Fierce cost pressures in the hospitality sector are seeing venues close but Liverpool city region-based Mikhail Group is weathering the storm according to its latest accounts. Tony McDonough reports
Mikhail Hotel & Leisure Group is one of Merseyside’s fastest-growing hospitality businesses and its latest annual accounts show significant growth in a tough trading environment.
Filed on Companies House in the last few weeks, the accounts for the 12 months to December 31, 2022, show a 34.7% increase in revenues to £11.4m from £8.5m in the previous year.
However, the report also shows a sharp fall in pre-tax profits to £839,270 from £1.72m the year before. This is likely due to the fierce cost pressures placed on the hospitality sector. Soaring inflation and energy bills have hit margins across the sector.
Mikhail, whose registered office is in Southport but whose main admin operations are at Cains Brewery Village in Liverpool’s Baltic Triangle, operates more than 10 venues across the city region, with more in the pipeline.
Majority owned by Andrew and Vicky Mikhail, the group’s Liverpool portfolio includes Cains Brewery and one of the city centre’s best known traditional pubs, Doctor Duncan’s close to St George’s Hall.
In Southport Mikhail operates six bars and hotels. This summer it opened Maverick’s, an “American-themed dive bar”. It is located on the corner of Lord Street and Leicester Street. It completed phase one of the £4m restoration of The Grand in July last year.
At the end of June this year, Mikhail announced it had secured a contract to operate the newly developed Queen’s Market in Rhyl in North Wales.
Costing £12.6m the venue is scheduled for completion in summer 2023. It will serve as an indoor market hall, housing a variety of food and drink vendors, as well as providing a flexible space for events and commercial activities.
However, the company suffered a setback in the summer when it had to shut down its fine dining Chinese restaurant Lu Ban, led by celebrated Liverpool chef Dave Critchley.
Despite winning a number of awards the venue fell victim to the economic crisis.
At the time the company said: “The closure was not a decision we have taken lightly but was due to a combination of factors. The ongoing cost of living crisis has reduced footfall to what was always a niche concept.
“This coupled with increasing financial pressure of running and utility costs has rendered the business unsustainable.”
This scenario is being played out across the hospitality industry. In mid November, Red & Blue Restaurants closed Bouchon in Liverpool city centre. They blamed “robber baron” energy firms, in part, for the decision.
In the last few days, acclaimed chef and restaurateur Gary Usher admitted his Burnt Truffle restaurant in Heswall in Wirral was also facing a battle to stay open.
He posted on social media: “Unless people start using Burnt Truffle I will have to close it. If you’re in Heswall or Wirral in general please spread the word.
“I’m tired of doing videos full of doom and gloom but this is the reality… we just aren’t getting enough people in to cover the costs of being open.”
Despite the economic pressures Mikhail directors said in the annual report they believe the company “is in a strong financial position and has sufficient flexibility to navigate through the current difficulties”.
During 2022, the group employed 265 people – up from 215 in 2021. Total directors’ remuneration was £145,947 and shareholders received total dividends of £52,924 for the year.