The new EIS will acquire, develop and manage 12 freehold or long leasehold pubs to generate profits and increase the capital value of the pubs in its portfolio. It will follow a similar strategy to English Country Inns, which was established in 2000. Its portfolio of 14 pubs was sold to Wolverhampton and Dudley Breweries last September for 13.65m.
The management team will look for existing pubs in a character building, preferably with a garden. The pubs will be food led, featuring fresh local produce where possible. Menus will be priced to attract return visitors. The target markets will be families at weekends and a mixture of business people and retired customers during the week.
It is likely the pubs will be located in destination areas in the South of England, West Midlands and Wales, so that the pub will be the main focus of customers journeys. The management team intends to increase the level of business, make improvements through refurbishment and increase the overall portfolio value.
According to the directors of the EIS, the UK pub market has become fragmented due to anti-monopoly legislation, with no company having a dominant position. Consequently, the directors believe there is scope to develop existing pubs into food-orientated places, since food is becoming an increasingly important part of a pubs turnover. The directors feel pub-restaurants will be enhanced by recent changes in licensing and proposals to ban smoking, as most diners prefer a non-smoking atmosphere.
As an asset-backed EIS, this lower risk than some schemes because the pubs are properties which can be sold if necessary. But the schemes success depends upon the ability to find suitable pubs which can reach their full potential as pub-restaurants.