Rekom UK has “the potential” to reach 60 sites by the end of the calendar year, with the business confident that customer demand will remain strong, despite the cost of living crisis, chairman Peter Marks has told MCA.
The late-night bar and nightclub operator currently operates 47 venues, with four concrete openings (Proud Mary bars in Cardiff and Swansea, District in Cardiff and a sports bar concept in the former Bierkeller site in Swansea) and another nine or so sites in various stages of negotiations.
“We are hoping to get to potentially 60 sites by the end of the calendar year, which will be a material increase in what we’ve had,” he said. However, he likened the situation to that of the transfer window in football, where you can have lots in the pipeline but could potentially end up with no players at the end of it.
The majority of the new venues would be party bars rather than nightclubs, with the group actively looking to increase its blend of these venues. It is actively looking at sites in Birmingham, as well as other “obvious” cities and major towns in the UK.
Marks said the fact it has lined up so many potential sites demonstrated the confidence Rekom has in its guest base, and that demand will remain strong, despite the current cost headwinds.
In a trading update yesterday, the group announced that venue EBITDA was up 112%, to £26.3m, for the 12 months to 30 June 2022 – or 40% when omitting the post-Covid surge last summer.
While a period of more normalised growth followed an “extraordinary” period of trading between July and early October last year, Marks believes that its traditional customer base of 18-24 year-olds, and the fact it’s a wet-led operator, means it’s less exposed to the impact on consumers of the cost of living crisis.
“There is no question there are a lot of people in difficulty, but if you are targeting a young customer and you are largely wet-led in a town centre, you are probably up quite nicely,” he added.
“Our spend per head is up 23% without us really putting our prices up, but by reducing offers and the fact we have strong demand for our product, as well as other advances we have made that we worked hard on during lockdown, that have given us better online platforms to be able to purchase tickets easily.
“It isn’t just luck, there is some proper management thinking and strategy behind it.”
Looking ahead Marks said he would describe himself as being cautiously optimistic about trading, and the business’ ability to withstand cost pressures coming down the line.
Having done some calculations on projected cost increases for its drinks, labour energy bills – it is hedged on a fixed contract for electricity until 2024 – and music licensing fees, Rekom is looking at needing to increase the price of its drinks by the equivalent 16p each, compared to the 2p a drink he would have to put prices up by currently in order to cover all the extra costs.
