Electric Star is weighing up its funding options as it looks to get ahead of the curve on its expansion plans, MCA has learnt.
Rob Star, director at Electric Star, told MCA: “We are speaking to people about funding at the moment – banks, private equity and various other people, in terms of the next phase of development for us.”
He said the discussions around funding were on-going, and that he wouldn’t rule out crowdfunding, which he has used in the past, but that it was about the longer-term growth of the business, including the possibility of purchasing freeholds, he said.
Last summer Star had said the business planned to grow to 10 sites over the next two to three years – a target that has been stretched slightly to 10 over the next three to five years. While Electric Star’s Homerton pub The Jackdaw & Star has now closed, taking its estate down to five pubs.
“We know we can do one, possibly two sites, with our current cash flow, but if we identify maybe two or three sites in a year, we want to make sure we have the capital available to do that if we want,” he explained.
“We know where we want to go over the next three years, but I know it will come round really quickly so it would be nice to look beyond that as well,” he added.
Electric Star is also currently looking for a replacement site for its street food market Last Days of Shoreditch, which is coming to an end this summer when the land it is located on is redeveloped.
“We have got a few options that are coming up, but it’s difficult to find somewhere with as good footfall as we had at the location in Shoreditch,” said Star. One thing he has noticed is that landlords are more open to utilising spaces they have, which they are planning to redevelop or have longer-term plans for, by having tenants who will take that space for a short period. “Landlords do seem more open now to those sorts of deals,” said Star.
He told MCA he was “looking generally east somewhere”, but was not precious about its exact location – ideally it needs to be close to a tube station or other public transport and have a large outdoor area. He said he is hoping to have something lined-up to open next summer.
In terms of additional pubs, Star said a site it agreed terms on last year has still not come to fruition due to work needed on the site which has not yet been completed. “It is one we are really excited about. It will happen, but it just might take a while,” he said. In the interim the business is now actively looking for additional locations “as we really want to get somewhere open next year”.
“We are constantly looking at places, but we haven’t identified anywhere that we know would be the next one,” he added.
The company received planning permission a few months ago to create 13 en-suite bedrooms at its Leytonstone pub, The Heathcote & Star, with work due to star on those next February, he said. It also has planning permission to add rooms to its Kings Cross pub, which it will look to do subsequently, as well as rolling out accommodation to some of its other sites.
“As rents, business rates and staffing costs increase you are pressured with costs throughout the business and you need to try and find revenue streams to mitigate that.
“It is just more of a reality now that you almost can’t afford to have your manager live above the pub and not really receive any income for the space upstairs – you need to sweat the assets as they say, and make sure you are using all those revenue streams. So it’s an exciting thing for us as it’s another aspect of the business that we are keen to do, but it’s mainly external cost pressures that made us look at it,” he said.
Trading-wise he said the warm weather and World Cup had helped Electric Star “smash its targets” in June, following slower like-for-like growth in May, and that it was anticipating the same strong trading figures this month.
