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Morning Briefing for pub, restaurant and food wervice operators

Tue 6th Jul 2021 - Update: Sector’s £400m boost as social distancing ends, Marston’s, Wahaca et al
Last orders for social distancing gives pubs and restaurants a £400m boost: Prime minister Boris Johnson’s decision to ease social distancing rules sent pub and restaurant shares soaring. Almost £400m was added to the value of the sector in the run-up to the prime minister’s confirmation yesterday (Monday, 5 July) that most remaining lockdown measures in England will end on 19 July, reports The Times. These include the mandatory wearing of masks, while pub-goers will be allowed to order at the bar again, although the biggest plus for hospitality will be the removal of the one-metre-plus rule, providing a big boost to capacity. The UK-biased FTSE 250 closed at its highest level on record, surpassing its previous best which it hit at the beginning of last month. One of the biggest risers was JD Wetherspoon, whose chairman, Tim Martin, has been among the most vocal critics of the government’s covid-19 response. The company’s shares jumped by 39p, or 3.2%, to £12.73. Also up was Mitchells & Butlers, which operates the Harvester, Miller & Carter and All Bar One brands. Its share price rose by 10p, or 3%, to 300p, representing an increase of 75% over the past 12 months. Among restaurant stocks, The Restaurant Group stood out. The operator of Wagamama and Frankie & Benny’s jumped by 2½p, or 1.%, to 136p. Meanwhile Fulham Shore, which owns the Franco Manca and Real Greek chains, was a halfpenny better off, rising by 3% to 17¼p. Both restaurant firms have developed significant delivery businesses during the pandemic, but Domino’s Pizza, which only does delivery and takeout, still rose by 10½p, or 2.6%, to 412p. Whitbread, which in addition to its Premier Inn hotels runs the Beefeater and Brewers Fayre chains, limbered up for Freedom Day with a rise of 37p, or 1.2%, to £32.40. The government’s decision to lift restrictions has also been hailed by more sector leaders, but they warned there was still a long road ahead. Nick Mackenzie, chief executive of brewer and retailer Greene King, said: “It’s welcome news that the government has shared the five point plan for living with covid where the majority of restrictions can be lifted and we can get back to some form of normality, hopefully on the 19 July – allowing the possibility of profitable trading for the first time since March last year. It’s been a difficult time for everybody but as we start to come out of this crisis and learn to live with the virus, we still need the government to support the rebuilding of the hospitality sector particularly with business rates and duty reform, as well as tackling the short term issues around recruitment after months of closure. We can’t wait to get back to doing what we do best and give our customers the great pub experience they so love and make the most of the remaining summer so we can start getting back to being a thriving industry. Only then can we rebuild and reinvest, supporting jobs and the wider UK economy when it is needed most.” Peter Marks, chief executive of Rekom UK, the UK’s largest nightclub operator, with 47 clubs and bars, said: “The past 16 months have undoubtedly been the most challenging in the late-night leisure industry’s history, with the covid-19 pandemic having dramatically impacted even the most successful businesses within the sector. We welcome the government’s decision, which reflects its understanding not only of the significant economic contribution that nightclubs make, but also the vital role that this part of the late-night leisure industry plays in the continued health of our high streets and our cities. We are looking forward to now welcoming customers back and doing what we do best: providing fun, unforgettable experiences.” Punch Pubs & Co chief executive Clive Chesser added: “It is clearly encouraging news we remain on track to move to step four of the roadmap from 19 July thanks to the successful vaccination programme. We very much welcome the move towards self-responsibility when going about our everyday lives, and we will of course continue to keep our teams and guests safe within our businesses. At the same time, we are concerned by the lack of clarity on how the Test and Trace system will be adapted to provide a more pragmatic and risk-based system, moving to a ‘test to remain’ framework to reduce disproportionate interruptions to people’s working lives and to support business continuity. This is an urgent requirement, given the current level of disruption, and we remain keen to work with the government on helping to find a more practical solution.”

