Profits dive at pub chain proves industry downturn

Sep 4 2008 by Graeme King, The Journal

PUB and bar company Sir John Fitzgerald has reported a steep dive in profits as the downturn in the licensed trade begins to bite.

The Newcastle-based company served up profits of just £287,533 for the 12 months to January 31 this year – down from £3.6m the year before.

Sir John Fitzgerald operates 23 pubs, bars and cafes across the North East, but is probably best known for its high-quality city centre pubs.

The company runs such well-known Newcastle spots as the historic Crown Posada near the Quayside, Bacchus on High Bridge, The Bodega on Westgate Road and The Bridge, next to the High Level Bridge over the Tyne.

As well as pubs, the company also operates the Cafe Royal on Nelson Street, Newcastle, where the company’s offices are also based.

Out of town, Sir John Fitzgerald has six large food-based pubs, including the Twin Farms at Kenton Bankfoot and The Green in Wardley.

While the company’s profits fell substantially, overall sales for 2007/08 were healthy, seeing a small rise from £17.6m to £18.4m in the period. In a statement, the company said: “Current trading conditions are tough.

“It will take at least this coming year for us to see the way the future of this industry will go, following the considerable recent changes in it.”

Aside from its core activities, Sir John Fitzgerald is currently trying to sell the former Osborne Garage on Osborne Road in Jesmond, after failing to secure planning permission for a change of use.

John Harrington, news editor of specialist licensed trade magazine the Morning Advertiser, said most bar and pub operators were struggling to make profits, due to a collection of different factors.

“It’s a combination of things which are painfully familiar – the credit crunch, rising costs, etc. Those, combined with cheaper supermarket alcohol sales, have hurt the pub trade.

“In the next year or so, for the first time, ‘off’ trade beer volumes are expected to overtake the ‘on’ trade. Also, just this week, two major brewers, InBev and Coors, have introduced their second price rise this year.

“Coors, which makes Carling, announced it was putting 3p on the wholesale price of a pint, after putting on 4p in February.”