‘Amicable divorce’ for bar operators

Apr 18 2008 by Graeme King, The Journal

BAR and club operators Utopian Leisure and Tokyo Group have gone their separate ways in a £7m deal agreed less than two years after they merged.

The two Newcastle businesses only came together in the summer of 2006 but already the partners have decided the arrangement will not work – and they will both grow better as separate businesses.

After nine months of negotiation, a ‘divorce’ deal has been finalised between Utopian boss Bob Senior and Tokyo boss Rob Cameron.

Utopian, formed by ex-Ultimate Leisure boss and Tyneside leisure scene stalwart Senior, has always been in the mainstream of the leisure industry with bars and restaurants such as Sam Jacks and Fat Buddha serving the mass market. Meanwhile, Tokyo Group has always been a niche operator with a reputation built on the stylish bars Tokyo and Stereo, and the dance music oriented Digital nightclub in Times Square, which has recently opened a second outlet in Brighton in Sussex.

As the leisure industry has moved away from the late night market following changes to licensing laws and the smoking ban, Utopian has adjusted its strategy to focus more on food.

That policy seems to have led to Tokyo Group – known as Utopian 3 before the deal to part company – to seek independence again and buy out Utopian’s majority stake.

Both sides admitted the situation had caused some arguments before a deal was struck. Cameron said: “Such is the case when you have to strike a deal with someone. But it was amicable enough, and each side showed a willingness to get it done. We have parted as friends.”

Senior said: “There was a bit of positioning, some flexing of muscles, but we got there eventually.”

Cameron added: “It’s been a bit arduous, but that’s what happens. It’s never easy. We wanted to trade our assets in the way we wanted to. The way things were moving, we were unable to move it forward in the way we had hoped.

“This is a good company, profitable, and we can improve it. We have recently added Digital in Brighton and have a few other units being developed. We will be expanding the Tokyo and Digital brands.”

Cameron also confirmed that Tokyo Group is still in the market to establish a boutique hotel.

He said: “Since the merger we have sat back on that project, but it is something we are still keen to do. We are looking at a scheme not too far from Central Station. It would be a joint venture with a developer – just 15 to 20 rooms.”

Senior added: “We decided we wanted to go in the direction of food, and the guys were quite happy to take their business back and roll out their expansion plans.

“Meanwhile, we will roll out the Fat Buddha concept and stay in the mainstream. We have opened up a ‘Little Fat Buddha’ takeaway in Belfast, and a new restaurant will open in Darlington on May 16. It is a brand which has the legs to go pretty much anywhere.”

Tokyo Group was backed by David Brind and Nicola Boardman, of Barclays, and was advised by Mark Lazenby, of the Watson Burton law firm.

Utopian Leisure was advised by Mincoffs, while Barclays was advised by Eversheds, and KPMG completed due diligence work on the deal.