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Morning Briefing for pub, restaurant and food wervice operators

Tue 19th Mar 2024 - Update: XP Factory FY results, Diageo new chair, Michelin, big nights out research
XP Factory reports double digit FY lfl sales growth across both core brands: XP Factory, which operates the Escape Hunt and Boom Battle Bar brands, has reported double-digit like-for-like sales growth across both its owner-operated brands for the 52 weeks to 31 December 2023, with continued strong like-for-like growth in first ten weeks of 2024 underpinning the company’s “confidence in the future”. Group revenue in the twelve months to 31 December 2023 was £44.8m, an increase of 96% over the same period in 2022. The company said the increase reflects the significant site expansion undertaken in 2022 together with strong like-for-like sales growth. The company said: “A significant milestone was achieved, as the business generated for the first time a positive operating profit of £1.7m, compared to a loss of £4.9m in 2022. While some of this growth came from the four sites opened in the year (three Boom, one Escape Hunt), most was driven by the underlying momentum in the business, the strong like-for-like sales performances across both brands, and the continual improvements in operating margins.” Escape Hunt owner-operated revenue grew 38% to £13.5m, reflecting the full year benefit of turnover from new sites opened in 2022 together with 17% like-for-like sales growth from the existing estate. Boom owner operated revenue grew 201% to £28.6m, reflecting like-for-like sales growth of 29% and the growth of the owner operated estate from two sites in January 2022 to 19 at 31 December 2023. Boom’s franchise business delivered £1.9m revenue in the year. The business said: “This anticipated reduction of £1m versus prior year (2022: £2.9m) is largely from the fact that the 2022 revenue included £900,000 relating to the build and subsequent sale of a franchise unit for which there was an associated, offsetting cost of sale. Other changes were driven by the full year effect of sites opened in 2022, offset by group having bought back Chelmsford, Ealing, Liverpool, Watford and Glasgow in the period, and the full year effect of the buy-backs of franchise sites in Cardiff and Norwich in 2022. These vendor-financed deals are attractive to XP Factory, and we will continue to do similarly if opportunities present themselves and if we believe the risk-adjusted returns match the returns we can make from opening new sites.” In regards to Escape Hunt, site level Ebitda margins held steady at 42%, even after absorbing meaningful wage increases during the year. The company said: “Rather than increasing prices to offset rising cost lines, instead we sought to create capacity and drive volume, and in so doing, we proved remarkably resilient, even in a challenging consumer market. The bolstered corporate sales team delivered 40% more business than in the prior year and the Christmas period again proved to be popular, with corporate bookings representing 5% of total sales, a similar percentage to what has been achieved previously. Our focus on delivering outstanding customer service continued as always, and we were delighted to receive a market leading 99% satisfaction rating, compared to an average of 88% for the leisure industry as a whole and 94% for the competitive socialising sub sector. The return on capital within Escape Hunt remains extremely high at 46%. Interestingly we are typically seeing an upwards trend in the returns profile, since the new sites being opened tend to mature more quickly now that the brand is becoming better known, and our build costs are holding stable.” Within the year the business opened a new Escape Hunt in Woking, bringing its UK site total to 20, and its owner operated total to 23 with the inclusion of Dubai, Paris and Brussels. It said that both Escape Hunt and Boom Battle Bar continued to deliver strong like for like sales growth in the first ten weeks of 2024 (11% and 9% respectively), and the new sites and recently acquired former franchise sites are performing in line with anticipated maturity profiles. It said: “As we have come to expect, half term in February proved particularly successful for Escape Hunt, and at Boom, the operational focus over the last 12 months continues to yield the margin and customer improvements that were targeted. We remain confident about the outlook for the business and the board is confident that the results to 31 March 2024 will be in line with market expectations.” Richard Harpham, chief executive of XP Factory, said: “I’m delighted with the company’s performance over the last 12 months, and doubling in scale for the second year running is testament to the extraordinary efforts of our team. Both brands have significant runways ahead of them, and I’m excited to have such a robust foundation in place from which to grow further.”

