“SALE” OF THE CHERRY TREE – SETTING THE RECORD STRAIGHT.
We are aware of a great deal of rumour and speculation over the potential sale of The Cherry Tree. This note sets out the accurate picture: it’s a bit long (as it’s quite complicated) but bear with me…
Motivation, background and trading history
We bought and re-opened The Cherry Tree with the intention of providing an ongoing community asset, meeting the needs of a cross-section of the village and wider community. Our desire is to continue to provide this on a long-term basis.
The premises were purchased (in two phases: the main buildings, followed by the car park – the latter on the rejection of Punch Taverns’ planning application for that site) during 2019, as an investment by my pension fund. In addition to funding the purchase, the fund also provided a substantial investment in the very significant (and necessary) renovations to / upgrading of the premises. Substantial personal investment was also made by the principals, to fund the renovation work.
The Cherry Tree site accounts for a significant proportion of the pension fund and is obviously not a ‘liquid’ asset. I cannot draw pension benefits from bricks and mortar and therefore the position is (and always was) that the premises would need to be sold to allow me to convert that asset into cash for investment and retirement. Additionally, ownership by the pension fund carries several onerous limitations on how we use the premises – deriving rental from the domestic accommodation / the level of rent the business pays to the fund etc.
October ’19 - We opened for business as a licensed café and received tremendous local support. Business levels increased month by month until the spring of 2020.
March ’20 – Covid hit, and we faced the first of a series of lockdowns. Over the two years from initial opening, we had been closed for more time than we’d been open.
We “survived” on Government Grants, by revising our offering (Pizza delivery / takeaway etc) and with reliance on the financial resources of the owners.
Spring ’22 – despite the removal of all restrictions and the continued reinvention of our offering, business levels (particularly on our late nights of Friday and Saturday), did not return to their pre-Covid levels. People’s social habits have changed radically and at time of writing there are no signs of this changing to any significant degree.
This fact, in conjunction with the removal of preferential VAT rates for hospitality businesses, major increases in utilities costs, rental requirements (paid to the pension fund), and the ‘cost of living crisis” have created a “Perfect Storm” and threatened the ongoing viability of the business. The owners are no longer able to subsidise the business, having exhausted existing personal assets.
Spring ’23 – Notwithstanding that we have never had a ‘normal year’ of trading, what has become clear is that the business will not support two couples (the current situation), but is a good / viable lifestyle business to support one couple, (in this case Hannah and Chris and their expanding family).
In order to achieve this, Siobhan and I need to retire, and this (ideally) requires a number of actions / events to take place. These are in several independent phases:
Phase 1. Sale of the existing car park, as a development plot. Planning consent has been sought for a 4-bedroom house on the site. Concurrent with this, we will create a new car park for 12 cars (on what is currently the lawn area), the provision of cycle parking (16 bikes).
We also plan significant improvements to the (current) patio area, providing some permanent cover and a better, more flexible customer experience. We have been able to demonstrate that we can accommodate as many customers on the improved patio as we can on the current outdoor space – half of which (the grassed areas), is only used for half of the year.
The planning application is materially different from that previously submitted by Punch – which would have left the Cherry Tree with no parking at all.
A planning decision is due from East Cambs’ DC prior to the end of March.
Unfortunately, Haddenham Parish Council have recommended rejection of the application – citing traffic issues and ‘future viability’ of the business amongst their rationale.
The cash injection that would be provided by the sale of the development plot would compensate (in part) the pension fund for the investment made in renovations and the upgrading of the premises.
Phase 2. As identified above, the sale of the premises*
We have several options under discussion currently, all involve potential purchasers with a ‘vested interest’ and no desire to own or run the business.
This option would see The Cherry Tree continuing as is, with no appreciable difference
perceived by members of the public.
Hannah and Chris would take control of and continue to run the business, taking a lease on the premises and paying rent to the new owners (with increased flexibility re use of the domestic accommodation and negotiations over rental costs).
This option is currently seen as the most likely outcome and way forward.
[*The extent of the premises referred to above could be the overall site as it now is, the development plot, or the residual site – depending on the impending planning decision by ECDC, and the interest of potential buyers.]
Alternative Phase 2. If none of the above occurs, or agreement cannot be reached for the ongoing management of the business, we will seek the sale of both the premises and business to an interested 3rd party. This will recover part of the investments made to date and allow for retirement to be commenced.
The downside to this option is that we will have no influence / control over the future focus and direction of The Cherry Tree. As such, this is not our preferred option.
We have however appointed an agent to investigate this option. Currently, while there has been some early interest, we have had no discussions or negotiations on this matter.
If you would like any further information or to discuss the above, please feel free to call or email Chris (Taylor), details below.
firstname.lastname@example.org March 2023