Article on line in MA on Wednesday - Merrill Lynch both encouraging new investment in the UK Pub sector ( which I obviously support) and also recommending Punch & Enterprise as Buy stocks!
This was my contribution to an online debate:
There is absolutely no where for Punch and Enterprise to go with something like 25% of their remaining stock having no long term viability in the modern food or drink retailing world; those businesses are simply waiting to die as the tide has gone out on their local markets never to return. The only reason the death throes on these smaller local Pub businesses are going on so long is the still long queue of amateur operators who simply need somewhere to live; and whom Punch has now been reluctantly relying on to keep doors open (thats a virtual quote from a prior senior Ops Director at Punch).
Frankly this could go on for years but in the end someone is going to have to pay for the inevitable 30% fall ( my crude minimum estimate) in the number of trading sites in the sector. The inexplicable naievete of many parties involved - including Government, local Government, Great British Public, and to an extent the trade bodies - is all working to sustain the myth of this sector.
I would however say very confidently that for the remaining professional food service retailers, modern bar operators and some niche businesses the future should be pretty rosy and provide a good basis for growth and income.
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