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Morning Briefing for pub, restaurant and food wervice operators

Fri 26th May 2017 - Update: Carluccio's results, The Restaurant Group, Derby Brewing Co et al
Carluccio’s reports turnover boost but Ebitda falls 12%: Carluccio’s has reported UK turnover increased by 2.7% to £140.9m for the year ending 26 September 2016. Ebitda before non-cash exceptional expenses fell 12% to £13.2m (2015: £15.0m). During the period it opened its first new-generation restaurant in Spitalfields, London, and its first hotel-based site at Marriott Regent’s Park. It made significant investment in a new menu and its food quality. The company stated: “Investment in the estate has continued with the opening of nine new-generation restaurants and the accelerated refurbishment of Carluccio’s older restaurants. The recently opened Solihull and York restaurants are trading extremely well and beyond forecast. There is substantial investment in IT, with a new cloud-based EPOS system and tablets. New dishes have been developed and introduced, putting the spotlight on the provenance of our ingredients and the authenticity of our food. Investment in the team has been increased with the introduction of new training programmes.” Chief executive Neil Wickers said: “Despite the strong headwinds facing the industry, including business rate increases, labour costs and food cost pressures, we are strongly committed to investing in our estate, menu and team. We are confident that our unique brand proposition and our increased focus on the quality and authenticity of food will continue to resonate with diners.” 

Douglas Jack – The Restaurant Group’s hard work has ‘only just started’: Peel Hunt leisure analyst Douglas Jack has said The Restaurant Group’s hard work has “only just started”. Issuing a ‘Hold’ note on the shares with a target price of 350p, Jack said: “Like-for-like sales fell by 1.8% despite strong performances from the pubs and concession businesses. Thus, Leisure like-for-like sales fell by more than 1.8% despite cinemas (adjoining in most cases) enjoying a 13.2% uplift in footfall. We have retained our forecast of like-for-like sales falling by circa 4% this year as they should be undermined in the short-term by early May’s price reductions and cannot rely on recent footfall trends continuing. In our view, the new Frankie & Benny’s menu is sufficiently attractive to encourage a recovery in volumes, with big changes to follow at Chiquito and Coast to Coast. In our view, it would have been unrealistic to expect The Restaurant Group’s prices to fall as low as parts of the pub restaurant sector but its product range, service, location and customer occasion are different. We believe there has to be two phases to The Restaurant Group’s recovery – first volumes and then margins – after the full impact of price reductions and cost increases has been reflected in the accounts. This point (March to May 2018) will coincide with the anniversary of Frankie & Benny’s price reductions and represents the time-frame when like-for-like sales could return to growth. We are holding our full-year forecast of profit before tax falling by £22m (profit before tax £55.0m; consensus £56.3m). Our forecast requires a £5m benefit from recovering volumes. We expect the news flow to be weak over the next ten months, and would wait before buying the shares. However, as the visibility of a recovery increases, some may become prepared to write-off 2017E as a transitional year, comforted by the strong cash flow and low financial debt position, and focus on 2018E prospects.”

Derby Brewing Co hits £500,000 crowdfunding target for expansion: Derby-based brewer and retailer Derby Brewing Co has hit its £500,000 fund-raising target on crowdfunding platform Crowdcube. Earlier this month, the company increased its equity stake for a second time after failing to secure EIS status. It is offering a 9% stake in the business instead of the previous 6.5%. It originally offered 3.86% in return for the investment. The family-run company, founded by Trevor Harris in 2004, is raising funds to support its expansion plans. So far, 516 investors have pledged £508,870 and the campaign is currently “overfunding”. The fund-raise will support expansion of the brewery, launch of a new craft range and the addition of a fifth venue to its estate. The company currently operates The Tap, a specialist beer and spirit house with more than 75 beers and ciders and more than 70 spirits, in Derby; The Queen’s Head gastro-pub in Little Eaton; smoked food and craft house concept The Greyhound in Derby; and The Kedleston Country House, a bar, restaurant, boutique hotel and wedding venue in Quarndon. The company expects to generate turnover of £3.6m in its current financial year, with Ebitda of £257,000.

Drinks company LWC reports 15% rise in turnover to £212m: Licensed drinks company LWC has posted a turnover of £212.7m, up 15% year-on-year, driven by organic growth and acquisitions. All of the privately owned company’s turnover was generated in the UK, Insider Media reports. Pre-tax profits fell 6% to £8m during the same period. Average headcount increased to 669 in 2015/16 from 599 in 2014/15. A strategic report accompanying the results stated: “The directors are delighted with the results for the 12 months to September 2016 and the year-end balance sheet, generating a healthy increase in turnover reflecting continued organic growth and growth by acquisition.” On 1 June 2016, during the year covered by the accounts, LWC acquired the entire share capital of Northampton-headquartered drinks wholesaler Middleton Wholesale for £2.2m. Headquartered at Openshaw, Manchester, LWC has depots across the UK.

MeatLiquor and Square Pie to launch mash-up pie: MeatLiquor and gourmet pie company Square Pie have created a mash-up offering. The Dead Hip-pie is based on MeatLiquor’s signature Dead Hippie burger, with aged beef filling topped with a layer of melted cheese and encased in a short-crust pastry base and puff pastry top. It will be served with fries and pickles at MeatLiquor sites and with skin-on mashed potato and Dead Hippie sauce at Square Pie venues. The pie will be on offer at all MeatLiquor and Square Pie sites from Thursday, 1 June. MeatLiquor founder Yianni Papoutsis said: “The Dead Hippie is our signature burger, with more than 150,000 sold last year, and is London’s most ordered burger on Deliveroo. We’re cooking all the pie filling at MeatLiquor and sending it to Square Pie together with Hippie Sauce for them to work their magic.” Square Pie founder and managing director Martin Dewey added: “It’s a proper mash-up in the truest sense of the word. We’ve created more than 150 types of pie since we started and this beauty is right up there with the best.”

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