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Morning Briefing for pub, restaurant and food wervice operators

Thu 28th Mar 2019 - Update: Time Out Markets, Fulham Shore and Adnams
Time Out Group to open five North America food market this year: Time Out is to open five new Time Out Markets in North America this year. Locations will be Miami (opening in Q2), New York (Q2), Boston (Q2), Chicago (Q3), as well as Time Out Market’s first management agreement in Montréal (Q4). In addition, a Time Out Market London-Waterloo conditional lease agreement (planned 2021 opening) and Prague management agreement (2022 opening) have been signed. Time Out Market Lisbon saw visitor numbers hit 3.9m in the year to 31 December 2018, up from 3.6m the year before. Time Out Market revenue growth was 51% to £9.0m, with Time Out Market Lisbon delivering strong Ebitda in the period of £4.3m, up 95% year-on-year (2017: £2.2m). Group revenue saw 10% year-on-year growth to £48.8m (2017: £44.4m), driven by a combination of 5% underlying growth and the full year impact of 2017 acquisitions.. Operating loss was £11.5m (2017: £24.6m), including the £4.5m gain on disposal of the investment in Flyt. Julio Bruno, chief executive of Time Out Group, said: “I am pleased to report that Time Out has achieved a number of key milestones in the last twelve months. Our Media business materially grew its digital advertising revenue, in a challenging market, and its focus on the most profitable activities drove a significant improvement in the economics of the division. The group published its award-winning content in 207 more cities in 2018, bringing the total to 315. Time Out Market Lisbon was visited by almost four million people, driving 95% growth in Ebitda to £4.3m. As part of the roll out of the Time Out Market format, four new locations have been announced, including two management agreements, bringing the total number of contracted sites to ten. In light of the progress made in 2018, we are confident in the outlook for the group in the year ahead. 2019 will be a transformative year as Time Out opens its doors to five new markets in Miami, New York, Boston, Chicago and Montréal. By the end of the year, Time Out will have markets totalling 185,000 sq ft with almost 4,000 seats and offering food from 120 of some of the best chefs in these cities. Most importantly, whether on our print, digital or physical platforms, we will continue to focus on curating the best of the city, helping our global audience go out better.”

Fulham Shore reports it is “well ahead” of last’s figures: Franco Manca operator Fulham Shore has reported that “both revenue and headline Ebitda will be ahead of last year’s figures and in line with market expectations.” In a year-end trading update, the company stated: “The growth has been driven by increasing customer numbers in our existing restaurants and new restaurant openings. Our two restaurant businesses have steadily increased their turnover each quarter of this financial year, both in total revenue, and in comparison to the previous year. This culminated in a particularly strong trading performance towards the end of the financial year. As we predicted and in line with our growth strategy, the situation prevailing in prior years, where our new London Franco Manca openings initially borrowed sales and customers from nearby existing Franco Manca, has now ended. As a result, many of the early sites are now achieving growth again, reflecting the underlying quality and value of the Franco Manca customer proposition. The Real Greek continues to trade well, especially in warmer, sunny weather due to the availability of outside seating. We are ending the financial year with 61 restaurants, comprising 44 Franco Manca in the UK, 1 Franco Manca in Italy and 16 The Real Greek. We opened four new Franco Manca in the financial year ending 31 March 2019. Two of these pizzeria are outside London, in Bath and Cambridge, with the third just off the Aldwych in London and the fourth, opening last week, opposite the steps of St Paul’s Cathedral and the London Stock Exchange. In parallel with this expansion programme, and subject to sufficient cash generation within the business, we will consider formulating a dividend policy over the coming financial year, reflecting the board’s continued confidence in the outlook for Fulham Shore. One new Franco Manca restaurant is currently being built in Greenwich, and this will open early in the new financial year. We have signed a site for a Franco Manca pizzeria in Edinburgh and are in legal negotiations on other restaurant leases across the UK. These will be for openings targeted in the summer or autumn of 2019. The Real Greek is also negotiating for a number of new sites around the UK. Looking forward, assuming our customer numbers continue to grow and trading continues to be robust, we plan to open an increased number of restaurants across both brands in the financial year ending March 2020. This increased opening schedule will be financed primarily by internally generated cash flow. We will continue to monitor Brexit through April 2019 as it occurs. Our two restaurant businesses have experienced and motivated management teams, and both businesses offer delicious food at great prices. Both businesses continue to trade well and in-line with the board’s expectations and we remain confident that the group will continue to thrive over the coming years.” Chairman David Page added: “All is nearly there for builders to start in Manchester, Exeter, Leeds and central Birmingham so by the end of April with Greenwich and Edinburgh, we will have six out of the eight Franco Manca sites planned for 2020 financial year in progress.”

