England’s World Cup fever has boosted drink sales at Marston’s pubs by 50% as the chain looks forward to a stellar festive season with Christmas bookings up on pre-pandemic levels.
The group, which runs 1,468 pubs in the UK, said the combination of the World Cup and the first Christmas without pandemic restrictions in three years has led to a resurgence in the embattled hospitality sector.
However, the chain, which serves commuters through brands such as Caffè Ritazza and Upper Crust, warned of the impact of rail strikes, which are set to resume from next Tuesday.
Marston’s reported almost doubling in revenue to £800m for the year to October 1, turning a £171m loss last year into a pre-tax profit of £163m.
The company, which is pushing price hikes of up to 10% as its own costs rise, said trade in its pubs was up 6.8% since early October compared to last year, with festive bookings up on 2019.
“Current trading through the end of November has been positive, with encouraging levels of Christmas bookings as we look forward to the first restriction-free holiday period in three years,” said Andrew Andrea, CEO of Marston’s.
However, the company said the surge in food, drink, labor and energy bills led to annual operating costs rising from £492m to £657m.
“We will continue with a relentless focus on controlling costs to reduce the inflationary impact on the business,” the company said. “We expect to offset some of these higher inflation levels through a combination of cost cutting and pricing strategies.”
The hospitality industry is bracing for the impact of next week’s train strikes, which will see timetables cut by 80%. The RMT union also said it plans to strike from 6pm on Christmas Eve to 7am on December 27.
UKHospitality CEO Kate Nicholls said the strikes would be “hugely damaging” to the hospitality industry.
“Our estimate of the cost of these strikes has already amounted to £1.5bn in lost sales and it is incredibly frustrating that no solution has yet been found to prevent this disruption during the gold trading month for our industry,” said the head of the sector organization hospitality industry.
SSP, with offices in approximately 2,800 transport hubs, including airports and train stations, is returning to profitability thanks to a rapid recovery in the travel industry.
The company posted a pre-tax profit of £25 million in the year to the end of September, compared to a loss of £411 million due to widespread travel restrictions last year. Global sales averaged 4% above pre-pandemic levels in October and November.
“The recovery in passenger numbers was led by strong demand for holiday travel during the summer holidays, which continued well into the fall,” the company said.
However, the company said its UK business is lagging behind the global recovery, with sales currently at 84% of pre-pandemic levels.
SSP said this was due to the fact that a higher proportion of its sales came from outlets in train stations than at airports compared to other markets. The company said the UK’s rail sector is recovering more slowly and expects further fallout from the latest strikes.
“Since our UK year-end trading has remained at the same level as the fourth quarter of last year, with further impact from the ongoing industrial action in the rail network,” the company said.
In line with businesses in the hospitality sector, SSP also reported an increase of almost £1 billion in operating costs, from £1.1 billion to £2.09 billion year-on-year.
The company almost doubled its staff costs, from £352 million to £687 million. Food and materials increased from £235 million to £610 million, and lease costs rose from £96 million to £299 million.
“SSP is highly dependent on station locations, so the management team will be crossing their fingers that the union action we have seen this year does not spill over into 2023 and continue to depress passenger numbers,” said Lara Martinez, food sector and retail analyst at Third Bridge. “It will be a challenge for SSP to avoid margin erosion, especially in the UK. It is difficult to pass on inflationary costs to customers because SSP already offers premium prices.”