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Fri 18th Dec 2020 - Propel Friday News Briefing

Story of the Day:

Alex Reilley – we need to win the hearts and minds of the good people of the UK: Loungers chairman Alex Reilley has said if the hospitality stands any chance of avoiding a government-sanctioned Armageddon it needs “to win the hearts and minds of the good people of the UK”. Reilley said the sector must redeploy its efforts into changing the opinion of public because, to the government, “we’re just white noise to them now”. Reilley said: “The appalling manner in which the government continues to treat hospitality and their empty attempts at dialogue with the sector have led me to believe, depressingly, no additional help is coming for the sector. Worse still, hospitality will continue to be kicked and blamed by the likes of health secretary Matt Hancock as they see us as the obvious ‘easy target’ and the government is resigned to seeing hospitality businesses fail and mass job losses in the sector. This is happening despite the tireless lobbying efforts of many on behalf of the sector. So why is this happening and why is the government allowing the destruction of hospitality? In my opinion it’s because the good people of the UK don’t fully understand the seriousness of the issues the sector faces and whenever anyone from within government is challenged about the devastation and lack of support they list the measures the government have taken – furlough, VAT cut, business rates holiday and grants. To the general public, this sounds like a very comprehensive package of support and any sense of anger they might have been feeling is immediately quelled by Boris’ list. So what’s my point? Well, in my opinion, it’s clear Boris Johnson governs by popular opinion and, as things stand, the misery being inflicted on hospitality is not fully appreciated by the general public. Consequently, the government doesn’t feel compelled to provide the sector with the additional support it needs to avoid catastrophic business failure and job losses – it simply needs to remind everyone of their list. If hospitality stands any chance of avoiding a government-sanctioned Armageddon, we need to win the hearts and minds of the good people of the UK as it’s their anger, and theirs alone, that will bring about change. It’s the only way we’ll save thousands of businesses and hundreds of thousands of jobs.”

Industry News:

Simon Stenning to assess state of hospitality going into 2021 as part of latest Premium column: Leading sector analyst Simon Stenning will give his assessment of the state of the hospitality sector as it heads into 2021 with a glimmer of light but starting from a rocky base, as part of this week’s Propel Premium column, which will be sent to subscribers on Friday (18 December) at 5pm. Meanwhile, Propel insights editor Mark Wingett will look at what lessons the sector has learned over the past year and there will also be the latest sector rumblings from Premium Diary. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,600 businesses. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email
Hospitality sector suffers £53bn loss this year, hope on horizon with vaccine and safety standards: The UK’s hospitality sector has taken a hit of more than £53bn worth of lost sales this year – and more losses are expected as Christmas trading collapses – according to the Future Shock report from CGA and UKHospitality. However, a coronavirus vaccine has been cited as grounds for cautious optimism in 2021. “Survival to Revival”, the eighth edition of the Future Shock report, which draws on business insights consultancy CGA’s suite of business and consumer sources, showed there has been a £53.3bn year-on-year drop in sales between the start of April and the end of September; consumer confidence fell as 78% of Brits were concerned about the long-term financial implications of the pandemic; 27% of leaders of multi-site groups predicted they will be unviable by mid-2021 with the current levels of support; and the prospects look bleak this Christmas as 98% of England’s licensed premises remain under tier two and three restrictions. But the report has also celebrated the hard work and achievements of operators and suppliers – especially in keeping people safe. It showed 95% of consumers have been satisfied with the level of hygiene in venues this year, and 55% said they feel safer in hospitality venues than in shops and supermarkets. Trends and developments for businesses to track in 2021, include an acceleration in consumer use of technology in restaurants, pubs and bars; a further increase in delivery sales – of alcoholic drinks as well as food; a continuation of the lockdown trend of eating and drinking close to home rather than travelling to city centres; and increased availability and affordability of property in the wake of business failures. Karl Chessell, business unit director, retail and food at CGA, said: “There have already been many business casualties in our sector and more will inevitably follow as a result of the onerous limits on trading and socialising at what should be the busiest time of the year. But among businesses that have been able to sustain themselves, the pandemic has instilled a resilience and innovation that will stand them in good stead for years to come.” UKHospitality chief executive Kate Nicholls added: “Undoubtedly, 2020 has been a disaster for the sector. There is, though, every chance that with the right support, businesses can begin to trade their way out of danger and towards some degree of prosperity next year. The rollout of a vaccine should give us all confidence that the next year will be dramatically better than this one.” Meanwhile, CGA now has 60 partners to participate in its Coffer Peach Business Tracker, which monitors sales among managed pubs, restaurants and bar groups. It reached the milestone with the recent additions of Nando’s, BrewDog, Cote Restaurants, Drake & Morgan, Giggling Squid, Oakman Inns & Restaurants, Rosa’s Thai Café, Star Pubs & Bars and Tattu.
