Graphite Capital, the private equity backer of Hawksmoor and Corbin & King, has acquired the fast-growing pub and restaurant business New World Trading Company (NWTC), in a £50m deal, MCA understands.
Founded by the owners of Living Ventures Group, the late Tim Bacon and Jeremy Roberts, in 2011, NWTC, which is led by Chris Hill, currently operates 14 pub restaurants under five sub-brands: The Botanist, The Oast House, Smugglers Cove, The Trading House and The Club House, across the UK.
The business, which currently employs more than 900 people across the country, from Glasgow to London, has opened seven sites in the past 15 months, with further openings lined up open in Sheffield, York and Reading for the coming months.
MCA understands that Graphite, which initiated the acquisition process with an off-market bid for NWTC, beat off competition from Livingbridge, the backer of Pho and Bistrot Pierre; and Bridgepoint Development Capital, to secure the business. The principal vendors were Living Ventures, Hill Capital and LDC, which held a minority stake in the business. AlixPartners advised on the deal.
The management team, led by Hill, has reinvested alongside Graphite for a stake in the business. The sale generates a 6.1x money multiple and IRR of 80% for LDC.
Hill and his senior management team will continue to run the company, which previously had a three-year funding deal with Hill Capital Partners Food & Beverage Fund. LDC originally invested £2.7m for a minority stake in NWTC in 2013 through the Hill Capital Food & Beverage Fund, which was set up to back early stage food and drink concepts.
Living Ventures co-founder and chief executive Roberts said: “It is particularly bitter sweet for me personally to be announcing this news today. Tim was extremely proud of the business model we have created at Living Ventures and this transaction was the last deal we were working on together. It is so sad that he is not here to share it with me. But I know he would be delighted with the achievement and I know he was pleased with the home that NWTC is going to. Graphite has acquired a great business and, in Chris Hill, has secured the services of one of the brightest of our prodigies.”
Hill, who last year collected the Rising Star Award at Retailers’ Retailer, said: “We are delighted to be working with Graphite. Their partnership approach was attractive to us and their experience in supporting roll-outs in the pub and restaurant sector will be invaluable in the coming years. They share our vision for the future of the business and our enthusiasm for pushing out the traditional boundaries of the pub industry.”
Graphite partner Omar Kayat said: “NWTC has rapidly established itself as one of the most innovative and respected pub and restaurant operators in the market. The company’s multi-branded approach to all day-dining combined with live entertainment in the evening has been hugely successful nationwide. We look forward to helping Chris and his team in their continued expansion across the UK.”
Comment by MCA editor Mark Wingett
NWTC managing director Chris Hill put his success in rising through the ranks at Living Ventures down to his desire to be one of the pub sector’s ‘lion riders’. He said last year: “It’s something that Tim Bacon (Living Ventures chief executive) looks for in people – the kind that wouldn’t be afraid to ride a lion. You can’t teach that.” But Bacon could spot it better than most. As Jeremy Roberts says, the recent death of his erstwhile business partner, makes this a bittersweet moment. This is the fruition of a business model laid down by Bacon and Roberts, but also more importantly I would imagine, this is a major step in the progression of one of their top pupils.
NWTC’s deal with Graphite, will see the Living Ventures chord broken in terms of ownership, but the company’s DNA will continue to run through the core of the business. The sale of The Botanist operator paves the way for similar deals to take place for Gusto and The Alchemist over the coming years.
As with Living Ventures, the meteoric success of NWTC has been based on the strength of its people. ”We invest nearly £100k per site in the training process and I think that’s unparalleled in the pub industry,” said Hill, who started out as a supervisor of a Living Ventures branch 12 years ago before moving up the ranks to lead NWTC.
He says: “From the moment we started we have invested time and money into all our staff at all levels and ultimately that shines through. The pub sector isn’t renowned for the way it trains its bar and kitchen staff in a way that now people associate with restaurant service. If we do that level of training in a pub environment we end up with very, very good service, and that has been core to our success.”
The group has underlined this emphasis on staff training and culture, with the recent launch of an innovative employee initiative which sees staff across the UK split into six ‘tribes’ competing against each other. Employees across the estate compete for points and the tribe that is crowned victorious at the end of the year wins each member an extra two days paid holiday each. Opportunities to gain points will come in many forms, primarily though the app developed to be the hub of all communication and engagement for the project.
Hill says: “The end product will deliver fun and team engagement across the estate, maintaining our inspiring company culture as we continue to grow. I couldn’t be prouder of this venture, we now have an incredible tool to remind the team every day how important they are to us; our focus on team spirit is stronger than ever before.”
The results of this people-centric approach has led to countless awards for the business and Hill over the past two years, but it has also translated to the bottom line. The company reported record sales over the Christmas period with its first ever £1m week. Hill said sales in the week before Christmas had hit £950,000.
It came on the back of a strong year of trading for the company, which recorded sales up 83% to £17.7m for the year to 31 March 2015 with like-for-like sales up 3.5%, and adjusted profit increasing 58% to £2.3m. The company was on track to achieve revenue of £30m in its most recent financial year.
Hill himself believes there is potential for ‘hundreds’ of sites under the company’s Botanist brand. Openings in Marlow and Farnham last year underlined the company’s belief that real opportunity in terms of growth of the brand lay in the market towns and large villages around the UK. Hill says: “That gives us huge scope and there’s no reason there couldn’t be hundreds of sites. The task is to make sure that we keep it relevant and we’re not just growing for the sake of it.”
Hill had previously set a target of six openings per year going forward. He said this year’s openings would be dominated by the Botanist brand but that the third Trading House location had been identified.
On the geography for expansion, Hill said: “We have established our spine which is down the M6 and onto the M40 and we are creating a cluster of sites around London. The next logical step is to move west and we are looking strongly at places like Cardiff, Bristol and Bath. But we want to make sure that expansion is sustainable and that we know the next step before we venture out that way.” It will also want to further prove itself in London, after the success of the Trading House in Gresham Street.
In Graphite, he has a backer with a long and successful track record of investing in the pub and restaurant sectors. It grew Wagamama from two units to more than 100 around the world, generating a return of over 10 times its original investment on the sale of the business in 2005. Being a stablemate of Hawksmoor and Corbin & King, another two companies respected for their cultures, feels a good, if not right fit, for NWTC.
Hill previously admitted he used to go to sector events and would sit and take it all in. He says: “I was slightly in awe of the people in the room and, while I wanted to learn as much as I could, I felt like they were on a completely different level to me. Now I feel like I’ve earned my place at that table.” He’s come up with a good starter, now for the important main course.
