Bramwell Pub Company in 2014, Tattershall Castle Group in 2015, Intertain in 2016 and Sports Bar & Grill in 2017. It is very rare that a year goes by that the TDR Capital-backed Stonegate Pub Company doesn’t look to add to its portfolio, to unlock value and to build up its expertise bank. There are still five months to run, but over the course of 48 hours it has made sure that 2018 will not be as frustrating a year as the previous 12 months in terms of securing its major targets.

It is no secret that the Simon Longbottom-led company was the frontrunner to acquire Be At One in the first part of last year, before its head was turned by the problems at Revolution Bars Group. Indeed, it still surprises me that there weren’t more companies/investment vehicles in the for the business last year. I am sure some will be kicking themselves that they missed out on an opportunity, Stonegate is primed to take advantage of. Despite securing a £20m refinancing and ending sales talk last October, it always felt like a question of when, not if, Stonegate returned to the table. As Longbottom admits, it’s a businesswe know well and have admired for some time”. You can understand his admiration.

As Be At One co-founder Leigh Miller once put it, his business is based on: “Fantastic drinks, served quickly, in a great atmosphere, by highly trained people, who really know what they’re doing, and care about looking after you, and who want to make sure you have the best time.” That’s before you consider the numerous consecutive years of like-for-like sales growth.

Longbottom says: “It is very lazy to say they do very good cocktails. I have visited each of the bars and, yes the do a great serve and a great cocktail offer, but it’s the atmosphere they generate in each site. I came away feeling very envious of the level of customer service they were achieving.”

For Piper it is another successful exit and again reinforces its ability to back market leading businesses, for example Loungers, Turtle Bay and Flat Iron. Since its £8m investment in 2011, which valued Be At One at c£20m. Piper has supported the chain’s growth from 11 to 33 bars, of which 17 are outside London. Over the lifetime of its investment, sales increased 5x to c£40m. It also remained patient and supportive - not a trait of all private equity players, despite the disappointment of not getting a deal away last year.

As with every deal it does, Stonegate will stand by its mantra of looking to learn three things from the acquisition of Be At One. It will certainly allow Stonegate to access the premium cocktail market, the ability to learn from the company’s great service and serve. Longbottom says: “There is a very strong DNA in this business and we are very keen to harness that and also not damage that in anyway. We can see how good things are front of house, it is now up to us to learn from Andrew (Stones, managing director) and his teams how they build the foundations behind the scenes. We are looking forward to that.”

In terms of scale, Be At One is the clear UK market leader in the premium cocktail bar market, and there is no reason why the business can’t grow to well in excess of 100 sites in the UK eventually. That is especially true now it has the backing of Stonegate, whether that is through its own pipeline or through conversions of the pub operator’s existing brands. I have written before that one of Stonegate’s key challenges is how to evolve its older high street brand’s such as Yates and Slug & Lettuce. Be At One could be part of the answer to that.

Be At One has two models – Classic and Destination. Classic is its main model (for example, smaller sites like its original in Battersea) while Destination sites are usually larger units, such as those found in Manchester, Leeds or London’s Monument. Sites mature in 12-18 months depending on location, with Classic sites taking £20,000-£25,000 a week and Destinations £35,000-plus. The company previously expected to open six to eight sites a year, predominantly Classic sites, with some Destinations.

The brand’s immediate pipeline starts with an opening later this week in Chelmsford, its first in Essex, whilst a second site in Birmingham, in Brindleyplace, will open later this year. There is also a trial format site in Soho that Stonegate has also picked up. The under-radar Bar Hercules on the site of the former Pillars of Hercules pub in Greek Street, is aimed at an older clientele and could also be developed further in the future.

Stonegate’s acquisition at the same time of a 15-strong package of central London-based bars from Novus Leisure also provides further opportunities to add to the Be At One pipeline. Of the 15 sites set to come across to Stonegate, two – Forge and Sway are big multi-room units, but the rest already run along similar lines to the Be At One model. I would be surprised if some aren’t converted in due course.

Both deals enhance Stonegates presence in the capital and its late-night venue credentials – an already successful part of its business. This will be further added too when the company launches the first site under its popular Popworld brand in the capital later this year, at the current Reflex site in Watling Street in the City.

Longbottom says that the double acquisition doesn’t rule out the group looking at further deals this year – especially if it can unlock further value and return on investment. It will also continue to look at ways to further evolve its existing offers. As the recent link up with MEATliquor testifies. MEATliquor, the Scott Collins-led group, took over the kitchen of the Walkabout in Brighton during the football World Cup, and Longbottom didn’t rule out working further with Collins, another operator he admires.

