At a crossroads
Cross Oaks Inns plans to introduce unique pub outlets to the home counties, reports Hamish Champ.
Fledgling pubco Cross Oaks Inns (COI) has taken its first steps towards creating what it hopes will be a small but perfectly formed network of food-led pubs in the South of England. Within the next 18 months the group aims to have a portfolio of around 10 unique, stand-alone pub restaurants in selected sites across a swathe of the Home Counties south of the M25, from Hampshire through to Berkshire, Surrey, Sussex and Kent.
Outlets will not be branded or given a chain theme, says COI founder and veteran hotelier Peter Eyles, former chief executive of Norfolk Capital Hotels Group. Instead, each pub will have its own individual feel and profile.
A strategy of acquiring and subsequently investing in such a collection of pubs takes considerable resources. But advisers to COI - which along with Mr Eyles is headed up by Dinah Young, former operations director of Whitbread's Brewster's pub restaurant chain - felt one option stood head and shoulders above the rest.
"Our finance people, Vantis, suggested we went down the enterprise investment scheme (EIS) route, since it's an extremely beneficial way to raise money," says Mr Eyles.
"We looked at how best to raise the funds we needed and preferred the EIS option to the banks, as I wanted more equity. Doing things this way means we can gear up if we feel we want or need to at a later stage."
COI has so far raised around £2m, including nearly half a million pounds of the management team's own money.
The advantages of an EIS are considerable, says Peter Drown, corporate finance specialist at Vantis. "There are key benefits including 20 per cent income tax relief up front, plus the ability to defer Capital Gains Tax (CGT) up to 40 per cent," he says. The scheme allows investors to hold shares for three years, then CGT is exempted.
Meanwhile, Mr Eyles says he is biding his time over which pubs to acquire. "It's not been difficult finding pubs that are available, but finding the right pub has. It's all about getting a good geographical position where there is good commercial as well as residential coverage, as we intend to serve food throughout the day and into the evening."
COI has already identified and acquired two pubs that meet these criteria - the Poacher in Tudeley in Kent (pictured), and the King's Arms in Ockley, Surrey.
The Poacher, currently an under-performing outlet, is well positioned between Tonbridge and Tunbridge Wells, says Mr Eyles. "It needs work doing to it," he adds. "But we will continue to run it as it is while we build a new kitchen. Then we'll close in October for four weeks and make some interior changes, knocking down some walls and doing some decorating." (The cost of this refurbishment will come in at around £250,000).
The King's Arms requires less work, says Mr Eyles. "It's a good, food-led pub already and has a wealthy catchment area [Dorking, Guildford and Reigate]. What we will be doing there is introducing a younger profile menu," he says.
COI plans to use a core recipe in its pubs and source ingredients locally. "These will not be gastropubs, instead they will offer casual dining for the 25 to 70-year-olds, charging around £25 to £30 a head," he says.
Given the competitive nature of the food-led pub business in the crowded South East - and aware of his reputation - observers will doubtless be watching Mr Eyles' progress with considerable interest.
