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Fri 12th Jun 2020 - Exclusive: Market Taverns acquires former Food & Fuel sites
Market Taverns acquires ex-Food & Fuel sites: London pub operator Market Taverns has acquired four sites from the former Food & Fuel estate, Propel has learned. The seven-strong group, which is led by Steve Welsh, has acquired the sites, including the Sporting Page in Chelsea and The Queens Head in Holborn, out of administration. It is thought the deal for the four sites, was funded through a separate finance deal from Market Taverns’ private majority shareholder. Propel revealed last month that The Restaurant Group (TRG) was to buy back five of the former Food & Fuel sites it placed into administration in March. TRG exchanged on a deal to buy the package, including The Queens in Crouch End, and the two Coco Momo sites in Kensington and Marylebone. TRG acquired the then 11-strong Food & Fuel in September 2018 for £14.9m, stating the deal gave its pubs arm a presence in London, on which it hoped to build. Karen Jones, the executive chair of Prezzo, who co-founded Food & Fuel in 2006, was thought to have also run the rule over a handful of her former sites, of which she is understood to still own the freeholds. Propel understands TRG was keen to keep a number of the Food & Fuel sites but there was no guarantee that would happen after having to place the business into administration. At the time of its acquisition by TRG, the business comprised eight gastro-pubs, one sports pub and two cafe bars under the Coco Momo name. After acquiring the business, TRG added the former Cafe Rouge site on the Strand-On-The-Green to the Food & Fuel portfolio, reopening the site under the name The Steam Packet last year. Earlier this year TRG appointed restructuring firm RSM as administrator to Food & Fuel. 

Chefs, restaurants and pubs come together for online charity auction: A group of Britain’s biggest names in food are to auction off private dinners, virtual baking classes, and celebratory cakes to help fight hardship brought about by the covid-19 pandemic. With thousands of the UK’s hospitality workers facing a challenging and uncertain future, the likes of Angela Hartnett, Michel Roux Jr, and Tom Kerridge will take part in “Today’s Special”, an online charity auction live streamed on video conferencing platform Zoom. Co-hosted by Great British Menu judges Andi Oliver and Oliver Peyton, auctioneer Tom Best will give the public the chance to bid on food experiences donated by celebrities, as well as restaurant groups such as Hawksmoor, Dishoom, Franco Manca, Pho, and St. John. Oliver and Peyton will host the event on 1 July on Zoom. The event will begin at 8pm and prospective bidders can buy a £5 ticket to the event, which will give access to the Zoom livestream and enable them to place bids on as many auctions as they like using a virtual paddle. Ticket holders will also be able to participate in a silent auction which will include more than 100 lots from every corner of the country. Through the two auctions and the ticket sales, Today’s Special is aiming to raise at least £50,000 for Action Against Hunger and Hospitality Action, organisations that support those at risk of hunger in the UK and around the world, as well as hospitality workers hit hardest by the industry shutdown in the UK. Lots include a cake made by Lily Vanilli, baker to Elton John and Lady Gaga, a Sunday roast cooked by Michelin-star winning chef Sally Abe, and a “jerk-spiced fried chicken” street party catered by James Cochran, a past Great British Menu winner. Huw Gott, co-founder of Hawksmoor, said: “Restaurants, pubs and bars don’t just feed people, they nourish their souls and bring people and communities together. Hopefully Today’s Special can help two charities that are extremely close to our hearts, Action Against Hunger and Hospitality Action, continue to support those most in need and hospitality’s most vulnerable, whose struggles have become even more acute since the pandemic started. I also hope it will celebrate the role and impending reopening of our industry: the neighbourhood restaurants, the incredible independents, the high-street favourites and the multi-starred greats as they struggle to their feet to welcome people once more.” Anyone looking to take part in the event can email

City Pub Company – ‘we will be a more efficient, steamlined business’: The City Pub Group chief executive Clive Watson has stated the company will reset as a more stream-lined business in the wake of coronavirus. He said: “We are excited about the prospect of reopening, not least because we have an excellent team who are keen to get back to work and keen to show hospitality to customers again. However, we will do it cautiously and above all safely. We will reopen with a reset, more efficient, streamlined business, reduced capital expenditure and our focus on the existing estate. We have a strong balance sheet not only to endure and prosper again, but also to take advantage of opportunities that arise.” His comments came as the company reported revenue up 31% to £60.0 million (2018: £45.7 million) in the 52 weeks to 29 December 2019. Like for like sales increased by 1.7% year on year, against a tough comparable period following the World Cup and long, hot summer in 2018. Adjusted Ebitda was up 15.4% to £9.1million (2018: £7.9 million), despite a temporary reduction in margin. Adjusted profit before tax was up 4% to £5.3 million (2018: £5.1 million). Watson added: “Covid-19 has given the board time to evaluate how the group can run its operations more effectively. Traditionally, the group has run its pubs as independent units where a lot of the local decision making was taken at site level. With the changes in technology, especially in relation to digital marketing and online bookings, now is the time to change how the group manages its day-to-day retail operations. The board is currently in the process of introducing a central sales and marketing function. Online sales and telephone sales will now be run centrally at head office and marketing of key events such as Valentine’s Day, Six Nations rugby, Easter, Christmas and other events will be done centrally. Pubs will still be able to market local events themselves to maintain individuality and focus. By adopting a central sales and marketing approach, the group will be able to use its database more effectively over the next three months, and will also improve the functionality of its City Club app. The group will work closely with key brands, existing and new, to continue its premium offering. There will be little additional cost, as much of this functionality sales and marketing has previously been done regionally. This will free up time for the retail operations, enabling them to focus more on execution of the offer with a more streamlined, but premiumised, offer. The group also expects to see savings elsewhere in systems, finance, unit employee costs and other regional costs. It is the board’s belief that there is unutilised capacity within its current estate which can be utilised more effectively when we return to normal trading conditions. Other measures which are being implemented include zero-budget policies, streamlining the company’s supply chain, and renegotiating construction costs, particularly on the equipment side. Covid-19 has given the group a one-off opportunity to re-set the way the business is run. Pubs will continue to be operated on an individual basis but with the support of a more robust central system. This will enable the group to raise the bar for its retailing standards across the estate.”

