Chameleon reports operating profit uplift

North England based Chameleon Pub Company is looking to add two sites to its portfolio in 2011 as it celebrates its tenth anniversary.

Chameleon, led by managing director Phil Strong with Alistair Arkley as chairman and Barry Whitehead as finance director, reported a 62% increase in operating profit on last year.

Year-on-year sales across the estate were up 1.2% for the festive period from December to the first week of January — showing a great recovery from an 11% dip in the first two weeks of December because of the snow.

Strong said its uplift in operating profit had been down to a policy of "quality, value and consistency" as well as a tighter control of margins.

The split in sales across the estate is around 50% drinks and 50% food, although food is a key driver of drink sales with wine sales seeing an increase.

He also praised the company's managers who are given considerable leeway to operate pubs as if they were their own, rather than to a prescribed format.

"We have some very special people working for us," he said. "Our managers and chefs are very important."

Venues​

Chameleon has continually churned its estate over its ten year history and now has three freeholds and four leaseholds — two Enterprise, one Marston's and one Greene King. It started with three leaseholds and grew to 11 sites at its peak.

The destination food-led company currently has one bid on the table for a site but said funding from banks remains an issue. It has not ruled out taking more leases if the right sites are available.

"The banks are still finding the pub industry too risky," said Strong. "The terms and restrictions are quite onerous and they are only lending about 60% of the value — not 70% like the good old days."

Loans​

As a result of funding difficulties, the directors of Chamelon lent the company £1.3m over the past year. As of 31 March 2010, £539,000 had been repaid.

The loans had been used to help fund acquisitions such as the Greaves Park in Lancaster, Lancashire from Whitbread last February.

"If we only get 60% from the banks, the other 40% has to come from somewhere," said Strong. "Some comes from our re-invested profits and some from the directors.

"The other factor is that it means we are in control of our business and not linked to venture capitalists."

Price rises​

The Greaves Park venue, which formerly operated as a Table Table outlet, saw sales increase 8% on last year, although Strong admits there is "still some way to go" before it achieves its full potential.

Chameleon took the decision to increase prices at the start of December to take into account the VAT rise, therefore adding margin for the month.

But Strong warned that January would be tough with the VAT rise and price rises from drinks companies filtering through.