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Fri 19th Mar 2021 - Update: Wetherspoon results, Hawthorn, McDonald’s, Jeremy King and consumer confidence
JD Wetherspoon first-half like-for-like sales down 53.9%, agrees further £51.7m CLBILS: JD Wetherspoon has reported a 53.9% decline in like-for-like sales in the 26 weeks to 24 January 2021, with revenue down by 53.8% to £431.1m (2020: £933.0m). The decline in sales, came as chairman Tim Martin said the future of the industry, and of the UK economy, “depends on a consistent set of sensible policies, based on scientific evidence, rather than on political expediency”. The business also announced it had agreed a further £51.7m from the Coronavirus Large Business Interruption Loan Scheme (CLBILS) earlier this month. The company said that like-for-like bar sales in the half year decreased by 57.3% (2020: up 4.2%), food by 48.4% (2020: up 5.6%) and fruit/slot machines by 53.7% (2020: up 20.3%). Like-for-like hotel room sales decreased by 51.8% (2020: down 1.3%). Pre-IFRS 16 operating profit decreased to minus £20.7m (2020: £76.6m). The operating margin was minus 4.8% (2020: 8.2%). Loss before tax and exceptional items was £46.2m (2020: £57.9m profit), including property losses of £1.3m (2020: £0.2m). The company said total capital investment was £19.0m in the period (2020: £135.8m), with £1.4m spent on freehold reversions of properties where Wetherspoon was the tenant (2020: £70.6m); £7.1m on new pub openings and extensions, mainly in respect of the Keavan’s Port Hotel in Dublin (2020: £34.8m); and £9.6m on existing pubs (2020: £32.8m). During the period, the company opened two new pubs and closed or sold two, bringing the number open at the period end to 872. Following a review of its estate, in recent years, the business placed about 100 pubs on the market, most of which it said had now been sold. Ten years ago (FY11) the group’s freehold/leasehold split was 43.4%/56.6%. At the half-year end, it was 64.4%/35.6%. As at 24 January 2021, the company’s net debt, including bank borrowings and finance leases, but excluding derivatives, was £811.9m (2020: £817.0m). The company said: “As a result of the pub closures, the normal net-debt-to-Ebitda covenant has been waived by the company’s lenders. The net-debt-to-Ebitda ratio has been replaced by a minimum liquidity covenant of £75m. As at 24 January 2021, the company had liquidity of £225.0m. There has been an increase in total facilities to £1,041.3m (2020: £993.0m), following the addition of a CLBILS loan in August 2020. Post period end, in March 2021, the company agreed a further £51.7m CLBILS loan.” Martin said: “Wetherspoon and its employees, along with the hospitality industry, have worked very hard to comply with ever-changing government guidelines. It is disappointing so many regulations, implemented at tremendous cost to the nation, appear to have had no real basis in common sense or science – for example, curfews, ‘substantial meals’ with drinks and masks for bathroom visits. The future of the industry, and of the UK economy, depends on a consistent set of sensible policies, and the ending of lockdowns and tier systems, which have created economic and social mayhem and colossal debts, with no apparent health benefits.” Martin said that by the time pubs were closed by the government after Christmas, a total of 1,244, or 3.3%, of 37,800 Wetherspoon employees had tested positive for covid-19, from reopening in July. He said: “For the UK as a whole, 2.3 million people had tested positive by then, according to the UK government website – 3.4% of the population. Since pub employees spend more time in pubs than anyone else, these statistics do not indicate pubs are centres of transmission, which some commentators have suggested. There were no reported instances of the virus being transmitted from staff to customers in Wetherspoon pubs, or vice versa, since the reopening last July. Wetherspoon recorded more than 50 million customer visits to its pubs from reopening in July, to the year end, and there has been no evidence of even a single outbreak, as defined by the health authorities, during this time. The main problem is the government and SAGE have been unscientific in their approach – ignoring evidence, which contradicts their ‘narrative’. Rather than embracing, debating and investigating anomalies and counterintuitive information, as real scientists do, they have, instead, tried to discredit dissenters, as Wetherspoon News has pointed out. These tactics can work in an election campaign, but risk disaster in the day-to-day management of problems. Examples of entirely unscientific initiatives include the introduction of a curfew, the requirement for a ‘substantial meal’ with a drink and the wearing of face masks to visit the bathroom.”

