Story of the Day:
Young’s – London bouncing back strongly with sales exceeding pre-pandemic levels, in talks on five pubs
Simon Dodd (pictured), chief executive of Young’s, has told Propel the capital is bouncing back strongly, with like-for-like sales in its central London pubs exceeding pre-covid levels. In central London, sales are up 44% on last year and 5% on pre-pandemic levels.
In the City, sales are up 32% on last year, and in east London, they’re up 29.2%. Speaking following the company’s full-year results, where revenue increased 19.4% to £368.9m, Dodd said changes in working patterns had resulted in sales in its London pubs increasing between Tuesdays and Thursdays. He also illustrated how the sunshine makes a huge difference to performance.
While group like-for-like sales are up 4.8% in the last seven weeks, the warmer weather led to them being up 10% last week, and Dodd said that is set to be repeated again this week. Dodd said the business remained acquisitive and has a “very strong” balance sheet, and added the business is in talks on five sites – all freehold – across the south of England. “We get a lot of opportunities come across our desk, but because of our selective criteria, we probably only pursue one or two in every ten,” he said. Dodd said Young’s has confidence in all its pubs and continues to invest in its entire estate.
“We invested in one of our smaller London pubs, The Porchester in Bayswater, and that’s up 80% on the previous year,” Dodd said. “There will always be one or two that we sell because they no longer fit in with the strategy, but in the main, we are happy with all our sites.”
Young’s made its usual annual price increase in March, but Dodd said the business had taken a “cautious approach” to make sure it continued to offer value for money. Drink prices went up on average by 3.8%, with food up 2.5%.
The business is not planning any further price increases this year, and with energy costs hedged until the end of 2024 and drink costs fixed until March 2024, Dodd said Young’s is doing what it could to mitigate cost headwinds. He added food inflation had started to come down and expected it to be in single digits in the next six months. He added that because of its good geographical spread, the rail strikes were “not hurting us as much as some operators”.
He said: “If customers are not drinking in our City pubs, then they are at our London ‘village’ sites. But like everyone else, we’re hoping for a resolution soon.” Dodd said he was optimistic about 2023, with the summer and the Rugby World Cup in the autumn set to be “exciting” for the company. He added: “Hospitality is a resilient industry.”
UKHospitality has said the current immigration system is not working for businesses, as it urged the government to “take stock of the labour market”. It comes as net migration increased to a record level of more than 600,000, despite promises from ministers to bring the total below 245,000.
Figures from the Office for National Statistics (ONS) show overall migration for 2022 was 606,000, which represents a 24% increase on the previous high of 488,000 last year. Total long-term immigration was estimated at about 1.2 million in 2022, and emigration was 557,000, the ONS said.
UKHospitality chief executive Kate Nicholls (pictured) said: “If there is one thing evident from the figures, it’s that the immigration system is not working effectively for businesses. Unfortunately, despite the numbers published, there remain significant shortages across hospitality with 132,000 vacancies, 48% above pre-pandemic levels.
While there is enormous investment in skills and training, it’s not enough on its own in the short term, and it’s time we had a sensible and pragmatic discussion about immigration. We need to take stock of the current labour market, where we have shortages and what role the immigration system can play in aiding businesses.
For example, adding chefs to the shortage occupation list would be a practical measure to plug a gaping hole for businesses and provide a huge boost to the sector. I urge the government to take a twin-track approach to investing in developing our own skills and making best use of the immigration system to plug vital job roles – both of which can drive economic growth.”