Propel’s updated Multi-Site Database to be released on Thursday, 28 March, with seven category segmentation including 906 casual dining restaurant operators: The next Propel Multi-Site Database, produced in association with Virgate, providing details of more than 3,000 multi-site operators, will be released on Thursday, 28 March, at midday, to Premium Club members – and companies are now searchable in seven main segments. The database features 906 (30%) restaurant operators from the casual dining sector, 761 (25%) pub and bar operators, 504 (16%) cafe bakery operators, 415 (13%) quick service restaurant operators, 249 (8%) hotel operators, 188 (6%) experiential leisure operators and 52 (2%) fine dining restaurant operators. The database is updated each month – this edition includes 16 new companies and brings the total to 3,075. Premium Club members also receive access to five other databases: the Turnover & Profits Blue Book, the New Openings Database, the UK Food and Beverage Franchisor Database, the UK Food and Beverage Franchisee Database and the Who’s Who of UK Hospitality. Plus, all members will be offered a 20% discount on tickets to five Propel paid-for events – The Excellence in Pub Retailing Conference (14 May), Social Media for Profit (18 July), the Talent and Training Conference (1 October) and Restaurant Marketer and Innovator (two days in January 2025). Operators will also be able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or a supplier. Email kai.kirkman@propelinfo.com today to sign up.

Diageo to appoint Sir John Manzoni as chair: Diageo has announced that current non-executive director Sir John Manzoni will be appointed its new chair on or around 5 February 2025 when current chair Javier Ferrán retires from its board. Manzoni joined the Diageo board in October 2020, having been chief executive of the UK Civil Service from 2014 to 2020. He is currently chair of FTSE-listed multinational energy business SSE plc and a non-executive director of engineering and technology business KBR, Inc. He was previously a non-executive director of the multinational drinks company SAB Miller plc for 11 years from 2004 to 2015. Earlier in his career he served as president and chief executive of Talisman Energy, and held a number of senior executive roles at BP plc. Javier Ferrán joined the Diageo board in July 2016 and was appointed chair on 1 January 2017. Ferrán said: “It has been a true privilege to lead Diageo’s board during a period in which we have achieved significant growth, reshaped our portfolio and geographic footprint, and navigated widespread global volatility. I look forward to working with John, the board and all my Diageo colleagues to ensure a smooth transition over the coming months.” Manzoni said: “It will be a privilege to take on this role and to succeed Javier, whose leadership and acumen have been so valuable to our business and to board colleagues. Since joining the board, I have been continually impressed by the growth potential of the organisation, the quality of our brands, and the dedication and high standards of Diageo colleagues around the world. Diageo has an unrivalled portfolio, a global footprint and world-leading capabilities, and I look forward to supporting the executive team to ensure that we deliver on our potential.” Debra Crew, chief executive of Diageo, said: “Javier has been an invaluable source of strategic counsel and advice for me and our wider leadership team, and I want to thank him personally for the role he has played in stewarding the business so successfully. With a strong focus on execution, we will continue to invest behind our iconic brands to create value for shareholders and maintain our position as an industry leader in total beverage alcohol, an attractive sector with a long runway for growth. I look forward to working with John as chair and the rest of the board to achieve those ambitions.” Manzoni will also succeed Ferrán as chair of the company’s Nomination Committee in February 2025.

Big nights out take more planning but less budgeting: Consumers still love a ‘big-night-out’ but ‘high tempo’ events have evolved over the past few years to become more varied, carefully planned and not necessarily late-night, according to a new consumer report from CGA by NIQ. The Evolving High Tempo Occasion Report, based on a survey of 2,000 “high-tempo consumers”, reveals that they tend to go out for such an event at least once every three months. Planning plays an important part of the occasion, typically for ticketed events, bottomless brunches, competitive socialising, themed events or pub or bar crawls. Fewer are now late-night visits, with afternoons and early evenings becoming popular times to go out. Booking ahead is important, with two in five (39%) consumers pre-booking a table or table with drinks beforehand – rising to 46% of females. Nearly half (47%) of pre-bookers – and 60% of students – reserve their tables at least a week in advance. Three quarters of consumers (75%) schedule their start time and a large majority also plan elements like the group they’re visiting with (87%), their pre-drinks (82%) and the venues they’ll visit (64%). Nearly a third say they would pre-order bottles of sparkling wine/champagne (31%) or sharing jugs (31%), while single-serves (31%), buckets of packaged drinks (27%), bottles of spirit with mixers (25%) and trays of shots/energy bombs (17%) are all in demand too. However, when it comes to how much money they’ll spend, consumers take a more relaxed approach with nearly 50% not budgeting what they’ll spend (47%) and if they do, 13% admit they won’t stick to their budget. Trading up in terms of drinks is an important part of the high tempo occasion, with more than half (53%) agreeing they are likely to pay more for a better quality drink – 14 percentage points more than on an average occasion. Jonny Jones, CGA by NIQ managing director UK and Ireland, said: “High tempo visits to the on premise involve an interesting mix of advance thought and in-the- moment decision-making – especially later on in a visit. But they will only make spontaneous in-venue purchases if they believe this will elevate their experience. This creates some great opportunities for suppliers and venues to sell drinks in advance and alongside food, and to plan strategies to maximise dwell time and spend. But behaviours are evolving fast, and success requires a good understanding of the new-look balance of planning and spontaneity.”