BBPA – increase in regions placed under tier three restrictions means future of Britain’s pubs hangs by a thread: The British Beer & Pub Association (BBPA) has said the increase in regions placed under tier three restrictions means the future of Britain’s pubs hangs by a thread this Christmas. It said the changes mean more than 32,500 pubs will now be at risk of permanent closure under tier two and three restrictions – 85% of the total in England. The BBPA said, without such support, a further wave of pub closures is inevitable heading into the new year. Chief executive Emma McClarkin said: “It is clear it is going to be longer than we thought until our pubs can open properly and be viable businesses again. The prime minister and chancellor have no excuses. They must now secure pubs and jobs by giving locals in England the same support as those in Wales. Without such support, a wave of pub closures is guaranteed at a time when they should be leading the economic recovery.” UKHospitality warned placing more regions into tier three would bring further despair to already hard-pressed businesses and bring Christmas heartbreak for hospitality. Chief executive Kate Nicholls said: “Businesses will have bought stock that will now go to waste and more people will lose work at a stressful time. Hotels are now facing a deluge of short-notice cancellations because of the tightening of restrictions. What was already looking like a bleak Christmas is now looking like a total write-off. More financial support must be forthcoming if we are to have any hope that these businesses will survive. They can trade their way out of danger next year only if they are still around to do so.” Tom Stainer, chief executive of the Campaign for Real Ale, said: “This week, thousands of consumers, publicans and brewers have taken to Twitter to share why #PubsMatter to them. Ministers must recognise local pubs are a force for good, bringing communities together and playing a key role in tackling loneliness and social isolation. Allowing a limited number of people to socialise safely in covid-secure pubs in all tiers is vital not just for businesses – but also for our communities and to people’s mental well-being.” The Campaign for Pubs said the government was treating pubs and publicans “disgracefully” and without urgent and meaningful support, will be responsible for the closure of thousands of pubs. Greg Mulholland, campaign director for the Campaign for Pubs, said: “The government either doesn’t understand or doesn’t care its failing strategy is destroying livelihoods and consigning many pubs to history. It must now come up with an urgent and meaningful package of support or it, not covid, will be responsible for the loss of thousands of pubs and for hardship faced by many families.” 
Furlough and business loan scheme extension not enough for sector without wider support, warns UKHospitality: The extension of the furlough and business loan schemes are not enough for the sector without wider support, UKHospitality has warned. Chancellor Rishi Sunak has extended the furlough scheme by one month until the end of April – and confirmed business loan schemes will be available until the end of March too. The government said the extensions would give businesses and employees certainty going into the new year and come ahead of the Budget, which Sunak has confirmed will take place on 3 March. But UKHospitality chief executive Kate Nicholls said: “The extension of the furlough scheme with full government contribution through to April and the longer period for applying for business loans are, of course, very welcome. However, with yet more of the country having been served notice of moving into tighter restrictions and 72,500 of Britain’s 110,00 licensed premises unable to open and a further 12,500 wet-led venues with little chance of reopening, more will be needed to safeguard jobs and businesses in a sector being seemingly singled out to bear the brunt of covid measures. Without additional business support to accompany this extension, there will inevitably be more widespread business failures and job losses. To instil the business confidence necessary to plan for survival, we urge the government to commit to a business rates holiday to cover the period of 2021-22 and a VAT cut extension through to end of 2021. Such measures will give a vital lifeline to many businesses and enable them to play their role in the economy’s recovery later in 2021.” The Job Retention Scheme, better known as furlough, pays 80% of employees’ wages up to a maximum of £2,500 per month. Sunak previously said he would review the employer contribution element of the furlough scheme in January but has announced the government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance contributions and pensions for hours worked; and National Insurance contributions and pensions for hours not worked. Loans available to businesses include the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme. These had been due to close at the end of January. 