To read the rest of this story and the whole of our latest Morning Briefing, CLICK HERE
Any visitor levy introduced in Scotland must be used effectively to stop Scottish tourism becoming “uncompetitive”, UKHospitality has said. Legislation to give local authorities the power to apply a “tourist tax” has been published, and if passed by MSPs, it will give councils the ability to add a tax to overnight accommodation. The City of Edinburgh Council has already proposed a £2-per-night charge being added to the price of any room for the first week of a stay. UKHospitality Scotland executive director Leon Thompson said: “The introduction of the visitor levy will leave hospitality businesses frustrated that yet another cost is being lumped on to a sector already challenged by record costs. With a visitor levy and a significantly higher rate of VAT than the rest of Europe, there is a real danger that we become uncompetitive compared with our neighbours.” Thompson said one positive is the suggestion that revenue raised should be spent boosting destinations and enhancing visitor experiences. “A key consideration must be a targeted strategy on how these funds can be spent effectively to protect and enhance Scotland’s reputation on the world stage,” he added. The Welsh government has already said it is moving ahead with similar plans for Wales. Earlier this week, the town of St Ives in Cornwall said it is considering introducing a tourist tax. This after Manchester became the first UK city to launch a visitor charge, in April.
Fast pizza brand Fireaway, the Mario Aleppo-led business, is gearing up to further increase its international presence with openings in Turkey and Spain. Propel understands that Fireaway is gearing up to make Turkey its next international territory, where a store is under construction in Istanbul and is due to open in September. The business, which has opened circa 145 sites since its launch in south London in 2017, is also under offer on a site in Madrid, Spain, with an opening scheduled for October. Fireaway made its international debut with a site in Amsterdam last spring, while master franchisees have also been signed up in Dubai, India, Canada, Australia, Pakistan, New Zealand and France. This week, the brand will increase its presence in Northern Ireland with an opening in Belfast’s Lisburn Road, as part of the country’s biggest independent halal food court. Last month, the business said it was in investment talks with an unnamed England international footballer. The brand secured investment from six new backers in October last year, and while Aleppo said he does not want to let too big a slice of his operation go, he is once more in discussions. “We’re in talks at the moment with one of the England players who is interested in taking a slice, but I don’t think I’d want to give away too much as I don’t want to risk losing interest,” he told The Ground Floor podcast. “We can raise a little bit, but I think I’d always want to keep 51%.” The company plans to have 170 sites by the end of the year, 200 by the end of next year and 500 within five years.
Fireaway features in the Propel UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and is available exclusively to Premium subscribers. The database is updated every two months and the latest version features 200 businesses. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email email@example.com to upgrade your subscription.
Oodles Chinese opens in Walsall, ten more locations in pipeline as concept closes in on first overseas sites
Indo-Chinese concept Oodles Chinese has opened in Walsall ahead of a pipeline of ten more UK locations and is closing in on its first overseas sites. The Walsall restaurant, in Unit 1 The Quarter, 44 High Street, is the franchise company’s 36th overall, with several more lined up for the coming months, including a third and fourth site in Birmingham and a ninth in London. “We have opened our 36th Oodles restaurant, in Walsall,” said operations director Simon Robinson. “Yet another of our ten new sites opening within the next few months, and the list continues to grow. Whitechapel, Newcastle, Northampton, Elephant & Castle, Aberdeen, Glasgow and Birmingham (three and four), get ready, we’re coming soon! It won’t be too long until we announce our first overseas locations.”
Pret A Manger, the JAB Holdings-backed company, has begun the roll out of its fledgling “hub” kitchen format, Propel has learned. First debuted in Hong Kong, Pret has opened a second site under the format, in Dubai, with franchise partner Emirates Leisure Retail. The “hub” kitchen format serves freshly prepared food and organic coffee to delivery customers, while also supplying nearby Pret shops. It is part of Pret’s plans to expand into new markets and bring the brand to more people, by trialling new formats. Pret’s shops in the United Arab Emirates are located at Dubai International airport (in terminals one and three) and in Dubai’s International Financial Centre. A Pret spokesperson told Propel: “Two years ago, we announced our plan to double the size of the business within five years and bring Pret to more people around the world. We’re making good progress against this goal and we’re excited to be expanding our footprint in the United Arab Emirates with our franchise partner, Emirate Leisure Retail. Our ambition is to open 20 shops in the region within the next five years.” Last month, Pret opened its debut site in India, in Maker Maxity, Mumbai. It said it would be the first of many shops set to open under the brand in the country later this year under its partnership with Reliance Brands. A second site in Mumbai, in Phoenix Palladium, opened last week. Meanwhile, Propel understands Guy Meakin, who had been Pret UK’s interim managing director, has moved to a new role as shops and franchise director, with the return of Clare Clough as UK managing director.
