Leisure industry entrepreneur Luke Johnson is investing £1.5m in Eclectic Bar Group and has taken over as executive chairman of the struggling chain aimed at wealthier students.
Johnson, best known for building up Pizza Express in the 1990s, will buy 3m new shares of Eclectic for 50p each. The deal, which needs approval by shareholders next month, will give him an 18.5% stake.
Eclectic’s chief executive, Reuben Harley, and its finance director, John Smith, will each also buy 150,000 new shares. The trio’s investments will give Eclectic £1.65m to spend on developing its business.
Johnson will be in charge of Eclectic’s overall strategy. He will not be paid a salary, but if Eclectic’s share price hits 60p in the four years after shareholders approve the plan, he will be awarded a further 10% stake.
The company’s shares jumped 29% to 62.5p after Johnson’s involvement in the business was announced.
Eclectic owns about 20 bars aimed at trendy students and young professionals under brands such as Embargo Republica, Po Na Na and Lola Lo. It warned in November that students drank less than expected during freshers weeks and that sales at new bars in Brighton and Derby had been disappointing.
Johnson said: “There is a great business within Eclectic with much potential, including some great people and an attractive portfolio of sites. 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.”
Johnson and Hugh Osmond bought Pizza Express in 1993 for about £20m. They expanded the chain from 12 restaurants to more than 250 and sold it for almost £700m in 1999.
Johnson then launched Strada pizzerias and the Signature restaurant group, which included London’s Ivy restaurant and the Belgo chain. He chairs and owns 50% of Grand Union, a London bar chain and is also the part owner of the companies behind Patisserie Valerie and Gail’s Artisan Bakery.
Eclectic warned that trading in the last few months had remained difficult and that this was likely to “impact on the result for this financial year”. The company is cutting costs and has put the timing for launches of bars in Sheffield and Liverpool under review.
Johnson, who is worth £220m according to the Sunday Times Rich List, was chairman of Channel 4 from 2004 to 2010.
