Oakman looks to raise £5.3m from shareholders
It comes as the group reported half-year LFL sales were up 9.8% vs 2019, a continuing outperformance of the market.
Oakman has a pipeline of six sites which are to be converted into the flagship Oakman Inn brand.
However, founder and executive chairman Peter Borg-Neal warned many of Oakman’s competitors will be closing their doors due to the challenging trading environment.
In a trading update, Oakman reported total sales for the 26 weeks ending 1 January 2023 were £36m – up 41.5% vs 2019. On a LFL basis sales were up 9.8% vs 2019.
December sales were particularly strong with a record period of £8.2m. Total sales during the period were up 34.3% v 2019, and up 6.5% on a LFL basis. Compared to 2021, totals sales were up 27.4% and up 17.5% LFL, when adjusted for VAT.
Peter Borg-Neal said: “We have continued to outperform sector averages over the past six months which reflects great credit on Dermot King and his team. We believe our locations and market positions have given us a competitive advantage in the current environment. In addition, our commitment to maintaining our quality despite the external challenges has been key to our out-performance. We continue to maintain our properties, train our people and develop our offer.
“We expect our growth to accelerate further over the coming months. It is an unfortunate consequence of the current situation that many of our competitors will be closing their doors – some temporarily, some permanently. We have already seen many closures and there will be many more to come in the next few months. This supply side adjustment does, of course, benefit those businesses that are still open and, indeed, our sales over the past couple of weeks show very strong growth over the last year.”
On funding, Oakman said that the debt markets were “pretty much closed” to hospitality operators at present.
The business will return to market for further funding once the environment has improved.
“We have very supportive shareholders, and we are confident that this raise will prove to be a success,” Borg-Neal said.
On expansion, Oakman has a pipeline of six sites, in Gerrard’s Cross, Ludlow, Epsom, Old Hatfield, Harpenden and St. Albans. The first of these, The Journeyman in Gerrards Cross, starts on site in February.
Oakman Inn, the group’s core brand, has grown to 28 sites with an average weekly sales per site for the year-to-date exceeding £42k net of VAT. The group has an “outstanding pipeline” of Oakman Inn sites to develop over the next eighteen months.
Meanwhile, the Seafood Pub collection now has eleven sites within its portfolio. The focus will be on investing further in those sites and developing the concept before looking at any further acquisitions.”
In terms of future outlook, Borg-Neal said the board was prepared to exit when appropriate.
“We will only do so when market conditions are such that we will secure the appropriate value for the business. We are fully confident of the future performance and to exit prematurely would be detrimental to all.”
He added that the sector should stop campaigning for short-term government interventions and instead focus on “long-term structural change”.
“Our sector is ridiculously overtaxed compared to the rest of Europe. We should focus our efforts and campaign on two issues only – Business Rates and VAT. The first is an antiquated tax that delivers an unfair burden on our sector. The second is ridiculous. For there to be no VAT on processed meals but for VAT to be charged on food in our sites is an abject nonsense. Furthermore, I think it can be proven that these taxes reduce income for the Revenue by depressing growth in our sector. Our trade bodies should focus their efforts on these two issues and not be distracted elsewhere.”
