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Tue 8th Feb 2022 - Alchemy Partners acquires Brasserie Bar Co in circa £40m deal
Alchemy Partners acquires Brasserie Bar Co in circa £40m deal: Brasserie Bar Co, the operator of Brasserie Blanc and the White Brasserie Company, has been acquired by Alchemy Partners in a deal that is thought to be valued at just over £40m. The Richard Ferrier-led, 32-strong company said that the deal will underpin its plan to accelerate growth towards a portfolio of 70 premium pubs over the next five years. The group, which operates 18 pubs and 14 restaurants, said it has “rebounded strongly” from the impact of covid-19 and continues to trade well across all its sites. It said: “Brasserie Bar Co has in place a strong platform for future growth, and with the support and investment of Alchemy, it will further accelerate the rollout of its proven business model, primarily through the expansion of the White Brasserie pub business. This acquisition follows a period of successful ownership by Soho Square Capital, during which time the group has grown into a market-leading business of 1,300 colleagues serving, on average, 34,000 customers a week.” As part of the deal, Mark Derry will remain as executive chairman of the business, with Ferrier as managing director. Brasserie Blanc was founded as Le Petit Blanc in 1996 by chef Raymond Blanc and Derry, who previously led Loch Fyne. Core Capital led a management buyout in 2006, with the group’s White Brasseries arm founded in 2014. The company said: “Given Brasserie Bar Co’s expansion strategy and the ambition of Alchemy Partners, the Group will, over time, create a significant number of new roles and opportunities for professionals seeking to develop their skills and further their careers in hospitality.” Derry, executive chairman of Brasserie Bar Co, said: “This is a great deal for Brasserie Bar Co, which opens up the path for us to operate more pubs and provide more opportunities for our colleagues. This will enable us to build on our achievements to date and drive further growth across the Group. I would like to thank Soho Square Capital for their support and we look forward to working with Alchemy, who share our vision for accelerating the roll-out of our successful and differentiated pub offer. “I would like to thank the whole team – led by Richard Ferrier, Chris Guy and Helen Melvin – for getting us to this point. Under their leadership, we have in place a winning combination of serving brasserie-quality food within historic and atmospheric pubs. It is an offer that customers love, and I am confident that the continued strength of our teams, our steadfast focus on food and our outstanding locations will drive future success and growth.” Thomas Boszko, partner at Alchemy Partners, which also backed the Inn Collection, added: “Brasserie Bar Co do food-led pubs exceptionally well – a combination of their differentiated product and a very experienced team who know exactly what they’re doing. This investment is all about backing that team with the capital they need to expand the estate, both in leasehold but also freehold. We are confident in the future of the industry and believe there couldn’t be a better time to do this” 
Brasserie Bar Co features in Propel’s Turnover & Profits Blue Book, which is updated monthly for Premium subscribers and now features more than 500 companies. Brasserie Bar Co has turned over an average of £48.5m in the past five years. The Blue Book, which is produced in association with Mapal Group, provides a five-year overview of turnover and profit and ranks companies according to turnover, pre-tax profit and profit conversion. The latest edition also features group editor Mark Wingett’s next quarterly pick of the companies well-placed to grow in the post-pandemic era. His latest pick of companies are Brakspear, Simmons Bars, Hub Box, Park Holidays, Vaulkhard Leisure, Hostmore, QFM Group, Caprice Holdings and Ivy Collection. The picks are accompanied by a 2,100-word report. The Blue Book also provides details of directors’ earnings and highest paid directors. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to sign up.

Going for gold by Mark Wingett

Imagine being promoted to lead one of the sector’s leading up-and-coming businesses in February 2020. At some point, Richard Ferrier, managing director of Brasserie Bar Co, the operator of Brasserie Blanc and the White Brasserie Company, may get the chance to pause and look back on those first few months in his new role. I would say that the word “challenging” doesn’t come close to summing them up. Not to mention “frustrating”. As Ferrier said on stepping up to the role from chief commercial officer of the Mark Derry-chaired business, it had a “tremendous opportunity to grow further”.

It was coming off a previous 12 months which it had described as a “watershed” for the business, as it achieved its transformation into a “market-leading food-led pub company”. I understand it had just appointed advisors Clearwater to begin reviewing its options, as the management team looked to begin ramping up its presence in the pub sector. A previous interest in acquiring Peach Pubs – it was an underbidder, with Punch, to The Restaurant Group – showed its ambition. Perversely, the pandemic may have put it in a better position to move forward, and now it may have found the perfect partner to do so.

In 2006, private equity firm Core Capital led the management buy-out of Blanc Brasseries from Loch Fyne, backing the team behind the successful development of Loch Fyne Restaurants – Mark Derry and Ian Glyn, along with chef Raymond Blanc. In 2011, Core invested a further £20m in the business, which at that point comprised nine Brasserie Blancs and the fledgling White Brasserie Company, which launched in August 2010, and was a pub dining business with two sites in Weybridge and Teddington. Steady growth ensued, and gradually the group’s focus switched from brasseries to pubs, with the latter becoming what Derry has often claimed as one of “the highest sales per outlet pubs in the sector”. It is thought the company’s sites are producing average weekly sales in excess of £40,000. What was needed was a war chest to bring more sites onboard, but also a restructure of the group’s shareholding to make it a more attractive proposition for suitors.

