Liberation Group reports ‘strong’ start to new financial year following record full-year revenue: Brewer and retailer Liberation Group has reported a strong start to its new financial year with like-for-like sales in its managed pubs is up 6.5% the 13 weeks ended 27 April 2024. The group said it has seen like-for-like growth in all three categories of food, drink and accommodation, including food at 8.5% and a ten percentage point growth in occupancy. The group said the 22-strong Cirrus Inns business, which it acquired in December 2022 and had now been integrated into the Butcombe managed estate, has led the way with 10.4% like-for-like growth. Liberation said the group’s strategy of prioritising occupancy is, in turn, stimulating growth in food and drink sales. Occupancy in the new pubs is 19 percentage points ahead of last year and like-for-like sales on food are up 18.8% for the first quarter. The group said building on this momentum is a clear focus for the rest of the year, which will include a number of targeted investments, including additional rooms. Butcombe Brewery once again achieved volume growth versus last year on its range of cask, keg and bottled brands with strong single digit growth in the free trade. The group has launched Butcombe Boutique Inns with the objective of becoming “the leading operator of premium rooms in the south of England”. The first inn to become part of Butcombe Boutique Inns was The George in Norton St Phillips and will shortly be followed by The Swan in Rowberrow. The initiative will then be steadily rolled out across more sites. It comes as the group, which operates 130 pubs across the UK and Channel Islands, reported revenue increased 20% to a record £144.4m for the year ending 27 January 2024 compared with £120.3m the previous year. Its 59 UK managed pubs reported strong performance with 8% like-for-like growth, ahead of the market as measured by the CGA RSM Hospitality Business Tracker, on the back of excellent contributions from all three categories of food, drink and accommodation. Like-for-like managed pub Ebitda was up 19%. Divisional Ebitda before central costs increased £1.4m to £23.4m due to growth of the pubs and inns division. Like-for-like accommodation sales were up 11.6%, “forming a key revenue stream for the business”. Investment into the estate continued during the year, with seven developments across the managed estate, including the Northey Arms in Box, Wiltshire, which, post investment, has achieved sales growth by an average of 22%. Enhancements across the estate’s external areas during the pandemic have resulted in 50% of covers being outside, “resulting in incremental sales in good weather and increased site profitability”. The group had a record year of volume and sales in Butcombe Brewery and uplift from cask and keg brands such as Tall Tales Pale Ale and Goram IPA Zero. The group’s loyalty scheme has more than 204,000 members and said the programme is increasingly a focus to drive frequency of visits and spend during those visits. It said loyalty customers not only have a higher frequency of visits, but average spend is up to 22% higher than non-loyalty members. Chief executive Jonathan Lawson said: “2023 was a standout year for Liberation Group as we delivered a year of record sales with growth across all of our divisions. It is particularly satisfying to see the way that mature parts of our business continue to grow such as our managed estate, tenancy and Butcombe drinks, while also seeing newer elements coming through strongly, such as accommodation. We should remind ourselves that in 2016 we only had ten rooms and now we have more than 400, with the potential to achieve 700 in the existing estate as our accommodation offering increasingly forms a substantial lever for our overall managed business. This performance is undoubtedly a differentiator for our group when we look at the wider performance across the sector. Our events-led offering is key as we continue to see a rise in the importance of experiences for our customers. For example, our premium pubs and inns are perfectly placed to take advantage of a growing trend for smaller, more exclusive and intimate weddings or celebrations and experiences such as comedy nights, outdoor cinemas and supper clubs. As we head into the summer months, we also see a rise in bookings around festivals such as Glastonbury and Goodwood Festival of Speed. We are witnessing a growing opportunity in the breakfast and brunch market and will continue to develop this offering in our estate of 42 inns and other selected locations. Market data shows that more than half (55%) of British adults are dining out for breakfast at least twice a month, while a quarter of us (25%) go out for breakfast every week1 as it is increasingly seen as a more affordable way to treat family and friends. Looking forward, we remain optimistic for the year ahead as we start to see a calmer cost environment and are excited by the plans that we have for growing the existing business. In accommodation, we have progressed rapidly in the last five years and the launch of Butcombe Boutique Inns presents an exciting next step.” Liberation features in the Propel Turnover & Profits Blue Book, which is available exclusively to Premium Club members. Liberation’s turnover of £144.4m is the 75th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.

