Heartstone Inns gears up for expansion

Birch told M&C Report​ that the group would soon reach the stage where the logical next step would be to seek institutional funding, such as private equity, to allow it to ramp up its opening programme to five or six new sites a year.

The group, which stated on its formation in 2006 plans to grow an estate of between 30 to 50 pubs, has also completed the merger of its two trading entities alongside a refinancing of its senior debt and working capital facilities with HSBC and Coutts & Co.

The merged business will have annual revenues of £6.6m from its now estate of 10 managed freehold pubs located throughout the South and South-West.

Since being founded in 2006 Heartstone has raised over £9m of equity, £5m of which has been issued under EIS. Birch said that the funding would be used to add further sites and to complete a new letting room development at one of its existing operations.

The latest addition to its estate is the Blathwayt Arms near Bath, with the company planning a refurbishment of the site in August. Birch said he hoped to add a further site by the end of the year.

Single platform​

During 2012, the company completed an extensive development of the Hare and Hounds in Devon which included the addition of a new 100 seat restaurant with views down the Sidmouth valley. Since re-opening, it said that results have exceeded expectation with like-for-like sales increasing by over 25%. The company also refurbished the Pelican Inn near Hungerford.

Birch said: “We are very pleased to have acquired the Blathwayt Arms which has enormous potential as a quality country inn in a popular destination area for tourists and the local community alike. The merger of our two businesses will considerably simplify our day to day operations and will enable us to create a single platform for future growth.

“It remains are intention to grow to 30 sites and above, with 50 being top of the range. This year trading wise is going well and I am very proud that we have seen like-for-like growth every year since the group’s inception.”