Wesfarmers’ Coles is looking to exit the NSW pub game, listing the Central Coast’s Northlakes Tavern as it focuses on off-premise-heavy Queensland.
Coles and Woolworths have been feeling the squeeze in the retail world in the wake of Aldi’s influence, and engaging in a battle for market share.
Since Wesfarmers’ 2007 purchase of the Coles Group for $20bn, years of double-digit growth have given way to shrinking earnings at the supermarkets, and last year’s drop of 13 per cent and another $5bn off its market value has triggered some hard-line fight-back strategies from Wesfarmers CEO Rob Scott into the “ability to deliver future growth”.
This includes increasing the off-premise liquor business, but complicating that, Coles is rumoured to be making a new push toward divesting its pub interests entirely to escape gaming machine exposure. Pundits tip a move to sell off its Queensland operations under condition it retains the leases of the four associated bottleshops allowed with a hotel licence.
Located on the Pacific Highway between Newcastle and Gosford, the Northlakes is well-positioned in an area earmarked for future growth, adjacent to a shopping centre anchored by a Coles supermarket, and unlike the parent company largely unfettered by proximate competition, with high barriers to entry.
The business holds an initial 15-year lease term expiring 2027, and eight further five-year options, with competitive market rent and outgoings.
The Tavern generates average revenue of more than $80k per week, and significantly the lessee retains the hotel licence and 24 gaming machine authorities.
After a decade of operation under Spirit Hotels, CBRE’s Daniel Dragicevich and Ben McDonald have been appointed to market the business, and “revenue growth opportunity” in the Charmhaven pub, less than two hours from Sydney.
“The Northlakes Tavern is the only Coles-operated venue remaining in NSW and we expect its sale will attract significant investor interest from astute operators that recognise the rarity of such an offering in a tightly held enclave of the market,” says Dragicevich.
Last year both the Collector Hotel at Parramatta and the CBD’s Verandah Bar sold, counting the comparable benefit of the leaseholder owning the licence and gaming interests. The big prices achieved highlight the market appeal for the high cash-flow businesses.
Northlakes Tavern is for sale via an Expressions of Interest campaign, closing Thursday 8 March.
