Oakman Inns pub group is eyeing further expansion as it predicts casual dining closures will present opportunities for other operators.
Founder and chief executive Peter Borg-Neal said the reduction in supply that will follow closures by big-name casual dining brands, including Prezzo, Jamie’s Italian and Byron, will see rents ease and improve market conditions.
He explained: “I take no pleasure from seeing any business struggle, but the over-expansion by big-name brands did impact on prime and even secondary site rentals and in the current market those demands may and should ease. I suspect rent reviews over the next two years are going to be very different.
“We have already benefitted from one such scenario where we have a site that has been trading well for nigh on five years we have owned it, and is due for a rent review. Six months ago we faced a situation where a well-known and very good restaurant operator was about to take over a similar, near-by site to ours but had agreed to pay 60% more rent than ours. This would have been a serious double-whammy as not only would we have lost trade to the new entrant, we would also have faced a very difficult battle at rent review to resist an increase in our rent to the same very high level. However, they have now decided to pull out of the deal. We believe the combined benefit of this change is worth well in excess of £100,000 profit a year to us.”
Borg-Neal accepted that Oakman is “not immune” to the cost pressures affecting the industry, however said its increasing purchasing power is helping it to maintain operating margins.
Like-for-like sales for the 49 weeks to March 11 increased by 7.1%, with openings planned in Olney, Buckinghamshire; Welford-on-Avon, Stratford-upon-Avon; and Ascot, Berkshire; later in the year.
The group is also looking to raise 10.2m in debt and equity to fund further expansion in 2018/2019.
Borg-Neal added: “We have recently gained planning permission to develop The Polecat in Prestwood, Buckinghamshire, and have an application in process for the Walter Arms, in Sindlesham, near Wokingham. We have signed an agreement to lease a new site in Epsom and are also very close on five others.”
In its latest results the group reported that turnover had increased by more than 20% in the 12 months to April 2017.
The company reported a turnover of £23.3m, with like-for-like sales up 3.5% across the group’s 16 sites open at the end of the financial year.
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