Speculation regarding an IPO for Stonegate has circled the group for a number of years but Longbottom admits it is not something the company has been looking at “for some time”. With the company reporting revenue of £720.9m and adjusted EBITDA of £106.2m for the 52 weeks to 8 April 2018; TDR Capital remaining supportive on further acquisitions; and having just added a further trading format, which for grows its market reach, it is in an enviable position of controlling what course it takes. It is one that is certainly set fair at present.

Time to let the Tiger loose

As Stonegate has underscored its late-night bar credentials with the acquisition of Be At One and 15 sites from Novus, the latter Toby Smith-led group has begun the process of moving away from what was once its traditional area of strength. The sale of the 15 sites to Stonegate was described as Smith, who has been at the helm of Novus for nearly four years, as a “transformational step” for the business.

This step will be complete when the group offloads a further 10 late-night sites, including its most famous brand – Tiger Tiger, which operates sites in Newcastle, Leeds, Manchester, Cardiff, Gunwharf Quay and London’s Haymarket. The other sites are based in central London and comprise Amber, Piccadilly Institute, Mabels and Ruby Blue. The majority are big, multi-room nightclubs that now don’t fit in with the long-term strategy Smith has been quietly steering Novus, with the help of backer Hayfin, along over the last four years.

I understand that a sale of the whole business was looked at last year, and although there was interest. It wasn’t at a level for Hayfin to crystalise its investment. It is thought that the investment firm has been impressed with what Smith has achieved with Balls Brothers and the early success of new format Tank & Paddle, to just return to the market with the group’s late-night venues, which remain cash generative and in good condition.

The possible disposal of Tiger Tiger will I’m sure garner the most interest, but nine of the 10 sites have 3am licences and seven of them are around 18,000sq ft. Deltic, with speculation of an IPO again popping up, is the obvious name to attach to this package. A deal would give the Peter Marks-led group a stronger presence in the capital, and a brand in Tiger Tiger, that has rollout potential in the UK and overseas – a pre-IPO/sale boost perhaps. However, the location and size of the 10 sites might also attract interest from the growing list of experience operators – Swingers, Puttshack etc - and from overseas investors.

Smith is keen to highlight that Novus is not selling sites that are not performing, just sites that don’t now fit with the direction the business is taking. He says: “Novus had become a complex business with two parts to it and we want to focus all our energy on one part. Hayfin is supportive of that decision. The venues side of the business remains strong but doesn’t fit with what we want to achieve, which is the rollout of Balls Brothers and Tank & Paddle.”

The sale of the 15 sites to Stonegate will provide the company with the firepower it needs to begin that expansion play, and Smith admits he has run the rule over the 22-strong CAU estate, not for the sites themselves, but for the towns and cities he believes both formats could work in – “the Oxfords, Cambridges and Guildfords” as he puts it. The continuing number of casual dining sites coming to the market will also aid his plans.

The 10-strong Balls Brothers is understood to generate average weekly sales of c£30,000, with the group’s most recent opening in Canary Wharf, opening strongly and continuing to grow. The more fledgling Tank & Paddle has been tried in a smaller format – c2,500sq ft in Bishopsgate and in two larger sites in Heddon Street and in the City, the smaller site generates average weekly sales in the late £20,000s, whilst the largest can reach £50,000. Smith is keen to open sites four and five under the format, before really pushing the button on its expansion.

Smith, who has no plans to move on from Novus at present, says: “What we have currently is a strong platform in the London premium bar/ restaurant sector from which Novus can focus and grow. It is up to us now to find the right opportunities so we can do that.”

The best mix

Finally, a word for the Be At One co-founders, Steve Locke, Rhys Oldfield and Leigh Miller, who opened their first site 20 years ago in Battersea Rise. They have lived and breathed their business each and every day of those two decades, making sure it stuck to its wet-led credentials and through their dedication to investing in people, allowed it to thrive in the eating-out market melee.

As Locke said to me at the end of 2016: “When we first set up, we were living and working together. We lived in Tooting and we would walk across Wandsworth Common in silence, spend the day working together and then walk back in silence. There were times in the beginning when it was hard work. We learnt that if there was a problem we needed to have it out in the open, talk about it.” Those hard yards, long silences and heart to hearts have certainly paid off. I hope they are having a deserved cocktail or two this week.