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Morning Briefing for pub, restaurant and food wervice operators

Fri 27th Jul 2018 - Update: Delivery success at McDonald’s, Chipotle, Starbucks results
McDonald’s Easterbrook – delivery now 10% of sales in some markets, UK leads LfL growth: McDonald’s has reported the UK led the sales growth in its key international markets with high single-digit sales increases for the quarter. Chief executive Steve Easterbrook told analysts: “Markets such as UK, Canada and France continue to perform well with strong sales and guest count growth. These markets began establishing the foundation for today’s success several years ago. They developed realistic plans guided by rich local insights about our customers and initiated programs to offer delicious food, compelling value and great running modernized restaurants. They also gained alignment with franchisees and enhanced engagement with restaurant employees, vital steps toward integrated and effective execution. The result is that our customers visiting these restaurants today can easily see our commitment to providing them with a great experience. With a solid platform in place, these markets also have been more effective in activating additional initiatives for growth, such as digital and delivery. Our UK market, for example, continues to be one of our best performers as the market achieved robust sales again during the quarter. Sales were the second highest on record in May, and April set a best-ever mark for guest counts. Many elements are coming together to drive this performance. In addition to the success of iconic menu items such as the Big Mac, our Signature beef premium sandwiches continue to be popular with our customers in the UK.” On the delivery opportunity, Easterbrook said: “Across the globe, there are more than one billion people living less than ten minutes from a McDonald’s. That gives us a significant advantage in quickly bringing delicious food to our customers in their homes, offices and college dorms. We’ve been moving at a pace that is unprecedented in the McDonald’s System. Last July, delivery was available in about 7,800 McDonald’s restaurants around the world. We’ve continued expanding and now delivery is available from more than 13,000 restaurants through 60 markets on six continents. Customers are responding. Delivery’s becoming a meaningful contributor to our sales. And in several of our top markets, delivery now represents as much as 10% of sales in those restaurants offering delivery. Delivery requires virtually no additional investment and is tremendously effective in bringing profitable and incremental guest count. We’re continuing to see delivery orders of about double the size of the standard restaurant average check.”
Starbucks reports global like-for-likes up 1% in Third Quarter: Starbucks has reported global like-for-like sales rose 1% in its Third Quarter to 1 July, driven by a 3% increase in average ticket. Americas and US comparable store sales increased 1%.CAP like-for-like sales, which includes the UK, decreased 1%. China like-for-like sales decreased 2%. Consolidated net revenues were $6.3 billion, up 11% over the prior year including. There was 3% net benefit from consolidation of the acquired East China business and other streamline-driven activities, including Teavana mall store closures, the Tazo divestiture, and the conversion of certain international retail operations from company-owned to licensed models. There was also a 1% benefit from foreign currency translation. The Starbucks Rewards loyalty program added 1.9 million active members in the US, up 14% year-over-year; total member spend now represents 40% of US company-operated sales. Mobile Order and Pay represented 13% of US company-operated transactions. The company opened 511 net new stores in Q3 and now operates 28,720 stores across 77 markets. “Starbucks record performance in Q3 reflects successful execution against our strategic growth priorities and our commitment to deliver predictable, sustainable growth at scale – and meaningful increases in long-term value – for our shareholders,” said Kevin Johnson, Starbucks chief executive and president. “We remain confident in our global growth strategies, in the sustainability of our leadership position around all things coffee and tea and in our leadership teams around the world to navigate our next phase of growth.” Chief financial officer Scott Maw added: “Starbucks record Q3 revenues and profits once again reflect the underlying strength of the Starbucks business and brand all around the world. We continue to grow share in virtually every market and channel in which we operate at the same time that our streamline initiatives are enabling us to sharpen our focus – and leverage our resources – against our highest value, long-term growth opportunities.”

Chipotle reports 3.3% like-for-like sales growth: Chipotle has reported sales rose 8.3% to $1.3 billion in the three months to 30 June. Like-for-like sales increased 3.3%. Restaurant level operating margin was 19.7%, an increase from 18.8%. The company opened 34 new restaurants and closed or relocated eight. “I’m pleased to report a solid second quarter with sales and restaurant margins ahead of expectations,” said Brian Niccol, chief executive officer. “While we made progress during the quarter with particular strength in digital sales, I firmly believe we can accelerate that progress by executing our reorganization and our strategy to win today and cultivate tomorrow.”