Hawthorn reveals latest package of support ahead of pubs reopening: Hawthorn, the community pub arm of NewRiver, has revealed its latest package of support for pub partners and operators ahead of the reopening of pubs in England and Scotland next month. The new measures set out Hawthorn’s rent policy through until August, support for its operator managed estate, and deals and incentives “to help partners get up and running and return to profitability as quickly as possible”. Hawthorn will continue with current rent levels through to the end of May, with further reductions continuing throughout June and July, with support grants continuing to be available post-August for any pubs requiring extra assistance. Under the new proposals, rent will be capped at about 30% until the end of May, before increasing to 50% in June and 75% in July before returning to 100% in August in-line with the expected gradual increase in trade. Further measures being introduced to support Partners include cashback incentives on all purchases, enhanced credit terms and step-by-step reopening guides. Hawthorn is also providing additional packages of support for its operator managed pubs, with about £550,000 worth of support to be paid to operators at both trading and non-trading pubs, with funds covering labour costs, and being invested in outside areas to increase capacities. Since March 2020, Hawthorn has provided more than £8m of support for its partners and operators. The company predicts more than 300 – or about 60% – of its pubs in England will be open for trading on 12 April. A similar proportion of the Scottish estate is expected to trade on 26 April, while the company is awaiting further information about the roadmap for reopening in Wales. Hawthorn chief executive Mark Davies said: “It is incredibly important to me and everyone at Hawthorn we support our partners and operators to get back to full strength as quickly as possible. Our business is only successful if our partners’ businesses are successful, and we hope this package of measures will help our pubs to bounce back stronger and more quickly.”

McDonald’s facing new claims of covid rules being broken: McDonald’s will expand its investigation into covid rule-breaking after claims that sales competitions between restaurants are endangering staff health and safety. Employees across England have contacted Sky News with serious concerns about how the chain has dealt with the winter wave of the pandemic. They have now claimed competitions, where restaurants try to beat each other on food service targets, have resumed and they further jeopardise adherence to the chain’s own covid-19 rules. McDonald’s UK paused the sales competitions during the pandemic to enable their restaurants to prioritise safety – a policy that is officially still in place – but Sky News understands some franchisees have recently reintroduced them. After McDonald’s reopened following last year’s first lockdown, it also promised staff would be able to wash their hands every 30 minutes, social distancing would be in place, and workers would have temperature checks before starting a shift. Earlier this week, McDonald’s workers in Greater Manchester, Merseyside and Kent approached Sky News with concerns after feeling powerless to raise the issues with local managers. Further reports of covid rule-breaking have now been made at restaurants in South Yorkshire, Derbyshire, Cambridgeshire and Norfolk, which McDonald’s said it would examine.

