Mark Wingett Editor, M&C Report

The economic headwinds for the UK’s pub and restaurant sectors remain challenging and don’t look like dropping for at least the first six months of the year, placing many businesses at risk of survival, but there will still be opportunities for others to grow estates and market share as 2012 progresses

With momentum picked up in the run up to Christmas, this year could be seen as a key one for the pub industry. A number of events including the Olympics, the Queen’s Diamond Jubilee and the European Football Championships, should prove catalysts for building momentum and a feelgood factor during the year.

At the same time, managed pub operators should continue to grow their share of the eating out market as consumers continue to seek value and quality, something the managed groups are increasingly able to offer.

This year could also see a number of significant pub portfolio’s brought to market, including c.200 sites from the bottom-end of the former 918-strong Galaxy estate and a large number of the former GRS Inns/Pubfolio pubs, which are currently being run under management. The major pubcos will also continue with their disposal programmes.

The question remains: who are the buyers for a large number of these sites? While many have pointed to the Heineken’s £422m acquisition of the Galaxy estate from RBS as a possible turning point for investment in the tenanted sector, we are still waiting for an investor without an agenda to make a move.

People will continue to eat out however, this will be seen as more of a treat over the coming year rather than part of the “everyday”. The majority of restaurant operators will continue on the discounting treadmill, although at some point the sector will have to look at ways of weaning themselves off the vouchers, a process that is unlikely to be painless but one that is necessary for the long-term future of a number of brands.

Private equity will continue to stalk the restaurant sector. Many private equity firms have cash burning a hole in their pockets. These firms are sat on time-limited funds that they must either put to work by investing in companies or return it to their investors. This issue could be particularly influential over the next 12 months.

It’s such a buyers’ market at present (and will continue to be for the foreseeable future) that there will be some tremendous bargains out there for those with growth ambition and the finance to match. As ever with the pub and restaurant sectors, it will be far from dull.