Brakspear remains on the lookout for acquisition and expansion opportunities for both its tenanted and managed estates, despite challenging bottom-line economics, chief executive Tom Davies tells MCA.
“We do want to grow. We are investing in our estate and looking for acquisitions,” Davies said. But while he is seeing more sites coming to market, he says “pricing is now out of kilter and there needs to be a correction”.
“With interest rates going where they are and the cost pressures I do think asset prices are not going to stay where they have been and they are probably going to come down.”
He said the business, which operates around 115 tenanted pubs, and 10 managed sites under its Honeycomb Houses business, had a supportive bank and a strong balance sheet, but that was about biding one’s time in terms of the right opportunities.
Reflecting on comments he made to MCA last year about the business being back in “survival mode”, Davies admitted that, certainly since the beginning of the current calendar year, trading has been “relatively strong” and better than expected.
“Turnover has been pretty strong and we’re finding that across our managed business and indeed our tentative business. But turnover is one thing – profit is something very different.”
While he has been proven wrong about his fears last year, Davies said he remains “very worried” about how trade will pan out over the next six months.
“There are definitely signs that as people have to remortgage, it’s taking out their disposable income – it is a worry.”
In terms of its own cost pressures, Davies said Brakspear had been educating itself and its tenants and managers about saving energy where possible. Staffing costs are still high but he said that in a lot of cases, its tenants are still struggling to find enough staff to fulfil vacancies, resulting in the decision to close one or two days a week.
“Our biggest single challenge is recruiting and retaining good people,” he said. In order to provide some extra focus on this issue, Brakspear has recently appointed Simone Brown as its new head of people – a role that had intentionally not been filled since the pandemic as the business wanted to take stock of the situation, he said.
“Looking at where the industry has gone, we do need someone who is entirely focused on people. It’s about recruiting the right people, it’s about training them and reward and recognition, and trying to get longer service out of those individuals.”
Although pressure on the bottom line is significant, Davies added that the business is keen to try and maintain capex levels this year, following a period of lower spend during the pandemic.
“We have got one tenancy that we are investing £1.5m in at the moment, and another that we’ll be going on site with which will be about a £500k spend. It shows we are still very focused on our tenanted business.”
