Liberation Group has set its sights on becoming the leading provider of premium accommodation in the South of England.
Through its Butcombe Pubs and & Inns business which now includes the former Cirrus Inns estate, the group has seen occupancy rates consistently in excess of 80% across the group, as the company exploits the gap in the market for high-end accommodation, food and drink and hospitality, all under one roof.
Jonathan Lawson, CEO, Liberation Group said: “Our fantastic teams in the South of England and the Channel Islands have delivered an encouraging start to the financial year in both our pubs and drinks businesses, building upon a solid start to the year and then accelerating in Q2, taking advantage of some positive weather in June that has benefited a pub estate where over 50% of our covers are external, boosting both food and drink and our own pubs which very much links to our roots as a craft brewer and innovator and are a key point of difference in the market vs generic brands.
“Increasingly we see the group’s integrated model as a significant strength in the market, which enables us to exploit sales opportunities, but to also leverage the scale of the group and minimise exposure to inflation that others may experience.
“We have been particularly encouraged by the strong demand for our accommodation, which has seen occupancy levels consistently exceed 80%, even outside holiday weeks and bank holidays. 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.
“Having navigated a potentially difficult Q1, which included the integration of the 22 new pubs following the Cirrus Inns combination and an unseasonably cold Easter, we have seen momentum building in both our existing business and the new pubs. This in turn has enabled us to view the rest of the year with some confidence, despite the obvious uncertainty for our customers caused by rising interest rates.
“We have commenced our investment plans for the year, with two substantial investments completed already in Dorset and Jersey and a further two investments signed off and commencing imminently, one in Somerset and another in Jersey, plus some investment into our Butcombe Brewery to create much-needed additional brewing capacity for next year given the record volumes over the last few months. Once again, 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 per pub basis by the end of the year.
“Strong headwinds have continued in the first half of the year, specifically in utilities, food inflation and payroll. In utilities, we have now secured a new contract from October that will significantly improve our costs for the remainder of this year and next. Food inflation has been stubborn, although we never shared the Bank of England’s optimism last year that inflation would fall quickly in 2023. We have done our best to navigate this with our food teams and suppliers to provide our customers with the best quality and value possible, whilst also needing to deliver stable and robust gross margins.
The headline 2023H1 results for the Liberation Group:
|Q1 13 weeks||Q2 13 weeks||H1 26 weeks|
|UK overall LFL||4.6%||10.8%||8.1%|
|CI overall LFL||-4.2%||2.2%||-0.6%|
|H1 2022||H1 2023||Year on Year|
|Keg OBV volume||3,811||4,453||17%
Jonathan continued: “We are beginning to see the costs of certain food products decline and this is gradually reducing the headline rate of inflation, but this remains a challenge that we believe will last well into the autumn. Payroll has been exposed to significant increases in NMW in both the UK and the Channel Islands and we have also needed to ensure that we remain competitive in the markets that we operate in. To mitigate this, we have implemented a significant piece of work designed to improve productivity in our pubs, whilst also having people where we need them to serve our customers.
“We have now completed our second recruitment trip to South Africa, which looks to be even more successful than our first venture and we are hugely impressed by both the quality and attitude of some fantastic chefs and managers looking to join our business.
“Our drinks business has had a strong start to the year, driven by a very strong sales performance from the Butcombe Brewing and drinks business and underpinned by another solid performance from our Channel Islands businesses, where our strong supplier relationships, own brands and experienced teams put us in a great position to exploit each sales channel available.
“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 which 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.”