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Wed 6th Jan 2021 - Update: Greggs, £9,000 grant, Deliveroo and McDonald’s
Greggs – it will be 2022 at the earliest before profits return to pre-covid levels, loses up to £15m in 2020: Greggs has reported its total 2020 sales were £811m (2019: £1,168m). Fourth quarter company-managed shop like-for-like sales (to 2 January 2021) averaged 81.1% of the equivalent 2019 level. Fourth quarter delivery sales were 5.5% of company-managed shop sales. Its full year loss before tax is expected to be up to £15m. Chief executive Roger Whiteside said: “In a year like no other I am enormously proud of the way in which our team has risen to the challenges we have faced, whilst looking after the interests of all stakeholders and providing support for communities. Whilst the impact of covid-19 has been enormous, we have established working practices that allow us to provide takeaway food services under the different levels of restrictions we have experienced. The breadth of Greggs’ customer base provides ongoing demand for our services which, combined with our diverse geographical spread, has demonstrated the resilience of our business. With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking. We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well. In light of the recent government announcements significant uncertainties remain in the near-term. We have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted. I want to thank everyone who has supported Greggs through 2020.” The company added: “In the fourth quarter of 2020 we saw variable trading conditions across the UK as restrictions were enacted to manage the incidence of covid-19. Over the quarter as a whole, total sales were £293 million (2019: £344 million) and company-managed shop like-for-like sales averaged 81.1% of the 2019 level. In the five weeks to 31 October, we saw a further improvement in the level of like-for-like sales in company-managed shops, averaging 80.1% of that seen in 2019. In the four weeks to 28 November, with more restricted trading conditions, the level of like-for-like sales in company-managed shops averaged 76.7% of that seen in 2019. Trading in December was initially more robust, supported by the reopening of non-essential retail shops, although this fell back with the introduction of tighter restrictions later in the month. In the five weeks to 2 January like-for-like sales in company-managed shops averaged 85.7% of the 2019 level. As previously communicated, in order to reflect below-normal activity levels we completed an employee consultation programme in the quarter. The consultation process minimised the number of job losses but, unfortunately, still resulted in 820 redundancies. Our digital offer continues to develop and the rollout of our national delivery offer, in partnership with Just Eat, is supporting the recovery in sales levels. In the fourth quarter of the year delivery represented 5.5% of company-managed shop sales. 600 of our shops now provide delivery services to catchments served by Just Eat and we expect this to increase to around 800 shops in 2021. During the year we opened 84 new shops (including 35 franchised units) and closed 56, growing the estate to 2,078 shops as at 2 January 2021, 328 of which are franchised shops operated by our partners.” On outlook, it added: “Looking ahead, the significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance. However, we do not expect that profits will return to pre-covid levels until 2022 at the earliest. As we enter 2021 Greggs is maintaining a strong financial position for the benefit of all its stakeholders, whilst developing new ways for customers to shop with us through digital channels and estate growth. We have a strong pipeline of new shop opportunities and expect to open around 100 net new stores in the year ahead, subject to prevailing market conditions.”

Kate Nicholls – grants are a ‘sticking plaster’: Pubs, restaurants and breweries in England have given a lukewarm reception to Rishi Sunak’s offer of grants of up to £9,000 to help them survive until the spring, warning the financial ‘sticking plaster’ will not stave off closures in the long-term. “While this announcement is most welcome, make no mistake that this is only a sticking plaster for immediate ills,” said Kate Nicholls, chief executive of UK Hospitality. “It is not enough to even cover the costs of many businesses and certainly will not underpin longer-term business viability for our sector.” Admiral Taverns boss Chris Jowsey, whose company leases premises to 1,000 publicans, said most would still be unable to cover their costs, with smaller venues particularly vulnerable. “It won’t be sufficient to stave off a lot of difficulties and closures,” he told The Guardian. The grants, worth £277m across England’s pubs sector, are based on the “rateable value” of a premises, effectively the rent the site could command on the open market. Those with a rateable value above £51,000 can get the maximum £9,000 grant. Smaller venues with a rateable value of less than £15,000 – often community pubs that largely serve alcohol – are only eligible for £4,000. Jowsey said this amounted to about £1,000 a month if restrictions on opening stay in place until the end of March. Together with existing support worth £1,334 a month for smaller pubs, the combined package falls well short of the £3,000 he said smaller pubs needed just to keep their heads above water. “That’s got to cover everything, including living expenses and feeding their family,” Jowsey told The Guardian. “It doesn’t leave anything for rent.” About two thirds of Admiral’s 1,000 pubs fall into the smaller venues category in terms of rateable value – less than £15,000 – and the company is charging them a maximum of £500 per month, about a third of what they would usually pay.

Deliveroo reports vegan demand increase: Deliveroo has reported a huge increase in demand for vegan food in the last twelve months, with orders of plant-based dishes up 163% on the previous year. The first week of January 2021 has already seen a 153% rise in searches for ‘vegan’ food in the app compared to the month before. The online food delivery service has seen the number of vegan restaurants on the app more than double in the last year alone. More restaurants than ever have introduced plant-based menus and dishes to their regular offering and there are now over 12,000 vegan friendly restaurants available in the UK on Deliveroo. According to the food-delivery company, the cities with the most vegan orders per capita in the past year have been Brighton, Bristol, London, Manchester and Edinburgh. Elena Devis, vegan category specialist at Deliveroo, said: “We’re continuing to see a massive increase in demand from our customers for Vegan dishes and so many of our restaurant partners have created exciting new dishes to kick-off Veganuary 2021. Vegan and Plant-based food is a growth area we are really excited by at Deliveroo so we’re super happy to be supporting Veganuary again this year.” Toni Vernelli, head of communications at Veganuary said: “With the climate crisis and global pandemic making headlines every day and many feeling helpless, Veganuary offers people a way to take positive action. The huge response we’ve had this year shows it’s exactly what many people need right now. It’s great to have Deliveroo on-board making it so much easier for people to try vegan this January.” 

McDonald’s to continue drive-thru and delivery in lockdown, made £405m pre-tax profit in the UK in 2019: McDonald’s has announced its delivery and drive-thru services will remain open but walk-in takeaway will end as the third lockdown starts. Paul Pomroy, McDonald’s chief executive of UK and Ireland, said: “Following the latest government announcements, our restaurants will remain open for Drive-Thru and McDelivery services and Click & Serve for Drive-Thru which is available via the My McDonald’s App. Our dine-in and walk-in takeaway services will be temporarily unavailable while we take time to review and reassess our safety procedures with an independent health and safety body. This is a temporary change in our operations to allow us to test and validate any additional measures that may further enhance the safety of our takeaway service. We will continue to keep customers updated via the My McDonald’s App and our website.” Meanwhile, the company has reported, in Companies House documents, that it made a pre-tax profit of £405m in 2019, which is £384,000 less than the year before. Turnover was £1.402bn compared to £1.514bn the year before. The reduction in turnover relates to the ongoing conversion of managed sites to franchise – where it recognises franchise income rather than site turnover. It paid a dividend of £400m (2018: £555m). 

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