8th Jun 2022 15:34
(Alliance News) - Investors on Wednesday cheered a pair of promising updates from the UK's pub and dining market, respite for a sector which has been hit by consumer confidence fears and inflationary panic.
Franco Manca and The Real Greek owner Fulham Shore PLC said it is trading in line with expectations, while City Pub Group PLC hailed a boost from the Platinum Jubilee extended weekend.
Shares in Fulham Shore were 0.1% higher at 14.27 pence each on Wednesday afternoon in London. City Pub was up 2.3% at 95.61p each. The duo have seen shares fall 18% and 25%, respectively, over the past 12 months, however, as the outlook for the UK leisure sector worsens.
Fulham Shore reported fortunes in April and May were in line with expectations.
It is now serving over 100,000 customers per week in Franco Manca and over 40,000 customers per week in The Real Greek, figures which it says highlight the "popularity of the two businesses as well as their reputation for "quality and value".
The company has been forced to lift menu prices to deal with inflationary pressures, it explained. It also noted "successful negotiations on rent reviews".
Analysts at Shore Capital Markets commented: "Even after menu inflation, both portfolio fascia (Franco Manca and The Real Greek) in our view remain very well positioned, offering consumers little compromise on quality but at a reasonable price."
Fulham Shore noted it has several stores near offices, benefiting somewhat from a return to office working, and in London's West End, where tourists are returning.
City Pub was similarly encouraged. The operator of 42 pubs in southern England and Wales says sales in May were ahead of pre-virus levels.
Like-for-like sales were up 5% from three years earlier in May, they had been down 2% in April.
Analysts at Liberum commented: "This trading update is encouraging with the business on track to meet expectations for the year.
"The group is confident in a strong 2H and with its low debt position providing flexibility to move quickly on acquisitions."
In the Jubilee long weekend alone, like-for-like sales were 20% higher from pre-Covid times. City Pub noted it was a one-off boost, but it did explain it was "great to see customers coming back to our pubs in force".
The company said it has reviewed its cost base "with vigour" as it grapples with inflation. Cost pressure and consumer confidence present a challenge going forward, however.
AJ Bell analyst Russ Mould commented: "Investors toasted City Pub as like-for-like sales continued to strengthen faster than expected – though how much of this was driven by the higher cost of a pint and how much related to increased volumes is open to question. The company is also looking to keep costs as low as it possibly can with a review of its menu offering. Achieving this without leaving its customers feeling short-changed is a key challenge."
On the horizon for the London-listed pub and dining sector are annual results from Fuller Smith & Turner PLC on Thursday.
By Eric Cunha; [email protected]
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