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Morning Briefing for pub, restaurant and food wervice operators

Tue 12th May 2015 - Faucet Inn reports net operating margin down 6.1% after adopting the Living Wage
Faucet Inn reports net operating margin down 6.1% after adopting the Living Wage: Faucet Inn, the London multiple operator led by Steve Cox, has reported that net operating margin fell by 6.1% from 10% to 3.9% in the year to 26 July 2014 after it became the first pub operator to pay staff the Living Wage. Aggregate labour costs rose to £3,000,125 from £2,252,760 the year before. Turnover rose to £8,987,626 from £7,341,219 in the year prior. Operating profit fell to £300,415 from £737,463. Pre-tax profit was £196,692 compared to £608,962 in 2013. ROCE, which is pre-tax profit before deducting interest, depreciation and amortization and exceptional costs, dropped to 13.7% from 30.2%. The company opened three new leased sites in the period. Faucet inn received management charge of £302,157 in the year (2013: £445,868) in respect of six sites that it manages on behalf of third party owners. Faucet Inn, which currently operates an estimated 24 sites, 60% of which are freehold, opened a new “urban neighbourhood brand”, called Neighbourhood, in East Village, Stratford, East London in mid-November after a £750,000 investment. Cox described it as a “pop-up with planning permission for ten years”. The company has also added five boutique bedrooms last year to its Warrington site in Maida Vale, once occupied by Gordon Ramsay. Faucet Inn undertook a “transformational” deal in 2010 when it bought six Mitchells & Butlers sites in London for around £17.5m with support from Kew Capital. Two years ago, the company undertook a sale and lease back of two of the sites, Compton’s in Soho (sold for circa £10m) and the Old Shades (sold for circa £6m) in Whitehall, to raise an estimated £16m to buy out Kew Capital. Faucet Inn move to become a Living Wage employer cost around £7,000 a week and added 2% to the labour line. Cox said last November: “It’s taken about 12 months to see a return but we now have a motivated workforce and have seen a steady increase in sales per person per hour.” 

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