The Heartwood Collection saw turnover increase to £60.3m in the financial year to June 2023, in what the company described as a “difficult and complicated market.”
The Alchemy Partners backed pub and brasserie business said that despite considerable focus on preparing for expansion, the unprecedented pressures on energy costs, spiralling food inflation and above-inflationary wage increases, the group enjoyed another successful year.
It has reported “comfortably beating budget” with site EBITDA of £10.9m, compared to £9.6m in 2022.
Like for like sales were up 6.2% in Heartwood Inns and 8.8% in Brasserie Blanc across the year, and site EBITDA margin increased to 18.2%, compared to a figure of 17.5% in 2022, excluding government support.
Gross margins were 73.2%, compared to 73.7%.
“Clearly the last few years have been punctuated with extreme difficulties caused by Brexit, Covid and now the tragic war in Ukraine. The Russian invasion has had the most profound effect in this financial year, specifically with regard to energy and food costs,” said executive chairman, Mark Derry.
However, he said the combination of firm but equitable negotiation, the utilisation of highly trained chefs and a sensible approach to pricing had protected both food margin and like for like covers.
The year was the last in which the group would trade as Brasserie Bar Co, after its rebranding took place in the three months to July 2023.
“The brand transformation followed a rigorously executed and outwardly seamless transition by Richard Ferrier (CEO) and his team following months of exhaustive work,” added Derry.
“We now have guest facing brands that we can all be proud of and a platform to confront the coming years of market-leading growth with confidence.”
He added that this was particularly relevant as the business enters the market for overnight accommodation.
“Undeterred by the difficulties facing the entire hospitality industry, much of the focus has been on preparing for future growth.”
The strategy, having moved to exclusively freeholds for the foreseeable future also sees a market opportuntiy for the group in ‘Pubs with Rooms’.
In October 2022 it recruited Ed Little as Property Director.
Several refurbishments were completed on the existing estate including Bournemouth, Beaconsfield and Wincheste. The company acquired 8 of its own freehold sites from landlords and have a “healthy pipeline” looking forward.
Across the year the group has invested £37.5m in additions to tangible fixed assets, of which £32.7m was investment in the purchase of freehold assets (and assets under construction).
This was funded through a combination of bank debt of £20m and shareholder funding of £15m drawn in the year.
Across sites set to open in the next 12 months, it will be operating up to 200 bedrooms.
After securing an extended debt package with OakNorth Bank and supported by investors, Alchemy, in July 2023, Heartwood agreed to extend the debt facility from £35m to £85m.
“As we move forward with future investments, Alchemy continue to demonstrate their support by co-investing in each new asset,” said Derry.
The company said that it would need to recruit a further 700 people in the following year, and had reduced its staff turnover to an all-time low of below 70%.
“The company’s succession planning for growth is in full swing, focussed on the successful opening of up to ten sites in the coming year.”
