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Mon 14th Jan 2019 - Update: Revolution trading, PizzaExpress debt and Patisserie Valerie audit
Revolution reports like-for-likes up 2.6% in December: Revolution Bars Group, the operator of 79 premium bars trading across the UK under the Revolution and Revolucion de Cuba brands, has provided a trading update for the 26 weeks to 29 December 2018 (H1 FY19) and for the Christmas and New Year trading period. The company stated: “Total revenue for the 26 weeks ended 29 December 2018 was £78.5m (H1 FY18: £73.8m), an increase of 6.4%. Five new venues opened during this period: Revolution Mitchell Street in Glasgow and Revolucion de Cuba Southampton in August, Revolucion de Cuba Bristol in October, and Revolucion de Cuba Huddersfield and Revolution Durham in November. Overall, these venues have traded ahead of expectations. Like-for-like sales in the important four week trading period leading up to and including New Year’s Eve were 2.6% higher than last year and 8.7% higher over two years. This is the sixth consecutive year of growth over the festive period. During this four week period, pre-booked party revenue was up 11.7% on a like-for-like basis and average weekly sales per venue were above £60,000 with 22 venues setting new total sales records. As expected, and as reported by many high street retailers, Christmas trading came late with like-for-like sales in the last two weeks of the financial period up 8.1%. Like-for-like sales performance for the 26 weeks ended 29 December 2018 was -4.0% below last year with the first quarter at -5.0% (as advised at the time of the group’s announcement of its annual results on 2 October 2018) and an improved second quarter at -3.1%. Sales trends in October and November broadly followed those experienced in the first quarter but, as anticipated, stepped up significantly in December. The 26 week reporting period does not include New Year’s Eve, consistent with the comparative period. Revolucion de Cuba has continued to grow like-for-like sales during the 26 week period with a particularly strong performance over the Christmas period. Whilst the Revolution brand has also achieved growth over the four week trading period to New Year’s Eve, it has consistently traded below last year over the 26 week period. The board is well progressed with its work on revitalising the Revolution brand proposition and continues to implement the required changes to the customer offer with further initiatives being launched in the coming weeks. The board expects to be able to provide an update on the Revolution brand proposition when it publishes interim results on Friday 1 March 2019. The board expects adjusted Ebitda for H1 FY19 to be approximately £2.0m lower than last year due to the like-for-like sales decline and increased operating costs. Whilst the business has seen a much improved trend over the Christmas period, there is still further work to be done on the Revolution brand and therefore the board is taking a cautious approach to trading in the second half given the economic and political uncertainties at this time. Accordingly, it expects adjusted Ebitda for the full year to be approximately £12.0m (FY18: £15.0m).” Rob Pitcher, chief executive, said: “The uplift in like-for-like sales performance over the festive period gives us momentum going into the second half and I’m pleased with the progress being made in refreshing the Revolution brand proposition. However, given the uncertain economic and political outlook we are adopting a more cautious outlook on trading in the coming months.”

Concerns raised about PizzaExpress debt: PizzaExpress bonds are trading at just 46p in the pound compared to 90p a year ago amid concerns about its debts. The company, owned by the Chinese private equity firm Hony Capital, is due to repay around £650 million over the next three years. But its total debt stands at more than £1 billion when a £424.6m loan from its parent company is taken into account. PizzaExpress faced interest costs of nearly £90 million alone in 2017, when it made a £28.7 million loss before tax. 

Financial Reporting Council gave Patisserie Valerie audit a clean bill of health six months before blackhole was revealed: The Times has reported that The Financial Reporting Council approved the quality of an audit of Patisserie Valerie’s accounts six months before the company revealed a £40 million fraud that brought the company to the brink of collapse. The newspaper reported: “The watchdog conducted a review of auditing work on the 2017 accounts of Patisserie Holdings, the parent company, as part of a random sample of businesses whose audits it inspected last spring. The regulator, whose investigations into the large accountants’ work has been criticised as ineffective, gave Grant Thornton’s work on the accounts a clean bill of health, according to people with knowledge of the matter”. A spokesman for the FRC told the newspaper: “The FRC’s routine monitoring of audits is designed to ensure the audit was conducted in a satisfactory manner and not to identify aspects such as fraud.”

Propel launches Leadership Summit, open for bookings: Propel is launching the Leadership Summit, which will see a select group of the sector’s most experienced bosses share their expertise on leadership. The full-day event, in partnership with Elliotts, will take place on Tuesday, 12 February at One Moorgate Place and is open for bookings. Speakers will include Will Stratton-Morris, UK chief executive of Caffe Nero, who will talk about building high-performance teams. Alasdair Murdoch, chief executive of Burger King, speaks about the role of leadership in business turnarounds. Elliotts chief executive Ann Elliott will talk to Des Gunewardena, chief executive of D&D London, about the lessons of leadership he has picked up in his career in the sector. Duncan Garrood, chief executive of Ten Entertainment, will give his views on leadership and the customer experience, while Jo Fleet, managing director of Flat Iron, will talk about empowering people and trust and getting the team to “buy in” through clear communication and vision. Mark Jones, chief executive of Carluccio’s, will explain how the company is building the quality and skillsets of its general managers to lead the business out of decline. Simon Townsend, chief executive of Ei Group, will give his views on the challenges of leadership during a period of immense change and Zoe Bowley, managing director of PizzaExpress, will give her top ten tips on leadership. Meanwhile, Loungers founder Alex Reilley will talk about the adaptations involved in growing a business from one site to more than 100, celebrating success and the art of succession, while Ann Elliott will give her views on the power of mentoring to grow talent in organisations. Propel managing director Paul Charity said: “With the industry facing such challenging times, effective leadership has never been more important. This is an unmissable opportunity to learn from high-profile leaders in our sector.” Prices are £295 plus VAT for Premium members, £345 plus VAT for operators and £445 plus VAT for suppliers. To book, email anne.steele@propelinfo.com

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