The pandemic seems to have forced the issue, and last summer, Brasserie Bar Co completed a restructuring and refinancing process, principally in order to secure a Coronavirus Large Business Interruption Loan Scheme (CLBILS) loan, which saw shareholder loan notes in excess of £50m waived securing the financial position of the group going forwards. The group received £6.7m from a combination of the government backed CBILS, of £5.7m via an extension of term loan facilities with OakNorth Bank and £1m of additional shareholder debt. All loans now expire in November 2023 and replace outstanding term loans due to expire in May 2022. Banking covenants were also reset at this time to reflect the circumstances of the pandemic going forward.

It is understood the refinancing put the 32-strong business in a strong position to take advantage of any opportunities over the next 12 months and beyond. In the financial year ended June 2020, the company saw sales decline from £58m in the previous year to £43m. The company said at the time the year’s results reflected the fact the final four months of an otherwise strong trading year were hit by the covid-19 crisis and the closure of the hospitality sector. Prior to this, results in the first eight months of the year saw company Ebitda increase by 11%, with the business on course to deliver £5m. For the first eight months of the financial period, restaurant Ebitda was 11% up on the previous period (£6.3m for the eight months to February 2020, compared with £5.7m for the eight months to February 2019). The company said the repositioning of the business away from the high street towards affluent commuter belt pub locations had now been completed. The focus was now back on taking underperforming pubs and “bringing them back to life”.

There has been a sense of the business “itching to get on with it”, wary that the window to get ahead of the pack may soon close. The Rooney Anand-chaired RedCat Pub Company, now circa 100-strong from a standing start last February, has had the market pretty much to itself for single-site and small group deals. More businesses have begun to re-enter the market – Portobello, Urban Pubs & Bars, Young’s and Oakman Inns to name a few – and others remain in the wings, with the expectation that some businesses, perhaps the majority being independents, will be impacted by “covid fatigue” and look to cash in. Others will sadly go under, as further government support ends. I would be amazed if the Partners Group-backed Cote had not expressed a passing interest in Brasserie Bar Co, and the obvious synergies provided. I also wonder whether one of the larger pubcos could have run the rule over the business, allowed the management to take some money off the table and give them access to a strong pipeline of new sites. As with Coaching Inn Group, you sense another good opportunity to structure such a deal has gone begging here for one of them.

Alchemy Partners, which has backed north east pub and hotel company the Inn Collection Group since 2018, is picking up a strong business, coming into the recovery with good momentum behind it, led by one of the most promising and astute new leaders in the sector in Ferrier, supported by an experienced chief financial officer in Chris Guy, formerly of Casual Dining Group and Loungers, and steered by one of industry’s long-term leading lights in Derry. The Brasserie Bar Co management team will obviously be attracted by the support Alchemy has provided Inn Collection over the past three years, especially during the pandemic when it comes to property. The Northumberland firm had just seven sites when it was acquired by Alchemy back in June 2018 and, on the back of significant funding, it has since boosted its list of leisure venues either operating or in its openings pipeline to 28 across Northumberland, Tyne & Wear, County Durham, Lancashire and Wales. Further acquisitions are on the horizon too as the group looks to widen its customer base and presence across the north of England. It is thought that Alchemy has invested over £100m in backing the growth of the Sean Donkin-led business, which is on track to produce Ebitda of circa £35m and a valuation of between £300m-£400m.

There is a sense that although leasehold sites might make the majority of the deals Brasserie Bar Co will look at for its pub estate, Alchemy will not be shy in pushing it and supporting it to acquire freeholds when possible. With Inn Collection, potential new-build sites and acquisitions are constantly being assessed and the group intends to add a further three to five new sites per year. Although Brasserie Bar Co plans to accelerate growth towards a portfolio of 70 premium pubs over the next five years, I imagine that figure would be pulled back if investment was needed to ramp up for the right sites. And that could include the group’s first move into taking on sites with bedrooms, something it is thought to be keen to explore.

What will become of the group’s remaining restaurant sites is one question that will need to be answered. Could it look to dispose of them? Often quoted as the engine room of the organisation, and attracting to the Blanc name customers and employees alike, there is logic either way. There’s also an emotional attachment to the brand, and the business has consolidated the Brasserie Blanc estate already to leave it with the best performers, and while they remain that way, where is the appetite to move them on? I also understand that the business has been investing in a refurbishment programme for its remaining 14 restaurants, and that sites in the likes of Chichester, Beaconsfield and Winchester are currently generating like-for-like sales in line with or ahead of their White Brasseries counterparts. For Ferrier and his team, I imagine that despite the injection of funds, their focus will remain on keeping the up level of discipline and consistency that has stood the business well so far. It will take the next six months to let the dust settle on the deal, to build on the momentum that it is already seeing come through in its performance since the start of year and begin building a pipeline of target sites, whether that is individual pubs or possibly complimentary businesses – for next year and beyond. The relationships it has built up with the larger pubcos will stand it in good stead if said businesses look to make strategic disposals. 

Is this the breaking of the dam on M&A in the sector? I sense it will be a case of wait and see for many wanting to follow a similar path, especially with the cost of living set to rise, VAT at present going back up to 20% at the end of March, and government support on rents ending next month. Businesses will want to see how all of that impacts their balance sheets, and subsequently valuations, before going out to would-be investors, and a return of the banks would obviously also be helpful. Brasserie Bar Co now has no such worries, just a need to expand into areas it currently doesn’t serve. It has got out ahead of the pack, now it is time to go mining for further sites and fill in those blanks.
A version of the above comment piece first appeared in Propel Premium last October

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