Vodka bar chain boss toasts successful year

VODKA bar chain operator Inventive Leisure boosted profits by 65% in the year to the end of June as it defied challenging market conditions.

Chief executive Roy Ellis attributes the firm’s success to the unique-ness of its concept, and the “sensible, long-term approach” of its management team.

The Tameside-based company, which has 62 sites nationwide under the Revolution brand, saw profits in the year to the end of June leap from £3m to £4.9m as sales rose from £81.49m to £84.5m.

Taken private from AIM in a £45m deal in 2006, Inventive is 68% owned by Alchemy Partners with the balance held by its management team.

During the year it expanded by opening three new bars in Sunderland, Brighton and Liverpool and in July opened another site in America Square in the City of London.

Focused mainly on the 18-35 market, Inventive, which makes many of its own cocktails and flavoured vodkas at its own facility in east Manchester, has not been as hard hit as some players in the leisure sector by a fall in consumer spending and the smoking ban.

Mr Ellis, who co-founded the business in Ashton-under-Lyne nearly 20 years ago, told TheBusinessDesk.com that Inventive’s sensible approach to growth, investment and keen focus on product and service had seen it through a very challenging period for the sector.

“We run the business for the long term – I don’t think we’ve done well because of who our consumers are in terms of being younger  and not having to pay a mortgage – but more about how we run the business with a stable management team, sensible approach to investment and having a focused product.

“I think we are like Wetherspoon, in terms of our long-term management team, having  a differentiated offering and remaining true to ourselves.”

He said at the company had grown EBITDA from £10.4m to £11.5m – and was the key performance indicator, as it did not include interest payments on the group’s debt.

Parent company Caspian Topco carries £63m of debt  – of which £27.3m is owed to a syndicate of three banks. The rest is made up of loan notes and PIKs owed to the Alchemy and the management team.

Mr Ellis said Inventive was focused on paying down the bank debt, but this meant limited funding for new sites.

“As a result of it being difficult to borrow more, we have to be very selective and rigorous in terms of new locations, which is a good thing. There are lots of opportunities out there, and yes we’d like to do more, but new openings have to be fully funded by ourselves and new bars cost between £700,000 to £1.5m.

As well as the new London site, Inventive has just opened in Norwich and has acquired an adjacent premises to its existing bar in York, which will double its size there.

“We’re always looking for new locations – I’ve been in  Portsmouth this week looking at opportunities,” he added.

He said Alchemy had invested in Inventive for six years, and with a typical deal span of seven years, he would not be surprised if the London-based firm stars to think about an exit in the next 12 months.

“I’m not aware of the process being under way, but logic leads me to conclude that Alchemy will in the next year look to crystallise their investment.

“However, it’s not the greatest market place to realise an investment and we are a great business which has grown sales, profits and its estate throughout the recession.We are unique in the market place.”