M&B updates on its liquidity position: Mitchells & Butlers has updated on its liquidity position. The company stated: “Mitchells & Butlers is a strong business with an enviable portfolio of freehold properties and brands, a consistent record of clear sales outperformance against the market and an established strategy of strengthening the balance sheet by reducing net debt and gearing. This has put us in good shape to address the challenge we now face. The full impact of covid-19 on our trading and financial position is uncertain, depending primarily on the extent of the closure period and the profile of recovery, but we moved swiftly to protect the business through a reduction of cash outflows including: cancelling all discretionary capital expenditure, furloughing of over 99% of the workforce, where possible reaching agreement on extended payment terms, and the elimination of all non-essential operating expenses. We have also been in close contact with our main creditors and are pleased to announce that we have now reached agreement on a number of new arrangements which provide a platform of both additional liquidity and improved financial flexibility for the group in order to meet the challenge presented by covid-19. We have agreed with our main relationship banks to the provision of committed unsecured liquidity facilities totalling £250m through to 31 December 2021. This comprises extension to the term of our existing £150m facilities plus the provision of additional facilities totalling £100m. These facilities will be on a new covenant structure, reflecting the revised trading profile of the group through the recovery of its business following re-opening, and continue to be supported by a negative pledge in respect of the group’s unsecured assets. The £100m additional facilities are structured under the government backed Coronavirus Large Business Interruption Loan Scheme. The group currently has cash balances of £130m, having fully drawn down the existing facilities of £150m. During closure, the Ebitda loss in a four-week period has stabilised at about £15m, including rent. Cash burn before debt service is higher than this, primarily as we pay down supplier balances (which we would expect to reverse on re-opening), at between £30m and £35m per four-week period. A number of technical breaches would have occurred under the group’s secured financing arrangements (the Secured Financing) entered into by Mitchells & Butlers Retail Limited (the Borrower) as a result of the enforced period of closure and so, in order to prevent such breaches, certain amendments and waivers have been agreed with Ambac Assurance UK Ltd (as controlling creditor of the Borrower) (Ambac) and the security trustee in relation to the Borrower’s financing arrangements including: a further waiver of, and amendment to, the 30 day suspension of business provision, where the suspension has arisen because of the enforced closure during the covid-19 pandemic; a waiver of the six month look-back debt service coverage ratio test up until July 2021 and a waiver of the 12 month look-back debt service coverage ratio test up until September 2021; a waiver of the requirement to appoint a financial adviser which would otherwise have arisen for any periods where the debt service coverage ratio falls to below the required level; a reduction in the minimum amount required to be spent on capex during the remainder of this, and the next, financial years arising from the business having been temporarily suspended; and a waiver to facilitate drawings of up to £100 million in total under the Secured Financing liquidity facility providing the group with additional facilities in order to meet payments of principal and interest, provided such drawings are repaid in full at the end of March 2021. These waivers and amendments are required to provide stability and flexibility to the group in order to manage the Secured Financing structure through the closure period and the rebuild of sales on re-opening, including the provision of additional liquidity facilities against debt service costs of £50m per quarter. In order to secure Ambac’s support as controlling creditor of the Borrower for such amendments and waivers, Mitchells & Butlers has given certain undertakings in relation to its own financing arrangements, namely, to secure the £250 million liquidity facilities referred to above, and an undertaking to provide funding into the Secured Financing structure of up to £100 million in line with drawings on the Secured Financing liquidity facility. In securing these valuable amendments the group has agreed not to pay an external dividend, undertake any share buy-backs or repurchase bond debt until the end of the financial year to September 2021, at the earliest. The financial arrangements we are announcing today put us in good shape to address the challenge ahead based on what we believe to be a conservative downside scenario in which the reopening of any of our sites is delayed until October and sales then build back to reach full previous year trade levels over the period to July 2021. Our current expectation is for the commencement of reopening of sites from early July this year.”

Economy shrinks 20.4% in April: The UK economy shrank by 20.4% in April – the largest monthly contraction on record – as the full impact of covid-19 lockdown was felt, Office for National Statistics show. Jonathan Athow, deputy national statistician for Economic Statistics, said: “April’s fall in gross domestic product is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-covid-19 fall. In April the economy was around 25% smaller than in February. Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.”

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