- Stonegate has not yet agreed on new loans to replace the £2billion debt
It’s famous for its elaborate drinks, its bottomless brunch and two-for-one cocktail deals, but could this be the end for Slug & Lettuce, as company bosses scramble to plug £2billion in debts.
Whether it’s for a girls’ social, a hen do, a birthday party or a date night, Slug & Lettuce is a popular location for revellers on a night out.
Its signature cocktails come in a range of textures and flavours. Some are a concoction of spiced rum and fruit puree, while others are a sweet tooth’s dream — a mix of chocolate liqueurs and caramel syrup.
But the news that its owners, Stonegate Pub Company, are trying to refinance £2billion in debt, has cast doubt on the company’s ability to continue.
The firm, which owns Be At One and has a network of over 4,400 bars and pubs, completed a takeover of rival Ei before the pandemic — before the industry was battered by lockdowns, a cost-of-living crisis and soaring energy costs.
Now it has warned of a ‘material uncertainty’, as it has not yet agreed on loans to replace the £2billion debt which is due for repayment in June 2025.
On the other hand, Wetherspoons appears to be bucking the industry trend, with sales up 5.8 per cent and reported profits of £36 million in January – up from £4.6 million the year before.
Responding to the news, one customer told MailOnline: ‘I was at the Be At One cocktail bar in Soho with a group of 50 something girlfriends just last week and we had the best time. Great friendly service, music and atmosphere plus fab 2-4-1 cocktails. All kinds of people too. Be very sad to see them close!’
Another said: ‘I’m surprised at this. Go in a Slug and Lettuce on a weekend in Cardiff and they are PACKED with bottomless brunchers.’
Another person said: ‘Having recently sold my hospitality venues, I’m not surprised with this news. The business model pre-Covid wasn’t sustainable and in a post-Covid world it’s certainly not. Their special offers and race to the bottom deals make it impossible to break even let alone make profit in an industry that has increasing price rises since lockdown.
Another added: ‘We have a very large Slug and Lettuce in Islington, over 2 floors. It has to offer so many deals that it must be difficult for them to make any profit, after rent, and rates, without any other operating costs.
‘It used to be rammed, but not anymore.’
It is the latest blow to the UK’s biggest pubs group, which previously mulled over plans to sell 1,000 of its venues in February 2023.
Stonegate’s debt issues also come after the company was criticised for introducing surge pricing in 800 of its venues last year, meaning customers had to fork out more for drinks at peak times such as during sports games and on weekends.
Bosses said in the annual report: ‘Whilst there is a plan in place for refinancing this debt, as at the date of signing the financial statements there is a risk that exists over the completion of this exercise.’
It went on: ‘Since the refinancing plans haven’t been executed, there is an indication that a material uncertainty exists that may cast significant doubt on the Company and Group’s ability to continue.’
This means the group ‘may be unable to realise their assets and discharge their liabilities in the normal course of business.’
Stonegate Pub Company has been trying to refinance its debts since February but it has yet been unable to do so, amid high inflation and an uncertainty in the industry post-Covid.
It was previously reported in MailOnline that there had been a wave of pubs and bars closing.
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Revolution Bars is considering putting itself up for sale and is looking to close a quarter of its venues in a move that could threaten hundreds of jobs.
The chain, which also owns Revolucion de Cuba, said it was looking at ‘all the strategic options available’ after facing ‘a period of external challenges’, it was reported last month. This includes talking to investors about raising emergency funds.
An estimated 30 bars are closing down each week it was reported in February, while dozens more are being forced to reduce their hours due to high costs.
Recent figures showed that 509 pubs shut down in 2023, equating to a loss of 6,000 jobs, while even more alarmingly an estimated 750 are expected to close by June this year.
In February it was also reported that London’s party scene faced ‘annihilation’ with more than 1,100 bars and clubs shutting in just three years and countless others hampered by curtailed drinking hours, threats from housing developers and rising costs.
Famed London venues which have shut their doors in recent years include Printworks in Rotherhithe, Space 289 in Bethnal Green and Werkhaus in Brick Lane.
RedCat Pub Company, which was founded by former Greene King CEO Rooney Anand, has been forced to close five of its under-performing sites, while it is also exploring the sale of a further 14, it was reported in March.
In contrast, total sales at booze chain Wetherspoons have hit £991miillion, a hike of 8.2 per cent as more punters appear to be turning to the discount chain over local independents.
Like-for-like sales grew by 7.4 per cent for the year, with this now 15.3 per cent ahead of pre-pandemic levels from 2019. The company recorded revenues of £991 million for the year to January, up from £916 million a year earlier.
Wetherspoon financial surge comes despite a recent reduction in its pub stock, with the company having 814 venues compared with a peak of 955 in December 2015.
But despite the reduction in outlets, Wetherspoon said total sales are now about one third higher than in 2015 – before the pandemic obliterated the hospitality industry – with sales per boozer ballooning by about 50 per cent since.
Chiefs at the much-loved pub firm have plans in place to boost the current fleet of boozers up to 1,000 in the UK.
Examples of recent pub openings include the Captain Flinders near Euston Station, the Stargazer at The O2 and The Star Light at Heathrow Airport.
The company said: ‘In the last decade, there has been a reduction in the number of trading Wetherspoon pubs, which peaked at 955 in December 2015.
‘In spite of a reduction in the overall number of pubs, sales have continued to increase – total sales are now about one third higher than in 2015.’
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