Adnams reports a year of ‘considerable change: Suffolk brewer and retailer Adnams has reported that 2018 was a year of considerable change. Chairman Jonathan Adnams stated: “After the very substantial investments in 2017, we had our first full year of trading at the transformed Swan Hotel and the first year of operation of our expanded brewery. We invested in our cutting-edge dealcoholisation plant, we planned and are developing our systems for the future, and we built new marketing capabilities. Our focus has been on quality, on creating first rate drinks and first rate customer experiences and on making Adnams the best and most efficient organisation that it can be. At £78.9 million our turnover was 5.6% ahead of 2017 and our beer volumes grew by 2.2%. Operating profit before highlighted items, at £1.6 million, was behind the £2.2 million that we made in 2017. Our Ebitda remained robust at £5.2 million, slightly down from £5.4 million in 2017, before charging the non-cash highlighted items. This year, we have £1.8 million of highlighted items relating to guaranteed minimum pension commitments and property impairment costs. After charging these items there was an operating loss of £160,000. This compares to an operating profit of £1.4m in 2017. The changes that we made in the year led to a number of one-off costs, notably the cost of outsourcing the filling of casks for a few months whilst we installed our dealcoholisation plant, and a new cask robot. However, as we anticipated at the time of our AGM, we moved from a first half position where operating profit was behind 2017 to being ahead of the prior year in the second half. Significant exceptional highlighted items have been charged at the full year. The strategy of Adnams is to be a high quality branded drinks producer and provider of top quality customer experience in our property estate. The success of our low alcohol Ghost Ship, further highly respected awards for our spirits, and plaudits for the reopened Swan stand as evidence that our strategy is being delivered.” Of its property estate, Adnams stated: “The Adnams properties aim to provide top quality customer experience. Foremost amongst them is the Swan Hotel, Southwold, which represents the epitome of the Adnams experience. We aim to provide customers with memorable visits and a deeper understanding of the Adnams brand, integrating Adnams’ premium drinks with experience of a great location. Service levels are crucial in pubs and hotels and we have sophisticated systems for capturing customer feedback. Over the last few years, Adnams has developed a much stronger capability to run its own managed pubs and hotels and this has allowed us the ability to move properties between tenancy, leasehold or management as circumstances suggest. In 2018, we moved the Five Bells in Wrentham under our own management and since the year end we have done likewise with the Cross Keys in Aldeburgh. The growing managed estate also allows us to ensure that skills are shared and staff can cover more properties. The managed estate allows us to communicate the Adnams brand under our own direction, though some pubs, particularly smaller ones, are better managed by others and many of our tenants and lessees are excellent advocates of Adnams.” Of the outlook, he added: “Those writing forward-looking statements at this time no doubt share an uneasiness as to how the future will look. At the time of writing we are due to circulate this report on the day before the UK is due to leave the EU. There is much talk of the leave date being delayed, though less clarity as to the deal that will accompany leaving, assuming that it happens. For businesses, this uncertainty makes planning very difficult; however, Adnams has the advantage that it is primarily a UK-based business and whilst we have plans to secure necessary imports and to continue the growth of our export business, our main concerns relate to consumer confidence and availability of suitably skilled staff including those in our wider supply chain and customer base. There is little that we can do about these matters, other than to try to ensure that we remain nimble and able to respond quickly to our markets as they change. This we will seek to do. Our business is well-invested including state of the art systems. We have ensured that quality is at the heart of what we do and that we can communicate that message to our customers. We are well placed for the future, uncertain as it may be, and we will continue to keep our focus on our long-term success. I would like to thank you for your support.” 

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