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Starbucks to receive £85m of support from US parent over three years – £45m related to covid-19

Starbucks Intu Milton KeynesStarbucks UK is receiving £85m over three years from its parent company as it moves to an increasingly franchised estate – and gets though the problems that have arisen from covid-19. Starbucks UK received a £40m capital injection from its US parent company in the year to 29 September 2019 – “the company relies on the support of its ultimate parent company”, newly filed accounts state.

A further £25m credit facility was provided in May 2020 to provide liquidity as a result of the impact of covid-19. The company added: “We have revised our projections as a result of covid-19 and estimate a further cash shortfall of approximately £20m will arise over the period to September 2021, which will require funding from Starbuck Corporation.”

The accounts for the year to 29 September 2019 show a loss before tax of £6.6m, compared with a loss before tax of £17.2m the year before. Turnover reduced to £361.7m from £387.6m the year before, having closed 52 company-operated stores. However, 61 new stores opened with 55 of these across its license and franchise partners. The company paid £15.1m to exit leases of company-operated stores in the year – and made a £2.3m impairment charge against 14 underperforming stores, with a £700,000 onerous lease provision against six of these stores. There was also an additional onerous lease provision of £3.4m in 2019 for office space within its support centre that it is no longer occupied.


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Drinking in pub generic viewUK pub operators have warned of a “polo mint” problem emerging in the sector as the coronavirus pandemic takes its toll – and it will take up to three years to get back to normal trade levels. Findings by research firm Third Bridge revealed sector bosses believe the first and second quarters of next year are going to be “very tough” as VAT goes back up, suspended payments become due, unemployment bites, business rates return and rent relief tapers away.
Ross Hindle, UK pubs and hospitality sector analyst at Third Bridge, said: “Some say a so-called ‘polo mint problem’ has already emerged, with inner-city pubs fighting for survival, while community and suburban pubs, typically serving food, do better. Overall, experts say, the UK is likely to lose between 1,500 and 2,000 pubs over the next 12 to 18 months. We’re told many pubs only become profitable at between 70% and 80% capacity, yet social distancing regulations and the rule of six mean many public houses are now capped at about 50% to 60% capacity – and so unable to break even. The usage of outdoor space can bolster that percentage but its impact is expected to fade as the winter months draw in. We’ve been told, in 2019, UK pub revenues were about £25bn.

