Allied Domecq to spend pounds 150m on new pubs

Allied Domecq, one of the UK's largest pub and drinks groups, yesterday announced plans to cash in on the consumer boom through spending pounds 150m over the next 12 months on the rapid expansion of its pub estate, creating 4,000 jobs in the process.

"The consumer economy is booming and that is feeding through to our pubs," Martin Grant, managing director of Allied Domecq's Leisure division, said yesterday.

Allied plans a big expansion of its themed pub estate. It will open around another 50 Big Steak and Wacky Warehouse outlets, which cater for the family market and include play areas for the kids. Another 45 Firkin pubs will be opened and a mixture of 40 tenanted and managed outlets will be turned into Mr Q's, which house pool tables and video screens to attract younger customers.

The company is also looking to roll out new concepts such as Golden Oak Inns, a traditional-style country pub chain designed to appeal to the older drinker.

In all, Allied plans to more than double its themed pub estate by the end of the millennium through opening another 400 outlets. "This is a long-term plan and we hope to spend a damn sight more than pounds 150m next year expanding our managed pubs," said Mr Grant.

The themed pub market has exploded over the last few years with anything from Irish pubs to sports bars springing up nationwide. Allied's move follows similar expansion plans by its main rivals. Bass is spending pounds 300m this year growing brands such as All Bar One, and Scottish & Newcastle is spending pounds 150m on its Rat and Parrot and Chef & Brewer chains. Independent groups like JD Wetherspoon are also rapidly expanding.

While the huge investment by the industry has led to some fears that the market could quickly become saturated, analysts believe that there is still plenty of room for growth. "The demand for new pubs is still buoyant, fuelled by the strength of the economy and the explosive growth in the pub food market, which is expanding by around 10 per cent a year. The companies are all making good returns and will continue to pump money into the market," said one drinks analyst yesterday.

Allied has only been able to expand its pub estate after selling its 50 per cent stake in brewer Carlsberg-Tetley last year. The 1989 Beer Orders restricted the number of pubs brewers are allowed to own and Allied was close to its ceiling. Now, however, it is free to expand its estate as quickly as it likes, even though it will probably end up with a near 15 per cent in Carlsberg-Tetley after the Government recently blocked its takeover by Bass.

Separately, Reg Vardy, the motor dealer, said that the feelgood factor had spread to the car industry.

"Demand for new cars from retail customers is strong at the moment. There is more disposable income around and the economy is going well," Graeme Potts, the company's chief executive, said.