Australian Venue Co (AVC) may be one of the largest pub groups in the country, but it has no plans to stop growing any time soon.

“2022 was a year of lollipops and rainbows compared to the previous two years,” Paul Waterson, CEO of AVC, when summing up last year.

“It was just wonderful to be able to have clear air, have a really sensible regulatory environment, and be able to get on with running the business in a great sector.”

While any challenges will have paled in comparison to the previous years’ difficulties, there were significant highlights for the company, most prominent among them being the acquisition of the majority of Sand Hill Road’s venues. Waterson commented on the early performance of these pubs in the AVC stable.

“They’ve been really great. Obviously, we’ve known the Sand Hill Road team and had really strong alignment with them over many years,” Waterson said.

“We’ve really admired the way they’ve developed their venues over time, particularly the two big ones, Garden State and the Espy.

“Our focus now is really ensuring that the legacy of those venues lives on – so we’ve made very few changes.”

In this regard, the Sand Hill Road acquisitions reflect the standard business practice employed by AVC.

“We don’t tend to buy business that we need to get into and immediately fix. Our model’s always been about buying really high-quality businesses and continuing their performance,” Waterson explained.

The Pass app passes muster

One highlight of 2022 was the launch of the company’s The Pass app loyalty program in August of last year. Waterson provided the key figures behind the app’s successful introduction.

“We’re averaging about $600,000 in per week sales through The Pass, and it’s growing at about 10 to 15 per cent week-on-week.”

The CEO also outlined how the loyalty programme was impacting consumer behaviour.

“We’re seeing really large uptakes with people who are transacting over multiple venues now – so the number of people who have been to five or more of our venues [in 2022] has doubled from the comparative time [in 2023].”

For AVC, the app allows venues to subtly change offers for different kinds of customer.

“To give you an example, we want to be sure that the locals in say Yarrawonga, Robe or Apollo Bay are getting sharp, all-year-round pricing, whereas if you’re in town for a quick holiday, you might be prepared to spend a bit more.

“So it allows us to provide that differentiation to each consumer in an individual market, which is probably where I think it’s got the most power and upside.”

Queensland in the crosshairs

In 2019, AVC made the significant purchase of a portfolio of 87 Queensland pubs from Coles, which divested its Spirits Hotels in the state. Since then, refreshing the Sunshine State portfolio has been a big focus of the national group.

“From a more practical perspective, those venues had been under invested in, as Coles had chosen to allocate more capital to other parts of their business prior to divestment, but many of them were real icons in their day,” says Waterson.

“So we’re really focused on returning them back to what was their past glories. They’re really great size, large footprint, multi-dimensional offerings.”

In particular, Waterson highlighted the recent success stories of Burleigh Town Hotel and Coomera Lodge Hotel on the Gold Coast.

“The revenues are well over double what [they were] prior to the refurbishment, because we’ve been able to keep what was good about the venue prior to acquisition, but really enhance it.”

“There hasn’t been one that has been unsuccessful.”

And more generally, the company is seeing significant ROI on its Sunshine State brownfield and greenfield sites.

“We get, on average, about 34 per cent return on the brownfield, and 42 per cent on the greenfield. If you look at where you deploy your capital, we think brownfields in particular are the best use of capital,” states the CEO.

“Fortunately for us, we’ve got quite a lot of venues that we can still apply this strategy to.”

Partnering with BrewDog

A particularly interesting greenfield development in 2022 was AVC’s partnership with Scottish beer and venue giants, BrewDog, which saw the opening of a pair of venues in Sydney and Melbourne.

Australian Hotelier asked Waterson what attracted the company to this collaboration.

“I’ve been keeping an eye out for more of a potential greenfield model that we could be able to roll out at scale, and BrewDog met a lot of that criteria. It was a really fast-growing challenger brand and they’ve been really great partners.”

And the early performance has been very promising.

“Sydney and Melbourne so far look on track to do well over $6 million of annualised sales each – so it’s certainly a model that I want to explore further.”

Brewdog Pentridge in Melbourne (pictured) was the first venue partnership between AVC and BrewDog, followed by another venue in Sydney.

Targets for 2023

There’s little doubt, then, that 2022 was a year of success and expansion for AVC. Nevertheless, the company will be looking to maintain this momentum into the new year.

“We’ve got a pretty well-defined growth strategy,” Waterson comments.

“Purchase at least 25 venues per year, renovate another 25 through brownfields, and build around five greenfields per year.

“Most importantly we want to consistently deliver at least four per cent plus organic growth, and that will be primarily through what I think is our best-in-class marketing and digital team,” Waterson continues.

“So it’s a mix of that inorganic growth through acquisitions… But really, what’s most important is to be able to deliver on organic growth, topline growth within venues. And that’s where we’re really focused.”

This article was first published in Australian Hotelier’s 2023 Annual Industry Leaders Forum.

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