The private equity owner of some of Aberdeen's most popular pubs has recorded a £214million pre-tax loss due to the soaring cost of servicing its £3.7billion debt pile.
Stonegate manages and leases more than 4,000 pubs across the UK, including some of Aberdeen’s most well-known boozers including the Bobbin, the Foundry, Murdos, Slains Castle and Triple Kirks. It also owns the Black Dog, which is located in Bridge of Don.
Despite recording sales totalling £1.7billion for the year to October 2024, new accounts reveal the cost of servicing its debt rose from £301million to £455million, pushing the business into loss.
Last July Stonegate’s owners, private equity house TDR Capital, pumped £250m into the company to avoid defaults as part of a major refinancing deal. The rise in Stonegate’s finance costs last year included sums associated with the refinancing.
While its sales rose over the year to October, Stonegate warned in its accounts that customers were continuing to cut back because of the high cost of living in the UK. Management said they were having to “work harder to attract guests to its pubs, bars and venues over our competitors”.
Stonegate bosses also raised the alarm over the impact of a slew of tax rises levied on employers this month by Rachel Reeves, including a rise in the rate of National Insurance (NI) contributions and a lowering of the earnings threshold at which it is paid from £9,100 per year to £5,000.
Hospitality chiefs have argued that the move will disproportionately hurt their industry because of the large number of lower-paid and part-time staff they employ.
In a bid to mitigate the impact of the tax raid, Stonegate said it had kicked off negotiations with its beer suppliers over prices and would consider raising some prices in its pubs too.
David McDowall, Stonegate’s chief executive, said the company had more recently benefited from “improved trading in the second quarter to date, notwithstanding continued headwinds including the unseasonably bad weather and ongoing cost pressures”.
David Ross, the company’s chief financial officer, said: “While we anticipate significant cost pressures, especially in labour, we are well-positioned to maintain our trajectory of profitable growth moving into 2025.”