Arc Inspirations sees record year with 8.6% revenue rise

Arc Inspirations, the leading bar operator of a number of fast-growing brands, has reported financial results for its most recent year, showing another successful period of strong growth and targeted expansion.

During the year to 1 April 2018, despite increased competition, challenging market conditions and the unprecedented industry-wide cost pressures experienced in the past 12 months, the group has performed very strongly, continuing to increase EBITDA and revenue, while also selectively expanding the number of locations from which it operates its premium bar and bar-restaurant concepts.

This performance is the result of a combination of factors, including: a management team committed to maintaining outstanding brand standards and service to guests; highly differentiated customer experiences delivered through key growth concepts such as Banyan, Manahatta and The Box; and its strategy of operating sites in ‘clusters’, with several venues located in close proximity and complementary to each other, typically in eating and drinking-out destinations, or ‘hubs’, in city centre and urban environments.

The business has enjoyed a record year, with revenue increasing 8.6% from £22.2 to £24.2m. This growth has been largely driven by the full-year effect of new bar openings and existing site rebrands/refurbishments during the prior year, plus one new opening during the current year. Existing bars have performed well in what continues to be very competitive and challenging market conditions. Like-for-like sales are up by 1% over the period.

The inflationary cost pressures that have swept across the UK eating and drinking-out market are well documented, not least to costs of goods and ingredients. The business worked hard to overcome these continued pressures, which is reflected in overall gross margin moving ahead from 71.8% to 73.0%.

EBITDA has increased by 33% from £2.4m to £3.2m. Group EBITDA as a percentage of sales has grown from 10.8% to 13.3%.

Arc has an exciting period of growth ahead and strategy for further expansion in 2019 and beyond. The company is opening a Box in Leeds city centre in September 2018; a Manahatta on Deansgate, Manchester, and a Banyan in Spinningfields, Manchester, both in October 2018. It also has a strong pipeline of sites for openings in 2020.

Martin Wolstencroft, Chief Executive, said, “We have enjoyed an exceptional year given the prevailing market conditions which puts us in a sound financial position to open more sites, and to continue to develop and grow the business in 2019 and beyond.

“Our three key brands continue to perform well; we have a simple philosophy and believe growth is derived by continually investing in our people, brands and guest experience.

'Many of our competitors have resorted to discounting, which we just don’t believe in, and we remain confident in our ability to continually innovate across people, product and design to remain attractive to our guests.”

Non-executive Director Steve Richards added, “Significant progress has been made in the past 12 months and Arc continues to be a leader in the sector. Our chosen markets remain buoyant, our organic progress impressive and the returns we are generating from our new sites are industry-leading.

'We are well set to execute our strategy of doubling the size of the business over the next three years.”