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Franco MancaFranco Manca operator Fulham Shore has announced its full year 2020 results will be published on or around 15 October. The company stated: “The company previously announced that it anticipated that the FY20 results would be published at the end of September 2020. However, as a result of the most recent measures put in place by the UK government in order to control the spread of covid-19 and additional work now required, it is now anticipated that the FY20 results will be published on or around 15 October 2020. Subject to the finalisation of the audit of the FY20 Results, the company expects to report revenue growth of 7.2% to £68.6 million (2019: £64.0 million). Following the completion of the placing and extension to its banking facilities in August 2020, the group remains well capitalised. The group’s net debt (before recognition of leases under IFRS 16) at the close of business on 25 September 2020 was £3.52 million, with £7.46 million undrawn of its £25.75 million of available banking facilities. Since the year end, the group opened a new Franco Manca on The Cut, near to the Old Vic theatre and Waterloo Station in London, in mid-September. As at the date of this announcement, Fulham Shore has 68 out of its 70 restaurants open and trading. Additional safety precautions and training were instigated throughout the group’s estate prior to re-opening for dine-in on 4 July 2020, with further improvements made following updated UK government guidelines last week. Thanks to the UK government’s ‘Eat Out to Help Out’ scheme, group revenues for the days when the scheme was operating increased markedly compared to those in the previous year. As of 24 September 2020, the UK and Scottish governments imposed further trading restrictions to combat the spread of covid-19. This included a 10pm curfew for all restaurants and bars. The board does not believe that this curfew will have a material effect on the group’s dine-in business, as the majority of its customers eat before then. The group will continue to react and adapt if and when new regulations come onto force in the areas where it has restaurants. If, as before, delivery and / or takeaway services are permitted and dine-in is curtailed, the company will pivot the business in this direction as it did earlier in the year.” David Page, chairman of the company, said: “ We are popular with the public, well capitalised and have headroom in our borrowing facilities. We believe that these positive attributes, combined with our cash balances, will see us emerge from this period as a successful survivor in an albeit reduced UK restaurant sector.”
London's West End shops and peopleConsumers will significantly reduce their visits to pubs, bars and restaurants in the light of new government restrictions but many plan to continue socialising elsewhere after curfew, according to a snap poll. CGA’s latest Consumer Pulse Survey, conducted on Tuesday (22 September) after the announcement of requirements, including 10pm closures and mandatory table service, revealed two in five (40%) said they will go out less often as a result of the measures – almost three times as many as those who will go out more frequently (14%). The research showed tighter regulations are set to have the biggest impact on consumers who have been slow to return to hospitality – especially those in older age groups. They appear less likely to affect the behaviour of previously regular visitors, who largely indicate they will maintain their frequency. But the curfew might not have the government’s desired effect of reducing late-night contact, the survey suggested. A third (34%) said they would be likely to invite friends back to their house after 10pm, and almost as many (30%) admit they would seek out alternative locations to continue socialising. The survey indicated the measures may have further important impacts on behaviour, including shorter visits and an even greater reluctance to visit city centres. Among people who often go out late, three quarters will either stay for a shorter length of time (43%) or stay away in the late evening completely (34%). Of those who typically visit city centres, half (48%) said they are now less likely to visit venues – much more than those in rural areas (29%). The regulations may also spread visits more evenly across the week – continuing a pattern of behaviour set in August by the popularity of the Eat Out To Help Out promotion on Mondays to Wednesdays. Two in five (41%) consumers, who previously went out on Saturdays, said they are less likely to do so now, compared with 29% of weekday visitors.
Pure. LogoHealthy food-to-go concept Pure has become the latest sector operator to launch a company voluntary arrangement (CVA). Propel understands the 22-strong company is working with advisors RSM on the proposals and expects the CVA process to complete on Wednesday, 7 October. Co-founder Spencer Craig told Propel: “We really did not want to do a CVA. It was the last option we considered. We took every other possible measure but in the end, the lack of people in central London has led to an unsustainable position for us. And with government guidance on working from home changing again last week, there is now unlikely to be any improvement until 2021. We have been a little surprised by how many people have not wanted to return to see their colleagues or enjoy the wonders of central London. We love both of these things. London is an ecosystem of the demand created by the people that work here, visit from its suburbs, and international tourists. There are so many wonderful restaurants, shops, theatres, museums, live events and a public transport infrastructure to support this demand. But if you remove office workers from this system, there will be far, far less for everyone to enjoy and then we are into self-fulfilling decline. But we have faith in London to return. Landlords have been very supportive. They recognise we are in this together. We have been talking for more than six months and their support has got us to this point and will continue to allow us to recover. Although we had no option other than a CVA in the short-term, we are confident about what the future holds. In February this year, Pure was an award-winning, high growth food-to-go business opening our first site in an airport. We had invested significantly in our older estate with refits and had an ambitious expansion plan over the next 24 months. Over the medium and long-term we will find a solution to this crisis because of our incredible team. Their spirit during the early stages of lock-down and their desire to improve since our estate has reopened has been inspiring. We will innovate and come back a stronger business over the next few years.”
Andrew Wong’s Kym’s restaurant at London’s Bloomberg Arcade has closed permanently after just two years trading. Backed by the White Rabbit Fund, Kym’s was an attempt by Wong to move into more mainstream territory. A spokesman for the business said: “It is with a heavy heart we have decided not to reopen Kym’s. The decision comes after careful consultation with all partners and staff. We’re extremely proud of the Kym’s team and everything we’ve achieved since opening our doors in the City. It has been a fantastic journey and we’re grateful to Bloomberg for their support.” Wong’s other restaurant, the Michelin-starred A Wong in Victoria, which he opened in 2012, remains open.
Flight Club general viewSocial Entertainment Ventures (SEV), the US and UK experiential leisure operator, has said it remains active in pursuing new opportunities for its brands in both countries. The company, which saw revenue for the 12 months to the end of 2019 increase year-on-year by 27% to £19.1m and adjusted Ebitda up 39% to £1.8m, said it continued to review opening plans for its pipeline of new sites in the US and UK. The group’s latest update includes the first full year’s trading from Flight Club Chicago, which SEV operates under licence in North America. The company opened its second Flight Club in Boston in December 2019, which pre-pandemic had traded “very successfully”. In the UK, its new bingo concept Hijingo was set to open in mid-March but its launch remains on hold due to coronavirus. SEV chief executive Toby Harris said: “What happened in 2019 seems a lifetime ago but it was a great year for us. Current trading during this period appears to be in line with our peers and both our US and UK teams are working very hard to navigate their way through all the challenges. London and Chicago have been tough given the lack of city centre action and we have only this week reopened in Boston. On a positive note the spacing between playing areas and the spaciousness of our venues certainly means that our guests feel safe and can still have fun.”
EatalyEataly, the Italian food emporium, plans to open its first UK site this winter, complete with three restaurants, four bars and a gourmet grocery market. The opening at 135 Bishopsgate, in the City of London, will feature the Terra restaurant, which is described as the “jewel in Eataly London’s crown”. Terra will be a wood-burning Italian grill restaurant inspired by “earth, gin and fire”. The store will also feature fresh market Italian restaurant Cucina Del Mercato and quick service restaurant Pronto. There will also be fresh counters and a bakery. The London store will host around 400 employees. Founded in 2007, Eataly is the world’s largest artisanal Italian food and beverage marketplace. In 2018, it signed a deal with British Land to open a 42,000 square foot venue at 135 Bishopsgate. The food market will occupy a double-fronted unit on the ground floor of an office building in Bishopsgate, which is located close to Liverpool Street station. Eataly’s market will be on the ground and first floors of the building.
@Pizza's site at the Grand Central shopping centreEdinburgh-based pizza concept @Pizza has hit its £820,000 target on crowdfunding platform Crowdcube within six hours of the campaign launch to support the UK’s first drive-thru pizza concept. The raise is taking the form of a convertible loan that will earn 10% interest per annum until it converts. Convertible loan holders will have an option to convert their capital into shares at a 25% discount if @Pizza raises equity within the next 36 months. The funds will be used to expand through a mix of permanent sites and semi-permanent outlets – the latter of which will be drive-thrus in the form of shipping containers. So far, 246 investors have pledged £905,430 and the campaign is “overfunding” with 30 days remaining. As previously reported, @Pizza – which currently has two restaurants, in Edinburgh and Birmingham – is looking to build a portfolio of 20 to 30 sites across the UK in four or five “clusters”. The shipping containers will occupy spaces of between 22 and 30 square metres. The drive-thrus would be able to make up to ten pizzas a minute, with customers offered unlimited options to customise. They would be able to order via an app with the option of collection or delivery to their vehicle. @Pizza is also due to open a site at the St James Quarter development in Edinburgh.
TriSpan-backed Rosa’s Thai Cafe is looking to further expand its presence in the capital, with an opening in Greenwich. The 20-strong group is believed to be in talks to take the former Saigon restaurant unit on Nelson Road. The Gavin Adair-led business recently opened its 20th site, in Queensway, as part of the West Walk Estate next month. It will follow this with an opening in The Cut, Waterloo, in October. The company has reopened all of its restaurants for dine-in after keeping several open in the capital for delivery and collection during lock-down. It also operates two delivery kitchen sites with Deliveroo, in Blackwell and Crouch End. It also has a site lined up at the new Paradise development in Birmingham alongside Dishoom and Vinoteca.
