The Alchemist has been able to build up its cash reserves during the past year and is now intent to put it to work in new UK sites and plans for an opening in Germany, chief executive Simon Potts told MCA.
The business has just closed its financial year and is working up the final year end numbers, but Potts said that it had been “without question” a record year from a sales and profitability point of view. “In pure EBITDA terms we are going to be about 60% up on what we finished FY 2019/20 with.”
While it set fairly prudent budgets, sales have been strong and it has been a good environment for the business to make money, given the savings in business rates for example, Potts said, so he is confident about the bar and restaurant group’s shape coming out of the pandemic and is genuinely excited about the year ahead.
“We had a very nervy first lockdown and did a lot of heavy lifting with landlords and suppliers, but ultimately we’ve paid down any credit overhang, we’ve not lost any sites and didn’t get anywhere near a CVA process, so we are in a really confident position,” Potts explained.
“We naturally slowed the pace of rollout as well so are sat on quite a bit of cash at the moment, so we are just putting that to work.”
The strength of its financial position at the back end of its last financial year has also enabled it to push forward with its plans to “plant a flag” overseas – a project which has been on hold since 2019.
The business had carried out a fairly sizeable research project which zeroed it in on Germany as a territory to go into, as there were similar parallels in the UK in terms of population size, the culture of eating and drinking out, and the fact there are a number of big cities it could expand to.
Rather than a scattergun approach across Europe, Potts said it would rather launch in one country and expand within that territory, with the intention for the site to be operated by The Alchemist rather than a franchise operation. “We have a location and a site identified. There is a bit more work in terms of getting set up, but I think by this time next year we are hoping to have it functioning.”
A new cosmically focused era
In terms of its forward pipeline in the UK, the business is due to open in Glasgow in October and is at heads of terms for two sites in London that Potts said he’d hope to open in November and February.
The Alchemist also has a busy refurbishment programme ahead of that with refreshes in Liverpool, Leeds, Birmingham and Oxford.
It has just reopened its original Spinningfields site in Manchester this week following a significant refurbishment, showcasing a new look for the brand. From the somewhat “medieval-orientated” design it sported when the business switched hands in 2015, to a slightly more “clubby” feel, the site has now moved into “a more cosmically focused era”.
Potts said that from a design perspective many bars were starting to look the same, so he was keen to reimagine how its onward spaces evolved. “There has been a change of colour palettes with lots more natural dark colours, and a bit more heavy-lifting being done by the music and the lighting. Spinningfields represents the first phase of that.”
The Manchester site has also relaunched with a new menu, which is 58% vegetarian, 38% gluten free and 44% vegan.
In terms of opportunities in the UK there are still “plenty more to go after, but ultimately we want the challenge of doing something a little bit more global”, Potts added.
“We have got plenty of cash that’s allowing us to move forward with the UK pipeline and think longer-term about more sizeable scaling up, so it#s pretty exciting.”
