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Morning Briefing for pub, restaurant and food wervice operators

Mon 22nd Aug 2022 - Update: Cineworld, Tim Martin and Nightcap
Cineworld reports possible Chapter 11 restructuring: Cineworld has responded to media speculation this morning by reporting it is considering a Chapter 11 restructuring. It stated: “In response to media speculation, Cineworld is today providing an update to its announcement on 17 August 2022 regarding an evaluation of strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction. Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members. The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process. Cineworld is in discussions with many of its major stakeholders including its secured lenders and their legal and financial advisers. Any such filing would be expected to allow the Group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction. Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees. As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld. Cineworld’s evaluation of these strategic options remains ongoing. A further announcement will be made if and when appropriate.”

Number of Italian restaurant operators set to join updated Premium Database of Multi-Site Companies: A number of Italian restaurant operators are among the 47 new multi-site companies being added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday (26 August), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, features Bash Redford and Michael Lavery, who operate south London Italian restaurant Forza Win and sister brand Forza Wine. Also added this month is Ayrshire operator Maria Timis, who operates Italian eatery Allegria in Gallowgate Street, in Largs, and is now launching her second site in the town, called the Riviera Largs. In addition, Monmouthshire operator Andreas Christou, an award-winning restaurateur who operates Italian restaurants La Piccola in Monmouth and Casa Bianca in Abergavenny, and is set to open his latest branch of Casa Bianca, in Merthyr Tydfil, will be featured. Premium subscribers will also receive a 3,200-word report on the new additions to the database. The comprehensive database is updated monthly and 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. The database currently features 2,572 companies. Premium subscribers will also receive the next edition of the New Openings Database,which is produced in association with StarStock, on Friday, 2 September, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 12,000-word report on the new additions to the database. Premium subscribers also receive access to the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated monthly, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers have also been given exclusive access to the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and is updated every two months. The third edition features 140 companies and almost 60,000 words of content, providing insight on the offer, locations, cost and other key details. 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 single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. 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 group editor Mark Wingett.

Wetherspoon founder Tim Martin stresses tax burden faced by pubs: JD Wetherspoon founder Tim Martin has stressed the tax unfairness that pubs faced compared to supermarkets. Writing in The Sun, he stated: “In 1979, when Wetherspoon first opened its doors, pubs accounted for around 90% of all beer consumed in the UK. In those far-off days, few people drank at home and pubs were the UK’s main social melting pot. Surveys showed that 50% of people met their partner, husband or wife in their local – hard to imagine today. Pubs have a lot to answer for, you might say. Fast forward to 2019 and things had changed. Even before the pandemic hit, pubs had lost half their beer trade to supermarkets. And the pandemic, of course, accelerated the trend. Supermarkets, which stayed open during the various national and regional lockdowns temporarily grabbed 100%, more or less, of beer sales. We humans are creatures of habit, of course, so once we’d got used to drinking at home, on the beach, in the park or in a pal’s garden, it was far harder to persuade people to return to the pub than most imagined- especial given the whopping price advantage that supermarkets have. But what had caused the revered institution of the British pub to suffer such a catastrophic loss of trade, year after year, long before the pandemic? Tax is the simple answer. In 1979, pubs sold relatively little food, so few people noticed or complained, when VAT, then 8%, was charged on food bought in pubs, whereas food bought in supermarkets was VAT-free. However, food sales in pubs, reflecting an international trend towards eating out, gradually increased at the same time as VAT rocketed to today’s level of 20%. So, in effect, the tax break which benefited supermarkets, became bigger and bigger. With food at about a quarter to a half of total sales in most pubs, but still zero in supermarkets, pubs had no alternative but to charge customers more, for both food and drink, than supermarkets. The reality has been that supermarkets have been able to subsidise the selling price of beer, using their VAT advantage. And, as if that we’re not enough, pubs also pay far more business rates per pint than supermarkets- around 25 pence a pint in pubs versus about two pence in supermarkets. To be fair, the pub industry hasn’t much helped itself. Instead of campaigning for tax equality with supermarkets, fairness and equality are sound principles of taxation- the big pub companies, over the decades, have only campaigned for temporary help when the going gets tough, as it undoubtedly is today. But when the going gets tough, it’s tough for everyone, so the public sees requests for favours in downturns as unjustifiable special pleading. Instead of campaigning for temporary help, the big pubcos should campaign for equality, something that everyone understands. Let’s not beat about the bush. If pubs are to survive and thrive in the future, generating a huge number of jobs as well as vast funds for the Treasury, they have to be treated fairly. Fairness means tax equality with supermarkets. Anything short of that means continuing decline for a once-great British institution.”

Nightcap lines up one of the world largest Tequila bars: Nightcap, the owner of The Cocktail Club, the Adventure Bar Group and the Barrio Familia group of bars, has announced the opening of what will be one of the world’s largest Tequila-focussed bars and is the first new site for its Barrio brand following the acquisition of the Barrio Familia Group in November 2021. The company stated: “The latest lease signing at Gillian Lynne Theatre, Parker Street, London, WC2B 5PW has a capacity of 600 arranged across the ground floor and first floor, measuring approximately 10,500 square feet in total. It has a 2:30 am license on Monday to Saturday with a 12:00 am license on Sunday. This is the first Barrio to open since 2015 and will be the flagship site as the largest Barrio to date and the largest Nightcap venue in London. It takes the total number of Barrio branded venues to five. The site – formerly The Tropicana Beach Club – is well known to our current senior management team and once completed it will be one of the largest Tequila-focussed bars in the world. Nightcap now has 35 sites within its estate and a further 21 premises under offer or in legal negotiations for all its brands and continues to see favourable market conditions for site acquisitions across the UK.” Sarah Willingham, chief executive of Nightcap, said: “When we acquired Barrio in November 2021 we wanted to respond to the growing demand for Latin-inspired, Margarita and Tequila focussed bars, we always viewed Barrio as a brand that had significant potential for growth and rollout and we are absolutely delighted to have secured such a landmark venue in Central London. It is a site that is very well known to our current senior management team at Barrio and we are very excited about the growth opportunity for the brand, so it’s very fitting that the first new site will be at such an iconic Central London venue. I am so proud of the way that Barrio has integrated into the business since day one. It is thanks to the hard work and dedication of the teams and all those involved that they can start their growth journey so quickly after joining the Nightcap group.”

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