How you could turn a profit from London’s nightlife
With going out the new staying in, we pick promising leisure stocks
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Your support makes all the difference.Fashions in eating (and drinking) out come and go, but the capital’s nightlife is still a good opportunity when it comes to investment, writes Emily Perryman, personal finance editor of SHARES magazine.
Londoners are shunning cheap deals and are instead choosing to spend their money in pubs that have a premium feel and in restaurants that offer something unique. There are several companies listed on the London Stock Exchange which give exposure to this trend.
Binge-drinking decline
There has been a huge shift in people’s preferences for food and drink over the past decade. Lots of young adults, including students, are opting to go teetotal and binge-drinking is in decline.
Figures from the Office for National Statistics show that over one-fifth of adults have cut alcohol out of their diets and excessive drinking has fallen from 18 per cent to 15 per cent in the past decade.
Londoners are continuing to go out despite this trend. Pubs are still thriving with many packed out whatever the day of the week. Not content with cheap food and drinks, Londoners are increasingly opting for quality over quantity.
This is evidenced by the rising popularity of sparkling wine, craft beer and spirits. Many adults are happy to pay over £5 for a pint of beer if they know it’s going to be full-flavoured and offer them something different. According to the British Beer and Pub Association breweries are opening up at a rate of three every week.
Sales of Prosecco rose by 26 per cent in the third quarter of 2015 while sales of gin increased by 11 per cent, show figures from the Wine and Spirit Trade Association. In two years, 56 gin distilleries have sprung up in Britain.
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Pub dining
Statistics suggest that many people now visit pubs to eat rather than drink, as they prefer the relaxed atmosphere of a pub over a stuffy restaurant.
A survey by Barclaycard in April 2015 found 40 per cent of consumers said they eat in a pub at least once a month. By contrast, 36 per cent said they never eat at a fine-dining restaurant.
A stock to play these trends is Young & Co’s Brewery, a pub group which has been listed on London’s Alternative Investment Market (AIM) since 2005. Its share price has risen by 130 per cent over the last five years, helped by its strong focus on London and South East and its premium, food-led offering.
Young’s has invested considerably in its estate, even during the recession, which means its pubs look modern and upmarket. It operates around 220 pubs and the majority of them are very far-removed from a traditional old man’s pub; they appeal to women and to families.
Riverside appeal
Young’s has several posh riverside pubs which it opened in partnership with Berkeley Homes, offering customers views of the Thames while they tuck into their Sunday roast. Young’s food is restaurant-quality and its customers are happy to pay around £15 for a main course.
A similar London Stock Exchange-listed pub company is Fuller, Smith & Turner. Like Young’s it operates managed pubs – they are run by the company’s own managers rather than a landlord who rents the building.
Fuller’s has also concentrated on introducing a food-led concept and its pubs are predominantly based in affluent areas; nearly 50 per cent are within the M25. At least 60 per cent of its customers go to a Fuller’s pub with the intention of eating food, which is freshly prepared by its on-site chefs. The company has several Thames riverside pubs and it also owns a 51 per cent share of The Stable, a craft cider and pizza restaurant business.
Pizza feast
Owning a London-based restaurant chain is challenging because of tough competition, but this hasn’t hindered sourdough pizza specialist Franco Manca, which has been popping up all over London. Franco Manca was recently bought by AIM-listed Fulham Shore, which also owns The Real Greek chain of restaurants.
You only have to type Franco Manca into Google to see the buzz surrounding the restaurant. It started life in Brixton and now has 17 restaurants spread all over London, with more sites scheduled to open soon.
Viewing pleasure
An alternative way to get exposure to London’s nightlife is through London-listed cinema group Cineworld, whose share price has risen by 86 per cent in the past 12 months.
In the summer Cineworld re-opened its cinema on Shaftesbury Avenue as Picturehouse Central, a 1,000-seat, seven-screen flagship venue with glitzy old-school charm. The old Trocadero centre has been completely revamped and at the upper level there is an exclusive members bar and roof terrace with views over Piccadilly.
Cineworld is having a good year as the line-up of films has been significantly better than the previous two years. Fifty Shades of Grey and Jurassic World smashed box office records and the upcoming films in the James Bond and Star Wars series are expected to do the same.
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Please note the value of investments, and any income from them can go down as well as up and you may not get back your original investment. AJ Bell Youinvest do not offer advice about the suitability of their products or any investments held within them. Should you require financial advice you should consult a suitably qualified financial adviser. Tax rules can change in the future and the tax treatment depends on your personal circumstances. Past performance is not a guide to future performance and some investments need to be held for the long term.
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