Heavenly Desserts in Rushden LakesArtisan dessert restaurant Heavenly Desserts will open its 30th site, in the £142m Time Square development in Warrington. Heavenly Desserts has secured a 1,500 square foot double-fronted unit on the corner of Dolmans Lane and Bridge Street. Heavenly Desserts director Mohammed Imran said: “The vision of what is here at Time Square is exactly what we’re looking for and we can’t wait to open and serve the town.” Time Square has been delivered by Warrington & Co on behalf of Warrington Borough Council, with urban regenerator Muse Developments as the scheme’s development manager. Muse development director Leon Guyett added: “The signing of Heavenly Desserts highlights, despite these unprecedented times, there’s still confidence in the market for innovative mixed-use schemes delivered through strong partnerships with a shared vision that offer well-designed buildings, which all comes together to create a destination. We’ve got a thriving new market, The Botanist and the Cineworld cinema, Gravity to open towards the end of the year and two further units under offer too.” According to a report by marketing, technology and data company CACI, Time Square will increase Warrington’s catering market potential by 14% to £68.5m making Warrington a top ten dining destination in the north west. Metis Real Estate Advisors acted on behalf of Warrington & Co. and Muse Developments. Rawstron Johnson acted for Heavenly Desserts.
Brian Bickell, chief executive of ShaftesburyWest End pub and restaurant landlord Shaftesbury, which owns a 16-acre portfolio in the heart of London’s West End, has reported 41% of rents due for the six months to 30 September 2020 have been collected, 10% are expected to be subject to deferred collection arrangements, 23% are being waived and 26% remain outstanding at 11 September 2020. The company stated: “Since the relaxation of government restrictions began to take effect from late June, the West End has seen a gradual recovery in footfall with the return of local and domestic leisure visitors and its office-based workforce. After an extended period of closure, most of our 611 restaurants, cafés, pubs and shops have now reopened. Bespoke packages of rental and other measures to support their recovery in place and being extended to the end of 2020. However, responding to the recent sharp rise in UK covid-19 infection rates, the government is now re-introducing national and localised restrictions, with a risk that further measures may be implemented until the situation is brought under control. Enquiries for commercial space continue but at a considerably lower volume than we would normally expect at this time of year.” Brian Bickell (pictured), chief executive, said: “The course of the pandemic in the short and medium term will continue to dictate the extent of restrictions imposed by the UK and other governments to contain the spread of the covid-19 virus, with implications for the global economy and the pace of recovery. As an international destination, local trading conditions in the West End will inevitably be affected by these macro uncertainties. Longer term, the exceptional qualities and features of London and the West End provide firm foundations for recovery as pandemic disruption recedes. Their long history of embracing change, dynamism, creativity and their enduring global appeal will be their most important strengths in a post-pandemic world of new priorities, expectations and patterns of activity. Against this backdrop, and with the benefit of our experienced, entrepreneurial and innovative management team, we remain confident in the long-term prospects for our exceptional portfolio and business.”
Nicola Knight, director of services at HorizonsThe food-to-go market will continue to be hit by covid-19 for three years and is set to decline by 43% this year, according to research by retail analysis company IGD. The sector is expected to be valued at £10.8bn in 2020 – a drop from £18.9bn in 2019. And despite a return of sorts in 2021 with high levels of year-on-year growth off a low base, 2022 will see the market reach only 88% (£16.7bn) of 2019 levels. IGD senior food-to-go analyst Nicola Knight (pictured) said: “Unsurprisingly, since the UK went into lock-down, almost all food-to-go shopping trips experienced significant declines. Where previous forecasts saw the sector growing at twice the rate of grocery retail, 2020 has seen a rapid change in consumer behaviour and daily routines that could have long-term implications. Footfall in cities and transport hubs – on which many food-to-go businesses depend – has so far been slow to return. The shift to more homeworking, in particular, has had massive implications for food-to-go. Specialist operators with sites prevalent in affected locations are already adapting strategies to offset this long-term change in consumer behaviour. The return will be gradual and may be subject to reversal; trends may differ by geographic area subject to local lock-downs.” Although IGD predicts food-to-go specialists in city centres and transport hubs will be hit hardest in the medium to long term, it also examined other areas of the sector. It claimed coffee shops will also be affected but on a lesser scale because locations are more dispersed and have a strong local presence; quick service restaurants will be the most resilient due to their value options and have adapted well via drive-thrus and deliveries – and will grow their share by 4.6 percentage points between 2019 and 2022; and retailers will benefit from increased visits where food-to-go crosses over with other shopping missions with convenience stores, in particular, benefiting from their local presence. Knight added: “Changes in consumer behaviour throughout this period offer up opportunities but food-to-go businesses need to be quick to grab them. Picnic sets for outdoor socialising, lunch boxes for home workers and meals to be heated at home are all examples of rapid deployment of new ranges adapted to current consumer needs.
Mitchells & ButlersMitchells & Butlers has reported like-for-like sales were down 6.4% in the first three weeks of September. The company stated: “Following enforced closure in response to the covid-19 pandemic in March we were able to reopen the vast majority of our estate on 4 July thanks to the hard work and dedication of our teams. We have now been trading for 11 weeks and at the date of this announcement the number of sites which have reopened has increased to over 95% of the estate. During the period since reopening we have, as before, continued to outperform the market, benefiting in particular from the breadth of our estate and the balanced exposure we have both regionally and across offerings. In July like-for-like sales declined by 32.4% impacted by reduced capacity as a result of enforcement of social distancing measures and by consumers’ caution to visit restaurants and pubs. During August, the well-publicised government funded Eat Out to Help Out scheme plus a temporary reduction in the rate of VAT on certain supplies combined to help return the business to like-for-like sales growth, of 1.4%. Subsequent trading in the first three weeks of September has settled slightly below this at a like-for-like sales decline of 6.4% prior to the introduction of additional trading restrictions this week. Total sales over the year to date have declined by 35.4% due to the closure period. On 12 June the group announced revised financing arrangements that had been agreed with our main creditors to provide a platform of both additional liquidity and improved financial flexibility in order to meet the challenge presented by covid-19. The group currently has unsecured cash balances of c.£100m, in addition to undrawn committed unsecured facilities of c.£140m. Before the closure of the estate we had completed 168 investment projects including two acquisitions. The investment programme was suspended in March and resumption will be considered through continuous review of operational performance and cash flow management.” Phil Urban, chief executive, said: “After a difficult period of closure, we have been delighted to welcome back our guests with the vast majority of our sites open and trading again under covid-secure procedures. I am particularly impressed by the way in which our teams have made this possible by responding to the challenge of our new operating environment with energy and enthusiasm. The future remains both challenging and uncertain, with only this week a curfew and other additional restrictions being imposed on how and when we can operate. However, we believe we are well placed to meet that challenge and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market.”
LeonNatural fast food brand Leon has appointed Nick Ayerst, formerly of The Restaurant Group (TRG), as its new managing director, Propel has learned. Ayerst stepped down as managing director of TRG Concessions earlier this year. He had been with TRG for almost 14 years, including the last seven as managing director of its successful Concessions arm. Ayerst will oversee the company’s managed and franchised operations in the UK and overseas. Shereen Ritchie continues as the UK managing director for Leon Restaurants. At the same time, Propel understands the company is set to trial order-at-table at a select site, as it continues to evolve its trading model. On Wednesday (23 September), the company announced the launch of 13 new grocery products, including six ready meals as part of its exclusive partnership with Sainsbury’s. Following the recent launch of its Gluten Free Chicken Nuggets, Brown Seeded Sourdough and Waffle Fries, the company has launched three product ranges that will span three new categories. This includes six new gluten-free ready meals, which are priced at £4 each. Leon chief commercial officer Charlotte Di Cello said: “With our first grocery anniversary around the corner, expanding our range will always be so important to us because we want our customers to experience the great-tasting products Leon has to offer in both our restaurants and in the comfort of their own home.”
Redemption Seven DialsAlex and Saiphin Moore, the founders of Rosa’s Thai Café, are to relaunch vegan restaurant and dry bar concept Redemption, after investing in the business, Propel has learned. Propel understands the Catherine Salway-founded business, which had grown to three sites in the capital, in Seven Dials, Notting Hill and Shoreditch, went into liquidation earlier this summer. Alex and Saiphin Moore, along with Rosa’s finance director Tom Kristensen, are now set to bring the business back to life by reopening the Seven Dials site next Wednesday (30 September). The trio have partnered with Salway to recreate a new version of the business. It will showcase a new menu with the help of new head chef Erich Riberio and a support team. This is the second business the Moores and Kristensen have rescued from liquidation via their company, Atomex, the first being the Peruvian restaurants Ceviche and Andina, which were acquired in November 2018. Atomex’s intention is to help founders fix broken businesses and turn them around. Propel understands the company is currently in talks on finding a new home in Shoreditch for Andina, after failing to come to an agreement with the landlord of the concept’s former site in Redchurch Street. Redemption will be run by Raquel De Oliveira, who is also managing director of Ceviche and Andina. Alex Moore said: “I am a big fan of the Redemption brand and its pioneering stance to promote all things vegan. With the right support, we hope we can help the new business survive the covid-19 nightmare in great shape so it can eventually expand again and, ultimately, fulfil its potential.”