McDonald’s UK’s largest franchisee among 62 companies added to next edition of Blue Book for Premium subscribers: McDonald’s UK’s largest franchisee, Appt Corporation, is among the additional 62 companies that will be added to the updated Turnover & Profits Blue Book, which will be published for Premium subscribers at midday on Friday (9 July). The second edition will feature a total of 280 companies and will provide an overview of the most recent five years, ranking them by turnover and profit conversion. It will also show directors’ earnings over five years and the top-earning director. Total turnover for the 280 companies is £25.8bn. The minimum company turnover to be included will be £4m. The Blue Book is updated each month, with more companies added. 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 Multi-Site Database. The updated database of multi-site companies for June includes 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 not only received the database as a PDF and an Excel spreadsheet, they were also sent a 10,389-word report on the businesses added during June. 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.

Marston’s promotes Hayleigh Lupino to chief financial officer: Marston’s has appointed Hayleigh Lupino as its new chief financial officer, with effect from 3 October 2021. Lupino, who is currently Marston’s director of group finance, will also be appointed to the company’s board as of the same date. She will succeed Andrew Andrea as chief financial officer who, in turn, takes over the role of chief executive from Ralph Findlay at the end of the current financial year ending 2 October 2021. Lupino has more than 18 years’ experience within the business. She also serves on the Carlsberg Marston’s Brewing Company (CMBC) board as a non-executive director and she is currently a trustee of Wolverhampton Grand Theatre, where she chairs the finance and business sub-committee. The company stated: “Hayleigh has strong operational and commercial credentials, as well as extensive knowledge of both Marston’s and the wider pub and brewing sector. A qualified ACMA, she joined Marston’s in 2003 since when she has held a number of senior roles within the group including director of finance for Marston’s Beer Company, culminating in her appointment as director of group finance earlier this year. She has both helped to develop the strategy, and led the integration plans, which saw a transformation of the beer business over the past ten years. This included the acquisition of Thwaites beer business and Charles Wells Beer Business, together with the expansion of the distribution business on to a wider national platform. Most recently, she played a key role in the sale of Marston’s Beer Company into the joint venture with Carlsberg UK (in 2020) and is currently the project lead for Marston’s on the transitional services agreement with CMBC to ensure a smooth transition with the joint venture integration plan, spanning IT, finance, tax, data, payroll and facilities.” Marston’s chairman William Rucker said: “Marston’s is a people business and Hayleigh has unparalleled knowledge, understanding and experience of Marston’s business, culture and values which, together with her clear financial prowess, will be a great asset to the senior leadership team. She has a proven track record of delivery and is highly regarded within Marston’s which will stand her in good stead in her future role. I, together with my fellow directors, look forward to working with her closely in future.”

Selby – Wahaca in best shape to recover swiftly once restaurants are allowed to reopen fully: Mark Selby, co-founder of Mexican restaurant company Wahaca, has said the actions taken by the business during the pandemic has put it in the “best shape possible to help us recover swiftly and progress once restaurants are allowed to fully reopen”. Selby was talking after the company, which last October underwent a company voluntary arrangement (CVA), filed its accounts for the year to 28 June 2020. The company said it was trading in line with expectations until the outbreak of covid-19 last March. However the subsequent closure of all of its restaurants and ongoing disruption led to it entering the CVA, which led to 12 of its sites closing leading to an impairment charge of £8.1m. The total future operating lease commitments associated with these sites are £34.5m. It also secured a further injection of £5m into the business from Yellowwoods, the investment vehicle that backs Nando’s, which upped its stake in Wahaca in the process. It also wrote off £25m of interest-bearing loans and borrowings. Subsequently, the business secured long-term financing facilities of £15m, which are fully drawn and repayable in September 2024. Turnover for the year to 28 June 2020 was £34.7m (2019: £50.0m), the gross profit margin was 32.7% (2019: 43.6%), adjusted operating loss was £1.3m (2019: profit of £3.2m), net loss before tax was £17.0m (2019: £4.2m), and net liabilities were £29.0m (2019: £11.7m). The company said: “The restructuring actions the group has undertaken have left the business with a solid financial platform from which to grow once the restaurants are allowed to fully reopen again. The business has additionally fully developed a successful delivery revenue channel which has performed well during the last two national lockdowns, helping to mitigate cash bum.” Selby told Propel: “The unprecedented situation that arose in the early months of last year meant that we, alongside every business operating in the British hospitality industry, faced considerable challenges that were impossible to predict. Our wonderful teams showed such passion and commitment by adapting to whatever was thrown at them over the course of the pandemic – from successfully establishing and growing the delivery side of the business to supporting initiatives such as the Cook-19 programme that provided meals for NHS workers. During the months of enforced closure, we continued our focus and investment into being one of the UK’s most sustainable restaurant businesses, upgrading all of our chicken and pork to be British and free range as well as creating more meat-free options, with around 50% of our menu now being suitable for vegetarians. Developments such as these, combined with the action we have taken to strengthen our position, means the business is in the best shape possible to help us recover swiftly and progress once restaurants are allowed to fully reopen.”

