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Morning Briefing for pub, restaurant and food wervice operators

Thu 17th Jan 2019 - Update: Whitbread, NewRiver, SSP, Ten Entertainment Group, Everyman
Whitbread reports like-for-like sales down 0.6% in third quarter, total UK sales increase 2.5%: Whitbread has reported like-for-like sales fell 0.6% in the 13 weeks to 29 November 2018, with total UK sales up 2.5% (year-to-date 2.7%). The company is now a focused hotel business under the Premier Inn brand following the sale of Costa Coffee to Coca-Cola for £3.9bn at the start of the month. Hotel like-for-likes were down 0.2% with sales increasing 3.5% (year-to-date 4.4%). Food and beverage like-for-likes were down 1.5% with UK sales rising 0.5% (year-to-date -0.4%). An initial £500m share buyback programme commences today (Thursday, 17 January). More than 2,000 bedrooms have been added in the current financial year so far and occupancy “remained high” at more than 80%. Whitbread said it expected to deliver FY19 results in-line with expectations. The company stated: “This has been a momentous year for Whitbread, with the sale of Costa to Coca-Cola for £3.9bn completed on 3 January, much sooner than expected. We are now commencing an initial share buyback programme of up to £500m, with further details about our plans to return a significant majority of the net cash proceeds to shareholders at our Capital Markets Day on 13 February. Whitbread is now a focused hotel business with more than 800 hotels in the UK, Germany and the Middle East, operating under the Premier Inn brand, with a committed pipeline of more than 20,000 additional rooms. Our performance in the quarter reflects a strong central London market and a weak regional market. We are cautious about the macro environment for the next financial year due to increased uncertainty and continuing high inflation. Although we are confident in our ability to create value from ongoing investment in the UK and increasing investment in international growth, in this environment we expect underlying profit before tax in FY20 to be consistent with this year. We continue to be excited about the opportunity in Germany and our first hotel in Frankfurt remains the number one choice for customers. Our second hotel in Germany will open in Hamburg in February and this year we have continued to extend the total committed pipeline in Germany, which now stands at more than 6,000 rooms across 34 hotels. Our unique model and leading market position in the UK puts us in a strong position to capture structural growth opportunities in the UK and internationally. Investing in growth through our disciplined approach to capital allocation ensures we can create sustainable value for shareholders over the longer-term. We look forward to presenting this in further detail at our Capital Markets Day.”

NewRiver looking at pub opportunities within its shopping centres after opening debut site, reports Ebitda per pub up 0.8% in third quarter: NewRiver has said it is looking at pub opportunities within its shopping centres after opening its debut site. The Keg & Kitchen has opened at The Ridings shopping centre, Wakefield, operated by Hawthorn Leisure. NewRiver said early trading performance has been encouraging and other opportunities across the wider portfolio were under review. NewRiver reported its Hawthorn Leisure portfolio saw like-for-like Ebitda per pub increase 0.8% in the company’s third quarter and was up 4.3% in the two weeks to 31 December 2018. Beer volumes were up 10.2% in the two weeks to 31 December 2018. Pub occupancy remained high at 98.9% (September 2018: 98.6%). NewRiver owns 671 pubs, accounting for 22% of total portfolio. The integration of Hawthorn Leisure will be completed by the end of the month as targeted. NewRiver will then benefit from £2m of the £3m synergies identified at the time of acquisition, includes £1.7m announced in the first half secured through supply contract renegotiations and further £0.3m unlocked in the third quarter. The remaining £1m will follow in FY20. NewRiver chief executive Allan Lockhart said: “NewRiver has had a solid third quarter as evidenced by the robust operating metrics across our retail and pub portfolios. The integration of Hawthorn Leisure is on track to complete later this month, and we have made excellent progress towards realising the £3m of synergies identified at the time of acquisition, as well as leveraging Hawthorn Leisure’s pub operating expertise across our wider retail portfolio. NewRiver’s portfolio of wet-led community pubs now accounts for more than 20% of our total assets, adding further diversification to our income streams.”

SSP reports like-for-likes up 2.5% in first quarter: SSP Group, the UK-based transport hub foodservice specialist, has reported like-for-like sales increased 2.5% for the 13 weeks to 31 December 2018 with total group revenue up 7.7%. The company stated: “The trends in like-for-like sales growth in the first quarter of the year were similar to those seen last year in the UK, North America and the rest of the world. Like-for-like sales growth in continental Europe was impacted by the recent protests in France towards the end of the quarter and by redevelopment activity at some of our sites. Looking forward to the full year, our expectation for like-for-like sales growth for the group remains unchanged, at between 2% and 3%. Net contract gains at 3.8% were slightly ahead of our expectations and were driven by significant contributions from North America and the rest of the world. Looking forward to the rest of FY2019, our latest expectation is for net gains to be a little ahead of our previous guidance of circa 3%, largely a reflection of new contract wins in the first quarter, particularly in North America. The new financial year has started well and the pipeline of new contracts is encouraging. While a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets.” 