Escape HuntEscape room operator Escape Hunt has reported encouraging trading. Ahead of its AGM, chairman Richard Rose stated: “Trading in our UK owner-operated sites has been encouraging since we re-opened on 12 July 2020. We initially chose to open sites on Thursdays to Sundays only, with the exception of the Summer Bank Holiday on 31 August 2020 and have since extended our opening from Wednesday to Sunday. In the first eight weeks after re-opening to 6 September 2020, sales grew from an initial level of around 25% of the seven-day week’s sales in the equivalent week in 2019 to over 90% of sales in the equivalent week in 2019 in each of the last two weeks of the eight-week period. Since then September has, as expected, seen the pace of recovery slow, although sales in the six weeks to 20 September were nevertheless an encouraging 72% of the same period in 2019. Additionally, helped by the UK government’s flexible furlough scheme and our reduced operating hours, we have been able to operate sites significantly more efficiently with lower labour cost ratios than we have historically been able to achieve. As expected, the first four weeks following re-opening generated site level Ebitda losses as the level of sales was not sufficient to cover fixed costs, including property. However, in the six-week period to 20 September 2020, the growth in sales resulted in a positive site level Ebitda which was approximately 33% higher than the site level Ebitda in the equivalent six-week period in 2019. Whilst the period under consideration is admittedly short, the performance is encouraging, in particular the significantly higher profit conversion ratios achieved. We are, however, aware of the growing rate of covid-19 infections and the likelihood of further restrictions being imposed, whether national or local, which may impact sentiment and performance. With the exception of six of our thirty eight sites, our international franchise network has also re-opened. While the rate of recovery varies in different parts of the world, overall we remain confident that key regions are recovering and will continue to perform in future. We remain positive, in particular, about the prospects for our US business through our area representative agreement with PCH. In other areas, we are making progress on our strategy. As previously announced, on 23 September 2020, we opened our new site in Norwich to the public and our site in Basingstoke is well advanced and scheduled to open in October 2020. We have exchanged and completed contracts and are on site at a new site in Cheltenham and are in advanced legal discussions on a further two sites. We have also been making progress on other initiatives. We were delighted to be able to launch a series of downloadable, print and play games during lockdown. The most recent of these has been done in partnership with Netflix to coincide with the anticipated release of a Netflix Original Film and represents an important step in developing our ‘Escape Hunt for Brands’ proposition. In addition, we launched a remote play format which enables players collaborating remotely to direct a games master around a physical room whilst solving puzzles. We have been developing the range of remote and outdoor games which we offer using them to further develop both our ‘Escape Hunt for Brands’ and ‘Escape Hunt for Business’ propositions.”
Alison Brittain, chief executive of WhitbreadWhitbread chief executive Alison Brittain (pictured) has stated the 10pm curfew for pubs and restaurants will not affect the business too badly. She said: “We don’t do a lot of trade after 10pm. Our experience is not terribly representative – we have a large amount of unproductive activity (after 10pm).” Brittain said of the up to 6,000 staff the company is consulting with on redundancy, 4,500 work for Premier Inn and 1,500 work within Whitbread restaurants. She also reported an occupancy rate of 51% in August compared with 80% for the same month the year before. Occupancy levels peaked at 58% in the last week of August with a wide range between being full in Newquay and very low levels of occupancy in metropolitan areas. She reported 20,000 staff members are still working on flexible furlough. Brittain also called for a permanent reduction in VAT rates and an additional year of business rates holidays. She suggested the sector was now looking at a period of trading expansion and contraction as the government periodically clamps down on the outbreak – until a vaccine arrives. She said: “The sector has been at the vanguard of everything negative. The help from the government has been exceptional but we are going to have a longer period of suppressed demand.” A note from financial analyst Morgan Stanley stated: “Forward visibility remains low and, although leisure demand over the summer was encouraging, the company expects demand to remain subdued in the short to medium term. It notes the latter half of the financial year (September to February) is more dependent on corporate demand. It also expects the UK government’s furlough scheme to come to an end in October. It is, therefore, taking action to right size its business, which could result in up to 6,000 redundancies – 18% of total posts. However, it expects a significant proportion of these to be achieved voluntarily and, if the furlough scheme is extended, it might be lower than this. The company guides to a £10m to £15m exceptional cost, much lower than what we model.”
SSP GroupTransport hub foodservice company SSP Group has reported current weekly sales are running at approximately 76% below last year, representing an improvement from the third quarter when sales were approximately 95% lower in April and May and 90% lower in June. The company stated: “The sales improvement has been driven by a stronger recovery in Continental Europe, where weekly sales are approximately 66% lower year-on-year, compared with the UK, North America and the rest of the world, where weekly sales remain around 80-85% lower year-on-year. Across the group, we have now re-opened just over a third, approximately 1,100, of our units, which is ahead of the expectations we set at the Interim results in June. Our approach to unit openings continues to be systematic, with units and sites only being opened selectively and where they will achieve break-even levels of sales, even at low levels of passenger activity. Sales in Continental Europe have benefitted from the stronger performance of the rail business, notably in Germany and France, and some recovery in regional air travel over the summer.” Simon Smith, chief executive of SSP Group said: “Covid-19 continues to have an unprecedented impact on the travel industry and on SSP’s businesses in all geographies. Our first priority throughout this crisis has been the health, safety and welfare of our people and our customers. We have taken rapid and decisive action to reduce cost, preserve cash and to substantially strengthen the group’s financial position. It is with regret that the prolonged nature of this crisis has resulted in us having to restructure and make considerable job losses in order to protect the business. These are always extremely difficult decisions, and we are supporting our colleagues throughout this process. We have seen some improvement in passenger demand since the start of the crisis and we have reopened units swiftly and profitably in response to this, with over one third of our units now trading. Our model is flexible and we will continue to align unit openings with demand, meeting the needs of our customers whilst managing operating costs and cash flow tightly. In the medium-term we expect to see the gradual return of passenger travel to more normalised levels. The actions we are taking to rebuild the business will enable us to emerge fitter and stronger, positioning us to capitalise on future opportunities and delivering long term sustainable growth for the benefit of all our stakeholders.” The company added: “Overall sales in the second half of the year are expected to be approximately 86% lower year-on-year, resulting in a reduction in revenue of around £1.3bn compared to H2 2019. Encouragingly, the extensive management action to reduce the cost base, notably rent, overhead and labour, means that despite the weaker sales the underlying Ebitda and operating loss (on an IAS 17 basis) are expected to fall broadly in the middle of the ranges set out in the Interim results in June (-£120m to £190m Ebitda and -£180m to £250m operating loss) for the second half of the year. Whilst the decision to implement redundancies across the group is extremely regrettable, it has been a necessary step to protect the business and preserve cash in the near term. Overall net cash usage in H2 is expected to be in the region of £250m to £270m, a considerably better outcome than that anticipated at the Interim results in June of £340m to £440m. This performance reflects tight management of working capital, including agreed rent waivers and deferrals with many of our clients, reduced capital expenditure, as well as the benefit of government support schemes and the recovery of previously paid corporation taxes in a number of countries. We were also able to retain some of the cash related to the declared final dividend for 2019, through the placing of new shares. Throughout this crisis, our focus has been and continues to be the health and safety of our people and our customers. SSP has taken decisive and significant action to protect the business and reduce costs. Proactive liquidity management has enabled us to keep our cash usage to a minimum during this period. More recently, we have seen some limited improvement in traffic in a number of regions, with sales currently at around 24% of pre- covid levels. As we head into the winter months, demand may well remain subdued. However, we have an important role, providing food and beverage services to the travelling public, and we will continue to re-open units dynamically where we see demand, maximising the profitability of the reopening programme and rigorously controlling costs and cash. Looking further out, we firmly believe that demand for travel will return and the actions we have taken since February, together with the evolving market backdrop, will ensure SSP emerges as a fitter, stronger leader in the sector.”
