Luminar - time to slim down?

"I'm not going to give up until I've turned it around," were the words of Steve Thomas last month, announcing a less than cheery trading statement. Since then Thomas has lost an operations director, a finance director and even more of the City’s faith. News of Andrew Burns’ resignation this week sent the company's shares tumbling. Wayne Brown, analyst at Altium, said: "Another senior board member has left the company. We are quite disappointed." Thomas has a long history of making money in nightclubs, in, as he puts it, 'the first-snog market'. But times are changing. What was once seen as youthful high spirits and 'boys will be boys' is now labeled ‘binge drinking’ and is set to be a key fighting ground in the election, up there with taxation, education and the NHS. The consumption of alcohol to excess is rapidly becoming unacceptable behaviour. The industry has long looked to the US for inspiration and, judging by that, we can look forward to drinking being limited to the occasional frat party between the ages of 18 and 21 and excess being more than two cocktails at a wedding reception. The government called for an extension to licensing laws so that we could be more Continental, avoiding the pre-close rush and allowing us the chance for that post-theatre gin’n’tonic. However, highlighting the differences between us and what is painted as the French ideal is what allowed the Daily Mail's recent campaign to have such an effect. No one knew there was a problem until it the government gave it a name. Thomas, whose instinct for the market had been so unerring in the past, is now falling foul of the values being touted by the likes of the Mail. Indeed, with his joint venture casino project with Accor, it is starting to look as though all you need to predict his next move is a copy of the Mail's list of future campaigns. Reports in this weekend's Independent on Sunday suggest that pre-election jitters may well see gambling reform shelved altogether. Politics is no respecter of business, and the government will sacrifice much for a third term. Even comments about the 'first-snog market' are now likely to provoke head shaking about kids growing up too fast and teenage pregnancies. McDonald's, when obesity became an issue, was quick to offer salads. Pubs have spruced up their menus and built children’s playgrounds. However, when your business is providing people with a dark room to get drunk and dance in, it's hard to know what to do. Thomas must either look for a way around nanny-state like finger waving, or look to avoid scrutiny altogether. Writing in this month’s M&C Report, Dominic Walsh raised the idea that it might be time for the company to leave the public arena and re-group in private, which would at least calm the City’s panic. Luminar has joined the responsible drinking movement, yet in this week's Morning Advertiser was found to be offering 3 for 1 drinks - tactics frowned on by the rest of the market. Once the furore over binge drinking has settled, it seems assured that most of us will be drinking less. There will be fewer outlets like those making up Luminar's estate, making it inevitable that, to succeed, the company will have to slim down. The expected MBO of 55 of the group’s underperforming unbranded outlets will create earnings stability, but at the cost of cashflow. Thomas’s knowledge of the market will help Luminar survive in what will become a smaller and more specialised sector within it, albeit with a lower profile for both him and the company.