New breed of investors puts the buzz back into the Dublin pub scene

Growth in tourism and economic recovery spurring investment in city centre venues

 

Trevor O’Shea, one of the new breed of investors at the vanguard of the bristling Dublin pub scene, was up at 5am on Wednesday sending emails to a health inspector.

The 37-year old Bodytonic founder, who also runs five city bars, told the inspector he was allowing dogs back into his MVP pub, on the Grand Canal.

The inspector had ordered MVP, which serves food, to stop allowing patrons bring their dogs in with them for a pint. The bar attracts an alternative, self-consciously cultured crowd, including plenty of hound-owning hipsters. The ban caused a howl of despair among MVP’s clientele, those on two legs and four.

“I got nothing in writing. I’ve been told the inspector can’t just go issuing verbal warnings. Until I get it in writing, I’ll allow the dogs back in. They won’t be near the kitchen,” said O’Shea later that day, clearly spotting an opportunity in all the publicity.

As proven by this month’s private equity-backed tie-up between Capital Bars and Frank Gleeson’s Mercantile group, creating a €40 million-a-year business with 600 staff, the Dublin pub and food scene is hot. It is also cool, if you venture into some newer city spots like MVP.

Good food, craft beers and cocktails are the “heroes” of the revived sector, said one industry expert. God bless heroes. Competition to buy pubs is intense in the city centre, if less vociferous in the suburbs. Asset prices are rocketing.

Paddy McKillen Jnr’s Press Up Entertainment group, which launched a blitzkrieg across the sector in recent years, was the first mover and now has more than 20 ultra-trendy venues employing 1,200 staff.

Several other big pub groups are forming and investment houses are also throwing money at the Dublin sector, which grew by up to 10 per cent last year.

Major financiers such as Dermot Desmond are backing lenders alongside foreign institutions, including the Bain Capital offshoot Sankaty Advisors.

Meanwhile, the pillar banks, AIB and Bank of Ireland, are back lending to publicans, who were mostly barred during the crash.

Even sports stars, such as rugby players Jamie Heaslip, the Kearney brothers and Seán O’Brien, and reportedly the footballer Robbie Keane, are investing heavily in the Dublin pub scene. A sure sign pubs are in vogue.

Financially, the sector is out on the lash and, after the recessionary hiatus, pub barons are back in fashion. This time, however, they’re a totally different breed to the Celtic Tiger barons. Who are they, and where is the industry headed?

O’Shea, a DJ who fits right in with his customers, would probably recoil at the notion that he might be a pub baron. He says his group isn’t looking to “get big”.

“As you grow, it gets tougher. We’re the opposite of some of the groups you mentioned, who are all aiming to grow fast. We’re just opening places we like, and that we think others will like.”

Minutes after playing down ambitions for growth, O’Shea lets slip he wants to open a hotel, a restaurant, possibly a “sports club” and that he has also thought of opening venues in London and New York.

His five Dublin pubs all have distinct characters, although all attract alternative crowds. As well as being dog friendly, MVP hosts yoga every Monday while its quirky cafe menu includes a bacon sandwich called “I believe I can fry”.

Spiritual home

Bernard Shaw

O’Shea, who once brewed an ale called Yer Aul’ Wan, runs a pub group that isn’t exactly a pint of plain when compared to some of its peers. He says difference is everything in this market.

“The Dublin market is getting more and more segmented. It’s all about niche pubs now. The old days where all the pubs were the same, everyone had a carvery, Sky television and Heineken. That’s gone,” he says.

Has it really? Most of the Tiger-era pub barons, who emerged as purveyors of the Dublin “superpub”, are still in business, even if much less prominent than before.

The Thomas Read pub group, founded by the late Hugh O’Regan, went bust, but others who rose to prominence alongside it have muddled through.

Jay Bourke, who has spoken of his own troubles with banks and landlords, still chugs along with Panti Bar and Pygmalion. He was among the first of the original pub barons to introduce trendy new concepts to the Dublin scene.

Charlie Chawke is still involved in several well-known Dublin pubs, including the Goat Grill, the Dropping Well, Bank on Dame Street and Searsons, as well as two in Limerick. His options are limited by the €20 million he owes on the Orchard Inn in Rathfarnham, a Tiger-era carpark development play. Its time might yet come, with the housing shortage.

“I’ll keep selling food and drink at the Orchard, and take it from there,” the veteran Chawke said this week. He says he has noticed a new breed of investor in the Dublin pub market, the “foreign money”.

“There has been a few inquiries made of me, but my pubs are not for sale,” he said. Several of his children are involved in his group, including his daughter Ali who runs the Orchard.

Louis Fitzgerald, a boomtime investor with Chawke in Sunderland football club, is also nudging his business towards the next generation. His son, Eddie, ran the Baggot Inn before rejoining his father’s group in recent years.

The Fitzgerald group refinanced loans of more than €60 million with AIB and Broadhaven, a joint venture between Desmond and Sankaty.

It remains one of the largest groups in the State, although it has sold off suburban outlets such as the Marble Arch. Fitzgerald, though, remains a respected industry grandee.

