Brasserie Bar Co secures £13.5m of new funding
According to our sister title, M&C Report, the Mark Derry-led group has secured the investment, which will be used primarily to develop the White Brasserie pub concept, from ESO Capital Group - a firm that specialises in providing tailor-made capital solutions to small- and medium-sized companies across Europe.
M&C Report understands that the company is currently in the process of recruiting a managing director to oversee its pub vehicle.
Core Capital, the private equity group, remains Brasserie Bar Co’s lead investor.
Co-investment
Derry, chief executive of Brasserie Bar Co, said: “Our aim is to open at least 15-20 new sites over the next three years of which pubs are the primary focus. We are bullish about the potential for our pubs and we are actively looking for new sites which we can develop.
“Now that we have new finance in place we want to work with pub owners to acquire new sites using our new leases. These we have designed to offer pub owners a co-investment opportunity. We both invest in developing the site and we offer the owner a proportion of turnover in rent.”
The group opened its first two White Brasserie sites, both Enterprise Inns leases, in 2010 in Teddington and Weybridge. It is currently in talks on a third pub, a Spirit lease in Orpington. The group is also thought to have a fourth South East-based site, another Enterprise lease, in the pipeline.
Derry said: “The funding option from ESO is suited to our growth plans. We need access to funds on a flexible basis to boost our development plans and we are delighted that ESO has chosen to support the business.”
In the pipeline
The company will open its 20th Brasserie Blanc site later this spring in Beaconsfield.
The 5,000sq ft site, which is located just off the town’s high street, will feature an evolved take on the brand’s design and offer. It will reflect a slightly more casual and contemporary feel but with all the ”facilities and comfort customers expect from the Raymond Blanc-inspired brand”.
Brasserie Bar Co plans to concentrate on upgrading the Blanc estate over the coming few years, whilst adding one or two sites a year to the brand’s portfolio.
A question of timing: comment by M&C Report editor Mark Wingett
Back in 2010, Mark Derry, the entrepreneur behind Loch Fyne, described Brasserie Blanc’s entry into the pub market as a “watershed moment” for the company. The state of the economy, the need to incorporate the portfolio of Chez Gerrard sites into the group’s core estate, the availability of funding, finding the right sites and a lease agreement that fits, has meant that the moment Derry talked about has been four years in the making. With the new funding in place, he is not about to be delayed this time in his goal of growing a portfolio of premium food-led pubs.
With the group’s existing sites at Teddington and Weybridge believed to be consistently out-performing the average UK pub with an average weekly turnover in excess of £30k, Derry is understandably bullish about the potential for rolling out the company’s pub concept and is actively looking for new sites and new lease agreements.
Speaking at last year’s Pub Retail Summit, the co-founder of Loch Fyne Restaurants said moving into the pub sector meant he came across “the dark arts of the tie”. “Now I know it has had a lot of stick but my god it is an extraordinary thing for a restaurateur,” Derry said. He criticised the fact that the person who “handcrafted” the beer and the “guy who had to do 290 transactions to sell it” are “third and fourth on the list of people who make money out of it”.
In response, Derry has designed a lease that includes a “fixed element” and a “turnover element”. He said: “In return for that we are striking some deals that require a little bit of investment from the landlord and a lot of investment from us. That means that the estate is improved. We get leases that have residual value rather than tied leases which are severely marked down, because it’s an open valve to price increases, frankly.”
Derry said the new lease is “designed to give a share of the upside in everything that we do, so it is not just tied for beer” - he said beer sales are “only going to go one way”.
Derry is not the only experienced restaurant operator tapping into the tenanted pub sector. Innovation in the tied-model and the need to tap into the operational know-how of experienced operators is allowing new businesses to be created (Pesto in a Pub and Mezze for example) and others to grow, as in the case of Derry’s peer and friend James Horler and his Ego brand. Others are sure to keep a close eye on how they perform before deciding on a similar move.
The comment by Derry on ESO Capital’s involvement and the need for ”access to funds on a flexible basis to boost our development” hints at frustration in the group’s existing relationship with its bank, but also its desire to get on with things.
History highlights why Derry is so keen to go down that route again. When he sold Loch Fyne to Greene King for £70m in August 2007, about 25% of the group’s 36 restaurants were located in former pubs and it had identified a strong pipeline of conversions for further openings.
It is too early to discuss exits, but Derry’s successful track record in introducing a restaurant offer into a pub environment points to him repeating the trick with White Brasserie and in the process adding further momentum to the rebirth of the UK’s pub sector.
This article was first published by M&C Report. To subscribe, contact Emily Croft on 01293 846578 or email emily.croft@wrbm.com.
