Overall, the volume of sales of licensed premises continued to reduce for the fifth consecutive year, pointing towards a stabilisation within the market coupled with a reluctance of operators to offer performing assets for sale.
Activity in the Dublin licensed premises market contracted slightly in 2019 with 16 transactions recorded compared to 17 in 2018, reports Lisney (incorporating Morrissey’s) with 31 in 2017 and 35 in 2016. The volume of sales last year remained below the 10-year average of 23 units.
Increase in higher value sales
However 37.5% of 2019’s transactions saw individual unit sales of over €4 million last year as opposed to just 6% of the market in 2018. Activity within the €0m to €4m range accounted for almost two-thirds of the market share with five transactions completed in both the €0m to €2m and €2m to €4m categories, states the report.
Activity from 2010 to 2018 was primarily rooted in the €0m to €2m bracket, by comparison, accounting for an average of 87.2% of sales.
Industry continues to adapt
According to the report, the manner in which licensed premises trade is evolving has seen the quality traditional-style licensed premises well located within well-populated urban districts continue to enjoy consumer support with volumes of business reported to be on the increase throughout the past three years.
“New-breed innovative operators continue to drive the market by strengthening revenue streams through the blending of food, drink and entertainment.”
Key drivers on demand
According to the report, “The licensed trade has benefitted from the increase in disposable income and discretionary spending levels. As a result the appeal of licensed premises within prime trading areas is set to continue both in terms of profitability and funding. A return towards normalised lending to the sector, with an improvement in pillar lending, has benefitted would-be purchasers. Alternative lenders have also begun targeting large towns and suburban areas and are competing with pillar banks for key trading area”.
Lisney expects this increased lending to the sector to increase in 2020 which will further increase the number of funded operators actively seeking opportunities within the market.
“The outlook for the Dublin licensed premises market is positive in 2020 and similarly so with Galway, Cork and Kilkenny,” says Lisney’s Director of Licence and Leisure Tony Morrissey, “Provincial towns and villages have not witnessed the same level of recovery and these businesses will continue to attract limited appeal. This is unfortunately likely to lead to more closure of non-viable premises.
“Supply levels have been affected by operators opting to continue to trade as opposed to trading up, down or retiring. Under different market conditions operators who may have retired in recent years have instead chosen to hold onto their assets due to the high growth of the past two to three years.
“We anticipate that these forecasts of more temperate growth could assist in improving supply as many of these operators may now give more serious consideration to retirement as the previous growth levels slacken.
We therefore expect the principle driver behind supply will be retirement in the coming years. This will be positive news for those considering expansion who will welcome the anticipated improvement in supply to the market.”
Morrissey’s was acquired by Lisney in May 2018 and now forms the Licensed & Leisure division of the company.