King – we’ve had to stall the completion of Manzi’s: Corbin & King co-founder Jeremy King has said the business has had to stall the completion of its new Soho-based seafood restaurant Manzi’s and the company’s home dining offer is expected to end in May, as they group will by then “need to concentrate on being restaurateurs”. King said: “One of the big frustrations for us is having had to stall the completion of Manzi’s and although we will be recommencing work as soon as possible we do also need to be prudent and ensure trading is secure for the foreseeable future before we lay out the not inconsiderable sum needed to finish. I will let you know as soon as I have a projected opening target date.” King said the terrace at Café Wolseley in Bicester will open on Monday, 12 April, while the terraces at the London-based Delaunay Counter, Colbert, Bellanger and Soutine will open the following day, but only with a truncated menu – for “practicality and to limit the potential losses if the weather is inclement”. King said: “It is not going to be possible to accommodate advance bookings I am afraid. Colbert will also be back in the middle of Sloane Square, but I am afraid purely for drinks and some snacks. We will be operating a crepe stand – sweet and savoury – as well as serving cold platters of charcuterie and cheese. Unfortunately, the possibility of running meals across the road is just too dangerous. Each site that opens in April will also be doing ‘takeaway’ but will have varying opening. Come 17 May, we plan to open everywhere – assuming the ‘parents’ don’t stop the car and go and sit outside a pub. Reservation lines for indoor dining at all of the restaurants will open on Monday, 29 March. In the meantime, I should mention despite the extraordinary reception and success of the home dining operation we don’t expect to continue this service beyond 16 May – not on a day-to-day basis. Space is limited in the Delaunay kitchen, where it is produced, and we need to concentrate on being restaurateurs.”

Consumer confidence hits highest level in year: Household confidence has surged to its highest level since the start of the pandemic on the back of the government’s announcement of a roadmap out of lockdown, according to GfK’s consumer confidence index. The Times reported the index rose by seven points to minus 16 in March as households responded to the news, delivered on 22 February, social distancing restrictions could be lifted by the summer. The rise in the index was driven by optimism about household finances. The index measuring changes in personal finances rose by six points to minus two, just four points shy of the figure recorded before the pandemic hit last March. The forecast for personal finances over the next 12 months was also up six points at plus ten, seven points higher than this time last year. Household finances have held up reasonably well during the pandemic as the government’s income support schemes have protected incomes, while consumption has dropped sharply because of the repeated lockdowns. GfK said the chancellor’s decision to continue supporting workers by extending the job retention scheme until September had also helped to support optimism. GfK’s report indicated consumers are gearing up to spend. Its major purchases index, which measures expenditure on expensive items such as holidays, rose by eight points to minus 11. “It is highly likely this upward trajectory on all measures will build over the next six months and beyond,” the report said.

Former theme park operator fined £1m after ride death: The former operator of a Staffordshire theme park has been fined £1m after a girl died on a ride, but the penalty will never be paid as it is in administration. Evha Jannath, 11, was on the Splash Canyon rapids ride at Drayton Manor during a school trip in May 2017 when she was “propelled” into the water. Evha, who could not swim, fell from the boat at the park in Tamworth, when it hit a barrier. In 2019 an inquest jury concluded she died accidentally. During a sentencing hearing at Stafford Crown Court on Thursday (18 March), Mr Justice Spencer said: “This was an utterly tragic waste of a young life.” He added there was “no prospect of the fine being paid” given the company operating the park at the time had since gone into administration. The park has been sold to Looping Group, which runs attractions in Europe and the UK including West Midland Safari Park and Pleasurewood Hills. Drayton Manor Park previously admitted a breach under Section 3 of the Health and Safety at Work Act, after the Health and Safety Executive (HSE) brought the prosecution. The court heard between 2011 and 2013, there were four instances of people falling into the water at the ride before it was closed following Evha’s death. Speaking after the hearing, HSE principal inspector Lyn Spooner said: “The risks from ejection from the raft had been evident to Drayton Manor for some time, yet it still failed to take the action that could have prevented Evha’s death.” Richard Matthews QC, representing Drayton Manor Park, told the hearing the park had co-operated with the HSE investigation fully and had no previous convictions.

Whitbread HR director to retire: Whitbread has agreed a date for the retirement from the board of group HR director, Louise Smalley. She will retire from the board on 31 August 2021. A successor has been appointed to the role, but the position is not an executive director position. Chief executive Alison Brittain said: “I would like to thank Louise for her very significant contribution to Whitbread over many years. She has been on the board since 2012 and has played a pivotal role in a period of significant change and development for Whitbread. She leaves with our very best wishes for her future success and happiness.”

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