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Morning Briefing for pub, restaurant and food wervice operators

Fri 29th Apr 2016 - The Restaurant Group reports further drop in trading, like-for-likes down 2.7%
The Restaurant Group reports further deterioration in trading, like-for-likes down 2.7%: The Restaurant Group has reported a “further deterioration” in trading conditions since it updated on current trading with the preliminary results on 9 March, It reported its leisure business, in particular, continuing to be impacted by the structural and business challenges referred to in the March preliminary results statement. As a result for the 17 weeks to 24 April, total sales are up 4.7% and like-for-like sales are down 2.7%. The company stated: “In the short term, we do not anticipate any improvement to underlying like-for-like trends and, on this basis, we now expect full year like for like sales to be down between 2.5% and 5.0%, which would translate into full-year profit before tax in the range of £74m to £80m. We are actively implementing the operational initiatives to improve performance that we outlined in detail at the preliminary results in March. The group is cash generative and our balance sheet strong, supporting the dividend. A comprehensive review of our current operating strategy has also commenced. This will include our property portfolio, site roll-out programme, brand positioning and overheads. We will update on this review at the interim results in August. We remain disciplined in our self-funded approach to the returns expected from new openings. Recent openings are generating good returns. Year to date we have opened four new sites, and expect to open a further three by the end of the first half. Overall openings this year will be fewer than last year, however we anticipate opening more than 30 sites across the brands. We will reassess the optimum number of new sites in total and by brand to open going forward. After 11 years with The Restaurant Group, it has been agreed that Stephen Critoph, chief financial officer, will leave the company with immediate effect. The board has commenced the search for a new chief financial officer. The board thanks Stephen for his contribution.”

AB InBev submits updated package of commitments to European Commission over SABMiller acquisition: Anheuser-Busch InBev (AB InBev) has submitted an updated package of commitments to the European Commission to address potential regulatory considerations over its acquisition of SABMiller. The company has offered the entirety of assets of SABMiller in central and eastern Europe (Hungary, Romania, Czech Republic, Slovakia and Poland) for divestment in addition to Peroni, Grolsch and Meantime and their related businesses. It said these assets include a number of top brands in their markets and are expected to attract considerable interest from potential buyers. The company stated: “In line with AB InBev’s ambition to close the overall transaction during the second half of 2016, the company has made this additional commitment in phase one of the European Commission enquiry. As previously stated, the proposed divestments are subject to review and approval by the European Commission and conditional on the successful closing of the recommended acquisition of SABMiller by AB InBev, as announced on 11 November 2015. The divestment process in Europe will be carried out in the framework of the relevant employee information and consultation requirements and the ongoing dialogue with employee representative bodies. The acquisition of SABMiller by AB InBev would create a truly global brewer, providing more choices for beer drinkers, including global and local brands, in new and existing markets around the world.”

Hotelier Guy Ivesha plans ‘premium work and lifestyle concept’ at Mortimer House in London: Great Portland Estates has exchanged contracts to sell Mortimer House, 37-41 Mortimer Street, for a price of £26.95m. The office property, extending to circa 23,800 square feet net internal area (31,200 square feet gross internal area), is currently vacant, and benefits from consent for a triple B1/A1/A3 use on the ground and basement floors. The buyer is a new vehicle set up by hotelier Guy Ivesha, in joint venture with Cain Hoy and other private investors, who plan to operate a premium work and lifestyle concept with a strong emphasis on hospitality. Hugh Morgan, head of investment management at GPE said: “We had the necessary consents in place to undertake a comprehensive refurbishment of Mortimer House in a supply constrained West End occupational market. However, as a consequence of strong demand for vacant refurbishment opportunities, it made sense to sell Mortimer House now and invest the proceeds for higher returns in our exceptional development programme.”

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