Liberation Group to invest in more rooms across estate

The south of England and Channel Islands brewer and pubs with rooms operator said its UK drinks lfls had risen 9% while UK food lfls climbed by 5% versus the period in FY22.

Although overall lfls at its Channel Islands site had fallen marginally at 0.6%, its OBV (on-balance volumes) of beer it produces rose from 16,157hl (hectolitres) to 17,144hl – up 6% – while keg OBV went up 17% from 3,811hl to 4,453hl.

The company, which operates Butcombe Pubs & Inns and recently acquired the former Cirrus Inns estate, has seen room occupancy rates consistently in excess of 80% across the group.

It added the group’s accommodation business has grown from less than 100 rooms in 2019 to more than 400 and has identified opportunities to add a further 300 rooms within its existing estate through further investment in rooms and pods, which it will commence later this year.

Q2 acceleration​

Liberation Group CEO Jonathan Lawson said its pubs and drinks businesses had started the year solidly and accelerated into Q2 (second quarter of FY23) by taking advantage of positive weather in June because its pub estate has more than 50% of its covers outdoors.

“We have been particularly encouraged by the strong demand for our accommodation,” Lawson said. “This is a reflection of our broad appeal for both leisure and business users and a rapidly growing events business that we view as a significant opportunity for growth.

“Increasingly we see our managed pub estate as being occasion and experience-led rather than being led by either one of the three categories of drinks, food or accommodation.”

He explained the business had integrated 22 pubs into its fold following the Cirrus Inns acquisition and built momentum “despite the obvious uncertainty for our customers caused by rising interest rates”.

It has completed two “substantial investments” in Dorset and Jersey and a further two investments beginning in Somerset and Jersey. It has also put investment into Butcombe Brewery to “create much-needed additional brewing capacity for next year given the record volumes over the past few months”.

Navigating headwinds​

He added: “We are heartened by the continued strength of our high-quality tenanted pub business, which has shown a resilient performance in the first half of the year and is on track to deliver solid growth on an EBITDA (earnings before interest taxation, depreciation and amortisation) per pub basis by the end of the year.”

Although strong headwinds hit the first half of the company’s financial year – specifically in utilities, food inflation and payroll – Liberation has secured a new utilities contract, food inflation has been navigated through a combination of best quality and value, while wages have been added to by increases in the national minimum wage a second recruitment trip to South Africa to find chefs and managers “looks to be even more successful than our first venture”.

Its drinks business had a strong start to the year, driven by a very strong sales performance from the Butcombe Brewing. It cited Butcombe Original as a cask ale hero while an “innovative” range of keg ales and lagers are “positioned perfectly for the current market”.

Lawson said: “The second half of the year poses a number of uncertainties and challenges, including inflation and the impact of rising interest rates and higher mortgage costs that pose a risk to both consumer confidence and disposable income.

“But we remain positive about our opportunity to deliver growth and market share in both our pubs and drinks divisions and, increasingly, see our integrated group as a model that is very much fit for the modern market and where the value of the total proposition is greater than the sum of its parts.”