Economy bouncing back at record rate but staff shortages in hospitality sector hampering recovery: The economy is bouncing back at a record rate but the main problem facing businesses is a shortage of staff, particularly in the hospitality sector, experts have warned. Latest data showed the services part of the economy grew rapidly in June with PMI output coming in at 62.4, marginally below the 62.9 reading in May. Nevertheless, anything above 50 represents growth. The sector covers pubs, restaurants and bars as well as the financial industry and is the largest part of the British economy. Tim Moore, economics director at data gathering business IHS Markit, said: “The service sector recovery remained in full swing during June as looser pandemic restrictions released pent-up demand for business and consumer services. But a shortage of workers continues to plague the sector and as a result firms are struggling to meet demand. Many staff who used to work in the hospitality industry have moved away from big cities such as London to save money during the pandemic, while many foreign workers returned home. Others used the pandemic to seek out different kinds of work as the sector was effectively shut down. Moore added: ‘Capacity constraints and staff shortages meant many service providers struggled to keep up with new orders. Backlogs of work increased at a faster pace than any other time since records began in July 1996. There were difficulties filling staff vacancies in all parts of the service economy during June, with hospitality and leisure experiencing the greatest squeeze.” Prime minister Boris Johnson confirmed he expects to lift the last remaining lockdown restrictions on 19 July with social distancing rules, mask laws and the work-from-home order set to go.

PM was told to ditch immunity passports for pubs and restaurants by SAGE: Prime minister Boris Johnson was urged to ditch plans for domestic “vaccine passports” by his expert advisers, documents published have shown. The controversial plans would have seen people refused entry to hospitality, nightclubs and other mass events unless they could prove they had already caught and beat covid, were vaccinated or had a negative test. The Scientific Advisory Group for Emergencies (SAGE) warned the scheme could lead to people purposefully trying to catch covid, fake test results or cause widespread unrest and discrimination, reports the Daily Mail. The government considered the idea of making proof of immunity cards mandatory in pubs and restaurants when it started planning its roadmap out of lockdown earlier this year. It later shifted the focus of the system to the reopening of theatres, sports venues, nightclubs and other mass events. But reviews carried out by SAGE in recent months showed there were a number of concerns about the reliability of immunity passports and their potential harms. The subgroup Nervtag said defining immunity was difficult and the only two reliable ways was for someone to show a recent negative PCR test or proof of vaccination. It warned rapid lateral flows were too unreliable. The same was true for antibody tests, it said. Meanwhile, the behavioural team on SAGE found people given immunity certificates appeared more likely to go and mingle with others and risk fuelling covid’s spread. SPI-B warned some people would purposefully go and catch the virus to get their papers. It also said making the documents mandatory would penalise ethnic minorities, who are less likely to get tested or apply for official documents due to a deep-rooted distrust in government. Johnson floated the idea of extending a new “covid certification scheme” to the hospitality sector in March. Officials suggested venues deploying the policy could be allowed to relax social distancing rules in return. But the plans were met with a furious backlash from Conservative MPs and the hospitality industry.

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