When Anand first announced plans to launch a new pub investment vehicle, as the country was stuck in the grasp of a third Coronavirus lockdown, many saw it as a hopeful vote of confidence in the sector’s post-Covid resurgence.
Launching as RedCat Pub Company, it was backed by funds managed by Oaktree Capital Management, which raised some £200m of equity to invest in the sector.
Anand, the former CEO of Greene King with a point to prove, spoke at the time of the great British pub always having the ability to bounce back from a crisis.
“It has survived the Blitz, the Great Plague and the Credit Crunch – always bouncing back and taking its rightful place at the heart of the community,” he said.
“We want to partner with talented licensees and entrepreneurs to give them the support, capital and help they need to thrive.”
It was a bullish move from the dogged Anand, and demonstrated an assertive confidence in a market strangled by restrictions.
It also mirrored periods of his tenure at Greene King, where he acquired cut-price assets from debt-laden rivals in the aftermath of the global financial crisis.
While Anand’s approach was assured at RedCat, some commentators saw those early days as somewhat scattershot; a strategy that sometimes lacked cohesion or consistency.
Growing pains
The group’s first acquisition, a collection of 42 sites from Stonegate, came about as a result of the latter’s takeover of Ei Group and comprised 30 freehold pubs and 12 leaseholds spread across England and Wales.
Some commentators saw transactions like these not as long term assets, but as a means for generating cash as the group found its feet.
Others viewed it as a scrappy approach from an opportunistic business out to hoover up any site it could under the swaggering belief it could run them better than their current owners.
In the following months, RedCat took advantage of a swathe of pub sites coming to the market, including the Essex-based Saint Arnold pub group, and quickly grew to around 100 sites.
The group has certainly suffered its fair share of growing pains in its brief years since.
In April 2024, administrators were appointed to RedCat Leased Pubs Limited (RCLP), a subsidiary of the wider group, which led to the closure of five sites.
Simultaneously, 14 pubs within its managed division were put up for sale. That same month the group posted a pre-tax loss of £31m for the year ended 3 April 2023 – an increase from the £3.2m pre-tax loss reported for the 64-week period ended 3 April 2022.
Later that year, RedCat completed a refinancing of its debt facilities to the value of £61m, a deal that comprised funding from Barclays Bank and further equity from the group’s existing investors including funds managed by Oaktree.
At the time, RedCat CEO Richard Lewis, who joined the business in late 2023 having previously worked alongside Anand at Greene King, said the refinancing would “provide the business with the stability required to invest for growth”.
“The introduction of rooms, if it is done well, gives consumers more reasons to use the pub and allows it to hum along a little more effectively"
Craig Rachel, director at AlixPartners
Lewis himself would later go on to acknowledge the challenges faced by RedCat in its adolescence. He described the group’s wide-ranging estate as being “a bit like a large collection of adopted children”.
“There’s lots of different businesses coming from different backgrounds with different formats from carveries to hotels,” he said.
“It had some structural issues in terms of some loss-making sites and we needed to create a slightly more coherent estate than we’d got, so it was a case of what do we want to keep and what do we want to lose.”
The mention of hotels is important, though, as without doubt the jewel in RedCat’s crown for much of its lifespan has been the Coaching Inn Group, which it took over in August 2021 for a reported £50m price tag.
As one industry expert described it, the acquisition ultimately transformed RedCat, providing it with ‘sensible levels of profitability and cash flow, and a pipeline of opportunities to grow’.
In the years since, RedCat has expanded the Coaching Inn portfolio to 36 sites. And as of this month, the group is now focused on being a pub-with-rooms operator having announced plans to exit its managed pub division just a few months on from selling its leased & tenanted pub estate to Admiral Taverns.
It’s a shrewd move, one that will see RedCat bring together the entirety of its pubs-with-rooms estate into one division comprising 43 sites, pulling together an estate that coalesces operationally – an undoubted benefit in a challenging trading environment.
It also achieves a more sensible, focused head office, and provides greater management continuity too.
Additionally, it speaks to the significant wider opportunities in the sector.
As Craig Rachel, director at AlixPartners, set out at last year’s MCA Pub Conference, pubs with rooms help broaden revenue streams and improve operating efficiency.
“Premium pubs are in general the most attractive part of the market, but when you add rooms into the mix it introduces a whole new financial dynamic that has a significant effect on the overall profitability of the business and the resilience of it,” he explained.
“The introduction of rooms, if it is done well, gives consumers more reasons to use the pub and allows it to hum along a little more effectively, and fundamentally enhances the business.”
Key focus
In particular, the pub with rooms model offers plenty of opportunity to sweat the asset with the accommodation element helping to support midweek trade and shoulder periods, Rachel added.
It also allows for dynamic pricing models that customers are familiar with from hotels. “Consumers are accepting of flexible pricing in the hotel and accommodation space, which you can’t do with any other line item in a pub,” he continued.
What’s more, pubs with rooms remain a key focus for investors and have emerged as ‘a really attractive asset class’.
”If you’re a pubs with room business, generally the growth platforms tend to be freehold, particularly if investors can invest into building out the rooms capability.
“If you’re an investor, particularly in real estate, you’re used to this business from hotels, they have a much clearer understanding on what the return on capital will be compared to pubs. Rate, occupancy, and the associated return on capital are metrics they can get their heads around.”
As such, more and more energy is being concentrated on the pubs with rooms space - and not just by RedCat.
Last year, the Butcombe Group said it was looking to grow its pubs with rooms business having revealed plans to convert 20 of its sites to the Butcombe Boutique Inns model.
Heartwood Collection is also pursuing growth having secured £100m of additional funding a few years back to support the expansion of its portfolio to over 60 pubs and nearly 500 rooms by June 2027.
For RedCat, the latest move will allow it to ‘concentrate investment, management time and future acquisitions on growing a leading premium inns business across the UK’.
The group adds that its new single division will ‘focus on the charm of a coaching inn, with the vibrancy of a modern premium food and pub operation, delivered through the company’s ‘hospitality from the heart’ ethos’.
There are questions that remain, of course, not least how much will RedCat be able to claw back from the sale of its managed estate. But should its accommodation business continue to thrive as it has then such queries almost become moot.
In its latest full year results for the year ended 30 March 2025, adjusted EBITDA rose 290% to £8.8m, with site EBITDA up 42% to £18.7m and like-for-like sales increasing 2%. More recently, Coaching Inn Group reported 11.7% growth during the two-week period across Christmas and New Years, with an 8.4% growth across the six-week seasonal period.
As Lewis himself put it, it’s a natural next step for the business. “Our premium inns have become an increasingly important part of what we do,” he says. “Operating under the Coaching Inn Group brand, we are extremely well positioned to build on the strong growth and momentum we have seen to date.
“The strength of our management team and people across both our support functions and sites gives us a powerful platform from which to grow. Our ambition is to welcome many more sites into the group.”
- This story originally appeared in The Morning Advertiser’s sister publication MCA here.
