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Sun 21st Mar 2021 - Update: Loungers, Fazenda, Ole & Steen, Marston’s, outdoor funding et al
Berenberg – Loungers could grow to reach 1,000 sites with an equity value of £2bn: Cafe-bar operator Loungers could eventually grow its current circa 170-strong estate to reach 1,000 sites and see its equity value grow to in excess of £2bn, from circa £260m today, according to sector analyst Berenberg. In a broker note, in which it initiated coverage on the Nick Collins-led business, Berenberg said: “While management’s target is circa 500 sites, our analysis suggests the Loungers estate could reach 1,000 sites in time. At that scale, we demonstrate how its equity value could grow to in excess of £2bn, from circa £260m today. Loungers is currently adding 25 sites per year, although we see scope for this to increase in the medium term, particularly considering the increasingly favourable rental landscape in the wake of the pandemic. The pandemic has far from dented its appeal, with like-for-like sales growth of circa 25% between July and October 2020, versus the market at circa minus 18%. While we forecast same-site revenues only recovering to FY19 levels in FY23 (ie. to April 2023), we believe this is likely to prove conservative. The pandemic has highlighted the resilience of Loungers’ proposition. High levels of customer loyalty and confidence mean that sales return quickly on reopening, while structural trends such as staying local and working from home have rewarded its suburban focus. For example, in August 2020, Loungers recorded like-for-like growth of over 50%, against a market average of 0%. Loungers still has plenty of tools at its disposal to continue driving this growth. In the past 18 months, management has experimented with menu premiumisation and regional pricing, and has successfully introduced an ordering app. We expect each of these to be beneficial for average spend.”

Premium subscribers to receive most comprehensive multi-site operator database in sector on 31 March: An updated list of UK multi-site operators, the most comprehensive database in the sector, is almost ready and if you are a Propel Premium subscriber, the list will be with you on Wednesday, 31 March. A new multi-site list will then be sent to Premium subscribers at the end of each month with a report on new companies and changes in the list, which stands at 1,629 companies. It provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different, and what each business specialises in. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. The list will then be updated at the end of each month. Being a Propel Premium subscriber not only entitles you to the most comprehensive list of businesses in the sector today; those signed up also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, regular video content, and regular exclusive columns from Mark Wingett. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email anne.steele@propelinfo.com to sign up.

Fazenda brand acquired out of administration for circa £2.6m: Southern Wind Group, a newly formed company headed by the management team of the parent company behind the Fazenda brand, acquired the bulk of the restaurant business via a pre-pack administration for a total consideration of £2.61m, Propel has learned. Julian Pitts and Bob Maxwell of Begbies Traynor in Leeds were appointed joint administrators of City District, which traded as the Fazenda Rodizio Bar & Grill alongside sister brand Picanha by Fazenda, at the start of this month. Southern Wind Group, which is headed up by City District’s former chief executive Terence Langley and managing director Tomás Maunier, will continue to trade as “Fazenda” and will retain the Leeds, Manchester, Edinburgh and Liverpool Fazenda sites, saving 243 jobs. However, Fazenda Birmingham and Picanha Chester are not included in the deal and 69 staff will be made redundant. Last summer, City District secured a Coronavirus Business Interruption Loan (CBILS) of £1.25m, while certain shareholders also injected additional funding by way of loans and HSBC moved its existing facilities to interest only to assist the ongoing financial difficulties experienced by the company. However, following the further lockdowns in November 2020 and January 2021, and taking into consideration the significantly reduced trade in the period when the restaurants were open, the company identified a significant funding requirement in the business from February-March 2021. During the marketing period of the business, five offers were received, including one (offer four) of £4m for the trade and assets of the business. This was subject to being offered a period of exclusivity to carry out due diligence and on the condition the existing management team would continue to undertake the day-to-day running of the business. However, when it became clear that management were looking to formulate their own bid (offer five) for the trade and assets of the company and, therefore, this interested party would potentially have to put its own management team in place, this offer was revised to £3.2m. The newly incorporated entity set up by the company’s management and certain shareholders originally put forward an offer with consideration totalling £750,000. However, later the same day, they came back with an unconditional offer for three of the Fazenda sites plus head office for £2.985m, of which £2.7m was cash consideration and £285,000 in respect of the customer voucher liability. The day prior to expected completion with the offer from the existing management team, the rival offer’s advisers submitted a revised offer for the business and assets of the company, changing the terms from a conditional to an unconditional offer for the same consideration of £3.2m. The administrators report stated: “As a result of the considerable risk associated with pursuing the revised offer put forward by offer four, we continued with our recommendation to HSBC that offer five should be accepted and proceed to completion on 1 March 2021, as originally anticipated. HSBC did not express any objections to our recommendation.” The report also stated a total sum of £7.2m was due to HSBC at the date of the appointment of the administrators. The report said: “While HSBC will be receiving a distribution in accordance with its fixed charge shortly, it is expected that HSBC will suffer a significant shortfall against its lending.”