John Ryan, director of pub and hotel sales with CBRE, said the Dublin city centre market is growing much faster than the suburbs. Inbound tourism and the general economic recovery are spurring investment, he says, and pubs valued at a cumulative €50 million changed hands last year.

“Receivership sales have dominated the market place in recent years,” says Ryan, “[but] we are beginning to see a more normalised market where publicans are retiring and taking benefit of the rising market.”

Donall O’Keeffe, chief executive of the Dublin pub association, the Licensed Vintners Association, says the new owners in the sector “bring fresh ideas that are good for the industry and good for consumers”.

“I’d also say that, traditionally, financial management in the sector wasn’t always great. Ironically, the outside pressure on the sector from banks and the new investors has brought new financial discipline,” said O’Keeffe.

Despite the influx of foreign capital, the building of new Dublin-based groups is mainly limited to a “handful” of groups fronted by locals, Ryan says.

The Loyola group is prominent among them. It is controlled by 34-year old lawyer Stephen Cooney, son of the prominent planning tribunal senior counsel Garrett Cooney, and also Brian O’Malley, brother of former Leinster rugby player Eoin O’Malley, who is also involved.

Leopardstown Inn

Last year, they also teamed up with investor Enda O’Coineen’s Kilcullen Kapital Partners to pay €2.4 million for Wexford Street premises, Solas. After sinking another €1 million into a revamp, it reopened in November as the Jar.

Cooney also recently invested in the Karma Stone, a pub a few doors down from the Jar that was part of a group in receivership. Ulster Bank backed Loyola in a property play on the pub building, which has a sitting tenant.

Cooney’s group is also an investor in the Base Wood Fired Pizza chain.

Alan Clancy is another guy who is looking at everything that moves on the market,” said another industry insider.

Clancy was once the manager of the group run by Wright Venue nightclub operator, Michael Wright. He branched out on his own with upscale food and drink emporium House on Leeson Street, followed by 37 Dawson Street.

Company documents suggest House is backed by the financial company Warren Private. Clancy also works with Kish Capital, which is thought to have invested in Clancy’s new pub, The Ivy, formerly the Thomas Read pub.

Clancy has also turned the Baggot Inn into hip joint Xico, as well as investing in the Bell & Pot cafe and the revamped Villager pub in Chapelizod.

Setanta Sports founders Mickey O’Rourke and Leonard Ryan are investors in the Mercantile-Capital bars deal fronted by Whelan’s veteran Gleeson.

But the most aggressive investor in the Dublin pub scene in recent years, however, has been McKillen Jnr.

Press Up Entertainment, which owns more than 20 venues such as the Vintage Cocktail Club, the Workmans Club and the Dean Hotel, is planning a new hotel in Ranelagh on top of a ground floor food and beverage operation.

“We are definitely not slowing down. The plan is to keep on growing,” said Aileen Galvin, Press Up’s marketing director. McKillen and Matt Ryan, his partner, are notoriously media shy.

“They do a lot of travelling and pick up ideas from London, New York, all over the world really. It’s all about identifying trends in architecture, interiors and levels of customer service.”

Apart form the Ranelagh hotel, Press Up’s next big project is a collaboration with Fallon & Byrne on a site next to the Clarence Hotel, Dollard House.

“We hope to be on site there in two months. The guys are very interested in looking for more partnerships, more opportunities.”

As the economy continues to recover and consumer spending takes off, the fierce competition to buy Dublin pubs looks set to continue.

The new breed of investors will surely drink to that. New breed: Dublin pub groups PRESS UP ENTERTAINMENT Paddy McKillen jnr and Matt Ryan: 21 venues, including Bison Bar, Peruke & Periwig, Vintage Cocktail Club, Union Café, Everleigh Gardens

MERCANTILE GROUP Frank Gleeson and Danu Partners: 12 venStephen Cooney and Brian O’Malley: morues, including Café en Seine, Howl at the Moon, the George, Opium and the Green Hen

BODYTONIC Trevor O’Shea: music festivals, brewing and five bar-restaurant venues, including The Bernard Shaw, the Back Page, Wigwam and MVP

LOYOLA GROUP e than six ventures, including The Bath, The Old Spot, The Leopardstown Inn, Base Wood Fired Pizza chain, The Jar, The Thatch

ALAN CLANCY At least seven venues, including House on Leeson Street. The Villager, Xico, Mrs Robinson in Greystones, 37 Dawson Street

Dublin pubs: The investors KISH CAPITAL Co-founded by Des Ennis, Cathal Sheehy and John Bohill. Linked to Alan Clancy (The Ivy)

WARREN PRIVATE Also linked to Alan Clancy (House)

KILKULLEN KAPITAL Co-founded by Enda O’Coineen. Has invested with Loyola

EMI-MR INVESTMENT LLC US investor in the Mercantile deal

SANKATY ADVISORS Affiliate of Bain Capital. Bought Ulster Bank’s Project Coney, which included many pubs and hotels.

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