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Morning Briefing for pub, restaurant and food wervice operators

Thu 20th Mar 2014 - Wahaca hits £1m pre-finance profit
Wahaca operator hits £1,000,000 profit market before finance charges: Mexican chain Wahaca, which was founded by Masterchef winner Thomasina Miers and whose ownership vehicle is called Oaxaca, has reported turnover rose more than 40% to £22,497,016 in the 53 weeks ended 30 June 2013, up from £14,585,657 the year before. Profit before finance charges rose to £1,009,215 compared to £372,969 the year before. Pre-tax profit was £416,822 compared to £60,474 the year before. The company stated: “The increase in turnover was primarily due to the full year effect of sites opened in the prior year and to new sites opening during the period and the existing sites also experiencing growth in sales. We believe that the Wahaca concepts offers customers a unique experience that gives us a competitive advantage.” A dividend of £104,000 was recommended. Wahaca, which trades from 13 London locations, has an offer “born of a love of fresh, honest, Mexican market food”. 

Rescue plan announced for Brazilian restaurant chain: The parent company of the Brazilian restaurant chain Tropeiro, which entered administration earlier this year, is set to enter a company voluntary arrangement (CVA). Camboriu Restaurants, which is based in Chester, will leave administration if creditors back the plans. The agreement is expected to secure the ongoing trading of the company’s five restaurants in Aberdeen, Chester, Glasgow, Nottingham and Sheffield and most of the jobs at the business. Tropeiro also had a restaurant in Carlisle, which closed suddenly in January. Administrator Ian Wright of WRI Associates said: “We have reached agreement with the director and he has now left the business. We hope to issue proposals to creditors this week, which, if accepted, would allow the company to exit administration via a company voluntary arrangement and, we hope, achieve a significant return to creditors. It is expected that this will secure the ongoing trading of the five remaining restaurants and most, if not all, of the jobs in these restaurants. Clearly this is a very positive outcome and we are very grateful to the staff, the company’s suppliers and landlords and particularly the restaurants customers for their continued support.”

Douglas Jack – the budget was positive for pubs on numerous counts: Numis Securities leisure analyst Douglas Jack has hailed the Budget as positive for pubs on numerous counts. He said: “The 1p/pint reduction in beer duty, the termination of the duty escalator on all alcohol, with duty frozen on standard cider and Scottish whisky (are all positive). Increases in income tax personal allowances and changes to NIC rules/pension access can only help customer cash flow; and increased capital allowances should reward investment. Last year, 3.97bn pints of beer were sold in the on trade. Of this, 3.0bn pints were sold in pubs, on which the 1p/pint duty reduction should be worth £30m. Across the on and off trade, £3.4bn of excise duty was paid last year on 7.8bn pints (50.8% on trade; 49.2% off trade), equivalent to 43p/pint. Many operators will pass on the cut, albeit against a backdrop of annual price increases that reflect higher costs and wholesale prices from the brewers. The saving was also 1% for Fuller, Smith & Turner and Greene King. Even though all the quoted managed operators are trading ahead, we will not upgrade forecasts to reflect the budget: the changes largely mean that drink prices will not have to increase as much; and forecasts allow for tougher comps for the pubs over the summer. Over-taxation and over-regulation are the main causes of pub closures. Fortunately, the Chancellor appears to understand that this, but Labour and the Liberal Democrats still blame the beer tie (a possible post-election risk) even though the free trade’s annualised pub closure rate (6.6%) was twice the tied tenanted sector’s (3.4%) during March-December 2013. Trading should be moving further ahead; the UK was under snow this time last year. Although comps will soon become tougher, we believe there is underlying momentum that is driven by operational improvement and customer demand rather than weather. Our key Buys are Domino’s Pizza (Buy 710p) and Spirit Pub Company (Buy 110p), which we believe offer above-average growth and scope to re-rate.”

Hillbrooke Hotels site on the market: The leasehold interest in The Elephant at Pangbourne, Berkshire, operated by Hillbrooke Hotels, has been placed on the market though agent Fleurets with a guide price of £230,000. Located in the affluent village of Pangbourne, close to Reading City Centre and Theale Business Park, the property has £950,000 in annual net sales. The Elephant has had a major refurbishment and features 22 themed guestrooms, a 70-cover restaurant and a bar. “The Elephant hotel represents an excellent opportunity for somebody to acquire a busy and well presented, yet multi-faceted business in a popular and affluent part of the country,” said Will Thomas of Fleurets.

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