Dublin hit peak Press Up in January 2022 when the hospitality group run by Paddy McKillen jnr and Matt Ryan opened Mama Yo, a 154-seat Chinese restaurant on Camden Street in Dublin. The opening brought to 36 the number of restaurants in the group, spread across 21 brands including Wow Burger and Elephant & Castle. The 12-year-old business also operated a portfolio of trendy hotels under the Dean brand.
Things have not gone well since then. It emerged over the weekend on business website the Currency that Press Up’s lenders have taken control of the business and appointed a restructuring team led by Patrick Sheehan, formerly of Alko Capital. McKillen jnr and Ryan are reported to have stepped back from their roles.
Mama Yo promised: “Authentic Chinese cuisine with a contemporary twist, featuring all the fan favourites that you will know and love, but to a level we guarantee you won’t have tried before.”
It would be simplistic to say McKillen jnr and Ryan’s difficulties are of their own making and they should have refinanced the business in 2018 when they had the chance
In hindsight the last bit sounds very like the Press Up business model. McKillen jnr and Ryan certainly took their business to a level and at a speed that few have tried before. They were backed by McKillen’s father, also Paddy, who is a well-known developer and an investor in the business.
[ Dean Hotel company swung to €2.3m operating loss before saleOpens in new window ]
The pair – who have been friends since their school days – took a handful of restaurants owned by McKillen snr and expanded very quickly. They often opened in premises in which they or businesses connected with them were also the landlord. Most of them were successful, with the pair credited with having caught perfectly the changing tastes of a country whose self-confidence was rebounding as it dragged itself surprising quickly out of national bankruptcy.
Press Up explored a stock market flotation in 2018 but did not proceed. Neither did a planned €50 million sale of 45 per cent of the business in 2019. On both occasion the underlying properties were excluded from the proposed deal.
Whether or not the pair’s dual interest put off investors is conjecture. But its clear Press Up wanted to raise money but did not feel under too much pressure.
Then came Covid in March 2020. Lockdowns combined with the changes in consumer behaviour that followed their lifting hit the business hard. The cost-of-living crisis that accompanied the economic rebound did not help. Nor did the rise in interest rates that followed.
In October 2021, the group took a loan from a fund set up by London-based Cheyne Capital to invest in distressed business. Such loans don’t come cheap. Presumably Press Up had fewer options at that stage.
[ Landlords pursue McKillen companies over rent claimsOpens in new window ]
Cheyne is reported to have invested €55.5 million and taken a lien on all the business in the group but not the underlying properties. Some €13 million was repaid when British property group Lifestyle Hospitality Capital and Elliott Investment Management bought the hotels operated by Press Up but owned separately by a company connected to McKillen jnr and Ryan.
Other companies connected to McKillen jnr and Ryan appear to still be the landlord of many of the Press Up businesses. A detailed examination by the Currency revealed a complex web of guarantees and leases, as well as litigation involving these properties.
It would be simplistic to say that McKillen jnr and Ryan’s difficulties are of their own making and they should have refinanced the business in 2018 when they had the chance. They would most likely have had to roll up at least some of the property assets to get the deal away. Presumably that did not make sense to them. Nobody foresaw the pandemic.
McKillen jnr and Ryan can also be accused of having got their hospitality business confused with a tech start-up. Burning cash in order to grow fast and achieve scale is a badge of honour in the latter sector but as a model doesn’t really work in the real economy.
Lockdowns combined with the changes in consumer behaviour that followed their lifting hit the business hard
A more realistic explanation is that they never really knew what they wanted. They may have started out as restaurateurs – something they clearly had a flair for – but seemed to secretly always want to be property developers. This is understandable given McKillen jnr’s father’s success in this area.
[ Paddy McKillen jnr seeking €13.5m for three Dublin pubsOpens in new window ]
In many ways Press Up became a vehicle to serve their wider ambitions in property. As long as it continued to grow, so could the underlying property portfolio, serviced out of the rental income. As long as they kept coming up with successful restaurant concepts and marketing them – two things they were good at – the model worked. The risk of over-expansion killing the goose that was laying the golden egg was always there and Covid made it real.
Cleaning up the mess was always going to be difficult and Cheyne have taken matters into their own hands. Paradoxically McKillen jnr and Ryan have now achieved what they wanted with Press Up looking like it will be independently run as a separate stand-alone business by Cheyne. However, Cheyne are likely to be demanding tenants.