Punch Taverns is the second largest pub chain that is operational in the UK and they have just announced that their profits have fallen by around 20 percent as customers are tending to go out less due to the economic recession. Despite the significant fall in profits the company said that they are going to meet their profit expectations for the year which were not very optimistic in the first place.
The company lease around 5000 pubs in the country and they have recently announced that they are going to be selling 2000 of the sites which are performing the worst. They are expecting to close around 450 outlets by the end of this financial year.
JD Wetherspoon’s, the popular budget chain also recently stated that they are being affected by customers having less money to spend. They have said that they are going to be decreasing their expansion over the next few years as sales have been weaker than expected.
Despite these declining profit figures, Punch Taverns have stated that they are optimistic about their business over the coming year. They stated that three major events taking place this year, the Olympic Games, the Queen’s Diamond Jubilee and the European Football Championships are all going to be good for business. These events are expected to boost the company’s profits for the second half of the financial year.
One of the main reasons why profits have been falling is because customers are generally drinking less in pubs. The decline would be more noticeable if the profit figures were not being partially propped up by customers choosing to eat out in pubs over more expensive restaurants because of budget constraints. After the announcements about the fall in profits was made by Punch Taverns the shares of the company dropped by around two percent.