Imbiba partner Darrel Connell: ‘You can’t predict the future in a period of flux’

Imbiba partner Darrel Connell has advised businesses against drawing “too many conclusions about what the future will look like” with the country still in the midst of the pandemic.

Speaking at MCA’s The Conversation, Connell - who’s investment group backs operators including Darwin & Wallace, Vagabond and Farmer J – said partners at Imbiba have “given up guessing” about potential post-coronavirus trends because of the difficulty in making predictions “in such a period of flux.”

With the majority of its portfolio based in London, Connell said one area the group will be watching closely is the shifting use of city centres, how corporate companies may alter their office hours and what this might mean for hospitality venues.

“If people aren’t coming in five days a week, if they’re coming in three days a week instead, several hospitality venues might benefit from drinks after work or client meetings,” he said. “But on the flip side, the grab and go community might struggle.”

That being said, he added that Farmer J, the Imbiba-backed to-go concept, has not been suffering to the same extent as some of its competitors.

“In this trading environment you can really see which are the quality brands and where the brand loyalty is,” he said. “As a grab and go concept primarily in the city, Farmer J should be a business having an unbelievably wretched time, but it’s trading profitably.”

Held up in lockdown by its delivery component, two of Farmer J’s most vulnerable sites – Canary Wharf and Liverpool Street – are both trading profitably, at 70% and 60% of pre-lockdown levels respectively.

“Those big queues that we were used to outside Farmer J at lunchtime are gone now but it’s still trading really strongly,” Connell said. “It’s a real testament to Jonathan [Recanati, founder] and other members of the management team. They’ve done an unbelievably good job.”

However, with huge numbers of businesses likely to enter tightened tier 2 and 3 restrictions next week, he added that even the most successful business leaders are still subject to failure at the hands of “completely bonkers” and “naïve” government policy.

“The best entrepreneurs in the sector have tried to do innovative things, but ultimately, many of these businesses are fixed leisure and hospitality venues at their core,” he said. “They’ve got overheads of rent, rates and service charges. So, it’s great to be innovative and it’s great to drive brand and do different things, but the core profits are always going to be derived, in most cases, from trading in venue.”

Faced with this reality, he argued that in many cases a business’ chance of survival through the next few months will be influenced by the external factors themselves, rather than a will or determination to manage them.

“If you are a bar that does good food or a restaurant in the tier 1 environment, I think you could have a stonking Christmas,” he said. “If you’re a late-night operator in the city centre, you’re going to have an awful Christmas.

“It really depends on where you’re operating and what sector you’re in. So, preserving cash and cash management is really important, because you don’t know what’s going on one day to the next.

“We talk about government policy and these bigger things, but for the people running these businesses, and in these businesses, it is really difficult day after day to deal with the uncertainty in which they are trading in. It’s our job to be there and support them.”