Coffee grows Brains profits

From Beer Today

S A Brain & Co Ltd has announced operating profit up by 23% to £5.5m, as turnover grew by 7% to £135m, for the financial year ending October 1, 2016.

Sales increases were largely the consequence of continued growth of the group’s award-winning Coffee#1 business, which grew by 28% following the opening of 14 new stores, and underlying growth in existing stores.

The company’s managed pub estate grew by 3% in total compared to the previous year, and by 1.5% on a like-for-like sales basis, outperforming the overall national pub market by about 0.8%.

Chief executive, Scott Waddington, said: “A wide number of initiatives were undertaken across the business during the year as we implement our five-year plan. I have been pleased with the progress that has been made in the last 12 months and delighted by the customer reaction to our pub developments, coffee shops, new food offers and beers.

“The opening of 14 new coffee shops, the development at The Dock Bar & Kitchen in Cardiff Bay and the brewing of Phonics, in collaboration with the Stereophonics, have been particular highlights.

“Everyone across the company worked extremely hard on managing the development of the business during the year and I would like to thank them all for their efforts. We recognise that our people are the key to our success and we have continued to invest in training and development for both our head office and retail teams.”

More than £6m was invested in the company’s managed pubs, including £1.2m in the Dock. Sales were boosted by strong growth in food of 5%. Pub operating costs were 0.5% lower than prior year, despite continued investment in staff development, marketing and the additional costs resulting from the introduction of the National Living Wage.

Coffee#1 was named coffee chain of the year at the Café Life Awards for the seventh time in eight years.

                          Letting agreement

Underlying sales across the leased and tenanted pub estate were down by just over 1%, while rationalisation continued with the sale of 13 commercially unviable pubs.

The year saw the successful introduction of the company’s new letting agreement, tenant support packages and pricing initiatives. Thirteen new agreements were signed during the year and six major pub redevelopment schemes were undertaken.

Sales of Brains’ portfolio of ales followed a wider consumer trend for more moderate alcohol consumption, with sales of Brains beers down on the prior year. However, The Rev James range, comprising Original, Gold and Rye, continued to grow, with sales increasing by 20% in the year. Total volume through the brewery increased by 8%, mainly driven by contract brewing for Heineken. This contract came to an end in March 2017.

John Rhys, chairman of S A Brain, said: “The year saw good progress being made across many of the fundamental areas of the business and it is encouraging to see the significant improvement in operating profit”.

“We invested significantly in the fabric of our managed pub estate at a level ahead of our business plan in order to continue to improve our guests’ experiences. Through our new agreements and an enhanced level of investment in our leased and tenanted pub estate we are now seeing real growth potential, whilst Coffee#1 expanded further in terms of store numbers, sales and profit contribution.”