Ten Entertainment Group reports full-year like-for-likes up 2.7%: Ten Entertainment Group, the UK’s second-largest ten-pin bowling operator, has reported like-for-like sales increased 2.7% for the year ending 30 December 2018. Total sales were up 7.5% to £76,350,000. Four sites were acquired during the year and one underperforming site closed during the period.The company said good progress had been made during the year with the expansion of the estate and the pipeline of opportunities remained strong for the coming year. It added expectations for FY18 group adjusted Ebitda remained unchanged. Newly appointed chief executive Duncan Garrood said: “I am pleased to have joined a business that delivered good sales growth in the last financial year. I have been very impressed by the quality of the people throughout the business, their focus on high standards of customer service and their commercial acumen. I am excited for the year ahead and look forward to driving a number of our key strategies such as our focus on digital, innovation and an enhanced customer experience.” Chairman Nick Basing added: “I am very pleased with this performance, the seventh consecutive year of like-for-like sales growth, despite the headwinds of the extreme summer conditions. It demonstrates the fast-growing and substantial ‘experiential’ segment of leisure in which we operate, with a largely invested, well proven, and technology enabled proposition for families and millennials, provides us with confidence during the current economic and politically uncertain times. We continue to find opportunities to expand our footprint and successfully apply our business model when making acquisitions. We look forward to a strong year of growth ahead.”

Domino’s Pizza Eurasia reports full-year system sales up 30.9%: Domino’s Pizza Eurasia, exclusive master franchisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan and Georgia, has reported group system sales growth of 30.9% for the year ending 31 December 2018. Turkish systems sales were up 14.0% while Russian system sales grew 81.8%. Azerbaijan and Georgia saw system sales growth of 80.2%. The company reported group online system sales growth of 59.6%. Turkish online system sales were up 36.4% and Russian online system sales increased 112.8%. Chief executive Aslan Saranga said: “We are extremely pleased to announce another year of strong top line performance. Along with the robust like-for-like performance, we have been continuously adding to our store count reaching 724 total stores for the group at the end of 2018. The franchising and geographical expansion efforts in Russia have been a strong testament to our business model – we are now in 12 cities outside of Greater Moscow and our franchise store mix has reached 44% from a standing start two years ago. We are also well on our way to eliminating our Turkish net debt and exposure to the associated high local interest rate as at the end of 2018. On the technology side, the new website launched in Turkey is experiencing higher conversion rates and the new Russian website will go live imminently. We also launched the GPS Tracker ad campaign nationwide in Turkey. We continue to adapt our offering to remain competitive; launching new pizzas and side dishes in both our main markets in the new year in addition to introducing a new pricing scheme in Turkey to help combat the high inflation operating environment. The Board remains confident in its growth strategy and expects the full year adjusted Ebitda for 2018 to be in line with expectations.”

Everyman secures new £30m banking facility, updates on pipeline: Everyman has secured a new £30m banking facility to support its growth and updated on its pipeline as it reported trading in 2018 continued to be in line with market expectations. In a trading update for the 53 weeks to 3 January, the company stated: “Everyman now operates 26 venues, with four new venues opened in the final quarter of the financial year (Altrincham, Crystal Palace, Glasgow and Liverpool). The total number of screens now operated by the group is 84 (2017: 69). Together with York, which was opened in the first half of the year, this brings the total number of venues opened in 2018 to five. The group also continues to source exciting opportunities for future investment. Since the interim results, which were published on 5 September 2018, lease agreements have been signed for four venues in Manchester, Clitheroe, Northallerton and Plymouth. Including these, the company has commitments in place to open a further 14 venues by 2022, with seven openings expected in 2019 – Horsham, Newcastle, Clitheroe, Manchester, London Broadgate, Cardiff, and Wokingham. The directors are confident of being able to grow the existing pipeline beyond the new sites which are already committed and expected to go live in 2020. To help achieve this, the company is pleased to announce on 16 January it agreed to a new loan facility of £30m, provided by Barclays Bank and Santander UK. This replaces the previous £20m facility signed by the company on 10 March 2017 with Barclays Bank. This new facility has a term of five years and supports growth opportunities for the group. The directors maintain a positive outlook for the cinema industry and for the company in 2019. Audiences continue to enjoy film, and specifically the Everyman experience.”

Holiday park operator collapses into administration: Holiday park operator Dream Lodge Group has collapsed into administration, potentially leaving investors millions of pounds out of pocket. Some 80 jobs have been lost across the company’s eight sites, whose parent company Walsham Chalet Park have called in Deloitte, reports The Telegraph. Investors were promised personal use of the holiday parks as well as either fixed rental income or a guaranteed profit after three years. Fears were raised in October when “guaranteed return” payments failed to arrive and the company missed a deadline to file its annual accounts. The Telegraph subsequently revealed KPMG had been appointed to assess the company’s financial options. Deloitte joint administrator Richard Hawes said two-thirds of Dream Lodge’s 121-strong workforce were made redundant immediately after it was “no longer possible to continue to operate the business in its existing format”. No further details were provided about the financial difficulties encountered by the company. In its October 2016 financial statements, the last set filed, Walsham Chalet amassed debts of more than £17m. Nearly £8m of that was listed as accruals and deferred income, which includes amounts owed to investors. The company had bank loans totalling about £6m from NatWest secured against its land, buildings and other assets, according to the same accounts. Hawes said Deloitte was exploring “all options – with the priority being to secure a sale of the business or its constituent parts”. He added: “Where at all possible, while a sale is explored, all lodge parks will remain operational.”

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

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