Budda is reborn

With its recent purchase of the Bar Budda chain - which had been in administration since August last year - Glasgow-based hotels firm the McKever Group believes it is gearing up to become "a major independent multiple operator" in Scottish pubs.

The Budda acquisition, for an undisclosed sum, sees McKever take ownership of a nine-strong portfolio of bars in prime sites in and around Glasgow and marks the start of its bid to operate as a heavy-hitting regional hotels-and-pubs business, capable of trading across several on-trade formats.

Until now McKever has been best known for assets ranging from city boutique hotels and serviced apartments to commercial property and boat moorings across Scotland and the North of England. Last year, amid rapid expansion, it launched a £9m City Aparthotel development in Newcastle's Quayside district.

But the firm is known to be careful with acquisitions. Group operations director Sean Craig said if McKever were to buy eight hotels "it means we have looked at 100". With the Budda deal, McKever - founded 16 years ago by property developer Alistair McKever - is joined by former Budda operations manager Euan Bain.

Last year the company, seen by trade observers as a quiet but potentially powerful trade player, entered the pubs market by launching a hybrid venue called September 31 in a former bank in Kilmarnock, Ayrshire, offering a county town audience an upper mid-market outlet combining bar, 200-cover restaurant and over-21 club.

Joining the fray

Besides developing these assets the company will now increasingly be in head-to-head competition with operators including Punch Taverns, Belhaven and Maclay for acquisitions of "good" town centre food-led bar sites. One pub property agent suggested the Budda wing of McKever alone could quickly achieve near-parity with significant independent operator Maclay Inns, which has 22 high-profile outlets.

Budda's rescue by McKever is said to have taken months to bring to fruition, in part because of the "complex" debt problems that brought about the collapse.

The brand was founded by Paisley-based entrepreneur David Davidson, who reportedly left the business in 2005 to pursue other business interests. Its nine managed houses include four sites in Glasgow - two city centre, one West End, one southside - plus pubs in Paisley, Dumbarton and other towns in the city's travel-to-work area.

Apart from the Scottish outlets Davidson controlled the opening of Budda offshoots in Oldham and Belfast - understood to have been leased from the former company - amid plans for more English venues.The Budda sites were widely seen as strong performers - the Glasgow West End unit is in the heart of a trade-busy student-land circuit - but, said administrator Tenon, the firm, trading as Fleetfern, had collapsed under the weight of historic company debt. It was involved in a rates wrangle with Glasgow City Council last year, which led to it agreeing to pay £50,000 of a £150,000 rates claim in one go, the rest in installments.

The council, following a policy which licensing lawyers find controversial, had threatened to complain to the city licensing board that the company was "not fit and proper" to hold a licence. Now, says Bain, McKever's takeover gives the company a solid base on which to build a strong bars brand while securing around 200 previously under-threat jobs."We are preserving under a great independent firm some excellent sites - and, importantly, a considerable number of trade jobs," he says.

"It certainly isn't an exaggeration to say we can become a major independent pubs operator in Scotland - we're set for expansion."

The bars will be run under a holding company, Dark Star Scotland, discrete from other McKever assets.

Expanding with a pot of cash

Bain says: "Inevitably any concept can get a little tired, so once we've had a proper look at the estate and each of the units we'll consider what should be the best plan for forward development - both for the existing sites and the new ones we aim to acquire."

The firm had an unpublicised acquisition target, he says, adding that there was "a pot of cash" earmarked for expansion of the Budda chain.

While the takeover deal has been settled, it is understood levels of credit that may be due to creditors, said to include a major brewer, have still to be assessed.McKever's non-pub assets include a substantial portfolio of hotels, some of which have been suggested to be capable of offering cross-trading synergies with Budda venues.

Describing itself as "Scotland's fastest growing family-owned hotels group" the company owns two branded City Hotels in Glasgow, while other hotels range from the Gordon and Richmond hotels in Tomintoul, near Aviemore in the Highlands, to the Howard Park Hotel in Kilmarnock.McKever has acquired its high-profile Bar Budda sites at a time when the Scottish pubs market is in flux.

High street food-friendly outlets with a healthy barrelage are in hot demand by operators ranging from Punch Taverns to Belhaven, but some once thriving city and town centre bars lie moribund and seem slow to shift.

However, with the Buddas the group considers the combination of broad mid-market through-day appeal and good locations makes a sound platform for future expansion.