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Morning Briefing for pub, restaurant and food wervice operators

Wed 28th Aug 2019 - PizzaExpress reports UK like-for-likes ‘largely flat’ in first half, group Ebitda down 7.7%
PizzaExpress reports UK like-for-likes ‘largely flat’ in first half, group Ebitda down 7.7%: PizzaExpress has reported a “resilient performance” in the UK and Ireland for the 26 weeks ending 30 June 2019, while its international business continues to expand. Underlying like-for-like sales in the UK and Ireland were down 0.2%, with sales up 0.5%. A net two sites opened in the period. Total group sales increased 2.6% with like-for-like sales up 0.2%. The company’s focus is on upgrading existing sites rather than new openings in the UK, with further development of the “Future Express” programme. PizzaExpress is trialling new menus, store formats and optimising operating models as it looks to appeal to changing consumer demands. The company said it had also expanded its vegan offering and strengthened relationships with partners such as Deliveroo to meet consumer demand. Group Ebitda was down 7.7% to £32.4m, driven by industry-wide cost pressures in the UK. In its international business, total sales were up 11.5% with like-for-likes increasing 1.9%. International operations now generate 21% of group revenue. Group chairman and chief executive Jinlong Wang said: “In the first half of the year we are pleased we have remained resilient across all our markets despite sector-wide challenges. At a group level, total sales grew 2.6% and like-for-like sales were broadly flat. Costs across the sector continue to rise and this offset the revenue growth, with group Ebitda down 7.7% to £32.4m. We will continue to maintain our focus on cost control, further improving productivity and efficiency, and are taking a measured approach to expanding our estate. Although we are not immune to the cautious consumer environment in the UK and Ireland, we are pleased to have delivered positive sales growth of 0.5% and a largely flat like-for-like sales performance. We are taking a measured approach to growing our business in the UK and Ireland, and in the first half we opened a net two new sites. We are now planning to focus our capital investment on upgrading our existing estate rather than adding more sites. The reopening of our Langham Place restaurant earlier this year kick-started our Future Express programme in which we are creating more sociable pizzerias and a more inviting dining environment with, for example, a greater focus on our kitchens, a refreshed customer service approach and new uniforms. We have now refurbished a further six sites and are pleased with the increased sales performance we have seen to date with a greatly enhanced customer experience generating very positive feedback. Intense competition in the casual dining sector encourages innovation and we are constantly seeking ways to increase appeal to new and existing customers. We developed our summer menu with a particular focus on our Leggera offering, which provides choices under 600 calories and now extends across our pizza range to tap into the wider trends of health and well-being. Our vegan offering has also grown in popularity as we have added additional items to the menu. Delivery remains a key part of our strategy and we have benefited from our strong partnership with Deliveroo. By participating in campaigns such as Deliveroo’s Treat Yourself Tuesdays offer and launching a vegan virtual brand in certain restaurants, we saw a positive volume benefit. Working closely with charitable partners has always been at the heart of our business. This year we are extremely proud to have reached the milestone of raising £2m for Macmillan Cancer Support. This has been achieved by our teams and through customer donations and could fund the equivalent of 36 Macmillan nurses full time for one year. Our international business continued to make steady progress and has shown early signs of recovery from a challenging 2018. We had a good start to the year, which continued throughout the first half, resulting in total sales growth of 11.5% and like-for-like sales growth of almost 2%. We have taken a measured approach to expanding our international estate and ended the first half with 148 sites, with five new openings and six closures since 30 December 2018. Throughout the first half of this year we have continued to invest in our brand proposition, develop new formats and maximise operational efficiencies. In China, for example, to appeal to changing consumer demands we recently launched a refreshed menu, reinforcing our differentiated offering and highlighting that pizza is at the very heart of our business. We have also trialled new formats such as PizzaMarzano Select, a smaller version of our standard site, which has shown early signs of success due to its simplified operations, reduced menu and enhanced use of digital technology for a better customer experience and improved satisfaction. Looking ahead, while we expect the UK and Ireland and international markets to remain challenging, we are confident in our ability to successfully appeal to customers and believe we will continue to deliver a resilient performance across the remainder of 2019.”

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