Entrepreneur Luke Johnson is set to invest in leading bar and club operator Eclectic as the business seeks to recover from a challenging trading period.
After his injection of funds, he will own 18.5% of the company’s issued share capital and join the board as executive chairman, although he will not draw a salary.
Drawing on his experience of restaurants and pubs, he will work with existing management to lead the business through its next stage of development and help it diversify into other areas in the hospitality sector.
Chief executive Reuben Harley and chief financial officer John Smith are also investing by subscribing to new shares which, with Luke Johnson, will raise £1.65million for the company and provide extra working capital.
Eclectic, which operates 19 venues around the UK, today also issued a statement confirming that trading had continued to see “competitive pressures” over the past few months in a number of locations. It follows a profits warning last November when it said it would be slowing down expansion and reducing costs.
It has announced the sale of its tiki bar Lola Lo in Bank Plain, Norwich, to expanding cocktail bar group Be At One for an undisclosed sum. The disposal is part of Eclectic’s strategy of focusing on the higher contributing sites within its portfolio.
As well as Lola Lo, Eclectic trades with a variety of brands, including Embargo Republica, Lowlander, Sakura, Po Na Na and Fez Club.
Jim Fallon, who is moving from non-executive chairman to become a non-executive director, said: “The board is delighted that Luke Johnson has agreed to join Eclectic. He brings a wealth of experience, contacts and opportunities to the business and we look forward to working with him to develop Eclectic further.
“Together with the existing team, and the injection of capital through the subscription, he will help drive the business in the next stage of its development.”
Reuben added: “I am excited at the opportunity to work with Luke Johnson. We will continue to work hard on improving the core business, but with the additional skill set on the board, and the net proceeds of the subscription, we will be able to accelerate the group’s plans and development as well as diversifying into a broader range of hospitality offers.”
Luke has been involved in the hospitality industry for over 20 years, including chairman of PizzaExpress in the 1990s, co-founder and chairman of Strada restaurants, and chairman of Giraffe restaurants for nine years until 2013. He is currently chairman of Patisserie Valerie owner Patisserie Holdings, Gail’s bakery group Bread Holdings, and Red Hot World Buffet operator Buffet Restaurants.
Luke said: “There is a great business within Eclectic with much potential, including some great people and an attractive portfolio of sites. It has firm foundations and continues to be cash generative. I look forward to gaining a deeper understanding of the business over the coming months, and helping them to plan and execute a strategy for growth.”