Oakman Inns’ Policy of “Safe Hospitality” Reaps Rewards in Higher Sales
The Oakman Group has issued a trading update for the 13 weeks ending Sunday 4th October.
In brief, The Oakman Group, which consists of Oakman Inns and Ashmore Inns, traded 40.6% higher at £15.1m sales with the four fledgling Ashmore Inns contributing £1.3m. Oakman Inns’ 24 pubs and restaurants showed a Like-for-Like increase of 25.4% , up £2.7m. Wet Sales were up 12.7% and Dry up 45.5% on Like-for-Like sales. Unsurprisingly, room sales across the estate were down 52.3%.
This is the highest sales quarter in the group’s history and comes at a time when many parts of the hospitality industry are facing an uncertain future, due to a certain extent to HMG’s use of untested scientific theory. Furthermore, the figures are even more impressive given that even removing the benefit of VAT cuts and the EOTHO scheme, they would still show double digit growth in Like-for-Likes.
Overall, staff numbers have increased, perhaps encouraged by the company’s award-winning career & training programme and a community engagement policy which makes Oakman Inns part of the heart of their communities.
The planning and policies adopted right at the beginning of the pandemic, in which Oakman Inns sought to provide a welcoming, yet bio-secure environment as far as was possible, has created an environment in which many of the pubs have become havens of normality in a world saddened by Government restrictions.
Oakman Inns has also planned for winter by creating soon-to-be-launched modular glazed garden pods that are warm, bright, and light and will comfortably sit a “bubble” of 6 people.
OAKMAN GROUP TRADING STATEMENT Q1 2020/21
The Oakman Group is delighted to update on sales performance for the 13 weeks ending Sunday 4th October.
Total sales Oakman Group £15.1m +40.6% vs last year
24 Oakman Inns £13.9 +28.5% vs last year
4 Ashmore Inns £1.3m
Total Like-For-Like sales for total 23 Oakman Inns £13.3m
+£2.7m
+25.4%
Like-For-Like sales via revenue stream
Wet +12.7%
Dry +45.5%
Rooms -52.3%
Average weekly net sales per mature Oakman Inn of £46,291
Peter Borg-Neal, Executive Chairman:
“Oakman has delivered the highest sales quarter in our history and in doing so have made considerable progress to restoring the damage done to our Balance Sheet during lockdown. The trading conditions since we reopened on July 4th have had a huge polarising effect on our industry with wet-led pubs and those in urban areas being negatively impacted through no fault of their own. Conversely, our pubs which are situated mainly in commuter belt market towns and in destination locations, have a substantial food offer, extensive internal areas and, in most cases, large gardens, have been ideally suited to the new trading conditions.
As a management team, we anticipated this scenario and were well prepared for reopening. The first decision we took was to commit to our people to do everything we could to protect their health and livelihoods. Key to delivering against our promise was the recapitalising of our business, the Government support and the creation of a cogent reopening plan.
Key to the latter objective was the development of an industry leading Covid-safe protocol designed to not only reassure our customers and team members with respect to their safety but, also, to ensure we retained the vital ingredient of ‘pubbiness’. Our operating systems were carefully designed to create a seamless and relaxing experience for our guests. In addition, all information materials and signage were delivered with clear non-alarmist messaging and utilised our normal corporate colour schemes rather than warning tape and hazard style signage. Considerable effort also went into communicating our plans to our customers which paid immediate dividends when we reopened.
In the early weeks we moved into gradual growth which accelerated considerably with the introduction of the Government’s ‘Eat Out To Help Out’ Scheme. We have continued to operate the scheme at our own expense. Whilst we do not see discounting as a sustainable competitive edge, the success of the scheme means that we have been able to compensate for the loss of margin by delivering high levels of sales. However, our main motivation for continuing the scheme has been to ensure we are able to retain all our people whilst also supporting our supply chain who are also rebuilding their business models.
I very much want to commend our Executive team who have performed magnificently in all respects. Dermot King, who succeeded me as CEO in August, has made a flying start in his new role and we look forward to the future with great confidence.”
