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Thu 16th Apr 2020 - Propel Thursday News Briefing

Story of the Day:

Wasabi refutes report casting doubt on future, like-for-likes up 5% pre-coronavirus crisis: Wasabi, the sushi and bento chain led by Henry Birts and backed by Capdesia, is confident the business is well placed to bounce back strongly when the country gets back on its feet, with the brand posting like-for-like growth in excess of 5% before the coronavirus crisis. The company told Propel: “The ‘food-to-go’ nature of our business model, our distinctive high quality food and value-for-money offer, coupled with our key locations, within and outside London, put us in a strong position to serve our loyal customers and get back into growing the business as things return to some sort of normality.” The group, in which Capdesia invested last year, was speaking after a report in a national newspaper cast doubt on its future based on its accounts for the year ending December 2018. The company told Propel: “In May 2019 restaurant industry specialist investment firm Capdesia made a significant equity investment to recapitalise Wasabi, reduce the level of debt (with the continued support of our existing lender HSBC) and lay the foundations for an exciting growth plan over the coming years. Since its investment, Wasabi has traded strongly delivering eight months of positive like-for-likes sales growth and bringing Ebitda back to historical healthy levels. We opened one new site in Victoria that was trading ahead of expectations, refurbished six sites and currently have two sites under construction at London Bridge and Camden. The current crisis has hit the hospitality sector extremely hard and, like our industry peers, we have reluctantly had to temporarily close all branches with the safety and well-being of our people being at the heart of the decision. Alongside the rest of the industry our key economic challenge is the affordability of rental payments through the closure period, the subsequent reopening of our estate and what is likely to be a challenging trading environment beyond. We are fortunate, however, in owning our own food manufacturing facility in Park Royal, which continues to service a strong at-home ready meal retail offer in Sainsbury’s supermarkets across the country. This part of the business is trading above expectations in the current environment and we continue to employ a core team of 65 that are doing a fantastic job driving this forward. We are also leveraging this capability to support the community and particularly our wonderful NHS where we have already donated 10,000 meals and continue to offer 500 free meals per day as they bravely fight this battle on the front line. In parallel we have teamed up with fellow operators in the #FeedNHS campaign and are supplying hospitals across London with much-needed meals on a daily basis.” On the back of news Pret was set to reopen ten of its sites in London for delivery, the company said: “We will continue listening to government advice and only reopen stores when it is safe to do so for our teams and customers.”

Industry News:

Luke Johnson ready to invest in established ‘high-quality’ hospitality businesses: Sector investor Luke Johnson has called on operators of “established, high-quality UK hospitality businesses seeking added value equity capital” to contact him. In a tweet, Johnson, who currently backs Gail’s Bakery, Lussmanns Fish & Grill and All Star Lanes, among others, said he was willing to invest £500,000 to £5m in companies who fitted that criteria, and ready to “move quickly if terms were realistic”. Johnson’s move came after he told Propel in terms of investing in the sector, he would want to know when the industry was reopening, “what the rules will be, and what the level of trade is”, but that was now unfortunately “slightly chicken before egg”, because a lot of companies would need capital to reopen. He said: “They won’t have working capital to do it because landlords, trade creditors and others – HM Revenue & Customs even – may need paying upfront almost immediately or very swiftly and they won’t have the trade under their belt, or cash flow, to fund that.” He said essentially the industry would have to be recapitalised across the piece and “debt won’t do it, it never does”. He said: “You need an equity base. Going forwards this industry will realise that to a degree we had the good times, but now it’s going to be tougher, not just this period, but the rest of this year and so forth for a while yet. Therefore, we are going to have to keep the gearing and leverage low. We are going to have to have more solid balance sheets. One thing that may come from this is people examining their costs and taking difficult, but necessary decisions to adjust to more austere times in terms of overheads. Clearly there are hundreds of good operators who are adaptable and entrepreneurial. They will survive, they will adapt and, in many cases, find money themselves – founders who will put in more money, or existing backers will, or they will find new backers. Attracting capital to this sector going forward after the shock it has had, the damage it will cause and when the dust has settled, is going to be extremely difficult. Although we are in a big sector, worth £100bn a year or more, its attractiveness as a place to put your money has obviously been somewhat dimmed. I am sad to say as it has become clear things can go wrong quite rapidly. Valuing assets is also going to be extremely difficult and finding investors is not going to be easy.” Johnson will share more of his thoughts in the video interview, which will be released on Thursday (16 April). Meanwhile, readers can support independent sector journalism and get their news 12 hours early (at 7pm each night) with a Propel Premium subscription. It costs £395 plus VAT per annum for operators and £495 plus VAT for suppliers. Email to sign up.