Nick Basing, chairman of Ten Entertainment GroupTen Entertainment Group, the operator of 46 family entertainment centres, has reported trading has begun well at 83% of previous levels since the easing of lockdown. The company reported a strong start in the first quarter with accelerating like-for-like sales growth of 9.6% before lockdown. Cost control, supplier support and government support reduced cash burn by over 70% I lockdown, it reported. Nick Basing (pictured), executive chairman said: “I am pleased that even in extreme adversity the team have taken decisive action that has enabled the group to emerge from Lockdown so strongly, putting in place sufficient cash liquidity to protect it through a continued period of uncertainty. We have made a very good start, showing that we have a safe and attractive business for customers and staff. I fully expect our strategy for growth, proven over the years, to return us to profitable growth in the near future once circumstances permit.” Chief executive Graham Blackwell added: “I am pleased to have been given the opportunity to lead the group at this crucial time and I am grateful for the fantastic support from my colleagues as we have secured our long-term position. My 30 years in the business have shown me that the strength and stability of our teams, the quality of our estate and our great service can stand the test of time. We are really encouraged by our reopening performance. Our primary focus is to return the business to the trend of the first quarter through our strengths in operational improvements and commercial innovation. Our proven strategy remains relevant, and with a track record of eight consecutive years of like-for-like sales progression, I am confident that we will return the business to growth.” The company reported turnover of £22.5m in the 26 weeks to 28 June (2019: £41.4m) and a loss of £5.7m (2019: profit of £7.3m).
North west brewer and retailer Hydes has appointed Simon Mollitt as its finance director, Propel has learned. Mollitt had been interim finance director since June having replaced Adam Mayers following his promotion to managing director. Mollitt, who has made a significant contribution to the company’s reopening plans, joined Hydes in June 2013 as financial controller. He is looking to recruit a successor and hopes to make an appointment by mid-autumn. Mollitt said: “I am looking forward to the challenge of continuing to help guide Hydes through the current difficult times but then see the business not only come out the other side but be in a position to continue to grow and achieve.”
Gail's BakeryGail’s Bakery, which is backed by sector investor Luke Johnson, is opening a site at Tunsgate Quarter Guildford on Thursday, 29 October. The artisan bakery was founded in 2005 by Tom Molnar and Ran Avidan and opened its first site in Hampstead, north London. It now has circa 60 outlets. Molner said: “I am thrilled to be opening in Guildford. We have identified a strong foodie culture in the town and Tunsgate Quarter offers us the perfect spot to operate both as a bakery and a high visual lunch spot. We look forward to meeting our new neighbours and get baking.” Owned by Merseyside Pension Fund and asset managed by CBRE, Tunsgate Quarter opened in 2018. Tunsgate Quarter forms the heart of a £30.3m redevelopment of the Surrey town’s historic Tunsgate area, and borders the cobbled High Street and the 11th century castle.
Pub BarLike-for-like sales in the hospitality sector have stabilised at 91% of last year’s for the second week in a row but are 15.5% up on the last week of July, according to S4labour, the online labour-scheduling management system from Catton Hospitality. As demonstrated last week, food sales continue to shine – up 4.9% on figures from the same period in 2019 – but drinks have evaporated somewhat, slipping by 18.7%. Once again, like-for-likes in London continue to lag behind the rest of the country, down 28.4% on the same week last year, with food sales dropping by 23.9% and drinks taking a 30.5% hit. Meanwhile, outside the capital, like-for-like sales fell by 3.7%, with food impressing with a rise of 11.3%. S4labour chief product officer Richard Hartley stated the figures indicate a flattening of sales and this could be the norm in the short term yet an extension of warm weather has been a welcome boost.
S4labour is a Propel BeatTheVirus campaign member
Breakspear chief executive Tom DaviesHenley-based pub operator and brewer Brakspear’s parent company JT Davies & Sons has increased its turnover by 11% to £35.3m up to the end of its financial year to 29 December 2019 – and trade has not been as bad as expected since lock-down was lifted. This figure also generated record Ebitda, before exceptional items, of £10m – up 15% on its previous year. Meanwhile profit before tax rose by 18% to reach £6.4m. Sales growth was driven by its managed house division, which now consists of 15 pubs, restaurants and inns. Like-for-like performance was up 2%, two site acquisitions generated an extra £2m and another £1.5m from the full-year growth of The Frogmill, near Cheltenham. The company’s tenanted and leased estate saw a 1% reduction in turnover as a result of one site transferring to the managed house division and the sale of another site. The improved Ebitda is a result of higher managed house sales supported by improved management, efficiency and productivity across the managed house estate. On recent trading, chief executive Tom Davies said (pictured): “Since July, trading has been better than we had feared and we are grateful to the government for its support. We are, however, extremely concerned about the unfounded anti-pub and restaurant rhetoric coming from the government in relation to the rise in covid cases. We have proved to be a covid-responsible industry doing our best to keep unemployment down and get the economy moving again. We need to government to extend the rates relief by another year while undertaking a complete rates review, reduce beer duty and extend the VAT reduction indefinitely to help us help them get our economy firing and, ultimately, return more to the Treasury through increased sales and greater employment.” On the financial figures up to the end of December, Davies added: “I am extremely pleased with our performance for 2019 and proud of the business for delivering a much better level of profitability on growing sales. Our core tenanted and leased business continues to trade consistently well. We have some of the best pubs and operators in the country.” Brakspear added three new sites to its growing managed estate. The Nags Head, in Abingdon, was purchased in June and The Golden Ball, in Maidenhead, was acquired nearer the end of the year. The Crown, near Reading, was transferred from the tenanted and leased estate. The group has, inevitably, been affected by coronavirus as all tenanted, leased and managed pubs, restaurants and inns were closed from 23 March to the beginning of July. Davies added: “This year has delivered an unexpected set of challenges, which the business addresses daily, ensuring that our 241-year old company will be in a good position to enter year number 242.”
Stonegate LogoStonegate Pub Company has announced further business support within its lease and tenanted business – Ei Publican Partnerships – creating an overall support package, since lock-down, in excess of £36.5m. The additional support includes rent reductions of 30% in October and a reduction of 20% in November for tied publicans operating substantive agreements in England. This package follows the rent and credit provisions that Ei Group gave to publicans from April to September, including publicans who were not in receipt of government grants receiving a three-month rent credit for the period. Nick Light, managing director of Ei Publican Partnerships, said: “The road out of lock-down is a long one and we are standing by our publicans every step of the way to help safeguard their businesses in these uncertain times.” In July, Stonegate used its scale as a managed house operator to offer promotional pricing for a three-month period for wine, spirits and minerals to its lease and tenanted business. Following positive feedback, this initiative is being extended until the end of November, enabling publicans to stock up for the Christmas period.
@Pizza's site at the Grand Central shopping centreEdinburgh-based pizza concept @Pizza is to launch an £820,000 fund-raise on crowdfunding platform Crowdcube to support the launch of the UK’s first drive-thru pizza concept. The raise will take the form of a convertible loan that will earn 10% interest per annum until it converts. Convertible loan holders will have an option to convert their capital into shares at a 25% discount if @Pizza raises equity within the next 36 months. The funds will be used to expand through a mix of permanent sites and semi-permanent outlets – the latter of which will be drive-thrus in the form of shipping containers. The company – which currently has two restaurants, in Edinburgh and Birmingham – is looking to build a portfolio of 20 to 30 sites across the UK in four or five “clusters”. The shipping containers will occupy spaces of between 22 and 30 square metres. The drive-thrus would be able to make up to ten pizzas a minute, with customers offered unlimited options to customise. They would be able to order via an app with the option of collection or delivery to their vehicle. The business said having proven the concept, it was ready to now take it to a wider audience through its “highly scalable” model. The shipping containers meant the company would not be tied to long-term rent deals in potentially unprofitable locations. Co-founder Rupert Lyle said: “Consumers crave new experiences and the UK pizza restaurant market, which is worth £5.2bn, lacks differentiation, quality, consistency and value; which will impact restaurant viability in the new norm. Our drive-thru restaurants will offer all of these attributes with the added convenience of the flexibility to enjoy pizza exactly how people want it.” @Pizza is also due to open a site at the St James Quarter development in Edinburgh.
Byron has unveiled its new look featuring a reimagined design and menu and first brunch offerBetter burger brand Byron, which last month was sold via pre-pack administration to investment vehicle Calveton UK under newly formed company Famously Proper for £4m, has begun its move into dark kitchens. The Simon Wilkinson-led business has opened kitchen sites through Foodstars in Colindale, Wandsworth and Birmingham. It is thought it will also open a site with Karma Kitchen at its new Wood Green kitchens unit. Pre-covid, the company’s delivery segment was understood to be posting ahead of a 10% like-for-like revenue. It’s thought the company will initially look to open five dark kitchens and may also explore the further rollout of fledgling virtual brand Cheese Louise. Byron has so far reopened 18 of its restaurants across the country. It’s thought to be currently in negotiations regarding a handful of sites, which would make up its final estate.
Thai Leisure Group has launched Thaikhun Street Bar at Liverpool ONEThai Leisure Group, operator of Thaikhun and Chaophraya, has had its proposed company voluntary arrangement (CVA) approved by creditors.
The company had been working with RSM on the proposal, which it is thought involves closing its Thaikhun Street Bar in Liverpool ONE and agreeing new rental levels on the majority of its 18 sites.
Managing director Ian Leigh said: “It’s not over yet but we have made it through some of the most challenging of times with the assistance of the UK government’s furlough scheme, VAT reduction scheme and Eat Out To Help Out promotion. And now we are incredibly relieved to have just had our CVA approved. I would like to thank the landlords across our 18 sites and our bank Santander for their ongoing support. I would like to thank our numerous suppliers for standing by us. I would like to thank our many thousands of customers for their continued loyalty to us. And, by no means least, I would like to thank my incredible, dedicated and hardworking colleagues, without whom being here today simply would not be possible. Together we can now move forward to better times.”

