Interview: Daniel Ellis, Fletchergate Industries

Daniel Ellis, CEO of Nottingham’s Fletchergate Industries, talks to Pub & Bar about concept inspiration, the risk of branded roll-outs and creating an independent group with a ‘corporate underbelly’.

P&B: Thanks for talking with us, Daniel. For those unfamiliar with Fletchergate, how would you summarise the business?
DE: Fletchergate Industries is dynamic. We're forward-thinking. We try and keep ourselves a step ahead of everyone else in the UK. If we’ve been to New York, Chicago or down to London, a lot of stuff from these places doesn't normally get up into the Midlands and further up until a few years later. If we can jump on it quickly, we find ourselves a bit ahead of the curve. We like to keep our venues vibrant. Chris Guest, who's our creative director, has got a very fine attention to detail, he sees things other people don't see. 

We have slowly built up over 15 or 16 years, and we've done it organically. We try and use our own funds, we don't borrow from any banks, and that's why we grew really slowly. I think there are pros and cons to that. The pros are that we've kept on top of cash flow and made sure that jobs are secure and not grown too quickly, which is when things tend to implode. But the cons are that we could have got bigger quicker, a lot faster, if we'd have borrowed money and stuck that on the balance sheet, but we haven't done it that way. 

P&B: So how and when did your first venue come about?
DE: It’s called Unit 13 now, but it was called EQ back in 2009. Me and Chris were promoting an event in there on Fridays and Saturdays, and we were doing quite well. No one wanted the venue, and someone said ‘these idiots might want it’. We put our hands up. It's still going now in its fourth iteration. Nightclubs need to evolve quite quickly. Three to five years of a nightclub is good going, and then you need to spend big or change the brand. 


Daniel Ellis, CEO of Fletchergate Industries 

P&B: You’re at 10 venues now, having just opened Tahula’s Tiki Shack. That must mean a fair few people work for you?
DE: Currently we have 251 employees, including 23 AGMs and GMs, 15 in head office, 190 front-of-house, 21 back-of-house and two salaried chefs. Then the rest are students and staff coming in and out. I don't think the Budget helped 18- to 21-year-olds, because you look at the numbers now and I can employ an 18-year-old for X, or I can employ a 24-year-old who has experience for the same amount. Everyone was moaning on a grand scale about what the Budget was going to add to the costs, rather than what it might actually do for disincentivising those younger employees to come through. It's another problem for us to navigate, but if you can get through a pandemic, you can get through this. 

P&B: Nottingham is very much a student city. What did that mean for footfall during the Christmas holidays?
DE: Thankfully, a lot of them don't go home until a little bit later, so we know that the city is going to be buzzing until the 20 something of December. Then, come the 24th, it can turn into a ghost town until New Year's Eve, but even that is not as big as it used to be. Not like Halloween. Halloween is massive. You get nearly a week of sales out of it. On New Year's Eve, people are doing house parties, etc, and then in January we just close our eyes, put our heads in the sand and hope for the best. 

P&B: What about Dry Jan in bars and clubs? Can that work?
DE: We did some research stuff with Trent University. It showed that the whole low and no thing is a thriving, growing part of the industry, but if you look at the overall percentages at the moment, you're still only looking at 1% to 3% of the total market. So, there's an opportunity. It's growing, but it's not quite there yet. Dragging people out in a very cold January to drink a 0% beer or cocktail is hard work at the moment. 

In our venues, we always try and offer more. So, in Penny Lane, we say ‘come out to play some games and be sociable’. It's not about drinking. It's about being out of your house, being away from your social media, being with people. Because that's what hospitality is about, being with people. And if we can keep designing venues that are innovative, unique, attractive, aesthetically pleasing, priced correctly and marketed well, people will come along and we can make money off the food and the soft drinks. It’s not all about alcohol. 


The Magic Garden in Nottingham's Lace Market

P&B: All of your sites stand as individual concepts. Are you not tempted to replicate some of them?
DE: When people roll businesses out, they are exactly the same because it’s easy, but will that business work exactly the same in Burnley as it does in Bournemouth? There are two different demographics you’re dealing with. When we do finally get out of Nottingham, we will probably blend the two ideas – so we'll have a very similar product to what we’ve done before, but try and adapt it to the city. Get under the city’s skin, understand it a bit more. 