Government extends CJRS cut-off date: The government has extended the cut-off date for the Coronavirus Job Retention Scheme to 19 March 2020. Previously the scheme had excluded those offered jobs but who had not joined their new employer, as well as thousands of seasonal staff who were due to join for Easter and the summer season. UKHospitality chief executive Kate Nicholls said: “This is great news for the sector and a welcome sign the government has listened to our concerns and those of the workforce. This will provide some very valuable peace of mind for employees who had missed the previous deadline, and it will give businesses some breathing-room knowing that they will be in a stronger situation once they are in a position to reopen.” Andrew Ball, partner at sector accountancy specialist haysmacintyre, added: “This is a welcome and sensible clarification.”
UKHospitality and haysmacintyre are Propel BeatTheVirus campaign members

PGB agrees suspension of all rent negotiations: The Pub Governing Body (PGB) in conjunction with the PGB of Scotland has agreed with the pub companies that follow the tenanted and leased codes of practice and self-regulation that all rent review negotiations will be suspended while outlets remain closed. The suspension covers the period from 16 March until at least the end of June. PGB chairman Sir Peter Luff said: “This pragmatic and sensible step is in addition to any agreements individual companies have put in place for their pubs and relieves all tenants of one possible worry during the coronavirus epidemic. This quick and flexible response to the current crisis shows how voluntary regulation brings real benefits to pubs.”

Regulator tells insurance companies to settle claims ‘as soon as possible’: The Financial Conduct Authority (FCA) has ordered insurance companies to pay out claims to firms “as soon as possible” or explain themselves to the watchdog. The FCA sent a letter to insurance companies on Wednesday (16 April) saying it would not intervene in most circumstances as the majority of business interruption insurance policies did not include pandemics. However, Christopher Woolard, the FCA’s interim chief executive, said insurers should be assessing and settling other claims quickly and if there were grounds not to pay claims in full, an interim payment should be made. “Many firms are already doing this,” he said in the letter. “If you disagree with doing so, we would like you to send to us the grounds for reaching that decision, including how you believe it represents a fair outcome for customers. A key objective of the FCA is to ensure financial pressures on policyholders are not exacerbated by slow payment, rather, such claims should be paid as soon as is possible. This is consistent with the wider objective of the authorities to support business and consumers during the current crisis.” The letter is targeted at insurers in relation to claims from small and medium firms for business interruption cover and does not address individuals' policies.

Restaurant and bar spend plummets in March but Brits remain resolute about own finances: Spending in restaurants dropped by 35.5% and by 22.2% at bars, pubs and clubs in March compared with the previous year but Brits remain resolute about their own financial situation, according to the latest Barclaycard data. Overall consumer spending dropped 6% year-on-year with spending on non-essentials down 12.9% as people were forced to stay at home during the latter part of the month. Specialist food and drink stores – including off-licences – saw spending up 30.5% in the month – and jumped 80% in the week before social distancing measures were introduced. Spending on essential items rose 11.6% with supermarket purchases driving much of this growth, with the category increasing 21.3% during the month – and 49% in the week before the government lock-down. Consumer confidence dropped to its lowest level since Barclaycard started the survey six years ago, with just 25% of UK adults feeling positive about the state of the UK economy – down 17% from February. Confidence in job security declined 6% to 43%, suggesting concern about the months to come. However, Brits continue to be resolute about their own financial situation, with 68% remaining positive about their household finances, broadly in line with last month. Barclaycard said this could be attributed to the fact 56% said they were saving money by avoiding the pub, eating out and commuting less. Barclaycard director Esme Harwood said: “The coronavirus pandemic continues to impact everyday life in the UK, and this is naturally reflected in where and how Brits are spending their money. However, despite these turbulent times, it’s positive to see many Brits remain resolute about their own household finances.” 

Scottish government extends grant for multiple operators: The Scottish government has extended its Coronavirus Small Business Grant scheme to include multiple businesses. It will now offer a 100% grant on the first premises and a 75% grant on “all subsequent properties”. The change comes after the Scottish government came under fire from hospitality operators and trade groups for limiting the grants to one per business, not one per property as in England. The new arrangements will be in place for applications from 5 May. The £25,000 grant is available to hospitality and leisure sector business with properties that have a rateable value between £18,001 and £50,999. Scottish Beer and Pub Association’s chief executive Emma McClarkin said: “This gives pubs and other hospitality businesses the extra cash flow needed to survive at this time and will also allow more businesses to reopen once the pandemic is over. There remain areas where further support is still needed – pubs with rateable values of more than £51,000 will still receive no grant support and is something we’re pushing both UK and Scottish governments for more action.”