Propel Multi ClubThe next Propel Multi Club Conference, taking place on Thursday, 8 October, will take the form of a day-long digital live webinar and will focus on the opportunity offered to operators by delivery. The event, which starts at 10am, is free for operators, who can claim two places by emailing anne.steele@propelinfo.com. Speakers include NPD Group foodservice director Dominic Allport talking about the growth of the delivery market, the key trends that are developing and where the sector goes from here. Elton Gray, commercial and operations director at Creams, will discuss the challenges and considerations of delivery working within a franchised business model. Thom Elliot, co-founder of Pizza Pilgrims, will discuss the evolution of the concept’s delivery strategy, plus the development and success of its pizza at home offer. Alasdair Murdoch, chief executive of Burger King UK, will talk to Propel insights editor Mark Wingett about being an early adopter of delivery during his time at Gourmet Burger Kitchen, the challenges and opportunities, and how delivery is working for Burger King. Just Eat managing director UK Andrew Kenny will discuss the key trends Just Eat is currently seeing; the key things it has learned since setting up its delivery operation; and how it is using data and insights to help operators improve the delivery experience. AlixPartners director Steve Braude will talk about the delivery market across the Pond and the differences with our own here. Susan Martindale, group HR director at Mitchells & Butlers, will look at building a delivery strategy for pubs, the company’s use of virtual brands and a possible move into dark kitchens. Andre Johnstone, the former Wagamama executive and founder of Delivery Insider, will give his views on how business can navigate through the confusing world of food delivery, from menu set-up to aggregator management. Richard Morris, chief executive of Tortilla, will explain how delivery has forced an evolution of the business for the better. Deliveroo’s director of national accounts Matt Ring will talk to Mark Wingett about how the business continues to innovate, its use of data to create virtual brands and the challenges it faces to stay ahead in terms of growing its consumer base. There will also be a panel session involving JP Then, founder of Crosstown Doughnuts; and Johnnie Tate, founder of Yard Sale Pizza on launching, operating and growing in a delivery-focused world.

