The latest Sunday Times Fast Track 100, which charts the fastest- growing private companies in the UK, has featured a record number of licensed retail and food service companies. True, we’re talking about only five companies. But those that appeared – Pho, Cote, Grand Union, Pattiserie Valerie and Amber Taverns – prove there’s opportunity in every part of the sector.
Cote, which was number seven in the list, has grown sales by 166% a year between 2008 and 2011 and now has annualised sales of £35.6m compared to £1.9m in 2008. Owned by the ubiquitous Richard Caring, Cote proves that that it’s possible to re-invent an offer in an established category – it targets the upper mid-market French bistro- brasserie niche that Café Rouge so successfully pioneered. Cote has now grown to 27 sites in a few short years.
Pho, the six-strong Vietnamese noodle soup chain, has grown sales by 133% per year from £427,000 in 2008 to £5.4m in 2011. The UK Asian food market is still very fragmented with the market dominated by individually owned premises. But there’s a very large market waiting for operators who can perfect their offer as Wagamama proves. As Orchid Pub Company chief executive Rufus Hall has said in the past, the margins on Asian food are pretty compelling too. Founders are husband-and-wife team Stephen and Juliette Wall who prove that application can overcome a lack of experience in the restaurant trade – they founded the company in 2005 after travelling in Vietnam and becoming convinced they had spotted a gap in the market.
Pattiserie Valerie has grown revenue by 68% a year from annual sales of £7.1m in 2007 to £33.4m in 2010 under chief executive Paul May.
Credit goes to restaurant sector entrepreneur Luke Johnson and his private equity firm Risk Capital Partners for spotting the growth potential of an offer that squarely targets the “affordable treat” market. Now at close to 50 sites, Pattiserie Valerie re-creates the high-quality world of freshly-made gateaux, croissants and pastry items that are a highlight of any French holiday. Johnson recently told a Daily Telegraph seminar that Pattiserie Valerie Ebitda was tracking close to £10m for the current year, including its sub-brands Druckers and Baker & Spice.
Amber Taverns has grown sales from £3.7m in 2008 to £18.5m in 20011, a rise of 70% per annum. Now backed by private equity firm LGV Capital, which has a 84% stake, the company is proof that the depressed market for low-end pub freehold is an opportunity. Even more impressive is that Amber operates in the north-west and focuses on community wet-led locals. The company, led by James Baer and Bryan Wardman, buys freeholds at the bottom-end of the market and then re-invents them with investment to turn them into the best traditional pub in their community. Amber now has 70 pubs and is on course to hit the 100 market, with each site producing around £100,000 of Ebitda per annum.
Grand Union, the London bar operator, has grown sales by 61% a year from £1.8m in 2008 to £7.5m in 2011. Founded by Adam Marshall and Adam Saword, Grand Union is testament to the much-vaunted benefits of the tied tenancy business model – cheap entry. The company has prospered by taking tenanted pubs and transforming their performance. It started with a clutch of Scottish & Newcastle Pub Company leases in places like Camden and Twickenham. It’s one of the few companies to have been trusted with three Young’s tenancies. And the leg-up provided by tied sites has allowed it more recently to open a mega-site in Paddington subject to a commercial lease. And here, the dampened property market provided an opportunity with a substantial reverse premium available and a stepped rent.
Like I said, there’s opportunity in every part of the licensed retail and food service market
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