OAPA calls for donations to support its members in need: Only A Pavement Away (OAPA), the industry charity that supports the homeless, ex-offenders and veterans with jobs in hospitality, is urging those who can to make donations to support its members who are struggling to get back on their feet. The call for donations comes following the charity’s pledge to bridge the funding gap for its members who have been made redundant or put on furlough during the coronavirus crisis. The emergency pay gap fund has so far resulted in 24 members being able to pay their rent, buy groceries and pay bills. OAPA founder Greg Mangham said: “Our objective as a charity is to support as many people out of poverty and destitution as we possibly can, and this starts with external funding and donations. We urge those who are in a position to do so to donate and help change someone’s life.” To pledge support and funding for the charity, either contact Greg at, or visit

Job of the day: COREcruitment is working with a premium hospitality business that manages some of the most popular venues across the UK. The business is keen to appoint an ambitious general manager for a group wide position. The role will have direct responsibility for planning, directing, developing and coordinating the venue catering and service arms. They will ensure delivery of a consistently high standard of service, focusing both internally and building strong networks with clients and relevant external parties. Anyone interested in exploring this opportunity can email their CV or profile to 
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Hornby earns £268,000 in first five months leading TRG after forgoing bonuses: The Restaurant Group (TRG) chief executive Andy Hornby earned £268,000 in his first five months leading the business, the company’s annual report has revealed. Hornby, who joined on 1 August and succeeded Andy McCue, received the entire amount as fixed pay for the year ending 31 December 2019. He was also due to receive a £98,000 bonus relating to the “stretching” synergy targets being fully met for the Wagamama integration and £5,000 as part of an employee share scheme. This was due to be paid at the end of March but he has volunteered to forgo these as announced by the company earlier this month. Due to his recent arrival, Hornby’s salary remained at £630,000 – although he has volunteered to take a 40% pay cut from 1 April for three months. Meanwhile, chief financial officer Kirk Davis earned a total of £446,000 in 2019, compared with £394,000 the year before. This also consisted of fixed pay. Davis was due to earn a bonus of £109,000 as well as £5,000 under the employee share scheme, but has also volunteered to forgo those. Davis received a 2% salary increase – in line with wider head office team – on 1 January that took his salary to £369,342. He has also volunteered to take a 20% pay cut over the same three-month period. The smaller reduction reflected the “exceptional workload for the finance function”, the company said this month. Last week TRG raised £57m in a share placing to support the business during the coronavirus crisis and anticipated a phased reopening of sites over the remainder of this year.

Canaccord – JD Wetherspoon may need to raise £250m to survive liquidity crisis: JD Wetherspoon may need to raise up to £250m to survive the liquidity crisis, according to analysts at Canaccord Genuity. Issuing a ‘Hold’ note on the shares and reducing the target price from 1,500p to 900p, they stated: “Wetherspoon’s long-standing, capable management team and outstanding ‘value-for-money’ proposition should stand it in good stead when the country starts to reopen for business. In the meantime it has withdrawn guidance, but our scenario suggests it may need to raise up to £250m to survive the liquidity crisis – not only to cope with closure but also potentially a sustained period of weak demand that does not suit its high-volume, high-cost, low-margin business model.” Canaccord said it expects the company is talking to the government about its Coronavirus Corporate Financing Facility and its bankers. It added investors should not fully discount an equity fund-raise, which would “likely not be the preferred route”. Canaccord’s case is based on Wetherspoon being closed for three months, reopening in July. This reduces Canaccord’s sales forecast for Wetherspoon by £460m to £1.35bn for FY20 and by £470m to £1.42bn for FY21. "We admit there could be a wide variation to this scenario but the direction feels right," the analysts said.