Propel has launched a campaign called BeatTheVirus to help operators through the coronavirus crisis.

We have teamed up with Propel Multi Club conference series partners to offer the sector their expertise. Partners will offer more general advice and highlight some of the initiatives they are doing.

Companies supporting the BeatTheVirus campaign include Airship, Bums on Seats, CACI, Christie & Co, COREcruitment, CPL Learning, Cynergy Bank, Elliotts, Hastee, haysmacintyre, John Gaunt & Partners, KAM Media, Prestige Purchasing, S4labour, Startle, Ten Kites, The NPD Group, Toggle, Trail, Venners, Wireless Social, Yapster and sector trade body UKHospitality.

Propel managing director Paul Charity said: “It is amazing to see how the industry has come together during this crisis and here at Propel we want to do our bit. This is why we are working with Multi Club partners to offer expert support and advice to our readers and to answer their questions at what is a tough time for everyone.”

Readers can email questions for our experts to paul.charity@propelinfo.com. Please use BeatTheVirus in the subject line.

Richard Hartley, chief product officer of S4labour, the online labour-scheduling management system from Catton Hospitality, has offered readers advice on the issue of furlough pay.

He said: “We are awaiting further information from the government but for those of you that need to pay your teams now, this is how we are treating furlough pay. In the absence of any advice we’re treating this as a normal pay element. It therefore attracts National Insurance payments, pension payments and is subject to holiday accrual.

