Maypole

One of AIM’s tiniest tiddlers at a market cap of less than £1m, gastro-pub chain Maypole claims to be thriving in the face of the economic downturn and the UK’s struggling pub market.

Its ‘pubs with rooms’ strategy and an open-all-day policy means the group’s seven inns generate higher margins than most. Flying in the face of the industry-wide woes, like-for-like sales have been rising as management controls costs, improves menus and increases marketing activity.

Despite another rainy summer, like-for-like sales for the eight weeks to the end of September grew 2.13%. This was a great encouragement, coming after a less inspiring first six months to June when group like-for-like sales fell 1% and losses swelled to £507,292.

Chief executive Alistair McEwen, a passionate enthusiast of the trade, concedes the four most recent acquisitions (two in Norfolk, one in Suffolk and one in Wiltshire) absorbed a lot of time and cash, but he says results are starting to show through. One, the riverside Bridge Inn near Great Yarmouth, grew first half sales by 142% as improvements kicked in.

McEwen has experience in building up such chains and selling them off (as he did with a coffee-bars-and-snooker-clubs chain to Regent Inns) and this is a plausible strategy for Maypole, once the estate is ‘up to the mid-teens’. With long-term borrowings already at £7.9m McEwen aims to add more leasehold properties to its predominantly freehold portfolio and says ‘we’re going to keep our powder dry until next year when we think there are going to be some bargains’.   

A highly experienced management team, including former Blacks chief executive Simon Bentley, have backed this venture with their own funds and, given time, should deliver the goods. At such a low price the shares have some, highly speculative, potential.