UKHospitality calls on government to give more support to vital supply chain businesses: UKHospitality has called for additional government support to ensure supply chain businesses survive. The trade body is urging the entire sector to unite to highlight the urgent need for support to ensure these vital businesses survive. Supply chain businesses in the hospitality sector are struggling to access support needed to survive and their failure puts the recovery of the entire sector at risk. The UKHospitality Supplier Alliance has produced a template letter drawing the plight of supply chain businesses to the attention of MPs and calling for an immediate review of support available, with changes in structure and format to allow suppliers to benefit alongside venues; and additional access to funding, potentially through invoice factoring, to ease cash flow as suppliers commit resources to the hospitality restart. UKHospitality chief executive Kate Nicholls said: “Venues have been grabbing most of the headlines this year and the plight of restaurants, cafes, pubs and bars has been obvious to everyone. The pandemic is touching every single part of our sector, though. Businesses in the supply chain have been hammered just as hard but have just not made the news as frequently. They are also struggling to access the same level of support as venues. This is support that they need to survive. If the supply chain folds, there is no chance of recovery for the sector. These businesses are every bit as important. If we expect to see the sector drive the economic recovery of the UK in 2021, then it absolutely has to be supported by a healthy supply chain. Anything else is like building a house on sand.” UKHospitality statistics show supply chains employ a total of 2.7 million people nationwide, including 1.4 million employed directly in the sector; the average number of suppliers for each of the UK 115,000 licensed premises is 50; and four in five operators require the support of supply chains to reopen their venues successfully.
Devastating year for Scottish hospitality ‘must be followed by increased support’: Scottish hospitality businesses have been devastated in 2020 and the immediate future looks equally bleak unless support from the Scottish government is improved, UKHospitality has warned. Giving evidence to the culture, tourism, Europe and external affairs in the Scottish Parliament, UKHospitality Scotland executive director Willie Macleod said: “The hospitality and tourism sectors in Scotland have taken a huge hit this year. There has been an almost complete absence of international travel and the forecast for next year is equally bleak. The industry forecasts one-quarter occupancy rates year-on-year for early 2021, which, in terms of revenue per room, is barely enough to cover fixed costs. Quarters two and three are not likely to be much better. The devastation hasn’t been limited to hotels, though. The hospitality offering in entire cities has been hammered. Bars and restaurants have taken a huge hit and their future is looking precarious. Nor have rural areas been immune from the impacts of the covid outbreak. The restrictions placed on businesses have had a huge effect, despite only a small fraction of cases being linked to hospitality. Businesses have ploughed time and money into making their venues safe for staff and customers, but they are still being hamstrung by restrictions. Financial support has been forthcoming and gratefully received, but it has not been sufficient. A significant chunk of the support has been discretionary, which means there have been winners and losers. Some businesses have lost out and that could be the difference between survival and failure. There must be a more appropriate support scheme that ensures businesses get the support they need and, above all, more funding must be made available if the hospitality industry is to demonstrate its resilience, adaptability and innovation to make the economic contribution it can through jobs, the supply chain and remission of taxes.”

Northern Ireland hospitality leader backs full lockdown: Hospitality Ulster chief executive Colin Neill has said he is backing a full lockdown in Northern Ireland because other measures have failed. Despite acknowledging the detrimental impact a lockdown would have on the sector, the trade body leader said “partial lockdowns have not worked” and that opening and closing regularly is potentially worse than a full closure. Neill told BBC’s Stephen Nolan Show: “Every time you have to reopen costs a lot of money and every time you have to close costs a lot of money because of wastage. If we are going for lockdown then we will support a total lockdown until we get this thing under control.” Stormont ministers have agreed a new lockdown that could last six weeks from Boxing Day, although hotels will be allowed to remain open until 28 December to accommodate “the Christmas situation”. Neill said: “I think we can all see the situation at our hospitals. We need to go back to what we did in March and April.” He also said many within the hospitality sector only remained open so they could earn enough to pay their contribution towards furlough and retain their staff. A two-week limited lockdown ended last Friday (11 December), which saw non-essential retail, close contact services and hospitality largely shut but coronavirus cases failed to drop because, according to chief scientific adviser Prof Ian Young, not enough people had followed the “stay at home” guidance.