“If the government changes any element regarding this, we plan to make adjustments in the next pay run to reflect those changes. The government is creating a portal for employers to claim back the furlough pay and aims to have this up and running by the end of April – presumably in time for April’s pay run.

“This will mean organisations need to fund any payments up to this point out of current cash reserves, which will undoubtedly take its toll on some operators. The intention is that organisations use the additional support available to bridge these payments. We will update this advice as we receive more information.”

Hartley said S4labour had also drafted a key worker letter. He added: “Our payroll team has moved to remote working and is working tirelessly to ensure we accurately process the pay for so many of our customers in these difficult times and with the additional pressure of furlough adjustments.

“We are, therefore, grateful the government has afforded them key worker status. As such, we have drafted a key worker letter they can pass on to relevant parties. For a copy of this letter, email Sam@s4labour.co.uk
S4labour is a Propel BeatTheVirus campaign member

Readers can email questions for our experts to paul.charity@propelinfo.com. Please use BeatTheVirus in the subject line.

Propel has launched The Delivery Conference, which is open for bookings. The ground-breaking event, which takes place at One Moorgate Place, London, on Wednesday, 30 September, will cover all aspects of this fast-growing sector, offering expertise, ideas and insights.

NPD Group foodservice director Dominic Allport will talk about the delivery market’s growth, key developing trends and where the sector goes from here. KAM Media managing director Katy Moses will reveal consumer perceptions of the market and how they use and interact with delivery operators.

Robin Himmels, of Eatclever, will explain how the company has become one of the leading virtual delivery brand operators in Europe and how he sees this part of the market developing. Alasdair Murdoch, chief executive of Burger King UK, will talk to Mark Wingett about early adoption of delivery during his time at Gourmet Burger Kitchen, challenges and opportunities, and how delivery is working for Burger King.

Just Eat UK head of strategic accounts Amy Heather, who leads the company’s relationships with QSR, casual dining and mid-market operators, will discuss major trends Just Eat is seeing, key things it has learned, and how it is using data and insights to help operators improve the delivery experience.

AlixPartners US director Eric Dzwonczyk and UK counterpart Steve Braude will talk about the US delivery market and how it differs with our own. Susan Martindale, group HR director at Mitchells & Butlers, will look at building a delivery strategy for pubs, the company’s use of virtual brands and a possible move into dark kitchens.

Richard Morris, chief executive of Tortilla, will reveal how delivery has forced an evolution of his business for the better. Wagamama’s Andre Johnstone will reveal how the brand has incorporated delivery and click and collect into its model and how it strikes a balance between in-store and digital sales. Deliveroo director of national accounts Matt Ring will talk to Mark Wingett about how the business continues to innovate, its use of data to create virtual brands and the challenges it faces to stay ahead.

Meanwhile, a panel featuring Macro Foods founder Kirsty-Lee Griffiths, Crosstown Doughnuts’ JP Then, Yard Sale Pizza founder Johnnie Tate, and Bababoom founder Eve Bugler will discuss launching, operating and growing in a delivery-focused world.

Propel managing director Paul Charity said: “Given delivery is one of the fastest-growing channels in the sector – and as its importance continues to rise – we are delighted to present this ground-breaking conference, which will allow operators to make the most of the opportunity delivery offers.”

Tickets to the event cost £295 for Propel Premium members, £345 for operators and £395 for suppliers. Email anne.steele@propelinfo.com

More than 300 readers have now signed up to Propel Premium – while those joining the new-look Propel Premium Club can save money by receiving a pair of free tickets to one of four conferences in 2020.

Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from insights editor Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,500 businesses.

Meanwhile, subscribers to the new-look Propel Premium Club will be able to choose to use a pair of free tickets to one of the following conferences – The Delivery Conference (Tuesday, 21 April), The Finance and Investment Conference (Thursday, 14 May), The Casual Dining Summit (Monday, 12 October) or The New Concept Conference (Monday, 19 October). The normal cost of two tickets to these events is £490 plus VAT for operators and £690 plus VAT for suppliers.

An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email anne.steele@propelinfo.com

Mark McCullochOperators can map their marketing strategy for 2020 through a video collection that features all sessions from the Social Media for Profit Masterclass. The videos reveal how to build sales and brands using social media and are taken from the social media boot camp hosted by Mark McCulloch (pictured), who has more than 20 years’ brand, marketing, digital and social media experience that includes senior positions at Pret A Manger and YO!

McCulloch reveals the hot trends and tips for 2020 and what social media strategists should focus on including channels, content and untapped areas you may be neglecting. He also reveals how businesses can grow their reach by creating a personal brand and using their most senior people to make that brand more human, relevant and accessible.

McCulloch is joined in the video series by Alison Battisby, founder and director of social media consultancy Avocado Social, who has ten years of social media experience and is a Facebook-accredited trainer. She reveals the best way to use Instagram to drive bookings and the do’s and don’ts of working with influencers. She also reveals how to ensure your social media adverts are working successfully.

Meanwhile, Move Digital founder and managing director Geraint John reveals why voice activation is so important, what it can do for your business, where to start and how to build your voice strategy before you launch a new way to reach your customers that will leave your competitors behind. The full video collection is £295 plus VAT.

To order, call Anne Steele on 01444 817691 or email anne.steele@propelinfo.com

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Propel Premium Club

Propel Premium Club annual subscription operator subscription costs £395 plus VAT and a supplier subscription costs £495 plus VAT
Benefits include:
  • A pair of free tickets to an event of your choice
  • Regular exclusive videos
  • Access to the Propel database of 1,600 multi-site companies, updated twice a year
  • Read Propel insight editor Mark Wingett’s weekly analysis column and City
  • Diary Discounts to attend other events
  • Plus insight from leading sector commentators from the UK and internationally

CONTACT: Anne Steele on anne.steele@propelinfo.com

Friday Wrap with Alex Reilley

The Propel Friday Wrap:

Featuring Mark Stretton, Mark Wingett and Alex Reilley

CLICK HERE to view