Tokyo Group, the nightclub operator led by Aaron Mellor, has reported a jump in profits in 2010 despite a dip in turnover after reducing costs and increasing margins. Pre-tax profit for parent company Tokyo Group increased 19.7% to £899,376, with operating profit up 16.1% to £1,288,819, according to accounts filed at Companies House. Turnover for the firm, which operates 20 sites, fell 3.1% to £6,994,395. Administrative expenses fell £437,699 to £4,193,712, with staff costs down 11.4% to £1,564,764 - it employed 33 fewer staff members (148). Mellor told M&C Report: “In times when it’s harder to grow the top line, you need to look at ways at reducing costs and increasing margin.” For Toyko Industries, this has included using its increased buying power and “battening down the hatches when it comes to wage and utility control”, he said. The late-night sector is “clearly in difficult times at the moment”, he added. “We’ve found customers are choosing to go out less but focus that spend on a more quality offer. Opening the doors and hoping for the best isn’t going to work in 2011 - people need a destination event to follow.” Mellor was cool on the prospect of adding new sites, saying: “There becomes a dis-economy of scale in expansion - the need to swell back office and middle management, and we’ve struggled to find truly great people to assist here.” But he added: “We’re being offered more sites than ever before, some in cities we’ve been desperate to get into for years. But we need to move forward cautiously so we maintain a careful eye on the existing estate and try to cultivate new management talent.” Mellor distanced himself from looking to acquire ex-Luminar clubs, saying “smaller more boutique sites seem more logical right now...the smaller, kookier spaces offer an independence that cant be replicated in KPI-driven roll outs”. Meanwhile, Mellor reiterated concerns of other operators about PPL’s plan to ratchet up fees for its Specially Featured Entertainment (SFE) tariff - saying the move would “close almost every club in the land”. The Tokyo chief added: “[They] fail to take on board the operational and legislative costs of running a music venue in 2011." The company is to open a new site in Lincoln later this year after a c.£1.5m investment to convert the city’s Constitutional Club into a 1,000 capacity nightclub with a 280-capacity live venue, a restaurant and a rooftop terrace.