Caribbean restaurant brand Turtle Bay, which is backed by Piper, has confirmed its next three openings as part of plans to open six sites this year. Following an opening in Hammersmith in March, the Nick Crossley-led business has confirmed it will open in Blackpool – on the ground floor of The Brook Group-owned newly restored Forshaws Hotel in Talbot Square – next month. It will follow this in August with the opening of its 50th site, in Camden, in the former Fatburger premises in Jamestown Road. A month later it will open in Lincoln, in the city’s Cornhill Quarter. It also has an opening lined up in Chester’s Northgate scheme. Crossley said: “We are excited to continue our expansion of Turtle Bay over the summer months. I frequently receive communication from guests asking for Turtle Bay to open in their city. We have a strong pipeline for the rest of 2023 and beyond, and we look forward to bringing our Caribbean good times to new towns and cities across the country.” At the end of last year, Crossley told Propel he sees a runway of 120-plus UK openings for the brand.
Sector leaders have warned the industry is still suffering despite a suggested easing in the rate of inflation. Figures from the Office for National Statistics showed the inflation rate has fallen to 8.7%, mainly driven by gas and electricity costs remaining stable in April, but food price inflation is still more than 19%. Kate Vacovec, chief financial officer of Pizza Hut UK & Europe, said: “With inflation from food prices alone coming in at 19.1% compared with 19.2% in March, this is barely enough of a drop to give the hospitality industry room for respite, delaying any prospect of a much-needed economic boost for the industry. Additional relief on bills will allow businesses like ours to better balance the multiple cost burdens we are facing – helping UK hospitality to deliver growth to the economy and value to customers.” UKHospitality chief executive Kate Nicholls added: “It is worrying food and drink inflation remains stubbornly high. This continued inflationary pressure shows there is a long way to go in this crisis yet. Food and drink are part of the core hospitality offering and it is becoming impossible for many to continue to absorb these costs.” Michael Kill, chief executive of the Night Time Industries Association, said: “Even the governor of the Bank of England cannot say with confidence this inflationary U-turn will not come with further monetary tightening if the economic position persists, meaning interest rates could still go up. We need the government to listen to the calls from industry to cut taxes, in particular VAT.” Emma McClarkin, chief executive of the British Beer & Pub Association, added: “These conditions have wiped out profits for pubs and brewers and completely stagnated opportunities for growth across our industry. Soaring energy costs have further squeezed profit margins, and we are still calling on the government to instruct energy suppliers to offer fairer terms to business locked-in to sky-high rates to help with this.”
Bettys & Taylors reports record sales of £260m but profits dip following ‘difficult trading conditions’
Family-owned Bettys & Taylors Group has reported record sales of £260,585,000 for the year ending 31 October 2022. The Harrogate company, which is still owned by its founding family, was launched in 1919 as Bettys before adding the Taylors business in 1962. It comprises five Bettys Café Tea Rooms, Bettys Craft Bakery, Bettys Cookery School, mail order service Bettys by Post and tea and coffee merchants Taylors of Harrogate, which produces Yorkshire Tea and a range of speciality coffee and tea. The record turnover comes a year after the business reported revenue passing the £250m for the first time (2021: £252,656,000). Of the 2022 figure, £240,634,000 came from UK operations (2021: £236,245,000), £11,129,000 from the US (2021: £10,389,000) and £8,822,000 from the rest of the world (2021: 6,022,000). However, pre-tax profit fell from £10,316,000 in 2021 to £9,870,000. It received no government grants, compared with £200,000 in 2021. In her statement accompanying the accounts, director Clare Morrow said: “2022 has been a year heavily impacted by the macroeconomic environment, with ongoing uncertainty and difficult trading conditions significantly impacting the performance of the group. In addition to experiencing an increase in the cost base, the strength and value of the pound reached all-time lows during the year, both directly impacting our tea and coffee business. Despite this, overall turnover grew by 3.1% (2021: 8.8%).” Morrow said the company continues to invest in the business “to ensure we remain able to satisfy demand for our products and to successfully navigate the challenging times ahead”, with new systems and processes put in place. She added: “In line with the trading performance of the business, the return on capital employed for the year reduced to 5.5% (2021: 6.1%). At the year-end, the group had cash balances of £12.0m, an increase of £200,000 in the year, while total shareholders’ funds increased by £6.5m to £138.5m.”
