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Sat 2nd May 2020 - Auction for Byron to start this week
Auction for Byron to start this week: Byron, the UK casual dinner burger chain, is understood to have instructed KPMG to explore a sale of the business by way of an auction this coming week. It is understood KPMG will be targeting a range of potential acquirers, including investment funds and corporates. KPMG is continuing to explore the covid-19 government support initiatives and also has a mandate to explore other options including a refinancing. Byron was founded in 2007 with two sites and grew to 70 sites in December 2016. Three Hills Capital Partners took control of Byron in early 2018, following a company voluntary arrangement that allowed the company to exit 15 to 20 underperforming restaurants and renegotiate rental agreements. As part of the process, Byron also reduced its company debt to zero. For the 2019 financial year, Byron delivered turnover of £70.9m, with a gross profit of £31.6m and a gross margin of 44.4%, from 51 sites with 1,200 staff. Byron sites are across city centres, neighbourhoods, retail and leisure centres and tourist destinations. A source said: “Covid-19 hit at a frustrating time for Byron, as it was entering the ninth month of its turnaround plan under a new leadership team led by Simon Wilkinson. Byron was quick to act once the crisis emerged, by pausing its refurbishment programme. The business also placed all hourly employees on minimum-hour payment terms to ensure they were protected during the lock-down. Byron made the decision to close all sites with effect from 18 March – two days before government mandate – including its delivery sites in order to protect employees and guests.” KPMG is understood to have assisted with government engagement on potential support packages, as Byron did not meet the initial support criteria. Byron received government support for the Coronavirus Job Retention Scheme and other government support options continue to be explored as part of the process being commenced.

Douglas Jack outlines key issues and questions for UK hospitality businesses as they look to find ways to reopen: Peel Hunt leisure analyst Douglas Jack has outlined some of the key issues and questions for UK hospitality businesses as they look to find ways to reopen. Looking at some of the lessons companies could learn from measures being taken by casinos reopening in Nevada, Jack pointed out trading space “will matter” in the “new normal”. He said: “The more space the operator has to play with and the longer it trades each day, the better placed it is deal with social distancing. This is one of the reasons we are positive on JD Wetherspoon (‘Buy’, 1,200p) and why our retail colleagues are cautious about Greggs (‘Sell’, 1,500p). Social distancing applies to staff as well as customers. Keeping enough space between people creates operational challenges and also changes the experience for customers. Will customers want to order food on an app in a restaurant or shout their order to waiting staff 1.5 metres away?” Wynn Resorts is introducing thermal cameras at entrances to its casinos and people with a temperature of 100 degrees Fahrenheit or above will be subjected to secondary screening. Jack asked how big premises needed to be to support this and said while it could work in UK shopping centres, retail and leisure parks “with multiple front doors” was a different proposition. Wynn Resorts is also planning to have a security officer greet each visitor and ask them to use hand santiser and wear a mask or face covering that would be provided. Jack said although the measures were necessary, they would not make for a “friendly welcome”. He added: “Will UK businesses use some variation of this? Will customers put up with it? Will staff be effective in policing it?” Looking at the overall measures, Jack said: “Some of this will clearly improve guest and employee safety, and some of it will improve guest and employee confidence. Will this kind of focus on covid-19 open up a new competitive challenge for businesses? Will the company that does the most to protect health (and talks about it most) gain market share? If companies don't adhere to whatever the most exacting safety practices turn out to be, will they open themselves up to legal challenges from guests and employees? What will it all cost? And how soon will it become irrelevant once vaccines or effective drug treatments become available?”

PCA challenges regulated pub companies to show they are being fair over rent and support: The Pubs Code adjudicator (PCA) has challenged each of the six companies regulated under the Pubs Code to show they are being fair over its rent approach and ensuring as far as possible every tenant is able to return to trading and profitability after lock-down. The PCA stated: “To that end, the PCA has told each pub-owning business to start from a clear and consistent methodology for how it will support its tenants, and to be open about their approach so individual tenants know what treatment they can expect. And we have stressed the importance of the Pubs Code requirements in regulation 41 to record and agree conversations with tenants. The PCA is also concerned to ensure the financial stresses caused by the lock-down do not translate into inequalities of risk and reward in the regulated sector once pubs reopen.”

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