Pubs will lose out on ‘at least’ £2.6bn this month as restrictions bite: Lost food and drink sales in December will see the pub and bar sector lose out on at least £2.6bn, according to leading payment app OrderPay. Data compiled by OrderPay in the first two weeks of the month was compared with figures from October, before the national lockdown, and since mandatory table service was introduced in late September. Analysis showed sales between 2 December and 9 December were a quarter of pre-lockdown levels, and from 2 December to 15 December, average sales had recovered slightly but were still one third down on the period before lockdown. OrderPay estimates there will sales losses of at least £2.6bn compared with December last year as London and parts of the south east will be in tier three conditions. It also found the average spend per customer visit is down by 10% compared with the previous periods and the average time customers spend in venue has fallen by about a fifth. 
Job of the day: COREcruitment is working with a quick growth restaurant business that is looking to hire a digital marketing manager, based in London. This role is about developing and leading on multi-channel communication plans for a rapidly growing restaurant brand, working closely with the brand and marketing team to also translate their strategies into a reality on social. The digital marketing manager will need to think strategically while also being able to act tactically as the business progresses towards a greater integration of all platforms and sales channels. The position will pay up to £55,000 and presents a great opportunity for personal career progression. For more information email 
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Revolution loses third of workforce with staff leaving due to uncertainty as boss warns government action is ‘forcing people out industry they love’: Rob Pitcher, chief executive of Revolution Bars Group, which operates the Revolution and Revolución de Cuba brands, has told Propel the government’s actions are “forcing people out of the industry they love”. Speaking after the company’s full-year results were posted, Pitcher said while the company had made 200 staff redundant, the business had actually lost nearer to 1,000 employees because they had been forced to look for work elsewhere due to the uncertainty. He added that with businesses across the sector in a similar position, the number of jobs lost in the industry since the pandemic began was around 660,000 rather than the 300,000 the Office for National Statistics reported this week. And with the vaccine now being rolled out, Pitcher said the government had no excuses not to end the tier system at the start of February. He said: “Before the pandemic, we employed 3,200 people and now it’s about 2,200. We’ve lost a third of the jobs we support. People say they love working here but with all the uncertainty they can’t afford to pay their rent and have to go elsewhere. This industry provides so many young people with their first experience of work. The government is forcing so many people out of an industry they love and we love having. The government has got to stop using hospitality as a scapegoat. It’s quite clear we are not the reason for the spread. Look at Kent, for example. It’s in tier three, hospitality is shut and the case numbers are still rising. Why does non-essential retail get to remain open? The evidence shows hospitality is ‘responsible’ for between 1% and 4% of cases and, in education, it’s north of 20%. How can university students be able to mix in that setting but not be allowed to do so in a pub or bar?” Pitcher said 40 of its 67 sites were shut as a result of tier three restrictions. It has 26 sites in tier two and just one at the tier one level – in Inverness. Pitcher said even that site is only doing about 50% of its trade of last year. Pitcher said he did not envisage the company exiting any further sites following the company voluntary arrangement and was instead looking at potential opportunities – although any expansion would come towards the end of next year or the start of 2022. He added: “We’ve done a lot of hard work over the past 18 months and believe, when restrictions are lifted, we can get back to where we were. We have a good offer, our like-for-likes sales were up almost 2% in the ten weeks prior to the march lockdown and we’re seeing an almost 60% return on investment from our refurbishment programme. We’ve improved technology – 80% of transactions are being done through order and pay and we have 550,000 app users.” With regards to the Nightcap plans that sees a new company led by hospitality entrepreneur and ex-Dragons’ Den investor Sarah Willingham floating on the stock market, Pitcher said: “We wish it well and it’s great to have another company in our sector on AIM. We see similar opportunities and if the right ones come along we are in a position to take advantage.”