Qoot Restaurant Group looks to appoint operating partner as it pivots business to delivery: Qoot Restaurant Group, which operates a number of fast-growing brands in London, is looking to appoint an operating partner as it pivots its model to delivery. The company, which is bringing Kuwait chef Ahmed Al Bader’s hot sandwich concept 77 Josper Bar to the UK, is opening a number of delivery kitchens for its various brands. These include The Lebanese Bakery, which has launched in Wandsworth and Belgravia. Plant-based brand By Chloe has opened a kitchen in Wandsworth with two more launching in Islington and Crouch End. A kitchen will also be opening for Vegan Dough Co – the vegan pizza concept that was launched last year and has been operating as a virtual brand from Erpingham House’s site in Norwich. To support the delivery kitchen plans, Qoot is hiring an operating partner to lead that part of the business. As a member of the senior leadership team, they will liaise with partners Deliveroo, Seamless and Food Stars to grow revenue “as well as maintain quality standards for all of our brands and help in the strategy and growth in the other markets that we operate”. Vice-president of operations Scot Turner told Propel: “We are adapting the business by opening delivery kitchens so we can continue serving our customers and we are looking for someone who can use our operating and investment platform to grow our brands while developing new concepts and opportunities to achieve the overall profitability for the business. We are also continuing to hire for some of our other brands, including a baker for Dominique Ansel Bakery. I think it’s important to show at what is tough times for the industry we are still open for business.”
Deliveroo extends free meal offer to NHS workers after raising £1.5m: Deliveroo has raised more than £1.5m from customer donations and corporate funding to support free meals for NHS workers through its restaurant delivery partners. The support will allow Deliveroo to extend its offer, now allowing NHS workers to order free meals to their homes instead of just hospitals. NHS workers will be eligible to receive a £20 voucher for Deliveroo, which will cover both the cost of the meal and delivery, up to a value of £20. A total of 50,000 vouchers will initially be made available. Deliveroo has already delivered almost 60,000 meals to NHS hospitals. Food has been donated by Deliveroo’s restaurant partners, led by Pizza Hut, and also including German Doner Kebab, KFC, healthy Asian food chain Itsu, Burger King, Lewis Hamilton’s Neat Burger and Casual Dining Group brand Bella Italia. In total, the value of food donated to the initiative and the money raised from consumers and corporates amounts to more than £3.5m.

Craft Union creates online operator community: Craft Union Pub Company, part of Ei Group’s managed operations, has created an online community to engage and support its operators. The virtual community, which is called the Crafty Squad and run on Facebook, has seen the organic growth of a number of pub-based events created by operators. Members of the closed group can get involved in everything from virtual quizzes, photo competitions and live music performances to brainstorming fund-raising ideas. A number of operators have taken the opportunity to share best practice around operational activities, such as tips for spring cleaning the pub, as well as cleaning lines. Craft Union Pub Company operations director Frazer Grimbleby said: “The true grit, determination and passion of your business really shines through when times are tough, and I couldn’t be prouder of the actions of our operators over the past few weeks. It’s fantastic to see the support network our pubs provide, not just in the heart of the communities they serve, but also for one another.”
Coal Rooms team relaunches as delivery service Fat Boy BBQ: The team behind Peckham restaurant Coal Rooms has relaunched it as delivery service Fat Boy BBQ. Available via Deliveroo from Thursday to Saturday, the concept serves American-style barbecue food including The Peckham In & Out Burger consisting of a single or double beef patty, house burger sauce, Gruyere cheese, Monterey Jack, burnt onion, lettuce and tomato; and Wing & Tings – six deep-fried chicken wings and Jerk barbecue glaze. There is also a combo box featuring two Peckham In & Out Burgers, a portion of wings, a side and sauce of their choosing. 

Collectiv Food launches direct-to-consumer offer in partnership with Deliveroo: Collectiv Food, the restaurant produce supply chain and delivery company, has entered into partnership with Deliveroo to bring its produce direct into consumers’ homes for the first time. Called Farmshop, the new company will build on Collectiv Food’s existing direct relationships with farmers and fishermen to provide domestic homes with restaurant-quality food in a time-efficient way. It said the whole process, from ordering to receipt, would take no longer than an hour. With its restaurant clients, such as The Big Easy and Megan’s on temporary hold, Collectiv Food founder Jeremy Hibbert-Garibaldi has developed the sister brand. He said: “Most of these fantastic producers are mainly selling to the foodservice industry, and with restaurant closure – having no direct route to consumers – would either shut down or die, putting families and staff at risk. To help as much as we can and try to prevent this from happening, we have worked hard to find a way to redirect their produce to consumers' homes. We are masters of restaurant supply chain and delivery but know little about the consumer market. Working with this trusted partner means we can get on with making sure the product is perfect without having to worry about the delivery.”

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