To paraphrase an oft trumpeted line from Arc Inspirations co-founder and chief executive Martin Wolstencroft, his company is now a 22-year overnight success story. The rise of the Leeds-based operator of 18 sites across three premium brands – Banyan Bar & Kitchen, Box and Manahatta – may have been gradual, but with new investment on board, on the back of a refinancing earlier this year, it finds itself ready to build on the strong foundations Wolstencroft and his team have put in place. The company can now focus on putting its ability to adapt to consumer trends, a reputation as a good employer and its cluster approach to openings, to the test across a broader range of locations. 

It's a long way since Wolstencroft was working part-time at the Skyrack pub in Headingley. After 18 months, he became operator Whitbread’s youngest ever manager, going on to hit £1m sales. His success prompted a series of promotions, but by the turn of the century, the inner entrepreneur was waiting to be unleashed. With land owner Chris Ure, he opened The Arc in Headingley, which took £60,000 in its first week. A gradual expansion of the business followed, as did its extension beyond the city of its birth. Along the way it learnt to adapt, landing on the three concepts it is currently keen to roll out to further cities across the country. 

That roll out had until a few years ago been funded by cash flow. In 2018, the company agreed a new £7m senior debt deal with Santander to fund expansion. It followed the appointment of then Casual Dining Group chief executive Steve Richards to its board as a non-executive director. By the end of the year, advisors had been appointed and the company was ready to explore its options. A mixture of the uncertain trading environment due to Brexit and then the pandemic has meant that was put on hold, not that Arc Inspirations stood still. During the pandemic, the company accelerated a change programme designed to strengthen the business. This included the introduction of a central sales force, driving 30% of revenues through pre-booked sales, investment in outdoor spaces and renegotiating property leases across the business. The group opened a new Manahatta in Birmingham and a new Box in Manchester towards the end of last year and has a Manahatta in Newcastle in the pipeline. This follows an encouraging period of trading in the second half of 2021, with sales up 42% from mid-July to mid-December versus the same trading period in 2019. This included a group record sales week in August, when it achieved sales of more than £1m across its venues. On the back of this strong return to trading, Arc Inspirations expects to produce another record performance in terms of both profit and sales for its full financial year to 31 March 2022.

With BGF’s funding behind them, the company is set to open four sites per year – doubling the business over next four years. The focus is “very much about revenue and profit rather than a site numbers game”. It will stick to its cluster model, running premium large-scale bar sites in close proximity to each other, under complementary brands in key towns and cities in the Midlands and the north, before branching out further – an international play not, as yet, on its radar. Plans to make Nottingham its next port of call for its brands are already thought to be underway, with the company emboldened that each concept is complimentary (Banyan more all-day fare, The Box – sports focused, and the more premium Manahatta) and doesn’t cannibalise trade – its three Leeds sites are within 500 yards of each other. There is a feeling it could, if it wanted to, push Box a bit more, as there remains a gap in the market for a good sports bar concept. In investment terms recent openings have ranged from about £1.5m to, in the case of Newcastle, later this year, £2.5m, which will be the company's biggest spend to date. These are big sites and require significant capex. Although like everyone across the sector it is facing operational challenges, current trading is understood to be “very strong”. 

The company’s performance, which was recently underlined with a double award win, is also underpinned by Wolstencroft’s eye for operational details and the culture he has fostered and is rightly proud of. The group makes great play of how it promotes from within, typified by how a number of the now senior team worked their way up through the business, none more so than managing director Anni Opong. In a sector facing a staffing crisis, it is details like this, coupled with the momentum the company has behind it, which should help it recruit the right people to match its expansion ambitions. 

For BGF, the current backer of, among others, Mission Mars and Giggling Squid, and off the back of a successful exit from The Coaching Inn Group, it is backing a business with a good and stable management team, strong brands that tap into consumers’ need for experience-led occasions, has opportunities to grow and has demonstrated strong performance over the past 12 months, when it has been allowed to be open. With other traditional sector private equity players (at this level of investment) currently sitting on their hands, and trade players, such as Revolution Bars Group and Stonegate focusing on their existing estates, BGF has taken the opportunity to make a move, backing not just Arc Inspirations but the sector’s recovery, and I expect more moves in the market to follow from it over the coming months. It will also provide confidence to Arc Inspirations’ peers, such as The Alchemist and Inception Group, which both were looking to explore their options pre-pandemic, that investors are out there and still keen to invest in premium bar businesses. 

As a useful rugby league player in his day – Wolstencroft as second row forward represented Great Britain at student level – he is used to doing the hard yards, the dirty work, in order to achieve his goals. With new funding behind it, he and Arc Inspirations now have the chance to run with the ball and to pull away from the pack.