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Fri 20th Mar 2020 - JD Wetherspoon results, more closures, PM plea, Leon, Thwaites
JD Wetherspoon reports revenue up 4.9% in first half, cancels interim dividend, sales ‘declining at significant rate’ following PM advice: JD Wetherspoon has reported revenue rose 4.9% to £933.0m for the 26 weeks to 26 January 2020, compared with £889.6m the previous year. Like-for-like sales were up 5%. Profit before tax before exceptional items pre-IFRS16 was up 15.2% to £57.9m, compared with £50.3m the year before. In view of the current uncertainty, the board has decided to cancel the interim dividend. Like-for-like bar sales in the period increased 4.2% (2019: 5.9%), food by 5.6% (2019: 7.1%) and fruit machines by 20.3% (2019: 5.7%). Like-for-like room sales at its hotels decreased 1.3% (2019: increased 0.3%). Bar sales were 60.0% of total sales, food 36.1%, fruit machines 2.8% and rooms 1.1%. During the period, the company opened one new pub and disposed of six, bringing the number open at the period end to 874. Exceptional items totalled £15.9m (2019: £1.6m) and resulted in a cash inflow of £2m. A total of £6.4m has been charged in respect of the disposal of the six pubs in the period and in respect of a number of future disposals and aborted transactions. Following a review, an exceptional charge of £9.5m has been made, reflecting a revised view of the future value of IT projects. Chairman Tim Martin said: “As recently reported, in the six weeks to 8 March 2020, like-for-like sales increased by 3.2% and total sales by 2.9%. In the following week, to 15 March, sales declined by 4.5%. In the early part of the current week, following the prime minister’s advice to avoid pubs, sales have declined at a significantly higher rate. It is obviously very difficult to predict, in these circumstances, how events will unfold in future weeks and months, but we now anticipate profits being below market expectations, so long as the current health scare continues. As a result of this uncertainty, it is impossible to provide realistic guidance on our performance in the remainder of the financial year. The company has decided to delay most capital projects and to reduce expenditure, where possible, including the cancellation of the interim dividend. As a result of these actions, combined with the government’s proposals on business rates relief and credit guarantee facilities, the company believes it has sufficient liquidity to maintain operations at a substantially lower level of sales. As many companies and commentators have noted, the current health crisis places the hospitality industry, in particular, under great pressure. Wetherspoon, like our peers, will be working closely with all parties, including employees, banks, landlords and suppliers, in order to emerge from the situation in the best shape.”
Bill’s, The Ivy Collection and NWTC among latest to close sites: Bill’s Restaurants, Ivy Collection, and Drake & Morgan are among the latest operators to temporarily close restaurants due to the impact of the coronavirus (covid-19). The Richard Caring-backed Caprice Holdings, has also shuttered its London-based estate. In an email to customers, Bill’s, which operates 78 sites, said: “It is with a heavy heart we inform you that due to the fight against the covid-19 pandemic and the advice from our government and the World Health Organisation, we are left with no option but to close Bill’s Restaurants until further notice. This extraordinary measure has been taken in the interest of both employee and guest safety, which are of utmost importance to us. During this time, we will continue to communicate via social media, our website and via our newsletter. We look forward to reopening, when we are able, and to welcoming you back to our restaurants.” Drake & Morgan has shuttered all 20 of its London-based sites, although its two sites in Manchester and one in Edinburgh currently remain opening. It said: “In light of the continuing challenges posed by covid-19 and the need to protect the health and well-being of both our customers and our team, we have taken the incredibly difficult decision temporarily to close our bars and restaurants in London. Our plan is to reopen in late April, unless guided otherwise by the UK government.” At the same time, Bistrot Pierre, New World Trading Company (NWTC), Flat Iron, Dirty Martini, Brewhouse & Kitchen, Ping Pong, Iberica Restaurants and Tapas Revolution have also decided to temporarily close all their respective sites. Iberica said it was “working hard to launch a delivery and collection service as soon as possible”. NWTC said: “Everyone, from our loyal guests to our hardworking teams and our loving communities. You have all contributed to what NWTC is today and for this reason the safety, well-being and health of everyone is at the heart of this extremely tough decision. Rest assured we will be back as soon as we can and it won’t be long before we’re all enjoying delicious food, sipping cocktails and dancing to live music together once again. We will miss you during this time and, for now, we will continue to keep our community together on our Instagram channels.”
