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Morning Briefing for pub, restaurant and food wervice operators

Tue 23rd May 2017 - Update: We Are Bar, Easyhotel and Shaftesbury
Richard Stringer steps down as chief executive of We Are Bar Group: We Are Bar Group, owner of London-based ‘Jamies’ and ‘Smollensky’s’ branded bars and restaurants and formerly known as Kornicis, has announced the departure of chief executive Richard Stringer. Chairman Simon Vardigans commented that Stringer had led the business with ‘energy and passion’ since leading a management buy-in in 2015. He added: “However, following a review of strategy, Richard decided he would leave the business with a plan to explore alternative opportunities. The board thanks Richard for his considerable contribution and wishes him well in the future. Richard’s responsibilities will be taken over by Ian Banks (currently chief financial officer) who will become acting chief executive with immediate effect.”

Easyhotel reports strong like-for-like growth in H1: Easyhotel, the owner, developer, operator and franchisor of “super budget” branded hotels, has reported its interim results for the six months ended 31 March 2017 with trading slightly ahead of the board’s expectations. Total system sales were up 24.7% to £12.05m (31 March 2016: £9.66m) with total revenue up 21.2% to £3.14m (31 March 2016: £2.59m). Adjusted Ebitda was up 13.2% to £0.65m (31 March 2016: £0.58m) with profit before tax down to £0.06m (31 March 2016: £0.14m), reflecting increased costs associated with the expanding development pipeline. Like-for-like revenue for owned hotels increased by 17.4% and for franchised hotels by 6.8%. Three hotels were opened during the period with occupancy of 85% with two new hotels opened in the last four weeks. Chief executive Guy Parsons said: “These results reflect the continued good progress the group is making against our long-term growth strategy to develop the Easyhotel brand as a market leader in “super budget” hotels. The strong like-for-like performance from our owned and franchised hotels over the period is very encouraging. Our new hotels opened during the period, under our ‘new-look’ format, have traded strongly. We have a number of exciting opportunities in our development pipeline and the board believes that the strength of the brand and our leading position in the branded super budget market means we are well positioned to capitalise on consumer desire to seek out the best value. Whilst we are mindful of the broader political and economic uncertainty and the impact this is having on consumer confidence, full year trading is on track to meet the board’s expectations.”

Shaftesbury reports West End thriving with ‘clear turnover growth; for restaurant and leisure tenants: Property company Shaftesbury, which is landlord to 282 pubs, restaurants and cafes in the West End, had reported West End continues to flourish, with good trading and footfall across its locations. It stated there was continuing good occupier demand across all uses delivering rental growth and low vacancy in the six months ended 31 March 2017. Net property income rose 4% to £43.8m and profit after tax rose 27.8% to £102.4m. Chief executive Brian Bickell, added: “This has been another busy period for Shaftesbury, with the benefit of asset management activity across the portfolio and last year’s refinancing initiatives delivering growth in earnings, the interim dividend and portfolio value. Across our portfolio, the data we collect is showing a clear trend of year-on-year turnover growth for our restaurant, leisure and retail tenants, reflecting the buoyancy of the West End’s economy. Occupier demand for these uses, and our office and residential space, is good and vacancy levels remain low. Looking ahead, the UK faces a period of uncertainty as it negotiates its exit from the EU. Whilst this brings a risk of lower business and consumer confidence, we expect the West End, underpinned by its wide appeal and dynamic economy, will maintain its long record of resilience. Our exceptional portfolio, located in its most popular destinations, continues to flourish. With the benefit of our forensic local knowledge and enterprising management, we are confident it will continue to deliver sustained long-term growth in income, capital values and returns to shareholders.” The company added: “With increasing numbers of visitors to the West End, and the widely-recognised growth in interest and spending on leisure activities, our 282 restaurants, cafés and pubs are important drivers of footfall and trading in our locations. We are the largest single provider of dining and leisure space in the West End, curating high-profile and busy destinations such as Kingly Court, Neal’s Yard, Chinatown and the Opera Quarter. The majority of our restaurants offer casual dining, with a focus on atmosphere, quality and experience, increasingly with an all-day offer. Operators are attracted to the West End as it provides access to exceptional daily footfall throughout the year and a discerning, affluent customer base of domestic and international visitors and a large working population. The independent sector is particularly active, reflecting the demand from diners to experience high quality, creative and accessible new food concepts, often then sharing their experiences on social media. Availability of space remains constrained by planning policies, which restrict large-scale development in our locations and discourage conversion of existing space to leisure uses, and the reluctance of operators to relinquish their valuable space other than for significant premiums. Against this backdrop of strong occupier demand and limited supply of space, competition for any of our available space is intense and vacancy rates are low. During the period, we completed leasing transactions in the wholly-owned portfolio with a rental value of £4.5 million, of which rent reviews accounted for £3.4 million.” It reported strong growth in earnings from increased contracted income and reduced finance costs, following refinancing in October 2016. Interim dividend increased 10.5% to 7.9p per share.

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