Pub operator and brewer, Young & Co has posted its financial results for 26 weeks to week ending 26 September. Total revenue was up 7.7%to £136m, driven again by a strong managed house performance, with like-for-like sales up 5.4%.
The groups has produced like-for-like growth of over 5%for five consecutive summers and it is to the great credit of our people that Young's continues to deliver such strong and consistent results. This sales performance, combined with a maintained adjusted operating margin of 18.5%, has resulted in our adjusted profit before tax increasing by 8.7% to £22.4m. Profit before tax including exceptional items was up 11.6%to £22.1m.
Revenue in its managed estate was up 7.6% in total and up 5.4%on a like-for-like basis. This performance has resulted in growth in adjusted operating profit of 5.7%. This is despite tough comparatives and the impact of the introduction of the National Living Wage, which added c. £1m in wage costs over the period and is expected to add c. £2m for the full financial year, in line with previous guidance.
In the Young's managed house estate it continued five years of like-for-like growth, this time up 6.0%. Geronimo has returned to form, up 3.5% on a like-for-like basis, after a 1.4% decline in the first half of last year. Total sales in Young's managed houses were up 6.7% and up 10.7% in the smaller Geronimo estate, influenced by the high number of new sites opened during the prior year.
Drink sales were up 8.4% in total and 6.4% on a like-for-like basis. Wine sales have grown by 9.1%, in part due to the roll-out of a new range of best in class wines in the Spring, following the switch to a new supplier, Berkmann Wine Cellars.
Food sales were up 6.9%in total and 4.0%on a like-for-like basis, with the benefits of our recently refreshed menus being felt across the estate. In the past few years, brunch has entered into the British psyche and we have embraced this with the launch of a new brunch offering.
Within the hotels business, room stock was boosted, now 487 rooms, by opening 12 individually designed boutique bedrooms at the Hand and Spear (Weybridge) at the start of the period. Half of rooms are now of boutique standard. Occupancy across the estate was up 1.3%to 78.6%, with RevPAR maintained at £63.80, compared with tough comparatives created by last year's Rugby World Cup.
In total, the firm invested £14.8m in our managed estate, comprising £1.7m in new pubs and £13.1m in our primary like- for-like business. It now operates 172 managed pubs, 132 as Young's (including 22 hotels) and 40 under the Geronimo brand.
The Ram Pub Company, the partnerships formed under the tenanted model, continues to harvest profitable returns for both parties. Revenue was up 9.2%in total and up 3.8% on a like-for-like basis, with particularly pleasing results from the decision to transfer the Lord Palmerston (Tufnell Park) and the Rose and Crown (Farnborough) from managed houses in the prior period.
Patrick Dardis (pictured), Chief Executive of Young's, commented, “I am very pleased with this set of results. We have delivered sector-leading like-for-like growth of over 5%for the fifth summer in a row, as well as maintaining our operating margin. We have generated sufficient cash to allow us to invest heavily in our estate and increase the dividend for the 20th consecutive year whilst reducing our net debt.
'Behind our success lies years of investment to create one of the highest quality pub estates in the UK. This has created hundreds of new jobs and we have trained thousands of people, contributing to our local communities and to the economy as a whole.
'We continue to innovate to attract existing and new customers to our pubs and hotels. We have rolled out our very successful BurgerShack concept to 21 pubs, we are embracing the newfound British love for brunch, and we have just launched “Young's on Tap”,an app that makes the experience of a Young's pub even better.'
Dardis continued, 'There are challenges ahead: the uncertainty over Brexit and cost pressures such as the National Living Wage, the apprenticeship levy, and on a successful company like us, an exceptionally high increase in business rates. However, we will continue to stick to our winning strategy and grow our premium business by investing in our existing estate, acquiring new pubs and developing our people.
'We have a proven strategy and an outstanding and well-invested estate, we also have the financial and management capacity to grow and there is real energy in our people across the business to take Young's forward. We therefore feel confident about the future. ”