On accommodation: “We have deliberately focused on occupancy over rates. That decision is paying off as that strong value is filtering through with regards to spend in our food and drinks business. Our occupancy rate is the second quarter of the year is 80% and we’re seeing strong bookings ahead of the summer. We now have more than 400 bedrooms in the estate and have set out a strategy to get to 700 through targeted investment but there’s no timeline on that. For example at The Langford Inn, near Bristol, we’re about to add three bedrooms, taking the total to ten, where we have an occupancy rate of 90%. It’s low risk, high return investment. Butcombe Boutique Inns is what the market is looking for – historic inns in the English countryside that people can use as a base and come back to enjoy fantastic drink and food and comfortable accommodation. Consumers value experiences rather than ‘stuff’ and we’ve got an offer that really stands out and we’ll be putting more marketing and support behind it. The premium market is ripe for us – there’s no operator that really stands out. There is the Pig Group, which has eight or nine sites, so that’s where we have an opportunity to lead that segment. I don’t feel there will be further consolidation in that part of the market but I think there will be a drop in capacity when it comes to those three and four-star hotels. We think Butcombe Boutique Inns will put us in a position to pick up that demand. Our inns are also very well located in terms of places like Goodwood, Ascot and Cheltenham as well as Glastonbury.”

On food and drink: “The quality of our offer is being rewarded. It’s about making sure we have fresh, locally sourced dishes. We’re very clear that our focus and point of difference is our food and drink.

On consumer trends: “We cater for the broad spectrum of customer needs. We’ve got a strong range of low and no-alcohol options and further development in that category is imminent, which we’re excited about. We’ve got a really healthy local food offer but for those who perhaps want to indulge a little bit more, we’ve got that covered too. Some people are coming in earlier in the week and enjoying small plates. That’s a reflection that people are choosing to come out earlier and not stay out as late and that’s why I think, as I mentioned at Propel’s Excellence in Pub & Bar Retailing Conference, there is an outstanding opportunity for our managed pub business to get involved in the breakfast, brunch and morning daypart market – and a lot of that won’t involve alcohol. We’ve got a really good coffee offer, which also helps us stand in good stead.”

On acquisitions: “We’ve proved that we’re very adept at acquiring small groups of pubs and integrating them. We’re always keeping an eye on the market and if an opportunity presents itself then we will review that. I’ve always said we won’t be tied to having a specific number of pubs – it’s quality over quantity. We’ve also got plenty of growth opportunities in our existing business.

On possibly spreading geographically: “I think our estate of predominately south west pubs does really well for us and we think there is still plenty of potential in that area. Sure, we’ve now made that move into Surrey, Sussex and of course London with the Cirrus acquisition. There may be scope to go out a little further but probably not further north.”

On costs and pricing: “The inflationary environment for us is calmer than last year, certainly on food and drink. That’s allowed us to be prudent and conservative on pricing and we’ve not put much through this year, particularly on food, and we’ve been rewarded for that. However, the increasing national minimum wage has put on a bit more pressure than we would have wished. In 2022, a recruitment programme was launched focusing on South Africa, which has seen some very talented, high calibre chefs and managers from South Africa join the group’s teams, therefore reducing costs and improving vacancy rates.

On the next government: “There’s been a very clear ask from the sector – the reform of business rates, along with a reduction in VAT. My expectations of either of these happening in pretty low regardless of who comes into power. What I am wanting to see is an improved understanding of the hospitality sector and what is needed to do business. There needs to be continuity – in the last few years it’s been shambolic. I’ve never been more depressed in the quality of politicians – all they have done is make our lives so much harder and prevent us from investing in our businesses. And if they can’t help us with those asks then they should just leave us alone to get on with it.”