PM tells businesses to ‘stand by staff’ ahead of support package announcement: Prime minister Boris Johnson yesterday evening (Thursday, 19 March) told businesses to “think carefully” before laying off staff ahead of the announcement of a support package for workers later today (Friday, 20 March). Johnson said: “My message to companies is think very carefully before you start laying off staff. Stand by your staff because we will stand by you. And you will hear more about that in the course of the next day or so. The chancellor will be saying more about the package we are putting in place for workers across the country to support everybody through this difficult time. We’ve been talking to the trade unions, and others, and we think we have a great package ready to go. So, I hope people will stick by their employees because we’re all going to need them.” Chancellor Rishi Sunak met with business groups and unions yesterday afternoon and will join the prime minister at the daily press conference later today to announce measures to help employees. UKHospitality chief executive Kate Nicholls tweeted: “We have put forward a simple proposal that could be implemented immediately and avoid people having to apply for universal credit worrying about their income – reverse PAYE and direct that cash support to workers through the payroll. It could be done immediately. Give a National Insurance Contribution and VAT holiday to keep cash in the business to pay wages. Businesses with no income want to stand by their people and do the right thing – it is government in-action that is stopping us and it is heart-breaking.” Many in the sector were hoping the government would bring in measures close to Denmark’s promise to cover 75% of the salary of employees impacted by the coronavirus outbreak and where temporary laid-off pay has been extended from four to 12 weeks.
Leon to turn restaurants into mini-supermarkets: Natural fast food brand Leon will turn its restaurants into mini-supermarkets in a bid to ease food concerns caused by panic-buying in the UK. Shelves across the country have been stripped bare of essential items, as shoppers form lengthy queues outside stores – despite official government advice that this is not necessary. Leon, which has more than 75 sites, will transform its shops and launch a new e-commerce platform that allows customers to book a delivery slot a few days in advance, similar to how other supermarkets do. Both the restaurant and website will sell restaurant-quality ready meals, sauces, meats and other food that customers can store and eat at home. The platform will launch by Wednesday (25 March) while customers will also be able to buy food immediately using Deliveroo and Just Eat. Leon founder and chief executive John Vincent said: “Right now you have struggling restaurants and their staff ready to provide food to customers on the one hand, and on the other, supermarkets with empty shelves. The balance isn’t right. Not for customers, not for people facing job losses and not for businesses.” The new online platform has been developed alongside London-based catering company Absolute Taste but will work in partnership with other catering companies and food suppliers to offer them the chance to sell directly to customers.
Thwaites suspends rent collection for pub tenants: Brewer and retailer Daniel Thwaites is suspending the collection of tenanted pub rents until the end of April. The company said it wanted to give tenants “a bit of breathing space” in light of the coronavirus (covid-19) crisis. In the letter Thwaites said: “This will give you the opportunity to use the cash that we are not collecting to pay your staff and other costs and give us some time to assess the full implications of covid-19 on the pub. We will also be able to see the effects that your own cost mitigation plans have had, while understanding how quickly the chancellor’s latest pub support package will make it to grass roots levels, as well as the payment of business rates grants promised in April and any further intervention that may come from government departments. We do ask that you continue to pay for stock delivered in line with your payment terms.” Andrew Buchanan, director of pubs and brewing at Thwaites, told the Lancashire Telegraph: “What I’m really proud of is the entrepreneurial spirit of those people in our pubs who have turned their focus to supporting their local community and helping vulnerable customers – offering to deliver food, prescriptions and making contact with those in self-isolation; offering to act as food banks; launching take-away and delivery services overnight. Never has it been more clear how important pubs are for communities in times of crisis.”

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