The sales process for Be At One, the Piper-backed bar chain, has begun, with the 31-strong business valued at up to c£60m.
AlixPartners has been appointed to oversee the process, which officially began last week with an information memorandum sent out to respective banks and investors.
Be At One is on course to report turnover of c£36m in its current financial year - to the end of March - up from £29.3m in the previous 12 months. Store adjusted EBITDA rose 30% to £7.5m in the year to the end of March 2016, with group adjusted EBITDA up 42% to £4.7m.
It is thought that the business, which has generated a like-for-like sales increase of 9%-plus for the past five years and produced positive like-for-like sales since inception in 1998, will attract interest from both trade, with Stonegate already touted as a likely suitor, and private equity.
The group, which is looking to open six to seven sites annually, hopes to open a further site before the end of its current financial year next March, and is in legals on its first site in Scotland, thought to be in Edinburgh.
It is also in advanced talks to take a second site in Leeds, the first time it has opened another unit in a regional city. The site is set to open in the city’s Boar Lane.
Earlier this year, co-founder Steve Locke told MCA: “It is an old-school Battersea-size site. We have been there two years and think there is another area where there is the opportunity to open a smaller unit. We have the infrastructure and management there so are confident it will be a success without cannibalising the existing site. It will be a good test to see if we can do something similar elsewhere.”
In terms of scale, the company sees no reason why it can’t grow to well in excess of 100 sites in the UK eventually.
Comment by MCA editor Mark Wingett
Who is going to turn the dial, drive sales in a challenging market or give your core business the breathing space it needs so that it can be refreshed/turned around away from the spotlight? These are the sort of questions I am sure that are currently being asked by a number of operators across the sector. A quick solution could be an acquisition and buyers should be bullish in this current market, but how many businesses out there could genuinely solve those issues?
I would certainly put Turtle Bay and Franco Manca in that bracket at present, and I imagine a number of larger companies have already carried out some modelling on how both could fit into their frameworks. I would also add Be At One to that list. I can’t hide my admiration for a business and management team that has never been afraid to run against the pack and prevailing sector trends. It now finds itself running ahead of the pack - in terms of performance, and ahead of the curve when it come to a key trend…premium cocktails.
That is without mentioning the investment it makes in its people. The group spends £6,000-£7,000 per person over an intensive nine-week programme. Staff turnover currently stands at 70% – a low figure by industry standards but one that the group is determined to lower, with the aim to get it down to 50%.
The company, formed in 1998, has been backed by Piper and chaired by Mark Derry since 2012. It now operates bars in 14 cities across the UK. All three founders (Steve Locke, Rhys Oldfield and Leigh Miller) remain absolutely focused on, and dedicated to, the things that made their first site, Battersea Rise, successful in 1998. As Miller states: “Fantastic drinks, served quickly, in a great atmosphere, by highly trained people, who really know what they’re doing, and care about looking after you, and who want to make sure you have the best time.”They are skilled at creating, that hard to quantify aspect of a night out, fun. As one commentator has suggested, the company has the ability to create environments “where guests step into the party and each time is a special experience”.
It’s the group’s points of difference and strong foundations that I believe will continue to set it apart, especially as operators further diversify into the cocktail market or those brands that have traditionally been placed in their peer group look to grow their food sales mix. Specialist cocktail venues are often imitated but are actually very few in number – Be At One being the only one of scale. This segment of the bar and restaurant market is typically populated by niche specialist players (such as Nightjar and Callooh Calley) and the high-end bars found in five-star London hotels (such as Dorchester and the Langham).
In terms of scale, Be At One is the clear UK market leader, and all three founders see no reason why the business can’t grow to well in excess of 100 sites in the UK eventually. With this expansion target in mind, Oldfield says that it has been the move outside the capital that has allowed the group to hone its business model.
The group has two models – Classic and Destination. Classic is its main model (for example, smaller sites like its original in Battersea) while Destination sites are usually larger units, such as those found in Manchester, Leeds or London’s Monument.
Sites mature in 12-18 months depending on location, with Classic sites taking £20,000-£25,000 a week and Destinations £35,000-plus. The company expects to open six to eight sites a year, predominantly Classic sites, with some Destinations. In terms of refurbishment, it works on a rolling five-year cycle. Here, it focuses on proactive spend to protect and preserve the premium look of venues, with typically £100,000 invested, in year five. Again one of its strengths is its relatively low capex requirements and the lack of competition for the sites it focuses on. As Oldfield puts it: “When you have 2,000sq ft spread over two floors with no extract that ticks the box for us, but not for many other people.”
The group’s expansion in the regions is being underpinned by the continued closure of nightclubs across the UK. The majority of the company’s openings outside of London have come through closed nightclub sites. Figures produced last year by the Association of Licensed Multiple Retailers found that almost half of the UK’s nightclubs had shut their doors in just 10 years. In 2005, there were 3,144 clubs and this is now down to 1,733. Locke says: “The cultural move away from the traditional nightclub visit to a more intimate, experience-led night out has certainly provided us with greater opportunities for expansion, especially outside of the capital.”
The ever-acquisitive Stonegate has already been touted as one possible trade suitor, especially with its success in the wet-led category and impressive ability to work across a number of formats and sites in close proximity of each other. It would be ironic if TGI Friday’s (the business in which the three founders originally met) also threw its hat in the ring, but the Electra-backed group has been looking for a bolt-on acquisition for some time. The price tag may put off the likes of Deltic, Revolution and Novus, but I wouldn’t rule out the Casual Dining Group or even The Restaurant Group running the rule over the business. Private equity appetite for the sector remains unsated, especially for businesses with strong management teams which offer roll out concepts coupled with excellent execution. A word for Piper as well, off the back of its recent sale of Loungers, and backing of Turtle Bay, this could be an exceptional 12-18 months for the investment firm.
Of that management team, it will be interesting to see if they have the appetite to go again. It takes a lot of effort, single-minded determination, military like discipline and exceptional skill to create a market leader. You wouldn’t begrudge them, if they did decide it was time to make an exit, it should a successful one.
