Quality management teams, brand strength and scalability are all key attractions for hospitality investors.

Speaking at MCA’s Pub Conference on a panel discussing the future of branded bars, Deepesh Thakrar, senior director at OakNorth Bank and Yasha Estraikh, associate partner at Piper Private Equity shared their insights into the current investment landscape for the sector.

Estraikh said at Piper, there is a focus on brand strength and customer proposition - “I spend my time with the team thinking about customer proposition. And that’s where we start - What is the customer proposition that’s really going to be important for the future?

He reflects on Pipers development of Pitcher and Piano in the 1980’s- one of the first bar chains to focus on the female customer and young people, heralding a new breed of bars.

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“Since then, Piper always been thinking about the pub of the future,” referencing café-bar brand Loungers as a key example of this from a branded bar perspective. “Scalability is really important for us as investors,” he adds.

Looking forward, he says after raising new funds the business is keen to make “one or two” hospitality investments. However, “The bar is very high. So we need to be really clear about who we’re going to sell business to.

“I think it’s slightly loosening. Small groups have been created or spun out, but ultimately there are not many buyers for hospitality businesses versus other consumer areas.

“We love the sector, and there are some amazing concepts, but it is just really thinking about what the final hope for the brand is.”

Similarly, Thakrar outlined positive trends in the hospitality sector. “We’re starting to see some real confidence and people wanting to go out into their local pub or bar.”

OakNorth remains optimistic and continues to seek out “strong, positive businesses” for investment. Thakrar emphasised the importance of strong management teams capable of navigating various challenges, whilst exploring potential new investments.

“Fundamentally, what we’re always looking at is the quality of management teams, how they’ve been able to weather different storms, whether it be Covid, the cost-of-living crisis, inflationary pressures, or the energy crisis,” he explained.

Beyond management, good backers behind the business are crucial, “It is also the people sitting behind the business, not necessarily the management team or the operators, but the people who are there to support the business, should these things occur.”

He says historically, OakNorth, whose recent loan book includes businesses such as The Alchemist and Sticks ‘n’ Sushi, has gone “heavily” into the leisure and bar sector.

“We’re still doing more, and just last week, managed to secure a refunding for a four bar operator in South West London. We’re still there to try and do some more.

Both businessees discussed the necessity of empowering entrepreneurs, a critical factor for Piper’s investment philosophy. “Making sure that entrepreneurs are empowered is really, really important.

Piper seeks to ensure that the balance between risk and reward is favorable for entrepreneurs, encouraging innovation and growth - “I think there are the moments in which that balance hasn’t been there.

“I hope a new government does that, so founders can take sites, for brilliant, innovative concepts.