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Thu 19th Mar 2020 - Coronavirus update: Young’s, Costa, Byron, Caravan, Rockfish et al
Young’s – we expect closure but will continue to trade for now: London pub operator Young’s is to keep trading for now. It stated: “During these uncertain times our focus is on protecting our staff and customers and supporting our tenants. It is too early at this stage to quantify the impact on earnings for the remainder of the current financial year without knowing how long our pubs will be affected. We do expect closure of some or all of our pubs, at some time, but hopefully only for a short period. Closure will inevitably impact earnings, but to some extent this would be mitigated by welcome government relief on business rates. Our intention at the moment is to continue to trade our pubs, as we feel they offer local communities a place of sanctuary in these uncertain and worrying times. We have introduced very clear guidelines on ‘social-distancing’ and are upholding the strictest health and hygiene measures to protect our customers and our teams. Currently, we are doing everything we can to limit the impact on our amazing teams out in our pubs and to protect pay for all. As for our tenants, we will be informing them that there will be a ‘property’ rent holiday for a period of three months, starting this week. From a financial perspective, we are taking appropriate measures to help reduce cost, optimise working capital and protect our financial position. We have a very strong balance sheet supported by a predominantly freehold estate. We also have one of the lowest gearing ratios in the industry at 25.7% (as reported at our Interim Results in November 2019) and significant financial headroom within our existing banking facilities.” Patrick Dardis, chief executive of Young’s, added: “These are challenging and uncertain times and we must all come together to do the right thing during the peak period of Covid-19. We have a resilient business underpinned by great people who we will support through this crisis. However, let’s be in no doubt that with pub closures imminent, albeit hopefully for only a short period, all businesses in our sector will be severely impacted. We must remember, as painful as this will be, that it will be temporary, and we look forward to welcoming all our customers back to our great pubs once we are through this. We remain confident in our strategy for the business.” 

Costa to offer just takeaway, as all stores go cashless: Costa Coffee, which is owned by Coca-Cola, has from today made several changes to its stores to help support in social distancing, including closing all seating areas. From today (19 March), all the brand’s stores will be cashless and will only accept card payments. At the same time, all seating areas will be closed for customer use in stores to support government guidance on social distancing, however, its toilets will continue to be open for customers. It will serve all drinks in takeaway cups and food in takeaway packaging, ‘dine-in’ crockery will not be available. It won’t be able to serve drinks in a reusable cup but will honour its 25p discount if consumers bring in their own cup. All Costa sites will also temporarily remove newspapers as the company said cannot clean them in between each customer handling them. All stores will also have a more limited food range but “we will be sure to stock Costa Coffee favourites and make sure we have choices available for all dietary requirements and preferences”. All Drive-Thru lanes will remain open as usual for those customers in vehicles but internal seating areas will be closed. Its Costa Express machines will continue to operate as normal. Whilst some of these changes will feel quite disruptive, we believe they are the right thing to do for our customers and store teams. We are especially mindful of the move to takeaway only and ask that customers dispose of and recycle their Costa Coffee packaging responsibly. We will continue to recycle cups and welcome you dropping them back into store, if possible. We thank you in advance for your support and assure you that these changes are temporary and will be regularly reviewed. Jill McDonald, chief executive of Costa, said: “These are difficult times and where we can provide a safe and familiar environment in your community, we hope to do so.”

Whitbread to temporarily close restaurants: Whitbread, the operator of the Brewers Fayre, Beefeater and Bar + Block brands, is to temporary close its c400 restaurants from this tonight (19 March). A Whitbread spokesperson said: “Whitbread has entered these unprecedented times in a very strong financial position, and we are taking decisive action to protect the interests of our guests, our staff and our business. Following the recent, updated government advice on social distancing, we have taken the decision to temporarily close our Restaurants commencing Friday night. All of our Premier Inn hotels will remain open.”

Shepherd Neame – the board is taking a 20% pay cut: Brewer and retailer Shepherd Neame has reported it is seeking to minimise all spend with the board taking a 20% pay cut. It stated: “Events have moved extremely rapidly since we reported our interim results on 11th March culminating in the government’s advice on Monday 16th March to the general public to ‘avoid pubs, theatres and other hospitality venues’ in order to contain the spread of the Covid-19 virus. We had seen some volatility in trading towards the end of the last week as media coverage of the crisis intensified. However, following the government’s advice, the company’s and the industry’s situation has changed materially and now it is inevitable that trading will deteriorate rapidly too. Until a semblance of clarity returns it remains impossible to gauge the impact on the years’ results. We welcome the chancellor’s comments on business rates and small business grants, but need more detail urgently. The overall provisions so far announced do not go far enough to support UK hospitality businesses. We want immediate cancellation of all taxes and support for staff overheads. In light of these changed circumstances, we are now implementing a number of precautionary measures to protect our employees, licensees and to conserve cash. These measures include: cessation of all non-contractual capital expenditure in the brewery and pub estate for the foreseeable future; minimising all expenditure to the lowest level possible; suspension of rent receipts from Monday 16 March to support our tenants; all office staff moving to home working. The brewery will continue to produce beer under new and strict access and hygiene controls including deep cleans between shifts, workplace distancing measures and monitoring the temperature of employees at the beginning and end of each shift; the board of directors voluntarily agreeing to take a temporary 20% pay reduction The above actions are precautionary at this stage and will be reviewed on a weekly basis to preserve maximum headroom on our facilities and in the hope that we can return to normal business in the near future.”

