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Tue 29th Jun 2021 - Update: Tasty sales growth, BrewDog under the spotlight
Tasty reports strong like-for-like sale growth: Tasty, the owner and operator of restaurants in the casual dining sector, has reported 49 of the company’s 54 sites are fully open for trade. The company stated: “Takeaway and delivery sales performed well during the most recent lockdown and throughout H1. The company has made good progress in expanding delivery and click and collect across all sites. We have been particularly pleased with the continued good performance of our takeaway sales which, even after dine-in reopened, have continued to perform well. Our rollout of our new takeaway sub-brands, Out the Box and Out the Box Asia, has progressed well and is contributing an additional revenue stream. Since the relaxation of indoor dining restrictions, the six-week period to 27 June 2021 as a comparison to 2019 has shown strong like-for-like growth. Trading has benefitted from significant pent-up demand, and we are encouraged by the initial strength of our overall trading performance despite the restaurants having restricted capacity due to social distancing. The board believes that, as a result of international travel restrictions, increased disposable income and a general strong desire to go out, trade will remain robust throughout the summer months. Notwithstanding this, the company is taking measures to combat the challenges ahead posed by supply chain disruption, recruitment issues, wage inflation, the reintroduction of business rates, and the reduction in furlough and VAT support. The company has strengthened its people and marketing departments and Harald Samuelsson, who joined the company as a non-executive director on 19 May 2021, is an invaluable addition to the board. The company has agreed consensual lease concessions and rent reductions on more than 80% of the estate and is continuing to negotiate with the remaining landlords and other creditors to settle any outstanding debts.”

Premium subscribers to receive updated database of multi-site businesses tomorrow: The updated database of multi-site companies for June, which is available exclusively to Propel Premium subscribers, will be sent out tomorrow (Wednesday, 30 June) at midday. It will include 63 new companies since its previous update in May – making a total of 1,880 listed businesses. Collectively the 63 new companies operate 565 venues. Subscribers will not only receive the database as a PDF and an Excel spreadsheet, they will also be sent a 10,389-word report on the businesses added during June. The go-to database 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. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. Premium subscribers also receive access to a second exclusive monthly database, The Propel Turnover & Profits Blue Book. This database provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers 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 Propel insights editor Mark Wingett. Email to sign up.

The Times reports on BrewDog’s co-founders property interests, The FT questions shareholder returns, The Guardian reports on ‘solid gold’ can row: The co-founder of BrewDog is selling off personal property assets linked to the craft brewer ahead of a planned flotation amid concerns over potential conflicts of interest, The Times has reported. James Watt told The Times that his remaining property holdings rented to the Scottish brewer were “in the process of being divested” and that three sites he owned and leased to BrewDog had been sold in the past two years. The current fundraising prospectus said the company paid “approximately £125,000 annually... for flights” to Jet Pack Pie Limited, which is wholly owned by Watt. In other related party transactions, the company and its US arm pay almost £200,000 a year in rent to property companies owned by Watt. One such transaction involves a bar in Columbus Ohio – BrewDog had owned the building. The company sold it in December 2017 to an entity owned by one of Watt’s companies, Ten Tonne Mouse, before it opened. Under the deal, the company provided Watt’s company with an interest-free loan to purchase the property for $657,816. The loan was repaid in 2018. BrewDog entered into a five-year lease to pay rent to Watt’s company of $150,000 a year. Watt told The Times the rent had been set independently by a third party and substantial construction costs had brought his investment to $1.75m. A BrewDog spokesman told The Times: “Related-party transactions are commonplace in many businesses. As with everything BrewDog does, these transactions are conducted under advice and managed by third parties at arm’s-length market rates designed to optimise benefit for BrewDog. All transactions to date have been reviewed by financial advisers and were at market rates in effect at that time.” Meanwhile, The Financial Times has questioned whether small shareholders will get a return on their investment given that private equity firm TSG is guaranteed an 18% compounding annual return on its 22% holding in the event of an IPO or sale. This return takes priority over other shareholders, according to BrewDog’s prospectus, meaning newer investors risk making nothing or losing money even if the company’s value rises. “If BrewDog raise the maximum £50m at the current valuation of just under £2bn, investors in the latest UK Equity for Punks crowdfund would only get their money back if the company sells for [about] £2.2bn in 2024,” Myrto Lalacos, investment executive at venture capital firm Praetura Ventures, told the FT. Brewdog’s latest crowdfunding round values it at about ten times net revenues. Consultancy Drink Adviser managing director Dave McCarthy told the FT the valuation was “remarkable” considering that listed brewers such as Heineken and Molson Coors trade at enterprise values of two to four times net revenues. “The challenge is that BrewDog is now a large business and craft beer is maturing — it’s no longer the explosive growth category that it once was... So achieving that valuation is going to become increasingly challenging,” he said. The brewer made a loss of £7.4m in 2020, down from a £3.7m profit a year earlier. Its net revenues were up 4.2% to £182m in 2020, having risen 25% the previous year. And The Guardian has reported a man who won a “solid gold” can of BrewDog beer has been left disappointed after the prize, which the Scottish brewery claims is worth £15,000, turned out to be largely made of brass. BrewDog and its chief executive, James Watt, advertised the chance to win the can across multiple media platforms between November 2020 and March 2021, as part of a promotional competition. A drinks industry worker, Mark Craig from Lisburn, Northern Ireland, was among fans of the brewery who snapped up cases of its flagship beer, Punk IPA, finding one of 50 gold versions hidden in one of them. Craig, who said he had hoped to fund his wedding by selling the gold, discovered the can was only plated with the precious metal after asking for a certificate from BrewDog. BrewDog said it stood by the £15,000 value placed on the cans, 50 of which have been made. It said the valuation was “reasonable based on multiple factors – including the price we paid for its manufacture, the constituent metal and quality of the final product, the standard retail mark-up and the rarity and uniqueness of the cans”. But the company said it could not guarantee their value on the open market and declined to answer whether it would buy the can back for £15,000 minus costs. A spokesperson also said BrewDog had immediately removed the “erroneous” mentions of solid gold in its competition marketing as soon as it realised the mistake. However, The Guardian reported that Twitter posts from the company’s official account and that of Watt, referencing the “solid gold” cans and their supposed £15,000 value, remained online as of Monday afternoon.

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