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Fri 21st Sep 2018 - Update: Tasty declares £11.2m impairment charge, plus Uber Eats and McDonald’s
Tasty declares £10.6m loss after £11.2m impairment charge: Wildwood operator Tasty has reported sales down 5.7% to £23m for the 26 weeks ended 1 July 2018. It has made an impairment charge of £11.2m and onerous lease provision of £1.7m. Chairman Keith Lassman stated: “The group is currently trading from 60 restaurants; 54 Wildwood and six dim t restaurants. As highlighted previously the market conditions in 2018 continue to be challenging and have been exacerbated by unfavourable weather conditions and the World Cup. This is not unique to Tasty and has been evidenced by the well-documented closures across the casual dining market and throughout the retail sector. In February 2018 we implemented major operational structural changes and are beginning to see early signs of improvements which we expect to continue in the second half of the year. In spite of the tough trading conditions the directors, believe the group’s brands remain attractive to consumers and are focused on optimising the performance of the estate. In the light of the changes to the general trading environment, we are continuously assessing our estate to identify where improvements can be made. Our estate is made up of a growing number of sites which are outperforming expectations and we will continue to invest in those restaurants. Where sites are underperforming, we are implementing turnaround strategies and in many instances, we have witnessed significant improvements. Where such measures are not successful or if we feel we can realise maximum value, we will continue to seek to dispose of those properties. We have closed three sites during the period under review, two of which have been sold. The board has no plans to open any new sites at the current time and, in line with the change of strategy from accelerated to suspended expansion, we continue to seek to optimise our capital structure with a view to utilising the proceeds of property disposals to reduce gearing. We are also continuing to review our funding arrangements and as a result, we have decided to reduce our funding costs by cancelling the unutilised £5 million revolving credit facility, that was previously earmarked for new restaurant openings. This will reduce financing costs by circa £35,000 per annum. Menu development and improvement is integral to our strategy to keep the brand relevant. We continue to innovate and review and are constantly looking at ways of making the offer more exciting including vegan and gluten free menus. We have invested in our training infrastructure and launched additional apprenticeship programmes, which will be expanded over the next 6 months. For every level of the team, we will be introducing a comprehensive career pathway to support their development, enhance job satisfaction and increase staff retention. We have restructured the operational team to improve efficiency and reduce costs. This has resulted in annualised cost savings of approximately £300,000 per annum and a more responsive and motivated team with a greater focus on cost control and sales growth. Sales are down 5.7% on the corresponding period to £22,977,000 (2017 – £24,375,000). Headline operating loss, before pre-opening costs, non-trade items and interest, was £119,000 (2017 – £544,000 profit) and pre-tax loss before pre-opening costs and non-trade items was £309,000 (2017 – £210,000 profit). In the light of current trading conditions and the retail landscape, the group has undertaken a further review of its estate during the period and has recognised an impairment charge of £11,185,000 and an onerous lease provision of £1,688,000. After taking into account all non-trade adjustments the group has a stated loss after tax for the period of £10,694,000 (H1 2017 – loss £9,302,000). Market conditions remain difficult, but we are starting to see the benefits of the infrastructure changes that have been, and continue to be, implemented. Our focus will continue to be growing sales and maximising value. We have a dedicated team that is leading the group through the challenges we are facing and we would like to thank all of them for their hard work. The directors believe that our restaurants are appealing to customers and, once the economic climate has improved, the group is well placed to resume growth.”

McDonald’s increases quarterly dividend by 15%: McDonald’s board of directors have approved the company’s 42nd consecutive annual dividend increase, raising the quarterly dividend 15% from $1.01 to $1.16 per share of common stock, payable on December 17, 2018 to shareholders of record at the close of business on December 3, 2018. This brings the fourth quarter dividend payout to nearly $900 million. McDonald’s has experienced increased capital allocation flexibility due to the evolution of the company’s business model and the effects of the Tax Cuts and Jobs Act of 2017. McDonald’s president and chief executive officer Steve Easterbrook said: “Our substantial cash flow enables us to invest in the business to drive growth under our Velocity Growth Plan. We are confident that the Plan will deliver sustained, long-term profitability for our system and our shareholders, which is reflected in today’s increases in our dividend and three-year cash return to shareholders target.” The company added: “These actions reinforce management’s confidence in the company’s ability to achieve the following long term, average annual (constant currency) financial targets, beginning in 2019: System-wide sales growth of 3-5%; operating margin in the mid-40% range; earnings per share growth in the high-single digits; and ROIIC in the mid-20% range.”

Uber Eats riders protest new pay structure: Uber Eats delivery riders has protested about pay for a second day outside the company’s UK headquarters. Around 100 motorcyclists blocked the road outside Aldgate East station in central London on Thursday afternoon after they said the company cut the minimum delivery rate for riders on Wednesday. Riders said the minimum per-delivery rate had been reduced from £4.26 to £3.50 and demanded a guaranteed minimum of £5 for London riders. The strikers chanted “No money and no food” and sounded their horns. Some attempted to confront individuals believed to be members of Uber Eats’s management outside the office before setting off in a procession towards Parliament Square. Christopher, a delivery rider from the IWW Couriers Network, who did not wish to give his full name because of fears he would lose work, said it was a wildcat strike but the IWW as well as the Independent Workers Union of Great Britain (IWGB) were supporting the workers. “These aren’t outrageous terms [they’re asking for],” he said. “They just want to be paid a fair wage so they can afford to eat and pay rent.” The protest also affected deliveries, with customers complaining on social media that orders through Uber Eats had been delayed or cancelled. An explanation sent by the company to its couriers said the new fare structure would lead to higher rates “at the busiest times and in the busiest places” but accepted “you may receive lower payments outside of typical meal times or in quieter areas”. An Uber Eats spokesman said: “In response to feedback from couriers we’ve made some changes to our payment structure in London, which brings it into line with other cities. The changes will help increase earnings during busy mealtimes and, as we transition to the new system, we’re introducing minimum payment guarantees of £9 to £11 an hour.”

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