Benugo parent secures £50m CLBILS: The parent company of Benugo, the operator of deli cafes and catering in high-profile venues such as the Natural History Museum and the Victoria & Albert Museum, has secured £50m from the Coronavirus Large Business Interruption Loan Scheme (CLBILS) to support its businesses through the pandemic. WSH Group said it had taken “all available measures to ensure the business is as best protected for the long term”. It stated: “While parts of the group were able to trade throughout – serving essential workers and their children – others inevitably closed or were materially reduced in scope as premises were closed. In addition to careful management of costs, the group has benefited from the utilisation of the government’s Coronavirus Job Retention Scheme and has secured £50m of liquidity from the CLBILS. With the support of the group, we believe the group’s surplus liquidity, including the CLBILS along with mitigating action that is within the group’s control, provides sufficient headroom.” The update was provided as Benugo reported turnover rose 4.3% to £121.1m for the year ending 27 December 2019, compared with £116.1m the previous year. The company said the increase was due to the full-year impact of contracts won in 2018, offset by the strategically exiting of some poor performing sites. Operating profit and profit before tax was up to £4.5m, compared with £3.9m the year before. Capital expenditure during the period was down to £3.4m from £5.1m the previous year. At the end of the period, net assets stood at £35.4m compared with £32.2m the year before. Cash and cash equivalent was down slightly to £6.7m from £6.8m the previous year. The company reported a total of £25.6m in tax borne or collected by Benugo, compared with £23.9m the previous year.
Dodo Pizza targets up to 50 UK sites by 2023 as it opens first company-owned store: Dodo Pizza has opened its debut UK company-owned site, in Leamington Spa – and has set its sights on growing the five-strong brand to up to 50 outlets in Britain by 2023. The company has opened the venue in Warwick Street that has seen it introduce a new concept to the market – a fast gourmet delivery/takeaway brand built around Roman-style dough. The 1,608 square foot site also incorporates an area for dough production that will also be used to supply up to five planned outlets in the area in 2021, with Banbury, Oxford and Warwick among the locations targeted. After testing the new concept in company-owned units, the brand plans to start franchising the new model at the beginning of 2022. The menu features three groups of pizzas in two sizes – six “classic”, seven “gourmet” and three “signature” pizzas along with sides, soft drinks, beer, cedar, wine, and gelato. Dodo Brands founder and chief executive Fyodor Ovchinnikov said: “For the next few years, we’re going to concentrate heavily on development in the UK. It’s one of the largest pizza delivery markets in Europe. The competition is stiff but we’re certain there is room for new innovative players. We see great potential in Great Britain and believe the total openness of our company, its integrity and customer-oriented approach as well as our tech platform will allow us to attract business partners, win favour with customers and build a strong brand in the UK.” Dodo Pizza operates four franchised stores in the UK – in Brighton, Coventry, and two in Walsall. The company was founded in Russia in 2011 and has more than 660 stores across 14 countries.
Sushi and bento brand Kokoro to open new site in Clapham: Sushi and bento brand Kokoro is to open a new site in Clapham, south west London, Propel has learned. A franchisee of the company will operate the former Roxie site at 81 St John’s Road, close to the junction with Northcote Road and Battersea Rise. Kokoro, which operates more than 30 sites in the UK, mainly across the south of England, is set to open its fifth new site of this year with an outlet in Oxford opening this month. The deal in Clapham was an assignment of the existing lease, a 20-year lease from 2013 at a passing rent of £40,000 per annum exclusive. A premium was paid for the lease. The site is 1,017 square foot on the ground floor. Louie Gazdar of Davis Coffer Lyons secured the deal, advising the outgoing restaurant tenant, Roxie, which still has five sites in London. Graham Tring Associates acted for Kokoro.
