Margaritaville planning Eastern Caribbean expansion
THE Margaritaville Caribbean Group has set its eyes on the Eastern Caribbean for the next phase of its growth as it emerges from the pandemic-enforced lockdown stronger.
The group now operates seven Margaritaville branded restaurants — one on the hip strip in Montego Bay, two at the Sangster International Airport, one in Ocho Rios, one in Negril, one in St Thomas in the US Virgin Islands and another at the cruise ship port on Grand Turks island in the Turks and Caicos Islands. A previous Margaritaville restaurant that was operated in the Cayman Islands was closed at the height of the COVID-19 pandemic and has not been reopened.
Despite that setback, the company is looking for further expansion in the Caribbean.
“We are looking on some new concepts from the group including Margaritaville, which will be rolled out in some additional islands over the next few years,” Ian Dear, chairman and CEO of Margaritaville Caribbean Group, told the Jamaica Observer.
Dear said the move is driven by the bullish outlook the company has on the prospects for the region.
“We have two or three islands already under discussion, so their roll-out is going to be a reality in short order,” he added.
Dear declined to identify which islands he is thinking of expanding the Margaritaville concept to next, citing that the discussions are at a sensitive stage.
However, he said, “It’s definitely Eastern Caribbean for the most part. There’s also one in the west side of the Caribbean.”
Meanwhile, he provided more insight on why the company has decided not to reopen its operation in the Cayman Islands.
“What happened with Cayman is that when COVID came along, they virtually stopped all tourism. And even after the cruise lines reopened their operation, Cayman didn’t. It’s a very expensive destination to operate. And so we had to make the tough decision not to reopen after we were closed for COVID,” he told the Caribbean Business Report.
But he said if an opportunity presents itself to reopen in the Cayman Islands in the future, it will be explored, and if it makes sense, the investment will be made.
Currently, the Margaritaville Caribbean Group operates the Starbucks franchise in the Cayman Islands “and we’re doing very well.”
Making plans to expand aside, the company said it is seeing strong growth in its Margaritaville restaurants since reopening after lockdowns due to the COVID-19 pandemic.
“Right about now, we are actually doing even better than we were doing prior to COVID,” Anthony Hewie, general manager, Margaritaville Ocho Rios, pointed out. Hewie said the recovery is seen in all locations in Jamaica.
“We are running really steady. I’m getting nice turnouts from ships. I can remember when we had an average spend of about US$21, we would consider that to be great. Now we are up to average spend of about US$25 to US$26,” he said, highlighting a 20 per cent jump in spending at the restaurants.
“So, it’s not only that we are getting more people, but we’re even getting up the average spend from each of these guests that are getting through the place.”
The core of Margaritaville’s business comes from hotels and cruise ships. That is behind the reason why the restaurants are only found in the resort towns of Ocho Rios, Montego Bay and Negril in Jamaica.
However, when tourist arrivals fell to zero in 2020 with global travel halted by the pandemic, it was locals who supported the restaurants when they started reopening in June 2020.
“Historically, about 20 per cent of customers were locals, but that has shifted coming out of COVID. When there were no ships in port, they were our only customers, supporting the business,” Dear added. He said even though the restaurants were being operated at a loss during that period, they were kept open to build a bigger customer base among locals that is paying off now.
It is estimated that even though cruise passengers and stay over tourists have increased and are supporting the restaurants again, Jamaicans now account for up to 40 per cent of the clientèle served each day.
Margaritaville even has a local loyalty programme where Jamaicans pay less than visitors.
“I love them more, because they helped me to keep the doors open. Of course, we were losing money, but we were able to keep the doors open, and the most important thing is that we were able to keep our valuable employees on,” added Hewie.
Still, the business in the Turks and Caicos Islands remains the most robust, attracting more patrons, though the spend per person is significantly less than average spend quoted to the Caribbean Business Report.
“Turks is still one of our top revenue generating centre in the company right now,” Hewie who managed the location for 10 years outlined.
That location has access to the over one million visitors who descend on the port each year.
The Grand Turks location, which is a publicly listed company in the Margaritaville Caribbean Group, reported in its last financial statements that its revenues amounted to US$2.8 million over the six months to the end of November. That was more than was earned over the entire 12 months period of the prior financial year, confirming how strongly the business has recovered. The location has also turned around from a US$609 thousand loss for the entire duration of the prior year to a profit of US$455 thousand in the first six months of its current financial year. Margaritaville’s financial year runs from June 1 to May 31. Its six months result corresponds to the end of November.
However, even as the company is seeing better days, supply chain issues, both locally and globally, are threatening to sap the growth.
“We are still not out of the woods, but we are way ahead now compared to where we were a few years ago,” Alton Thelwell, vice-president for operations in the Margaritaville Caribbean Group said.
He said the issues affect the company sourcing food for its clientèle and wonders if the recent shortage in animal feed in Jamaica will compound the issue of getting chicken wings for its restaurants.
“It’s a big concern. It’s a huge concern,” Dear said as he sighed before wondering out loud if the company will be able to secure enough chicken wings.
“For locals, one of the biggest demand is for wings, and we can’t get enough. We can’t get enough rum and other alcoholic beverages as well,” Thelwell added.
“There was a time we just couldn’t get any Hennessey and even our Red Stripe beer,” Roland Clarke, chief financial officer of Margaritaville Caribbean Group, chipped in.
“One of our biggest sellers is nachos and having access to it is a big challenge because we import it and we cannot get [enough] from overseas.”
They said they realise that suppliers are also in the recovery process and with that there will be delays and lack of supplies.
“We have plenty headwinds coming around. And we see that with the high interest rates, with the cost of goods, with the supply chain, with the war, all these things impact us. But we remain very, very confident and bullish about our country as a tourism destination, and that our numbers will hold up and continue to grow,” Dear stated.