7 minute read
A national strategy
AS THE NAME IMPLIES, AUSTRALIAN VENUE CO HAS A FOOTPRINT AROUND MOST OF THE COUNTRY. CEO PAUL WATERSON DISCUSSES THE GROUP’S ACQUISITION STRATEGY AND THE PLANS TO KEEP ON GROWING.
Australian Venue Co has had an extremely acquisitive couple of years, both in its first iteration as Dixon Hospitality, and in the last six months since the rebrand and funding boost from private equity firm KKR – who bought a majority stake in the business for $190 million. Paul Waterson discusses what makes a venue attractive to the business, and what its long-term goals are.
Paul Waterson
Q ARE THERE MORE ACQUISITIONS ON THE HORIZON FOR AUSTRALIAN VENUE CO OR ARE YOU LOOKING TO CONSOLIDATE NOW?
We’ve got a 2-3 year horizon where we’re looking to acquire more venues. That will lead to an eventual exit of the business by KKR, because being a private equity firm they will look to realise their investment at some point, whether that’s from an IPO point of view or a trade sale. So we’re very well capitalised and supported by them to do more acquisitions. And we’re doing them pretty much in all markets at this point. We don’t have any presence in Tasmania or South Australia, but other than that we are looking to grow pretty aggressively.
Fargo and Co, Melbourne
Q ARE THEY AREAS THAT YOU WILL BE LOOKING AT?
We’d consider them, but in terms of the criteria that we’re looking for, we really want to acquire venues that are doing a minimum of $70,000-80,000 turnover per week. In Tasmania in particular that’s pretty hard to find venues of scale in that market. And South Australia we’ve found, to be honest, to be a bit expensive compared to some of the other markets.
Q DO YOU HAVE A PREFERENCE FOR LEASEHOLD OR FREEHOLD?
Only leaseholds. We don’t own any of the freeholds but as we find a good freehold opportunity, we’ve got a number of great partners who will look to buy the freehold and then put us in as the leasehold operator. We do that because it’s a bit more of a capital-light model, so it enables us to grow at scale in a less capital-intensive manner.
Q THE GROUP OWNS AND OPERATES A WIDE VARIETY OF VENUES ACROSS THE COUNTRY – WHAT ARE THE COMMONALITIES BETWEEN THEM?
Yes, they are all very different. I think that’s what we want to maintain with our offerings. So they’ve got to be unique to what that local community wants in which they operate. So that’s why we maintain all different offerings, multiple brands and multiple types of venues. And all we’re trying to overlay is some of those back-office systems – so things like finance systems, the procurement system and the general operating system – whereas the marketing offering, the food and beverage offering really needs to be bespoke to what each of the markets in which the venue is operating requires. So we really get the venue managers to drive those unique offerings, and we’ll continue to do that.
The exception is obviously the Beer Deluxe brand. We’ve got the five of them across the portfolio now, and we may look to roll out more Beer Deluxes over time. That would be the only branded offering that we would do.
Q AS DIXON HOSPITALITY, THE BUSINESS HAD A POLICY OF BEING A NON-GAMING GROUP. IS THAT STILL THE CASE FOR AUSTRALIAN VENUE CO?
We’ve got some gaming across three venues now, which are the two venues in Darwin and also Beer Deluxe Albury. I think given our aspirations for growth, it’s inevitable that we will need to take on some gaming because of the venues we’re looking at, particularly in New South Wales and Queensland, which tend to have gaming. So we would look at gaming venues, but certainly the heritage and the core of our offering is food and beverage.
The Winery, Sydney
The Winery, Sydney
Q YOU’VE EXPANDED INTO NT AND WA OVER THE LAST YEAR – WHAT MAKES THEM ATTRACTIVE MARKETS TO YOU?
We really like these markets. They are quite different. In terms of WA, going back to our business being food and beverage focused, the venues in WA are all food and beverage. We see great attractiveness in that market because they’re similar to the venues that we operate in Melbourne. I think also there’s been some great publican families in that market, and we see WA – and Perth in particular – as a very sophisticated offering and market. Which is relatively consistent with a lot of our Melbourne venues. I think also the multiples that we pay for pubs over there are a little bit less than what we’re paying on the East Coast. And thirdly, we really see that that market, in terms of discretionary spenders, has bottomed out and is starting to turn a little bit upwards. So it’s an attractive time for us to get into that WA market, given we’re starting to see some really good green shoots of growth over there.
Beer Deluxe, Sydney Airport T2
In terms of the Northern Territory, we think we’ve probably taken the two best venues in Shenannigans and Monsoons. We really like the Northern Territory market because it’s a lot of fun. There’s a great vibe to the place, a great cycle of tourists coming through there as their first entry point into the country. It’s also a great point in which we can gain staff when they first come into the country, and then travel around multiple states and move into our other venues as well. It’s been really good for us. Given the size of the market, we probably won’t be able to expand more materially in the Northern Territory, but it’s a pretty attractive place for us.
Beer Deluxe, Sydney Airport T2
12-Micron, Sydney
Q ARE YOU BUYING VENUES WHERE YOU BELIEVE THAT THE CURRENT OFFERING DOESN’T NEED TO BE TINKERED WITH? OR DO YOU LOOK TO REFURBISH THESE ACQUISITIONS?
We’re not buying venues to fundamentally change the offer that the pub has already provided. We’re attracted to models that are working well on a sustainable basis. Having said that, we’re putting quite a lot of capital into redeveloping existing venues. So for example, we’ve just opened a rooftop at The Duke of Wellington, and it’s a pretty fundamental part of our growth that we continue to do brownfield developments in existing venues to add capacity. We get really good uptick in sales as you add capacity and keep the venues looking fresh. But we won’t fundamentally change the offerings of the venues that we have.
The Smith, Melbourne
Q WITH SUCH A PROFOUND LOT OF ACQUISITIONS IN THE LAST YEAR, HOW DO YOU ENSURE THAT THE COMPANY DOESN’T OVERCOMMIT ITSELF IN TERMS OF THE STANDARD OF SERVICE, QUALITY OF OFFERING ETC?
It’s critical that the standard of offering and the quality of service is led at the venue level. So our involvement in that at the head office level is to ensure that the standard offering is very high. How it’s delivered is really done at a venue-specific level.
We look at things like net promotor scores using a system called Review Tracker very carefully. We watch all social media reviews of all the venues. As soon as we get a one- or two-star review at any of our venues, it pops up immediately in my inbox, and I personally look at and address those with the venue managers. We pretty intensively look at the feedback the customers are giving us.
But it’s very much venue-led in terms of offering, with an overlay of us keeping an eye on it if there seems to be a trend that service is declining. Fortunately we’ve seen good improvements in our ratings across metrics like Facebook and Google – which is what we watch pretty intently.
Sweetwater Rooftop Bar, Perth
Q WHAT CAN WE EXPECT FROM AUSTRALIAN VENUE CO IN THE NEXT TWELVE MONTHS?
In the next twelve months we’d love to continue to grow and add capacity to our venues. We think we’re well-placed to double again from the size we’re at now. Certainly over the next 24-36 months, that would be our objective, to try and double again.
Oxford Tavern, Sydney
We’re really lucky in that we’ve got a great shareholder base and a great mix of managers who are shareholders, as well as having a great partner in KKR. It’s pretty unique to the industry, we’d like to think, and we’ve got a board that’s 50 per cent managers – Bruce Dixon, myself and Vita Pepe – and 50 per cent KKR representatives. It’s a really nice dynamic.