Byron to switch to delivery only: Better burger brand Byron is to become the latest operator to switch to a delivery-only format, as it looks to combat the impact of a drop in trade due to the coronavirus. The service through Deliveroo will be operated out of c35 of the group’s 49 sites. A statement on the Simon Wilkinson-led brand’s website said: “As you will have heard over the last few days, the latest government advice is for the public not to visit restaurants at this time. With this in mind, we have decided to close our eat-in restaurants and become Deliveroo-only for the time being. This is a sad decision for us to make. We love nothing more than bringing people together over proper burgers and a proper good time. But, the health and wellbeing of our customers, colleagues and community always comes first. We hope that all of our lives can return to normal as soon as possible and that we can welcome you back to Byron for a celebratory burger!”

Caravan, Rockfish, Burger & Lobster and Blacklock temporarily close sites: Caravan, Rockfish, London Cocktail Club, Burger & Lobster and Blacklock are amongst the latest operators to announce they are temporarily closing all their sites in response to the impact of the coronavirus and in light of the current government advice on avoiding pubs, bars and restaurants. The Active Partners-backed Caravan announced the closure of its five eponymous sites in the capital, and latest opening Vardo in Duke of York Square. The company said: “It is with great sadness that we announce the temporary closure of our restaurants. Our main focus needs to be the health and well-being of our people, our guests, the wider community and the survival of our business. We will be back as soon as we can – even stronger!” Goodman Restaurants and Burger & Lobster has also temporarily closed their sites in the capital. Founder Misha Zelman said: “In light of the current government advice, it is with a heavy heart that I have had to make the hardest decision of my life to temporarily close our London restaurants from this afternoon. At this time, we need to help each other, look after our families and ultimately, we need to look after ourselves. We’ve spent so many years crafting this fantastic brand and I will be working tirelessly to get us through these unprecedented times to ensure that we can continue to do what we do best for many more years to come. This virus will not last forever, and I promise now that we will reopen our restaurants. Until then, stay safe London and we promise to be on hand and ready to help you celebrate once this is all under control.” The skinny chops concept Blacklock has also temporarily closed its three sites in London. At the same time, Rockfish, the south west-based seafood restaurant group run by Mitch Tonks, has announced it will temporarily close its eight sites tomorrow. Tonks said: “We feel it our duty to join others in the fight to protect our people, our customers and our community amid the spread of Covid-19. We are taking the tough, but necessary, decision to temporarily close all our Rockfish restaurants from Saturday 21 March. This decision has taken a lot of detailed planning and naturally we expect some difficult decisions to be ongoing, especially around our people. I have explained to them how important everyone is to the combined Seahorse and Rockfish family and we will do all we can to support and guide them through this unprecedented period. Whilst none of the decisions we are making are easy we are doing so with the aim of protecting jobs within the company. If we can continue to employ our great people through the entire period of closure, we will be ready to bounce back once we are out the other side.” London Cocktail Club, the ten-strong group led by JJ Goodman, has also decided to temporarily close its sites until further notice.

Adventure Bar Group launches crowd-fund for survival: London bar operator Adventure Bar Group has launched a crowd-funding campaign for each of its sites in an attempt to survive. Co-founder Tobias Jackson said: “It is with sadness that I must send this Press Release as we fear that Tonight Josephine, its sister bars and the independently run Adventure Bar Group that has grown for 15 years from the ground up is in danger of not surviving until the time it takes for the help to come, not that this is guaranteed for everyone (as our bank has told us). We have launched this campaign to save 135 jobs and the future of this company. The experiences are exciting and varied and we aim to give it everything to get to the other side!”

Escape Hunt – we are exploring every avenue to conserve cash: Escape Room operator Escape Hunt has reported it is now seeking to conserve cash amid the coronavirus outbreak. It stated: “In the first two weeks of March, sales in the UK business held up remarkably well with almost no discernible impact from Covid-19. Our new US master franchisee has converted an existing site to the new format which was received well giving them confidence that the business model can be scaled out across the US as planned. However, Covid-19 will prove to be a huge challenge for us all. In the past few days, countries around the world have been adopting increasingly stringent measures to curb the spread of the virus, in many cases leading to the forced closure of all non-essential retail and leisure facilities. In this environment, we fully expect franchise income will progressively decline or cease. The UK government’s advice that citizens should avoid unnecessary social contact, referencing bars and restaurants, has been felt this week with a pronounced increase in customers seeking to re-schedule or cancel bookings. At a site level, we have implemented a more stringent cleaning regime and have taken other steps to protect staff and customers and for the moment, sites remain open for business. However, we anticipate further sales reductions and it is possible that the UK government will follow other European countries and force the closure of all leisure facilities, which would directly impact Escape Hunt. For this reason, the board is taking immediate action to dramatically reduce costs, ceasing all development expenditure and exploring every avenue to conserve cash with a view effectively to putting the business into hibernation as and when necessary. Whilst the excellent trading performance of the UK sites has proven the model and given us confidence to roll-out more, new openings of owner-operated venues in the UK have now been put on hold pending greater clarity of the situation. The recent budget and Tuesday’s announcement of direct aid to the sector by the Chancellor of the Exchequer provides some welcome relief, although the extent to which the company will be able to benefit is not yet known, nor is the depth or duration of the impact of Covid-19 on trading. As at close of business on 17 March 2020, the company had approximately £1.8m cash in the bank. A level of expenditure will need to be maintained throughout any hibernation period to enable the business to re-open as conditions permit, but the measures being taken are expected to be sufficient to sustain the business for several months. Given the unknown duration of the impact of Covid-19, the board will continue to monitor the group’s funding requirements closely and will proactively explore all options available.”

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