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Morning Briefing for pub, restaurant and food wervice operators

Thu 15th Oct 2015 - Results: McDonald’s, Papa Johns and Five Guys
McDonald’s reports turnover increase of £67.5m: McDonald’s has reported turnover increased by £67.5m to £1.43bn in the year to 31 December 2014, compared to £1.36bn the year before. Pre-tax profit fell to 225,428,000, compared to £244,885,000 the previous year, according to newly filed accounts with Companies House. The company stated: “The level of business and the period end financial position remain satisfactory for both company and subsidiaries and the directors are confident of being able to develop the business further in the future. Turnover comprises sales from company owned restaurants and rent and fees received from franchisees. As we continue with our strategy of franchising restaurants, our turnover reduces as we move from recognising sales to recognising rent and fees from the franchisee. However, due to strong sales growth from all store types, during the year total company turnover has increased by £67.5m to £1.4bn. The ongoing franchising strategy is also driving improved profitability, which is in line with the directors’ expectations and objectives. The company operates in a highly competitive market. High street consumer behaviour impacts the company’s turnover and variability of commodity prices impacts profitability. The company’s gross profit has increased to £403.0m (2013: £377.8m). The improvements are due to higher sales and margins within company owned restaurants and positive sales growth from franchisee restaurants. The company’s operating profit of £213m (2013: £233.8m) is in line with expectations. The company has restated its previously issued turnover and cost of sales for the year ended 31 December 2013, to correct for an error in its presentation of turnover and cost of sales. The restatement is a mapping correction between turnover and cost of sales and does not impact gross profit, operating profit, profit on ordinary activities before tax or the amount of tax paid.”

Papa John’s UK reports pre-tax profit more than quadrupled and extra 36 sites: Papa John’s has reported its UK business grew by 36 stores to hit 284 sites in 2014. Pre-tax profit more than quadrupled to £2,315,000 in the year to 28 December 2014, compared to £523,000 the previous year. Turnover increased 17.1% to £38,323,000, compared to £32,724,000 the year before, according to accounts filed with Companies House. The company stated: “As at 28 December 2014 the company operated a total network of 282 Papa John’s outlets in the UK (2013: 246 outlets), all operated by franchisees. The company’s operating profit from trading activities during the year was £2,264,000 (2013: £493,000). The company’s financial profit for the year after tax was £4,365,000 (2013: £523,000). Given that the company has a period of sustained profits and continues to forecast profits, the company has recognised a deferred tax asset of £2,050,000, which has contributed to the increased profits in 2014. The company’s turnover was £38,323,000 (2013: £32,724,000), a 17.1% increase. Prior years’ turnover increased by 15.2% for 2013 and 23.9% for 2012. During 2014 like-for-like retail sales from continuing operations in the franchised Papa John’s store network grew significantly. For the ninth consecutive year underlying comparable sales of our UK delco outlets grew. The pizza market does however remain intensely competitive with significant promotional discounting continuing to take place in 2015 as in prior years. The company’s commitment to the Papa John’s brand, with its focus on superior product quality and innovation remains. The focus for the forthcoming year is to continue our strong growth in the underlying outlets and significantly grow the number of outlets trading under the Papa John’s brand, thus increasing geographical coverage. A significant and on-going area of growth for both Papa John’s and the industry as a whole continues to be internet/online sales. The company continues to invest heavily in marketing activities to further build on the brand recognition, and in 2015 has for the first time been advertising in national media, leading to increased brand recognition by consumers, also leading to an increase in the number of enquiries from potential franchisees considering joining the brand and opening Papa John’s sites. The majority of sales take place within the UK, with only a small proportion of royalty income being generated from Ireland. The directors remain confident that the Papa John’s brand has made strides in our efforts to establish itself in the UK pizza sector and emulate the brand’s success in the US where the commitment to superior product quality has seen Papa John’s grow to become the third largest pizza company in the world. Papa John’s is the third largest pizza delivery operator in the UK.”

Five Guys reports turnover jump: Five Guys has reported turnover jumped to £23,812,047 in the year ending 28 December 2014, compared to £3,606,254 the year before. Pre-tax losses increased to £6,792,013 driven by the cost of new store openings, compared to £3,892,118 the previous year, according to accounts filed with Companies House. The company stated: “The 16 stores opened in the period have delivered on, or ahead of, planned performance targets, with trading margins achieving our key KPI of circa 4O% (2013: 40%). The company had 19 stores in operation at the year-end with a further 11 stores opened in 2015 so far. The loss for the period, after taxation, amounted to £6,792,013 (2013 – 16 month period: £3,892,118), driven by the cost of successful store openings. The company will build on its UK presence for the foreseeable future by undertaking a programme of opening new stores. During 2015 plans for expansion into Europe are being formalised.”

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