest growing.

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“Retail is focused on food. We have doubled our food turnover since 2007 and maximised the amount of available revenue we can make from food.

“We have focused on high growth categories such as wine, soft drinks and coffee.

“We have invested in our pubs, unlike some of our peer group who have had to cut back capital expenditure to preserve cash.”

On the outlook for the pub industry, he said: “Good businesses will continue to take market share and weaker businesses will suffer.” On the wider economy, Mr Anand said: “There’s not going to be a sudden pronouncement we are out of recession.”

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He added: “We may only return to very gentle growth and that will have to be earned.”

The group, which recently spent £108m on 26 pubs through the acquisition of chains Realpubs and Cloverleaf, cautioned that despite the strong numbers it expects another testing year ahead as inflation and the impact of the government’s cutbacks take effect.

The group added that the weather has also made trading much more variable with a strong April being followed by a weak May, though it said June has been more in line with normal trading patterns.

Reflecting that, sales in the first eight weeks have slowed in the retail arm to 1 per cent excluding the World Cup last year, while brewing volumes are down by 2 per cent and underlying profits in the tenanted estate 1 per cent lower.

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Underlying profits for the financial year rose by 13.8 per cent to £140m, helped by the strong retail performance and also a 4 per cent profit lift in brewing, where Belhaven in Scotland was again strong while best-seller ale brand Old Speckled Hen gained market share.

Greene King added it is still on course to increase the size of its retail estate to 1,100 pubs – the portfolio rose from 888 to 915 during the year – through acquisitions and transfers from tenanted pubs, where it wants to cut the estate size from 1,554 to 1,200.

Profits were down slightly in the tenanted arm in the year to April at £74.5m, though they rose on a per pub basis.

Greene King posted pre-tax profits of £116.8m, up from £101.9m a year earlier.

It employs nearly 20,000 people across the UK.

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Simon French at Panmure Gordon said he did not expect any change to his forecast for underlying profits of £148m for the current year to April.

“We remain positive on the stock but consider that the strength in price over the last three months has removed much of the near term upside and hence we move to an add while retaining our PT of 560p,” stockbroker Charles Stanley said in a note.

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