Small pub companies' total revenue up one-third in five years, outperforming larger chains, research finds

 
William Turvill
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Small pub companies are outperforming larger chains in terms of revenue growth

Pint glasses are clinking across the country after new research found small pub companies' revenue has grown by nearly a third in five years.

According to Ortus Secured Finance, SME pub companies' total turnover grew from £980m to £1.3bn between 2010 and 2015.

This compared with 13 per cent growth over the same period for large chains, from £12.4bn to £14.1bn.

Read more: Pub sector raises glass to economic recovery

The trend is believed to have come about as a result of large chains selling off pubs in order to reduce debt burdens, and smaller groups purchasing them.

SME firms have also cashed in by taking advantage of consumer interest in more expensive craft beers, small distillery spirits and “gastro pub” priced meals.

Ortus said that despite a relative scarcity of bank finance, smaller pub chains are bouncing back from the smoking ban and long term effect of the recession. Total revenue dropped to £730m in 2008, from £1.1bn in 2007, the commercial lender found.

Ortus chief executive Richard Beenstock said smaller pub companies are “taking advantage of disruption” among larger chains, which can sell off their pubs at “very reasonable prices”.

He also highlighted the introduction of the Market Rent Option as an important boost to smaller pub companies. Giving tenants of larger pub companies the choice to buy alcohol from other breweries rather than their landlord, Ortus said this leads to tied pubs being “no longer attractive to the big chains”.

Beenstock said the Market Rent Option was “loosening the group of the big operators on the pub industry giving more power to smaller entrepreneurial pub businesses”.

Read more: The great British pubs trade-off

Beenstock said: “Smaller pub companies often have more freedom to experiment and respond to what the customer wants than the larger chains and many have been able to transform the pubs sold by the big chains back into profitable enterprises.

“If the small chains and independents get their offering right they can add significantly to their turnover and more importantly profit by shifting customers from mass market brands to local favourites.”

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