Ole & Steen plans to continue its accelerated new openings programme: Danish baker Ole & Steen has said it plans to continue its accelerated new openings programme throughout this year and into 2022. The company will open its first site of 2021 on Monday (22 March) on the former Cafe Rouge in Hampstead High Street, which will become its 13th site in the capital. It also operates a site in the Oxford Westgate scheme. The Hampstead opening will come complete with two separate giveaways for the first time. From 10am, visitors to the new store will be able to collect one of 500 free Cinnamon Social slices. The offer is available to customers who have signed up to the Ole & Steen newsletter. In addition, customers will be able to pick up one of 350 free Honey Hearts, which will be engraved on the spot with the name of their choice. Chief executive Jason Cotta said: “We are delighted that Hampstead is our first of many new bakeries in 2021 – in time for Easter and our new summer menu, which launches in mid-April. Following a strong Christmas and Valentine’s Day, the business is in a robust shape coming out of the UK lockdown and we plan to continue our accelerated new openings programme throughout this year and into 2022.”

More than 7,500 of Britain’s licensed premises lost in the year of covid, independents bear brunt of closures: Britain has 7,592 fewer licensed premises than it did before the covid-19 pandemic hit, according to a new report by analyst CGA and advisory firm AlixPartners. The March edition of the Market Recovery Monitor, published as the UK marks 12 months since its first lockdown began, sets out the full devastating impact of the pandemic and lockdowns on hospitality, including a rapid acceleration in closures since the start of 2021. Britain’s total number of licensed premises fell by 2,713 over January and February – equivalent to 46 closures a day, or one every 31 minutes. In total, Britain had 107,516 sites at the end of February 2021, down by 7,592 or 6.6% from 115,108 in March 2020. The Monitor revealed how independent businesses have borne the brunt of closures. A total of 5,112 have been lost since March 2020, including 1,971 in January and February alone. By comparison, restaurant and pub groups have recorded 1,229 closures – fewer than a quarter of the independent sector’s number. Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA, said: “While hospitality finally has a roadmap out of lockdown, these figures show dozens more businesses are being pushed to collapse every day. Losing Christmas sales had a shattering impact on many entrepreneurial restaurants, pubs and bars.” AlixPartners managing director Graeme Smith added: “All segments of the market have been impacted but the dynamic independent sector has borne the brunt of closures. The pandemic has reshaped the market for many years to come and, unfortunately, there are likely to be further casualties before businesses are permitted to trade without restrictions this summer. With many businesses unable to trade before 17 May, further support is needed for the industry, which is creaking at the seams.”
AlixPartners is a Propel BeatTheVirus campaign member

