Greene King selling 150 pubs over ‘unprecedented costs’, boss says
Greene King’s decision to put 150 pubs up for sale was a reaction to the “unprecedented” costs facing hospitality, its boss has said.
The pub chain, one of the UK’s largest, revealed plans to put as many as 150 pubs on the chopping block in March and chief executive Nick Mackenzie told City PM this decision was taken in response to rising costs and “changing consumer behaviour”.
The company, which also brews Greene King IPA, Old Speckled Hen and Belhaven beers, plans to offload 300 pubs into a separate unit, half of which will be turned into leased or tenanted venues, with the other half to be put on the market.
Announcing the Chinese-owned pub firm’s annual results, Mackenzie said: “Long-term permanent reform from government is essential to ensure that unprecedented costs do not hold back the enormous potential of the sector.”
He told City PM the decision to sell pubs was taken as part of a regular review of the Greene King estate, but that the pub chain opted to act preemptively in response to a changing economic environment.
He blamed “the cost environment that our industry has faced for the last five years, which is increased employment costs, increased cost of goods through events like the Ukraine war and now obviously what’s happening in Iran and the general economy”.
Mackenzie also took aim at business rates, after changes to the tax at last year’s Budget sent bills soaring for thousands of pubs and saw Chancellor Rachel Reeves forced into a £300m concession.
Iran war to blame for plunging consumer confidence
Labour committed to business rates reform in its manifesto but has yet to deliver wholesale change to the tax.
The pub boss said: “Business rates are unbalanced for our sector so we want the reform that was promised, and the fundamental reform is to rebalance the level of business rates taxation that our sector pays.”
Mackenzie, who sits on the government’s hospitality advisory board, said he is urging Labour to cut taxes on beer and rethink its implementation of guaranteed hours rules for workers on zero-hour contracts.
Last month, a number of leading trade bodies warned the government its current plans to crack down on zero-hour contracts would cause youth unemployment to surge.
As consumer confidence plummets to its lowest level in more than two years, Mackenzie said he is “worried” Brits may cut down on non-essential spending like trips to the pub.
“It’s been a challenging start to the year for consumer confidence [and] I think the Iran war is having an impact,” he said.
World Cup offers boon for pubs
But Mackenzie hopes the World Cup in the summer will boost Greene King’s takings, as the government pledges to allow pubs to open later.
Greene King saw revenue inch up by 3.6 per cent to £2.5bn last year, as it took an operating profit of £94m, up from a £16m loss the year before.
The pub firm is building a new £40m brewery in Bury St Edmunds which is set to open next year.
The company invested £10m into its London pubs this year, including key sites like the Blue Posts in Soho and The Railway Tavern on Liverpool Street.
Greene King operates around 2,600 pubs in Britain, 840 of which are managed directly while a large number of others are operated on a franchise or tenanted basis.
Founded by Benjamin Greene in Bury St Edmunds in 1799, Greene King was listed on the London Stock Exchange before being taken private by Hong Kong billionaire Li Ka-Shing’s CK Asset Holdings for £2.7bn in 2019.