Young’s will ‘invest its way out of’ headwinds currently facing the hospitality sector after a major acquisition helped rapidly accelerate growth last year, according to the pub group’s boss.
The FTSE 250-listed group saw total revenues soar by nearly a quarter to £485.8 million in the year to 31 March, largely thanks to the £162million takeover of City Pub Group late in 2023.
Young’s also invested £47million developing and refurbishing its 277 pub estate, helping to drive like-for-like sales 5.7 per cent higher, while slashing net debt by £19.5million to £248.3million.
Boss Simon Dodd told This is Money: ‘We’re not acquiring at the moment – the [City pubs takeover] accelerated our growth by about five years.
‘But with the National Insurance hike and other costs that are hitting our sector, we think we should invest our way out of it; invest in our people, invest in our pubs and invest in technology.’
Young’s, which typically invests £50million a year, has ‘a number of exciting investments’ currently being rolled-out, according to Dodd, including a click-and-collect service and a loyalty platform for its growing bedroom business.
Young’s boss Simon Dodd says there are ‘a number of exciting investments’ in the pipeline
Dodd has previously criticised decisions made in last year’s Autumn Budget, which will see the group’s cost base grow by £11million a year.
‘A tough macroeconomic environment for the industry seems to have been par for the course since I became CEO and Government changes coming into effect in April make life no easier,’ he told shareholders.
Synergies achieved from the City Pub Group takeover have helped address some of those issues, while Young’s has been able to limit the need for price hikes by utilising its own staff agency in addition to other cost savings.
Dodd had previously highlighted research that suggested Autumn Budget changes could result in the price of a pint rising by 20p.
But he said on Wednesday the group would continue to avoid ‘blanket’ price hikes across its estate and maintain an annual increase of 2 to 2.5 per cent in total.
Dodds added: ‘We will do it on a pub-by-pub basis, some pubs won’t see an increase and some pubs will charge a little bit more.
‘We don’t believe you can price your way out of this in terms of volume, we grew our drinks business by about 3.5 per cent in volume – we’re one of the only pub companies to grow volumes.
‘We have to take a cautious approach to both value and volume.’
Young’s ‘scale and size’ and ‘more importantly’ its strong presence in the South East of England are crucial factors in weathering the storm currently facing the sector, according to Dodd, with central London sales alone up 16 per cent on a like-for-like basis last year.
He added: ‘London continues to lead the way in terms of growth, West London was up 10 per cent and, our heartland, South West London, was up 6 per cent.
‘London is definitely alive and kicking and is driving phenomenal growth for us as a business.’
Asked how the Government could improve conditions for the sector, Dodd said: ‘The one ask we will continue to ask from the Government is business rate reform.
‘We bang on about it every year, but it hasn’t happened yet, and that could be a real stimulus for the sector.’
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