Pub chieftain Bruce Mathieson predicts a long and bumpy recovery from COVID-19, as Australia’s biggest publican is further hammered by restrictions and shutdowns.

In a recent interview with The Australian, Mathieson spoke of grave fears for the economic damage being felt now, but also what is to be expected into the future.

The Mathieson family own and operate 330 pubs in a joint entity with Woolworths. Recent results released by Woolworths (ASX:WOW) cited a fall in earnings by Australian Leisure & Hospitality (ALH) of 51 per cent, and at least 80 of the group’s hotels are in Victoria and remain shut.

ALH was merged mid-2019 with Woolworths’ drinks arm Endeavour Liquor. The new Endeavour Group structure meant ALH was subsequently not eligible for the Federal Government’s JobKeeper relief, as the new company’s revenue had not fallen by the required 30 per cent. This brought about the dismissal of most of ALH’s roughly 8,000 staff.

There were plans to list the new Endeavour on the ASX in late 2020, but the pandemic has put the idea on hold until at least next year. It’s understood Mathieson plans to have a 14.6 per cent stake in the floated company.

He predicts the true economic damage of the virus may not manifest for another 12-18 months, with likely higher unemployment and longer-term financing pressures. The tougher economic conditions could provide buying opportunities for pub entities in a position to spend, although it is far from clear the precise nature of assets that will succeed in the new normal.

ALH was relatively quiet in the first quarter of 2020, acquiring Queensland pubs the Victoria Hotel in Goondiwindi and Queens Beach Motor Hotel near Townsville.

Bruce Mathieson. Image: Wikinetworth

After more than four decades in the game Mathieson estimates he has owned and operated over 900 pubs in total, counting his portfolio in the 1980s and the ALH venture since 2000.

He believes the potential in an acquisition is all about the price paid and sees potential for opportunity post-COVID, particularly noting freehold consortiums of four or five people that might be forced to sell if one party comes financially unstuck.

Similarly, financiers may call in debt if subdued trading continues and earning potential becomes questionable, affecting de-valuations.

Australia’s only listed pub entity, Redcape (ASX:RDC), fell a dizzying 60.89 per cent in late March to $0.44, from a relative high on 4 March. Hovering below a resurgence to $0.85 mid-June, RDC closed today at $0.79, representing a recovery of 51.1 per cent of its value lost since March.

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