Loungers expansion of 'no fewer than eight sites a year' remains on track
Circo Lounge opened in late February in the Westbourne area of Bournemouth and has become the 22nd site for the company which was founded in Bristol 10 years ago. The site is the 19th under the Lounge concept and is the third venue in the Dorset town as the company pushes its expansion plans to have a multi-site presence in a number of locations.
In August last year Alex Reilley, founder and managing director of Loungers, told BigHospitality the business was pushing to have 32 sites by mid-2013 after a process of switching banks to provide more certain funding. Six months on Reilley said the plans remained on track and the company was now gradually accelerating the growth of the business.
The company also operates the informal casual dining and drinking concept Cosy Club in less urban environments.
70 in five
After two openings in Bournemouth, Reilley said another six new venues were planned for 2012 with that momentum of growth the template for future expansion with the potential for hundreds of sites nationwide.
"We are certainly not intending to open any less than eight sites a year now. We have got scope to potentially open more if the opportunities arise but we are very much focusing now on growing the business towards 70 sites in the next five years. We are very expansive at the moment," he said.
The company has already opened two lounges in Bournemouth this year and are on-site in Hove and Birmingham. Reilley is hoping to open in Christchurch, awaiting a difficult planning permission process, and plans three Cosy Clubs from the summer onwards in Salisbury, Cardiff and Exeter.
The latest opening in Bournemouth followed a familiar pattern for the company of targeting retail sites and applying for a change of use to open the neighbourhood café/bar concept. Circo Lounge, now an 80-cover indoor eating and dining area with additional terrace, was originally a newsagents with living accommodation.
Dominant brand
Speaking specifically about the future expansion plans, Reilley said the Lounge concept was and would remain the dominant brand and the available opportunities and business plan was built around more aggressive expansion with it than Cosy Club.
"That particular brand we are able to roll-out a bit more at will, I think with the Cosy Club it is more a case of going into the right town or city and there is a lot more capital involved with setting those sites up," he said.
The number of Cosy Club sites would, Reilley explained, naturally grow but in an estate of 70 sites, 50 would be Lounges. The focus will be on developing multi-site locations in the south east, with aspirations to open more in Brighton, as well as getting set-up in places of the country the business does not yet exist in including the north west.
Big test
One of the biggest openings for the year will be in Cardiff where the St David's 2 shopping centre site, at 7,300sq.ft, will be the largest opening so far for Loungers. Reilley said the operational challenges would not be new to the business but would represent a big test as it was expected to be a particularly busy location.
Loungers switched banks last year but Reilley said it had not affected the ability of the business to borrow money or open new sites while competitors might be scaling back their openings programme.
"A lot of the issues we have in the industry is the fact that there is a lot of over-leveraged businesses out there who, fundamentally, if they can’t grow their estate just by generated profits of the business because they are having to service their debt - that is where the problem lies," he said. In comparison Loungers continues to have low debt multiples and are able to borrow and succeed as it did during the recession.
Reilley, who was named Rising Star by fellow industry professionals in this year’s Retailer's Retailer of the Year awards, said he expected 2012 trading to continue to be largely flat and general industry trading would not return to pre-recession levels in the near future.
