Orchid’s ‘pubs and people’ focus helps deliver modest growth

By Luke Nicholls

- Last updated on GMT

Related tags: Investment, Finance

Orchid was able to defend gross margins in 2012, which were flat against the previous year
Orchid was able to defend gross margins in 2012, which were flat against the previous year
The Orchid Group has reported what it calls ‘a period of significant progress’ in 2012, with a modest underlying sales growth across its c240-strong estate following a refinancing of the business.

Turnover for the food-led pub and bar operator declined slightly for the 52 weeks to 31 December, by £0.8m to £178.8m. EBITDA was also down to £29.3m, versus £32.2m in 2011.

But, in a period which saw the selective disposals of 10 pubs, like-for-like sales were still up by 3 per cent, with Orchid outperforming the Peach Tracker - which tracks the like-for-like sales performance of 27 major companies in the eating and drinking-out markets – in the first seven months of the year.

And the successful refinancing of Orchid under the auspices of Deutsche Bank has since paved the way for a £20m capital investment programme, giving the group greater flexibility to manage its pub estate.

It now expects EBITDA to materially grow in the current year and on a current run-rate basis, it is above £30m.

“In short the refinancing has placed Orchid on a much firmer footing,” said Orchid’s chief executive Rufus Hall. “Banking facilities are now in place to January 2015 and with the new financial structure in place, a clear plan, our customer propositions and strong teams, the directors of Orchid are confident the business will deliver sustainable growth.”

Profits for the year were slightly lower, but Orchid says this is due to the impact of short-term pub closures associated with the capital investment programme, along with widespread cost inflation and the pub disposals.

Investment in people

Last year, Orchid stated its intention to attain ‘Investors In People’ status as a leading business for people management and people-related practices. The group has since realised this ambition, making it the only major pub retailer to receive such recognition.

“Our business is built on people,” added Hall. “We work hard to create a demanding but enjoyable environment for our teams where they feel valued and motivated, and are provided ample opportunity to develop and progress.

“When we reported our figures last year we were at the beginning of a major push on apprenticeships.  I am pleased to be able to report that we now have over 300 serving apprentices in our pubs and are actively seeking to grow this number further in the next 12 months.

“We believe our continuing investment in people at all levels of the organisation is a key cornerstone to a long-term and sustainable business model.”

For the year ahead, Hall added that Orchid is ‘well positioned to take advantage of the changing pub market’. Orchid will focus on a two-pronged strategy of developing great people and great pubs, supported by a perpetual focus on better ways of working, cost reduction and the capital investment programme which is already delivering encouraging results. 

Related topics: Business, Pubs & Bars

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