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Wed 6th Sep 2017 - Fulham Shore reports summer slowdown – to seek keener terms on new sites
Fulham Shore reports summer slowdown – to seek keener terms on new sites: Franco Manca operator Fulham Shore is to seek keener terms from landlords on new sites as other operator face “well-publicised pressures” – it also reported a summer slowdown in sales, particularly in London suburbs. At today’s annual general meeting, David Page, chairman of the company, will say: “In the 2018 financial year to date, Fulham Shore has opened seven Franco Manca pizzeria in the UK, one Franco Manca franchise in Italy and three The Real Greek restaurants. This takes Fulham Shore’s restaurant portfolio to 56 sites, comprising 15 The Real Greek, 40 Franco Manca and one Bukowski Grill. Many of the group’s new restaurants are located outside London, in line with our strategy of extending the reach of our core brands. We are currently building two more Franco Manca pizzeria, in London and in Bristol, which are due to open later this autumn. The group continues to anticipate opening 15 new restaurants in the current financial year, in line with expectations (10 have been opened so far, the latest two being Franca Manca Oxford and The Real Greek Dulwich Village). However, given an increased availability of sites for sale due to the well-publicised pressures on other restaurant operators, we have decided to review our opening pipeline and to seek to improve terms with landlords of new sites we had already identified. This may delay some of our openings to later in this financial year. In March 2017, the company announced that it was reviewing the progress of its third business, a single franchise of the Bukowski Grill. In order to simplify operations and focus on the group’s core brands, Fulham Shore has taken the decision to sell its Bukowski franchise and site in D’Arblay Street, Soho. A further update will be announced in due course. Despite hitting our group targets for the first quarter of this financial year, during the holiday season in July and August the group has seen a slowdown in trade, primarily from our restaurants in London suburbs. We believe this is a sector-wide trading pattern and not unique to our brands. In addition to this slowdown in revenue growth, as previously indicated, the group is experiencing a higher fixed cost element to support its increased level of operations, especially in The Real Greek. As a result of these two factors, the board expects that, while Headline Ebitda (as defined in the company’s accounts) for FY18 will be significantly higher than that achieved in FY17, it is likely to be less than current market expectations. The board is confident that the group’s Franco Manca and The Real Greek brands offer customers delicious, well-priced dining options in congenial surroundings. The board believes that these strengths will see Fulham Shore through the current uncertain market conditions. We believe that both of our key brands have significant further growth potential and we continue to anticipate opening 15 new restaurants in the current financial year. Whilst the casual dining sector continues to face a number of cost pressures, the group does not intend to raise menu prices in the short term as we believe this is one of the fundamental reasons for the success of both The Real Greek and Franco Manca. In addition, the group will continue to pay at least the national living wage to all its employees, including those under the age of 25, and we will look for more ways to retain and incentivise our talented and committed team.”

Hawthorn Leisure reports increased losses: Hawthorn Leisure has reported increased losses after costs linked to a refinancing, The Daily Telegraph has reported. The company, which owns 230 pubs, saw pre-tax losses rise to £8.9m in 2016 from £5.8m the prior year largely because of exceptional costs linked to the refinancing of its debt. The group said the £89.5m debt owed to the shareholders of its parent has been replaced by a mixture of a bank loan, a payment-in-kind loan and an inter-company loan with parent Hawthorn Leisure Holdings and that the costs linked to this refinancing had been £3.5m. But the company said the refinancing is expected to “provide significant savings in finance costs and improve cash levels, which gives management opportunities to re-invest in the estate and grow the business through future acquisitions”. Sales dipped slightly by 1.4pc to £19.9m, partly caused by the 20 sites it sold in 2016. Noah Bulkin, a former Merrill Lynch and Lazard banker, founded Hawthorn Leisure in 2014 when he bought 275 pubs from Greene King and 88 from R&L, the pub portfolio which previously belonged to Robert Tchenguiz’s property estate. Bulkin resigned as a director of Hawthorn Leisure Holdings in May. The former investment banker’s May Capital still retains a stake in Hawthorn but also supported Patron Capital’s purchase of Punch and the subsequent transaction which saw Heineken take on roughly 1,900 Punch sites. Bulkin is also a director at Vine Acquisitions, the entity set up by Patron Capital to execute the Punch deal.

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