We are a group of independents with a corporate underbelly. We've been looking to roll Penny Lane out for a while, but roll-outs are expensive, different cities are scary, and in the last five years, we've had a pandemic and a cost-of-living crisis. Now, if we roll out and spend £1.5m on doing a venue with our own money that we saved, and we get it wrong, we've got hundreds of people who rely on us for jobs who might suffer. It would be great to go and expand and spend this money, but that means our cash flow is going to be really tight, and it only takes a few tweaks in the market, and we might see one, two, three venues fall to the wayside. I don't think that's the right thing to do in the chase for growth. We are looking, but it's about saving enough money that you still have the buffers for each business, and also not spending a fortune on another landlord’s property. 

P&B: Where are you currently seeking inspiration from?
DE: There is a lot of social gaming stuff coming out at the moment, isn't there? Lots of golf, lots of darts, Flight Club is a very polished product. Big Fang as well. Another good roll-out. You’ve still got the nice polished stuff like The Botanist and The Alchemist, and Manahatta has just come to the city. They're the big boys. Lots of money, lots of investors, but they’re still what I would call just ‘a bar group’ – there’s no social gaming in those type of sites, it is just very well polished, lovely bars, good service, decent food, which is what you need to do. I'm sure they'll be branching out into that sort of [social gaming] thing soon.

P&B: You’re currently self-funded. Have you not had any offers of external investment? 
DE: We nearly got bought two years ago by a company that you'll probably know, but I suppose looking back, I’m quite glad that it didn't happen, because they'd have taken us down with them. 

The club scene needs to move on pretty quickly, especially certain models – I just find them a bit old fad, doing stuff that has been done for the last 20 years, while kids these days are very clued up. They get information at their fingertips. Club products need to change a little bit, brands need to evolve. 


Fletchergate's Penny Lane also features competitive socialising

P&B: So, would you ever be tempted to sell?
DE: If someone wants a cluster model that's been successful for a decade-plus, with unique offerings and a very good head office structure, systems and processes, which can show profitability over the last 10 years, of course, but no one's knocking our door down. 

It’s either people don't know that we are a group or they look at it and go: ‘Well, they're all different’. A lot of investors don't understand that. They want a roll-out brand like Wagamama that they can pick up and drop so they can do 50 of them quickly. There's probably two or three of our brands that can be picked up and dropped anywhere quite easily. And you could just keep a cluster in Nottingham as your bread and butter, and then go and roll out two or three of the brands, which is what we're trying to do. But you know, we're not going to rush. We're quite happy as we are. 

P&B: You don’t operate pubs. Do you just prefer what bars have to offer?
DE: Back when every village would have a pub, we’d all go there to sort so many things out. But things are different. I can do anything using a mobile phone, so pubs have to be resilient, be different, try and entice people out away from these phones or their computers or their warm front rooms where they can get a drink delivered to their door. With real pubs which sell ale and beers and have communities around them, the breakdown of community in itself, where people don't even know their own neighbour, means that the pub also has an issue, because that community isn't there where the neighbours will go down to the same pub and chat there instead of being in the front room. 

P&B: How’s the financial position of the business?
DE: We’re doing OK, but what I will say is the government are going to probably take quite a big proportion of that come April with the changes that are coming, so that's what I'm planning for. 

Do we really want to be spending big money or expanding just yet when we know we're going to get 6% disappearing off our bottom line pretty quick, with no additional benefit? I'm all for people being paid more and being paid correctly for their jobs, so I'm not saying I've got the answers. I’m just not sure if this one's going to be the greatest for hospitality. I think there are a few people that will fall by the wayside just because they might be running at an 8% margin, and most of that's going to disappear. They’re not going to do anything different, but one morning they will wake up and that money that they were surviving on and doing okay with has just gone because their rates have gone up, minimum wage has gone up, and the National Insurance took a big chunk as well. 

P&B: Not the cheeriest of notes to end on, so is there anything else you’d like to add?
DE: I would like to end with a thank you to all our staff and all the people in Nottingham and surrounding areas who have supported Fletchergate Industries. We are a group and maybe we should be a bit more proud of it and talk about that we are an independent business with all these wonderful sites. Thank you to everyone who has been to our venues and enjoyed what we do. 


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