Dermot King, CEO:
“I am delighted with our Q1 performance which reflects a tremendous effort from all our team – across our 28 sites and in our central support functions. Whilst we unfortunately had to take the tough decision to reduce the size of our central team, we have created more jobs in our sites and I am very proud that we now employ over 100 more people than we did before lockdown.
As the numbers clearly demonstrate, although our core food and wet sales have seen strong growth, our accommodation sales have been weak due to the reduction in business travel and the banning of events such as large weddings. However, we are fighting back by developing our short break offer with more families taking domestic breaks and exploring our localities.
Along with the rest of the sector we have been impacted in recent weeks by the Government decision to impose a curfew and are braced for further challenges given the spectre of more Government restrictions ahead. However, we have the balance sheet to withstand further shocks and I remain optimistic given that we have a proven ability to adapt effectively and respond positively when faced with adversity.
Our core Oakman Inn business has performed brilliantly and the average net sales per pub of over £46k per week reflect how compelling the Oakman offer is to our customers. Our fledgling Ashmore Inns business has made an excellent start and my expectation is that we will accelerate its growth over the coming 18 months as we anticipate that increasing numbers of owners of high-quality assets will be attracted to the high-quality management solution that we can provide.
We are delivering a raft of initiatives to ensure that we can maintain momentum. Key among these is investment to create a variety of covered heated outdoor spaces to mitigate the capacity restrictions being driven by our Covid-safe protocol. These include our very own ‘Beehive’ concept of hexagonal glass buildings which can be tessellated to create flexible layouts.”
Peter Borg-Neal, Executive Chairman:
“These numbers are clearly excellent and bear close scrutiny. Even if you discard the benefit of the VAT cut and the EOTHO Government funding there is still underlying double-digit LFL growth – what is more this is not just LFL but comparable growth as none of the 23 sites have benefitted from significant capital expenditure in the last eighteen months.
“We would like to commend the Government for the excellent sector support provided through the business rates holiday, the VAT reduction, Job Retention Scheme and Eat Out To Help Out. All have been strategically intelligent and executed efficiently. Going forward, I would hope that we can prove to Government that, with the burden of taxation eased, this is a sector that can make a huge contribution to economic growth. In particular, we are a meritocratic industry that can provide a gateway to employment for young people and give them an opportunity to forge a progressive career.
“Less welcome has been the unfair and illogical restrictions placed on our industry and we hope that greater Parliamentary scrutiny will lead to wiser decision making going forward. In particular we would like to see the removal of the current curfew arrangement which, remarkably, manages to damage both public health and the economy.
“I would also appeal to the Government to recognise that further support is required for the night-time economy who have suffered disproportionately to date through no fault of their own.”
Dermot King, CEO:
“I see our journey through this year as being in three stages – pull through, pull together and pull ahead. During lockdown we pulled through by getting short term support from our creditors, raising fresh equity and making a successful CBIL application. We are now in the middle stage where we are consolidating our position through our trading success. We are now preparing to pull ahead by raising additional capital to enable us to invest in our growth.
“We already have an excellent pipeline with three projects expected to go on site in January and a further three later in the year and Peter and I are looking at a number of carefully selected acquisition opportunities. I am looking forward to the future with considerable relish.”
Steven Kenee, Chief Investment Officer:
“When I joined Oakman a year ago, I was expecting an exciting ride but could never have predicted the events of the last twelve months. From my previous role as an investor in Oakman, it was clear to me that they were a best in class operator and my view has been confirmed by this astonishing performance - which has been delivered in the face of considerable adversity.
“Historically, Oakman has only been held back by a somewhat dysfunctional balance sheet and my role is to ensure that the business is properly funded going forward to allow it to fulfil its true potential.
“Looking forwards, the Oakman Group has the balance sheet to withstand further short-term shocks, the infrastructure and management capability to operate a much larger business and a fantastic current pub estate. To build from that robust base, I am working on a number of funding options with which to take advantage of the significant opportunities for growth that are expected to arise in the near future.”