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Fri 6th Oct 2017 - Update: Gaucho and Cabana results, Japan Centre joint venture, Domino's deal, and Hollywood Bowl
Gaucho reports turnover boost but losses double in first year under new ownership: Gaucho, which operates its eponymous brand as well as CAU, has reported a turnover boost in its first year under new ownership. The company, which was bought by private equity firm Equistone in January 2016, saw turnover increase to £83,086,993 for the year ending 31 December 2016, compared with £70,329,000 the year before. Ebitda before pre-opening costs fell to £9,441,587, compared with £11,902,000 the previous year. Loss after tax more than doubled to £13,373,667 compared with £6.4m the year before, according to accounts filed at Companies House. At the end of the period, Gaucho operated 39 restaurants under its eponymous and CAU brands – 36 sites in the UK and one each in the UAE, Hong Kong and Holland. Furthermore, the group had one joint venture in Argentina operating under a separate brand. The company said its continual growth was principally driven by the CAU brand with the addition of new restaurants in Bath, Birmingham, Edinburgh, Harrogate, Leamington, Leeds and Southampton. Turnover in the UK increased to £71,269,173 compared with £63,463,000 the year before, turnover from the Holland site was up to £3,460,648 compared with £3,178,000 the previous year, turnover from the joint-venture site in Argentina was down to £966,186 from £1,345,000 the year before, and turnover from its Middle East restaurant doubled to £5,675,899 compared with £2,343,00 the previous year. Its Hong Kong site generated turnover of £1,715,087. The company stated: “The directors wish to maintain the growth of turnover in the business through continued expansion of restaurants. The group will continue to evolve and grow the existing estate as well as expand through new openings, specifically Gaucho in Birmingham, which opened in March – the first eponymous UK restaurant in seven years – and additional CAU sites.”

Japan Centre partners with Cool Japan Fund to launch £3m food and drinks venture in London: Japan Centre, the Japanese food hall in Soho led by Shoryu Ramen founder Tak Tokumine, has partnered with funding group Cool Japan Fund to launch a joint-venture food and drinks space. The partnership aims to set up retail spaces across Europe showcasing Japanese food, ingredients and brands. The first space – Ichiba – will launch in London next year with Cool Japan Fund investing £3m in the project. Ichiba will feature food stations offering fresh noodles, tempura and Japanese street food favourites, as well as a bakery, sushi and sake bars, and a dine-in courtyard. Consultants CADA Design will design the store concept. Cool Japan Fund, which supports businesses to promote Japanese culture overseas, also plans to open food culture showcases in other major European cities. Each space will feature restaurants, shops and in-store experiences and partner with artisan suppliers across Japan to offer a vast range of produce. Weekly classes and workshops will also be offered, including sake-tasting and sushi-making, while artisan products will be showcased in seasonal and regional food and drink festivals. Tokumine opened Japan Centre last month in Panton Street. The 6,000 square foot venue features a main food hall, three specialist rooms focusing on tea, sake and miso, a 100-cover central courtyard eating area, and demonstration kitchens. Tokumine launched the original Japan Centre near Piccadilly Circus in 1976.

Cabana reports turnover increases 18%: Cabana, the Brazilian barbecue group founded by Jamie Barber and David Ponte, has reported turnover increased 18% to £12,234,391 for the year ending 31 December 2016, compared with £10,358,857 the previous year. Adjusted Editda fell to minus £666,125 compared with minus £393,432 the year before, according to accounts filed at Companies House. Pre-tax losses increased to £2,276,609, compared with £1,595,189 the year before. The company opened two sites during the year – in Newcastle and Southampton – and during the summer operated a pop-up in London’s Southbank that was a “financial and PR success”. Cabana stated: “The company received a short-term shareholder loan of £750,000 in the post year-end period and all shareholders have indicated a desire to continue to support the business.” The number of employees during the period increased to 312 from 263 the year before. The highest-paid director received remuneration of £125,000, compared with £135,000 the year before. Cabana currently operates 11 sites across the UK.

Domino’s completes £24m deal to buy 75% stake in largest London franchisee: Domino’s Pizza Group has completed a £24m deal to form a partnership with its largest franchisee in London. The company will have a 75% stake in the newly formed business, whose assets will consist of all the franchisee’s operations – 25 Domino’s stores in London. Domino’s Pizza Group previously stated when the deal was revealed in August: “The creation of the partnership will enable Domino’s Pizza Group to take advantage of the significant growth opportunity in the London area.”

Peel Hunt upgrades forecast on Hollywood Bowl Group by 2%: Peel Hunt leisure analyst Douglas Jack has upgraded its forecast on Hollywood Bowl Group by 2%. Issuing a ‘Buy’ note on the shares with a target price of 215p, Jack said: “Like-for-like sales exceeded our 3% forecast. Previously, we have said each extra 1% of like-for-like sales equates to a 4% upgrade, hence our upgrade is 2% (profit before tax from £20.3m to £20.7m). Our forecasts also assume Ebitda margins rise by 120 basis points in the second half of 2017 versus ten basis points in the first half due to the stronger like-for-like sales. In our view, there is upside to our forecast of Ebitda margins growing by 70 basis points over the next two years. We believe our medium-term forecasts are cautious in relation to labour-scheduling benefits, ‘Pins On Strings’ benefits (only a 10% return is in our forecasts) and like-for-like sales (2.5% is assumed for 2018E; 2.75% for 2019E). Hollywood Bowl’s balance sheet is strong in our view, with net debt/Ebitdar forecast to fall below three times in 2019E. The company has announced its intention to return cash to shareholders after the 11 December prelims. We believe this is most likely to occur through a special dividend. We believe the two leading bowling operators have substantial scope to grow through self-help, increasing their dominance of the sector. They have both met/beaten expectations despite trading through a relatively unfavourable, hot/dry year, and can both look forward to easy weather comparables in the year ahead. We expect the trading news flow for both companies to continue to be strong in 2018E. Our 215p target price reflects the growth of the company and assumes no change in the circa 17 times price-to-earnings ratio and circa nine times EV/Ebitda ratings. We believe further forecast upgrades could drive additional upside.”

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