Marston’s to reopen more than 600 pubs in England next month: Marston’s is to reopen more than 600 pubs in England – almost 70% of its English estate – from Monday, 12 April. With the focus on alfresco hospitality, pubs that can accommodate customers in outdoor gardens will operate with an adapted offering in line with restrictions. Food offers may vary from site to site, but “much-loved pub food will be at the heart of every menu”. To accompany table service, Marston’s has introduced an online ordering system called Marston’s Tap. The online platform is available across the majority of Marston’s pubs for guests to use and a full rollout is under way following its success last year. Bookings are being accepted as are walk-ins. Access to toilets and baby-changing facilities will be available. While pubs have been closed, where possible, Marston’s said it has invested in and adapted its outdoor spaces and pub gardens “to enhance guest experience for the reopening”. Chief executive Ralph Findlay said: “We are delighted we can reopen many of our pubs, but we can’t wait until all our pubs can serve customers once again. The resilience of our pub managers and pub partners during this time has been admirable and we look forward to safely welcoming back guests and reuniting friends and family.” Meanwhile, Petersham Nurseries will reopen Petersham Nurseries Cafe and the Teahouse in Richmond and La Goccia in Covent Garden on 12 April. Guests will be able to dine alfresco in all weathers, with extended greenhouse-style roofs and heaters with new spring menus. 

Government cuts red tape to give pubs and restaurants more flexibility to use land for outdoor hospitality: The government has announced it has cut red tape to give pubs and restaurants more flexibility to use their land to provide further outdoor space from 12 April. Under the new measures, any venue, even if it is listed, can put up a marquee or structure of any size on their land without planning permission, and keep it up until September. The government said: “To make sure businesses can make the most of the summer, businesses such as pubs and restaurants, including where these premises are in listed buildings, will be allowed to use their land more flexibly to set up marquees and provide more outdoor space for diners as restrictions ease, allowing them to serve more customers and recover from the effects of the pandemic. They can be kept up for the whole summer rather than the 28 days currently permitted.” The Sun reported venues with pavement access can also put out tables and chairs for dining without having to go through the “tedious public consultation process that usually takes weeks”. They can notify their town hall and carry on serving if they do not hear back in ten days. The measures are part of a new £56m “Welcome Back Fund”, which the government said will help councils boost tourism, improve green spaces and provide more outdoor seating areas, markets and food stall pop-ups. Communities secretary Robert Jenrick said: “As we move to the next stage on the roadmap out of lockdown we are all looking forward to being reunited with friends and family outdoors and making a safe and happy return to our favourite shops, cafes, pubs and restaurants. This funding will help councils and businesses to welcome shoppers, diners and tourists back safely. As soon as the roadmap allows, we need to get behind our local businesses and enjoy all that this country has to offer and that we’ve been missing so much. I’m allowing every pub in the country to erect a marquee in their garden for the whole summer as a one-off power to support our locals.”

Liverpool to pilot return of nightclubs without social distancing: Liverpool will test the return of crowds to nightclubs, comedy centres and business events as part of the government’s roadmap out of lockdown. The “Events Research Programme” will test how small and large-scale events can be done safely to allow venues to reopen as lockdown restrictions ease by collecting scientific data from the events this spring. Culture secretary Oliver Dowden said the events will be “crucial” in getting audiences back in “safely without social distancing”. Under the government’s current plan, all lockdown restrictions will be removed no earlier than 21 June, with outdoor hospitality due to open on 12 April. The government has said decisions on audience sizes have not yet been made and will be worked out with local authorities.

Pacha Group acquires Cafe de Paris: Ibiza nightclub operator Pacha Group has swooped on Cafe de Paris, one of London’s oldest nightclubs, and plans to reopen the landmark as a cabaret venue. The Sunday Times reported Pacha plans to reopen the club under the name Lio – the dinner and cabaret club that has been open in Ibiza for ten years. Sanjay Nandi, director for business development at the Pacha Group, said it followed on from a six-week pop-up London Cabaret Club in 2019. “We wanted to come back to London for more,” he said. Nandi said the club would reopen towards the end of this year or the beginning of 2022. In December, London restaurant and bar operator Maxwell’s Restaurants, which owned Cafe de Paris and Tropicana Beach Club in the West End, went into liquidation, leading to the loss of 400 jobs Howard Raymond, the son of the “King of Soho” Paul Raymond, who owns the venue, said it was important the venue remained intact – and didn’t become a casino. “It just goes to show the West End isn’t dead,” he said.

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