RINGING THE CHANGES

November 5th, 2014 | Posted in: Editors' Picks,Features

by Susan Young

What a year Scotland has had – and I’m not just talking about the Ryder Cup, Commonwealth Games and the Referendum… it seems that there has never been so much money invested into the Scottish licensed trade. Progressive operators have been growing the businesses, and have invested millions in the Scottish hospitality industry.

The combined spend of independent operators SimpsInns, DiMaggio’s, Maclay Inns, Buzzworks, Manorview, Signature Pubs, Montpeliers, Costley & Costley, Aurora Hotels, BrewDog and James Rusk alone this year exceeds £20m. And obviously there have been millions spent across the board when you consider all the larger operators such as JD Wetherspoon. They alone have opened eight places over the past year with an average spend of £1.5m per unit. Smaller operators have also invested heavily in their business by renovating or adding space and buying new businesses. It certainly is a welcome turn around.

One company that is growing its business is SimpsInns. This year they acquired North Gailes Golf and Leisure, which is adjacent to the Gailes Hotel, which it already owns and owner Malcolm Simpson has his eye on a few potential acquisitions for spring next year. He told DRAM. “Things are easing off, but it’s not a lot easier. It’s like a great big ship turning. We made a decision to go into the recession and be in pole position so we continued to invest, and we got a lot of support from our bank. We were determined not to go into the recession and play catch up. That smaller scale operators are investing in existing outlets is also a positive flag. When the big players start to creep back in, that’s when you know things are getting better. We’re starting to get lots of corporate enquiries, so when they’re reaching out for quotes it’s getting better.”

He continues, “Our business is diverse across food, drink, hotels, corporate and weddings, so we can see different aspects of the business changing and volume is starting to grow slowly. The discounts culture has been very damaging, so it’s good that that’s starting to ease off too. You can’t really compete. You can’t sell a product at the same price it was five years ago, when your overheads aren’t the same price.”

Two other Ayrshire group have also been investing. Costley & Costley re-opened Soutar Johnnie’s back in the Spring (it was destroyed in a fire) and have also embarked on a programme which included refurbishing the Cochrane Inn and Brig O’Doon. While Buzzworks re-opened Lido and did a glitzy refurbishment on Elliots.

In Glasgow the Di Maggio Group has invested over £3m on new openings this year alone, and owner Mario Gizzi feels the vibe in Scotland is fantastic. “Scotland is very positive at the moment,” he says. “There’s a real feel good factor around us what with the Ryder Cup and the Commonwealth Games.”

The company spent £1.2m on opening an Amarone outlet in Aberdeen at the beginning of the year, invested in £500k in Topolabamba, a Mexican restaurant in Glasgow and then £1.5m on its ambitious Anchor Line venue in Glasgow, which you can read about on p28. “We knew what we wanted to do with Anchor Line so we held off doing it until we felt the market was right,” says Mario. “But like anything, you start to realise what works and what doesn’t so you’re constantly tweaking.”

And the business is continuing its expansion. Says Mario. “We are just starting work on our 16th venture, Cafe Andaluz in Aberdeen.” It’s the second Aberdeen venture for the company. They opened Amarone just before last Christmas. Says Mario, “We’re very happy with Amarone in Aberdeen, but like everything, if something doesn’t work we change things.” Topolabamba, which Mario and Tony Conetta opened with Paul Sloan, has received rave reviews and Mario believes it has been a success because it was so unusual. “There’s nothing like it in Glasgow,” he says. “A brand new concept always goes down well.”

Three months before DiMaggio’s opened Anchor Line, James Rusk, who also owns The Butchershop, launched Hutchesons, the lease on which he negotiated with the National Trust. The Rusks spent in the region of £1.5m transforming the A-listed building, which is set over three floors (around 4,000 sq ft). Rusk agrees that while investing in new openings is positive, operators also investing in their current businesses makes sense. “

James Rusk comments, “Things are going really well. Obviously when you open a business like this, which is actually three businesses, it’s going to be a work in progress. It’s a big investment but one we’re committed to. ”

At Hutcheson’s the spend is continuing. Says James, “The private dining room, which we’ve literally just finished, can seat 18.” However he plans on now working on the operational side of business to ensure it’s success. He comments, “We have to make sure we’re still balancing our attention between Hutchesons and The Butcher Shop and ensuring we’re keeping our high standards there. I’m not planning anything else just yet, this is enough!” However then he adds, “But you’re always looking!”

