Orchid ups food focus as it reports fall in earnings

By Luke Nicholls

- Last updated on GMT

Related tags: Public house

Food now accounts for 40 per cent of the sales mix accross Orchid Group's estate of around 260 pubs and bars
Food now accounts for 40 per cent of the sales mix accross Orchid Group's estate of around 260 pubs and bars
Pub and bar operator Orchid Group has reported a 5.4 per cent drop in EBITDAR in 2011, although turnover grew by 3.7 per cent to £179.6m as the company announced a £20m programme which will see all of its wed-led pubs become food-led. 

The managed operator, led by Rufus Hall, saw EBITDAR at £40.6m for the 12 months to December 2011 but it improved its underlying gross margins by £2.3m (1.9 per cent). Across its estate of around 260 pubs and bars, food now accounts for 40 per cent of the sales mix, up from 28 per cent in 2006.

“Food has continued to perform ahead of expectations for the first three quarters of 2012,” said Hall. “The UK continues to be a tough trading environment as customers tighten their belts.

Consequently, businesses need to differentiate their offerings and deliver excellent service in order to grow profits. Orchid is well positioned to take advantage of this changing pub market through delivering its simple strategy built around ‘pubs and people’.”

“It has been a significant period of progress for the company, and one that has seen us continue to move forward on every level. In the three years between 1 January 2009 to 31 December 2011, Orchid operated in a capital constrained environment with an average core capex spend of just £7.5k per pub.

Investment, resilience, quality

“Nevertheless, like-for-like sales declined by less than 1 per cent in the same period, and this strong performance reflects our continued investment in people, the resilience of our offers and the quality of our teams.”

In the statement, Hall also said that he believes introducing a minimum price for alcohol is a ‘step in the right direction’. He called for a VAT cut to help the sector and end to the alcohol duty escalator.

Earlier in the year, the managed pub operator gave full control of its Premium Bars & Restaurants (PBR) division to Eclectic Clubs & Bars in a bid to ‘focus on the core business and the assets that it owns’.

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