Oakman Inns is in the process of raising a further £10.2m in debt and equity to fund further growth in 2018/19.
The currently 20-strong group is currently developing The Polecat in Prestwood, Buckinghamshire and has an application in process for the Walter Arms in Sindlesham near Wokingham. It has also signed an agreement to lease a new site in Epsom and according to chief executive Peter Borg-Neal is “very close on five others”.
He said that like-for-like sales in the 49 weeks of the year currently stand at 7.1%. The group’s most recent opening - the Beech House in Amersham took over £50k net of VAT in its first week - despite the heavy snow – and over £55k net of VAT last week - almost 50% higher than its investment target.
Borg-Neal said that the company’s success was a clear sign that there were upsides to the current correction in the hospitality property scene.
He said: “I take no pleasure from seeing any business struggle, but the over-expansion by big-name brands did impact on prime and even secondary site rentals and in the current market those demands may and should ease. I suspect rent reviews over the next two years are going to be very different. We have already benefitted from one such scenario where we have a site that has been trading well for nigh on five years we have owned it, and is due for a rent review. Six months ago we faced a situation where a well known and very good restaurant operator was about to take over a similar, near-by site to ours but had agreed to pay 60% more rent than ours. This would have been a serious double-whammy as not only would we have lost trade to the new entrant, we would also have faced a very difficult battle at rent review to resist an increase in our rent to the same very high level. However, they have now decided to pull out of the deal. We believe the combined benefit of this change is worth well in excess of £100k profit a year to us.”
Borg-Neal accepted that “Oakman is not immune to the cost pressures the industry is experiencing with the swingeing increases in Business Rates being particularly impactful. However, our ever growing purchasing power means that we are able to mitigate increases in our cost of goods and thereby maintain our operating margins. Most importantly of all, our sales remain strong. Our LFLs for the year to date stand at 7.1% for the 49 weeks ending Sunday, March 11th. Our new site, The Beech House in Amersham, has launched brilliantly, taking over £50k net of VAT in its first week - despite the heavy snow – and over £55k net of VAT last week - almost 50% higher than our investment target. We believe our performance underlines the attractiveness of a flexible, premium pub model and it is interesting to see that The Restaurant Group are investing heavily into Brunning & Price whilst scaling back its restaurant divisions.”
Oakman Inns opens The Cherry Tree in Olney at the end of this month, followed by the Four Alls in Welford-on-Avon, which will be the second development in the Hunky Dory Pubs partnership with Ei Group. In June, Oakman Inns will open The Royal Foresters in Ascot in time for the world-famous ‘Royal Meeting’ at Ascot. The pub will have 240 dining covers, a 100-seat capacity contemporary function facility, 96 car parking spaces, three gardens, seven staff flats and 24 hotel rooms. The combined acquisition, pre-opening and development costs amount to a £10m investment for Oakman Inns – their largest to date.