Mark Brunjes, managing director of CM Design, which worked on both Hutchesons and Anchor Line, says he’s finding that there’s money out there to be spent on both refurbishment and opening.

“I’ve found that the entrepreneurs and individuals have been the ones spending money recently, but what’s good is that the brewers are starting to spend money, as they haven’t been for the last couple of years. There’s quite a bit of money around. We’re finding that while businesses are still looking for value for money, they’ve more to spend. I think they’re starting to see the stuff individuals are doing and know that they have to compete with them. Individuals and entrepreneurs are more open to design and willing to take more risks. We’re talking to people all the time about doing refurbishments and the money they have to spend is going up. We’re currently talking to someone in Glasgow about a job that’s has £500k spend, so the money is there.”

Glendola Leisure has also been spending. The company invested £1m developing space at Central Station. They opened a very stylish basement bar and grill – Alston Bar and Beef as well as an Artisan Coffee Shop. It’s was the first redevelopment for the company in a few years with their estate also including Waxy O’Connor’s, the Carlton George Hotel and Hortons in Glasgow and Frankenstein’s in Edinburgh.

Meanwhile Manchester-based group Living Ventures also secured its first site in Glasgow for its Gusto brand which will open in Bothwell Street shortly, Five Guys Burger and Fries are opening in St Vincent Street this month and Alan Tomkins is opening The Western Club at Blythswood Square… none of these are insignificant investments.

In Edinburgh the Contini’s splashed out on the Contini Cafe at Cannonball House, adding to their portolio which also includes Contini Restaurante and the Scottish Cafe and Restaurant at the National Gallery. Iain Pert opened MacSorley’s and the Cask and Still, while Garreth Wood’s Speratus Group refurbished various premises and have just opened the Boozy Cow in Aberdeen. Meanwhile Signature Pubs, run by Nic Wood, also plowed cash into refurbishing. Element in Rose Street has had a make-over as has The Queens Arms, and The Basement Bar in Broughton Street too.

One company that has really puts its heart and soul into refurbishments over the last 18 months has been Montpeliers, and the investment has certainly paid off with a significant sales uplift within its revamped establishments. The man tasked with developing the premises, David Johnstone, development director at Montpelier’s, has certainly been busy. Indigo Yard, Montpeliers, the Candy Bar and the Opal Lounge have all had refurbishments and Rick’s is also to get it own facelift. He comments, “It makes sense for operators like us to look at our existing outlets and make them work harder for us. And what we’ve learnt from our refurbishments so far we’ll replicate over the rest of the business. We are having to dig deep and every aspect of our business is constantly being looked at and evaluated. In the style bar market, which is our sector, we have to keep looking at what we offering. We probably went through a longer extended period than we would have normally have done of doing no refurbishment. But we have made up for it over the last 18 months.” However he doesn’t completely rule out opening a new place. Says David, “As David [Wither] and I always say, if the right location comes up we’d look at it. But if you look at the £9m we spent on Tiger Lily eight years ago, and if you were to ask me would we do that again, I’d probably laugh!”

However big spends particularly in the hotel sector are still very much the norm, and its independent operators that are splashing the cash. Steven Macleod opened his much anticipated Colessio Hotel in Stirling and admits to investing £10m in the project, while the Maclean family opened the Raeburn Hotel in Stockbridge and invested £5m. Graham Wood spent a similar amount on The Chester Hotel in Aberdeen, while a more modest make-over saw The Craigellachie in Speyside, revamped and a new whisky bar created. Last month we focussed on Banchory Lodge which has seen all its public areas revamped, while the RAD Group, owned by Vivien and Robert Kyle bought the Shawlands Park Hotel in Lanarkshire, renamed in The Radstone and revamped it. They managed to secure £6m worth of funding from Santander which help facilitate the refurbishment, while Barclays delivered a £6.25m deal for the thriving Manorview Hotel and Leisure Group (see design feature). They have just refurbished The Busby Hotel and re-opened. Jamie Grant, Head of Corporate Banking, Barclays, Scotland, commented, “We are increasing our presence in the hospitality and leisure sector where we believe there are strong opportunities for operators like Manorview. The company has been astute in taking advantage of competitively priced assets coming to the market and using their extensive knowledge and experience to turn them into profitable businesses.”

There are obviously many many more success stories out there, but as you see, there is no shortage of news and recently its been good news. Long may it continue.


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