Cineworld has reported it expects to emerge from its Chapter 11 proceedings in July after reaching agreement with lenders over its proposed restructuring. The company stated: “Cineworld is pleased to announce additional lenders under the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 acceded to amended and restated versions of the restructuring support agreement and the backstop commitment agreement (BCA), each of which was originally filed with the United States Bankruptcy Court for the Southern District of Texas, Houston Division on 2 April 2023. As a result of this, the proposed restructuring of the group now has the support of lenders holding and controlling approximately 99% of the legacy facilities and at least 69% of the outstanding indebtedness under the debtor-in-possession facility of Cineworld and certain of its subsidiaries. In addition, following a hearing on 2 May 2023, the Bankruptcy Court approved the terms of the BCA and authorised the relevant group Chapter 11 companies to implement those terms, including raising the exit facility contemplated by the BCA and the payment of relevant fees and expenses in connection therewith. This order marked another positive step taken by the group Chapter 11 companies towards implementation of the proposed restructuring. As previously announced, in light of the level of existing debt that is proposed to be released under the group Chapter 11 companies’ plan of reorganisation, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests. The group Chapter 11 companies now expect to emerge from the Chapter 11 cases in July 2023. The group Chapter 11 companies remain committed to emerging from the Chapter 11 cases as expeditiously as possible. During the restructuring process, Cineworld continues to operate its global business and cinemas as usual without interruption. Cineworld and its brands around the world – including Regal, Cinema City, Picturehouse and Planet – are continuing to welcome customers to cinemas as usual. The group continues to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.”
US brand Chipotle is to further increase its presence in the UK with an opening at the O2, in Greenwich, Propel has learned. Chipotle, which operates 15 sites in the UK – 14 in London and one in Watford – has secured a new lease on the former Benito’s Hat unit at the O2, Peninsula Square. Earlier this week, Propel revealed Chipotle, which operates more than 3,000 sites in the US, will further increase its presence in London “villages” with an opening in East Dulwich. It will open on the former Hisar restaurant site in Lordship Lane later this summer. Chipotle paid a premium for the Lordship Lane site. It is thought the business has a number of other sites currently under offer and is seeking further outlets in high footfall locations and London neighbourhoods. Last month, Chipotle opened its latest UK site on the former Caffe Nero site in London Road, Twickenham. Louie Gazar, of Davis Coffer Lyons, advised Chipotle, while Ruvan Sangra, of Lunson Mitchenall, acted for the landlord on the O2 deal.