Peel Hotels reports turnover and operating profit dip: Peel Hotels has reported turnover decreased 4.1% to £16,097,313 (2017: £16,790,320) in the year ended 28 January. Operating profit excluding the exceptional expenses decreased 29.6% to £893,115 (2017: £1,268,734). Operating loss after exceptional expense was £268,126 (2017 – operating profit of £1,098,234) on a statutory basis. Ebitda excluding the exceptional expenses in the current and previous year decreased 18.5% to £1,833,611 (2017: £2,250,328). Loss before tax, (including the exceptional expense of £1,161,241 due to impairment of the Net Book Values of two leasehold properties held within subsidiaries in the current year and the previous year’s exceptional expense in relation to the Strathdon Hotel) was £734,986 loss (2017: £575,387 profit). Chairman Robert Peel said: “Demand has slowed in many of the provincial areas of the United Kingdom, and together with upwards pressure from increases in the living wage, business rates and energy costs this has created challenges to the profitability of the company. However it is not unreasonable to suppose that once the terms and conditions of Brexit are clear, that stability and growth will return. In the mean time we remain focused on reducing debt and our overall cost base.”

Hotel Chocolat signs Scandanavian franchisee: Hotel Chocolat, the British chocolatier and omni-channel retailer, has announced the transfer of its retail stores in Denmark to Retail Brand, and the signing of a development agreement covering Denmark, Sweden, Norway and Finland. Hotel Chocolat opened its first store in Copenhagen in 2012 and operated three stores in Denmark. Retail Brands is an operator of international retail franchises in the Nordic region with strong local knowledge of the Scandinavian market making it ideally placed to further grow operations in this region. The existing trade in Denmark will transfer to the franchisee who aims to grow the business in accordance with a development agreement, with Hotel Chocolat retaining an option to buy back the business after a period of 5 years, pursuant to a pre-agreed formula. Goods will be sold to the partner on wholesale terms, and a royalty levied on sales. Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said: “Having proven the popularity of the Hotel Chocolat brand with Danish consumers we are excited to be entering our next phase of Scandinavia-wide growth. By combining the strengths of our products and brand with the operational skills of an in-country partner, our goal is to deliver sustainable growth in Denmark and the wider Nordic region.” Tobias Johan Toft, co-founder and chairman of Retail Brands, said: “We are delighted to add Hotel Chocolat to our brand portfolio. We are well advanced with our plans to open new stores and expect to open at the Bruuns Galleri shopping mall in Arhus and Ro’s Torv mall in Roskilde this autumn.”

Women’s Entrepreneur Conference six weeks away: Propel has partnered with Elliotts chief executive Ann Elliott to launch the sector’s first conference featuring an all-female line-up of company leaders. The event, which is open for bookings, takes place on Tuesday, 4 September at One Moorgate Place, London. Speakers will be Wahaca founder Thomasina Miers (“How to ascertain if your business idea is genius or madness”); Mowgli founder Nisha Katona (“From barrister to bunny chow: why risk it all for restaurants?”); Sophie Bathgate, of Sophie’s Steakhouse (“What I would do differently next time”); Artizian founder Alison Frith (“How to market a startup”); Cheshire Cat Pubs & Bars founder Mary Mclaughlin (“Growing an idea from startup to sustainable”); Eve Bugler, founder of BabaBoom (“How to keep the joy when it’s all on your shoulders”); Jane O’Riordan, founder of The Dynamo (“The importance of patience”); Sally Jackson, owner of The Pink Pig Farm (“The ten hardest lessons I’ve learned”); Christine Winton, of Siam Eatery (“Can you have work-life balance when you start a business?”); Vanessa Hall, co-founder of Jack & Alice (“The importance of staying true to your values when you start and expand your business”); and Laura Harper-Hinton, co-founder of Caravan (“Why people are key to your success”). The event will also see an award given to the Wireless Social Female Entrepreneur of the Year. Elliott said: “Female entrepreneurs are making an enormous contribution to the hospitality sector – but we need even more of them. The conference is intended as a showcase of some of the sector’s best female entrepreneurs and to encourage even more of them to take the plunge.” Propel managing director Paul Charity added: “If our sector is to truly serve its market, we need more companies led by women at senior levels. We hope companies send their brightest female talent to the conference to pick up inspiration and develop their entrepreneurial talent. We also believe it’s a great opportunity for male colleagues to gain insights into female entrepreneurial skills.” Tickets are £195 plus VAT for Propel Premium subscribers, £245 plus VAT for operators and £395 plus VAT for suppliers and can be booked by emailing or calling her on 01444 817691.

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