Hydes MD: 'We beat our trading expectations'
The family-owned independent business which is celebrating its 160th anniversary this year, delivered turnover of £34.1m for the year ending 2 April 2023, despite turnover of £34.1m for the year ending 2 April 2023, despite challenging economic conditions.
The latest record turnover is up £5.8m on 2022’s figure of £28.3m.
Hydes, with its brewery in Media City, was formed in 1863 and supplies beers to wholesalers, pub companies and other brewers throughout the UK and a pub retailing estate of nearly 50 pubs across the North West of England and North Wales.
Soaring inflation, high energy costs, a tight labour market and rising interest rates all contributed to extremely difficult trading conditions for the hospitality industry as a whole.
Decisions made in previous years to fix energy costs until 2024 and enter long term contracts with major suppliers ensured the family-run business was shielded from some of the worst financial impacts of inflation.
Speaking to The Morning Advertiser, Hydes managing director Adam Mayers said the brewery was lucky to have fixed energy contracts that have been in place since before the pandemic. “If we hadn’t had those contracts, it would have been an additional cost of £1m per annum off the bottom line,” he said.
Inflation meant the company saw increases in food costs, and on input costs and on things like consumables. If you added up those, they would certainly come into a “significant three-digit sum,” said Mayers. “That was the impact of inflation on overall profitability”.
However, Hydes worked with suppliers to mitigate a lot of those costs. “We were quite lucky we didn’t have to pass on a lot of this inflation to the consumer,” said Mayers.
The brewery sought to secure long term arrangements with suppliers, for instance. If you have a three-year contract, there’s limited scope to hike costs above a certain amount, the manging director explained.
Then, it works with suppliers for a long period to get security of supply. Hydes has also built up trust with the suppliers as it is a “very good payer”, according to Mayers.
'Record year'
Turnover was the highest in the company’s history, which was “brilliant,” he added. “It was a very good performance in very challenging circumstances off the back of challenging times with the pandemic.”
Trade is also “significantly ahead of” pre-pandemic levels of 2019.
“Despite the poor weather throughout the summer we’ve had a good start to this year,” he added.
Throughout the sunshine of May and June the company traded “exceptionally”. But what followed was potentially the wettest summer on record for Greater Manchester, Lancashire and Meryseyside.
The rainy weather impacted trade, however, “we actually beat our expectations and still traded ahead of the prior year,” Mayers said.
Staff recruitment, particularly in the kitchens, also presented a challenge, resulting in higher payroll across Hydes’ managed pub estate.
However, the chefs the company has recruited it has also managed to retain.
Now, the situation has also improved a bit. Mayers believed this was due to those who had moved out of the hospitality sector coming back to it after trying out other careers.
Financial year ended 2 April 2023 saw an operating profit of £2.2m, the same as 2022.
While operating profit for 2023 increased marginally, the previous year had significant Government support in the form of grants and rates relief (£1.2m) plus VAT reduction on food and soft drinks.
According to non-executive chairman, Richard Lancaster, the foresight to fix energy costs and negotiate long term supplier contracts allowed the business to limit sales price increases throughout the year.
This ensured competitiveness on price, offering value for money for customers whenever visiting one of Hydes’ pubs.
Throughout the year Hydes also continued to invest in its estate. The Jolly Thresher in Lymm and The John Millington in Cheadle Hulme both underwent extensive refurbishments.
The Jolly Thresher performed strongly throughout the year, exceeding all expectations, whilst the sales performance following the John Millington refurbishment project has been exceptional.
Looking to the future
Further investments were made at various other sites including the Sam Brooks in Sale, the Golden Lion in Rossett and Alfred’s in Macclesfield. All managed public houses in the estate are now fully Hydes branded.
In October 2022, Hydes completed its first freehold acquisition since September 2015, purchasingthe former police station in Heswall.
Named after the architect of the original building, the Harry Beswick, has seen more than £3.6m in investment and is currently undergoing an extensive renovation ahead of its opening as a premium pub and dining venue in November this year.
Two disposals from the tenanted estate took place during the year with the Carltonn Tavern in Chester sold to existing tenants for £175,000 and the Eagle Hotel in Buxton sold for £170,000.
And what’s Hydes’ biggest achievement of past year? According to Mayers, it’s that where the business had redeveloped or refurbished sites, it had significantly improved trade.
The second thing was that the brewery continued to enhance its reputation with customers and had retained a very good online reputation.
But Mayers also thought to pinpoint one thing would be unfair. “If you're operating good pubs, you must have good people, and you must be selling good products,” he said. “At the moment, we're taking all those three boxes.”
Looking forward, the brewery is planning to open a site on a former police station in November, and will continue to refurbish its existing estate.
Inevitably, there will also be pub closures, but Mayers said, “My challenge is to keep that to an absolute minimum. We want to keep the pubs open. We don’t want to sell them”.
He feels very confident” about the future.
“We've been along around a long time, we've been through a number of world wars, we’ve been through a pandemic now, so we’ve seen a lot of things off as a company.
“In terms of the wider economy, it’s going to continue to be challenging – interest rates are relatively high and inflation hasn’t gone away, so we’ll just have to see.”