Fever-Tree, the premium tonic maker, has said it recorded its highest ever value share in the UK on-trade during a first quarter trading period in the first quarter of 2023 – circa 6% higher than its share in the first quarter of 2020. Ahead of its annual general meeting (AGM) today (Thursday, 25 May), the company stated: “We look forward to the key summer trading period, with multiple activations planned across our portfolio and are seeing an encouraging performance from our new adult soft range. We continue to innovate and broaden our portfolio of drinks, launching our range of cocktail mixers across both channels at the beginning of the second quarter, with strong interest from our customers and activations planned over the summer.” Fever-Tree said it has made a ‘good’ start to the year and trading in-line with the expectations set out at its FY22 results. It added: “We are confident the brand will continue to deliver strong revenue growth as we start our key summer trading period and therefore reiterate our top-line guidance range as set out in March at £390m to £405m. While inflationary cost pressures remain elevated, the group continues to be focused on delivering initiatives to mitigate these costs and expects to drive margin improvements as we progress through the year, which means we’re on-track to deliver Ebitda in-line with our guidance range of £36m to £42m for 2023.” Fever-Tree also announced Coline McConville is stepping down later this year, having served nine years as a non-executive director. Following the conclusion of today’s AGM, McConville will be succeeded as senior independent director by Kevin Havelock who joined the board in January 2018. Laura Hagan, who joined the board and the remuneration committee in May 2021, will take over from McConville as chair of the remuneration committee. Fever-Tree has also announced the appointment of Clare Swindell as an independent non-executive director and chair of the audit committee following the conclusion of today’s AGM. Fever-Tree stated: “Clare is a qualified chartered accountant and has extensive experience within the consumer brand sector. She is currently Co-chief executive at Camelot, operator of The National Lottery, having joined as chief financial officer in 2017 before being appointed to the board in 2019. Prior to that she was group chief financial officer at dunnhumby, having previously spent more than 17 years at Tesco where she worked across a wide range of operational and financial positions, including chief financial officer for Tesco.com and group audit director.”
C&C Group – macroeconomic conditions continue to impact trading environment, full-year revenue up 18%
C&C Group has said macroeconomic conditions continue to impact the trading environment. which is expected to remain “challenging in the near term, particularly in the British market”. It comes as the business reported revenue increased 18% to €1,689.0m for the year ending 28 February 2023, driven by volume growth of 4.2% and price/mix growth of 14.2%. (2022: €1,427.1m). Operating profit increased 75.6% to €84.1m (2022: €47.9m) in line with guidance, delivered an operating profit margin of 5.0% (2022: 3.4%). It said second half margins were challenged by weakened consumer demand, due to cost-of-living pressures, various strikes in the UK and latterly Enterprise Resource Planning (ERP) system implementation disruption in the group’s British distribution businesses. The company stated: “During February 2023, the group implemented a complex ERP system upgrade in our Matthew Clark and Bibendum (MCB) business. The implementation of this advanced warehousing management technology is a key step in the group’s digital transformation of our GB operations, which will enhance customer service, improve efficiency and maximise capacity utilisation through more automated processes. The implementation process has taken longer than originally envisaged, with a consequent material impact on service and profitability within MCB. As announced on 19 May 2023 the group currently expects a one-off impact of circa €25m associated with the ERP system disruption in FY2024, reflecting the cost associated with restoring service levels and lost revenue. There is expected to be a consequential increase in working capital in FY2024, however leverage is expected to remain within the group’s stated range of 1.5 times to 2.0 times. Excluding the impact on MCB, the group is currently performing in line with management expectations for FY2024 and the board is confident in the group’s medium and long-term strategy and prospects.” The group has reinstated dividends. The company proposes an FY2023 dividend of 3.79 cent per share and intention to adopt a progressive dividend policy going forward. C&C Group said market share for Tennent’s and Bulmers improved year-on-year “maintaining clear market-leading positions”. Premium beer brand portfolio delivered on-trade volume growth of 44.1% in the year. The on-trade in Britain grew its revenue per customer year-on-year by 29.5% and increased the percentage of on-trade outlets stocking a C&C brand from 53% to 58%. Chief executive Patrick McMahon said: “Set against a challenging backdrop in FY2023, C&C delivered an improved performance against all financial measures. Increased balance sheet strength and inherently strong free cash flow characteristics have enabled C&C to return capital to shareholders through the re-instatement of dividends.”
to get involved with Propel Multi Club
for more information
from John Gaunt & Partners
CLICK HERE to view the latest briefing
CLICK HERE to view archive
with Mark Stretton, Mark Wingett and Steve Richards
CLICK HERE to view