Food marketplace business Gourmet4 plans nine more outlets across UK as it signs 15-year lease on ex-ASK Italian site: Food marketplace business Gourmet4 has signed for a 15-year lease on the former ASK Italian restaurant site in Birmingham city centre – and is planning another nine outlets across the UK. Gourmet4 said it wants to attract customers back into restaurants by delivering quality, choice and speed through a combination of a dine-in, food hall experience and takeaway options. The food hall will host multiple food offerings in one building, which can be switched depending on their popularity. The Business Desk said the company will select between 13 existing in-house brands, such as Fat Burgers, 3Amigos, Smokin’ Buns, Saucy Chicks and Bangon Thai street food at the Hagley Road site. Gourmet4 also plans to open another nine sites across the UK, including outlets in Moseley, Shirley and Sutton Coldfield. Gourmet4 chief executive Aaron Kahn said: “We are very excited to be bringing our well-established brands to this fantastic location. This restaurant will give our customers the chance to enjoy our food in an attractive restaurant setting in addition to the comfort of their home.” Commercial property estate agent FHP secured the letting after attracting interest from 48 occupiers. Best and final bids were called on the property after a two-week marketing period, with 17 offers received. Doug Tweedie, FHP director and head of its Birmingham office, said: “With Gourmet4, we believe we have found an occupier that has, effectively, future-proofed [the site] through an interchangeable food offering. An efficient and sustainable delivery model has been the key to survival for many restaurant operators this year and I’m certain that mixing this with a fun, food hall dine-in experience will prove popular with customers and ensure the longevity of the concept.”
Tim Hortons to open two drive-thrus in two days next week: Canadian quick service restaurant brand Tim Hortons has announced a double opening for next week. It will open one drive-thru restaurant on Killymoon Street, Cookstown, Northern Ireland, on Monday (21 December) and another on Windmillhill Street, Motherwell, Scotland, on Tuesday (22 December). To celebrate, the brand will give away two free medium coffees for a whole year to the first customer to enter each of the drive-thrus on their respective opening days – a prize worth £3,100. An added bonus at the Cookstown operation will be a free main lunch item with a pot of potato wedges, dipping sauce and a hot or cold drink for the first 100 drive-thru customers, plus a month of giveaways including Christmas drinks and donuts for those who activate their Tim Hortons digital wallet. Kevin Hydes, chief commercial officer of the UK Tim Hortons franchises said: “Christmas is coming a little early this year with the official opening of our fantastic new drive-thru restaurant. The response from the local community has been incredible and we are so pleased to finally be opening the doors and sharing our delicious food and drink with everyone.” Once these two sites have opened, Tim Hortons will be operating 27 sites in the UK and, in October, revealed ambitions of opening “in every major city and town in the UK by 2022”, creating more than 2,000 jobs.
Team behind Taka to open Japanese restaurant Maru in February: The team behind Japanese restaurant Taka has announced it will open Maru in February, in Mayfair. Maru, led by executive chef Taiji Maruyama and partners Andrey and Anastasia Datsenko, will serve a 20-course omakase-style, farm-to-table inspired, tasting menu and has claimed to be the first Japanese restaurant in the UK to specialise in the culinary technique of dry ageing fish, in-house. The restaurant will seat ten people who will all be served from behind the counter by chef Maruyama and his team. The “omakase” menu, which means “I’ll leave it up to the chef”, will be an innovative take on traditional Japanese cuisine, combining British ingredients with classical training and techniques. Maruyama has previously worked in Tokyo, and at Nobu, Beaverbrook and Taka. The tasting menu at Maru, in Shepherd Market, will be priced at £150 for 20 courses, with a supplementary drink pairing, to include wine, champagne, sake and tea. 
Wickwar Wessex stops ale production over virus ‘impact’: Cotswolds-based brewer and retailer Wickwar Wessex has been forced to stop producing ale after 30 years in the town it is named after because of the “catastrophic impact” of the coronavirus pandemic. The company said it had been a “very sad and difficult decision” to shut down in Wickwar, Gloucestershire. The firm said ale will still be brewed by its contract partners. Its brewery shop will remain open until January. Spokeswoman Abi Brown told the BBC: “It’s been a very sad and difficult decision to come to. Covid has had a catastrophic impact on the brewing industry. I’m not sure what will happen to the site, and I’m sure the local community will want to know what the landlord is going to do with it. While the pandemic has, undoubtedly, brought difficulties and pressures to all of us, we are delighted we will are able to maintain availability of the Wickwar ale range and look forward to serving our loyal customers in the coming months and years ahead.” The company’s ales will remain on sale in 13 pubs in the region owned by the firm’s pub arm, and in other local free houses and retailers.
Dalata expects to end year in ‘strong position’ to plough ahead with UK growth: Irish hotel operator Dalata, which has a growing presence in the UK, is expected to end the year in a “strong financial position” as it looks to embark on growth and expansion plans in 2021. Despite the challenging environment, Ebitda for the year ending 31 December 2020 is expected to be “marginally ahead of market expectations”, with current cash and undrawn debt facilities of €293m after deducting upcoming payments, including quarterly rent and interest. Post the initial lockdown in Ireland and the UK, hotels reopened to the general public in June and July with hotels in regional Ireland and regional UK benefiting from strong staycation demand during the summer months, the group said. Its Dublin and London hotels were quieter because a higher proportion of their business is ordinarily driven by international travel and events. Occupancy in the third quarter amounted to 26% in Dublin, 60% in regional Ireland and 36% in the UK. During December, bookings have been “encouraging but are on short lead times”. Occupancy for the fourth quarter is projected to be 17% in Dublin, 28% in regional Ireland and 21% in the UK. Dalata said it was continuing to progress its development pipeline of almost 3,250 rooms across Ireland and the UK. Dermot Crowley, deputy chief executive – business development and finance, said: “We have an exciting pipeline of hotels to open over the next three years. We protected our liquidity as a priority over the past nine months through the strong relationships we enjoy with our stakeholders. The strength of our balance sheet, the retention of our teams and the quality of our hotel portfolio will give us a significant advantage as international travel recommences in 2021.”
Douglas Jack cuts SSP forecasts to reflect slower recovery: Peel Hunt leisure analyst Douglas Jack has cut his forecasts at UK-based travel hub foodservice company SSP Group to reflect a slower recovery. Issuing a “Hold” note on the shares with a target price of 375p following the company’s full-year results, Jack said: “Profits are in line. Sales fell 93.4% in the third quarter and 79.6% in the fourth quarter, versus 8.4% in the first half. There was a circa 30% drop-through from the reduction in sales to operating profit, helped by some significant cost savings in the second half. SSP will only open sites if they can be profitable, often helped by turnover-based rent deals with no minimum guarantees. On this basis, mainland Europe had led the recovery (assisted by a propensity to return to offices), with about half its units (circa 700) open in September. The ratio of opened sites was closer to 30% in the UK (circa 200 units), the US (circa 100 units) and rest of the world (circa 200 units). Domestic leisure travel is leading the recovery, especially in Asia Pacific. However, in mainland Europe and the UK, travel has reduced owing to the second covid-19 wave. We now expect current levels of travel disruption (with sales down 80%, versus down 76% in September) to continue throughout the first half of 2021, followed by a gradual recovery thereafter. The pace of cash burn (currently £25m to £30m per month) should reduce as the estate reopens and sales return. As this takes place, working capital should rewind, with £80 to £100m of working capital rewind expected as trading fully recovers. The company should pay £70m to £80m of rent deferrals as sales recover. Capex, which dropped to £15m in the second half of 2020, should pick up slightly in the first half of 2021 and increase by a greater amount in the second half. In addition to reducing costs and renegotiating rents, SSP has been winning new and extending existing contracts. It has also removed complicated items from menus and added new revenue streams, such as feeding airline staff. Technology, especially around ordering, is boosting sales and reducing costs. The vaccine rollout should enable sites to reopen. Management appears to be particularly confident about the likelihood of the European leisure market opening up this summer. Nevertheless, we now value the company on 2023E. Our 375p target price equates to nine times EV/Ebitda 2023E.”

Hiden Japanese Curry Lab opens in former Bodega Rita’s site in King’s Cross: Hiden Japanese Curry Lab has opened at Coal Drops Yard in King’s Cross. Chef Hideaki Yoshiyama serves beef and vegan curry with rice and pickles from the site that used to be Bodega Rita’s. Hiden said it wants to “create an ever-changing, surprising sweet, hot and savoury, rich browny sauce, rigorously served with rice and topped with in-house fermented garnish”. The curry business added: “Designed around the quintessentially Japanese aesthetic sense of shibui, Hiden is a revised version of a traditional hole-in-the-whole speciality shop, with tiny space for a handful people to seat and the option for takeaway.” Hiden said Japanese curries are sweeter and less fiery than other Asian curries.

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