Employers’ spending on training has fallen by a fifth in a decade: Spending by businesses on training their workers has fallen by nearly a fifth over the past decade, underscoring the challenge Britain faces to reverse its dismal productivity growth since the 2008 financial crisis, research has revealed. The Times reports that investment in skills by employers has dropped by 19% in real terms per employee between 2011 and 2022, according to an analysis of official data by the New Economics Foundation think tank. Expenditure on training per worker has fallen by 35% among larger businesses and by 38% in the public sector. Spending by businesses in the northeast and southwest fell by a steeper amount than the UK-wide average. The falling investment in skills makes it more likely that the UK economy will continue to be constrained by poor productivity, the think tank warned. Slower improvement in workers’ output has added to inflationary pressures and contributed to the longest squeeze on real wages on record. The New Economics Foundation recommended that employers be allowed to claim tax relief for every hour a worker spends on training set at the rate equivalent to the real living wage. Alex Chapman, senior researcher at the foundation, said: “We currently have a system which makes it too difficult and too expensive for employers to train their workers, or for people to retrain later in life. This is having dire consequences on our economy right now with low productivity and limited options for people to develop and earn more. But it also means we are seriously behind where we need to be in the transition to a green economy, with a significant skills gap in renewable energy, home energy efficiency, and other emerging sustainable industries.” Rishi Sunak announced on Monday that the government will cover the cost of apprenticeships at small businesses for anyone aged 21 or under.

Michelin hails ‘cultural dynamism’ as 52 French restaurants earn their first stars: A record 52 restaurants in France – including 23 that only opened in the past year – have been awarded one or more Michelin stars for the first time, which the French foodies’ bible said reflected the “cultural dynamism” of a new generation of innovative young chefs. “This year’s is a generous vintage, and also true to our values,” said Gwendal Poullennec, the director of the Michelin Guide, at the launch of its 115th edition on Monday. Well over half of the new laureates were under the age of 40, he said. The Guardian reports that one of them, Fabien Ferré, 35, received the top accolade of three stars at his first attempt. Ferré, who took over the kitchen of La Table du Castellet in the southern Var department last year, thus becomes France’s youngest tri-stellar cook. “The gastronomy that you serve, the passion and the talent that are yours, enlighten all our lives”, François Bonneau, the regional president, told an audience of more than 500 chefs gathered for the ceremony in the Loire Valley capital of Tours. Around the turn of the millennium, critics argued that French cuisine had had its day: jaded mockeries of once-great dishes, a gastronomy in decline, a lamentable lack of innovation. You could eat better French food in London or New York than in France, some claimed. The Michelin Guide itself, first published by the tyre-manufacturing brothers André and Édouard Michelin in 1900 to encourage motorists to discover restaurants around France, has come in for its fair share of criticism over the years. Many gastronomes have argued that the guide has failed to move with the times, rewarding tradition rather than innovation. But after a long period of resting on its laurels, France has seen a flourishing of new restaurants in the past few years, with more daring and creative young chefs – many of whom have worked abroad – eager to experiment and adopt international ideas. More than 20 more restaurants won a first star this year than last, confirming that 2024’s crop was “a superb selection that bears witness to the quality and quantity of France’s culinary dynamism on the world stage”, Poullennec said. “It’s no longer just about heritage,” he told Agence France-Presse. “French gastronomy is no longer stuck in the past.” The 2024 selection marked “the emergence of a whole generation that we could feel coming up,” he said.

Jesus Adorno steps down from the Arlington: Celebrated maitre d’ Jesus Adorno has announced he has stepped down from Jeremy King’s Arlington restaurant, which opened just last month on the former Le Caprice site in London’s West End. Adorno – who, when Le Caprice closed with the arrival of the pandemic, had previously completed 38 years’ service at the restaurant. King announced his return to the site last year, with Adorno saying: “Here we are again, a dream that I didn’t dare to dream until Jeremy King spoke to me about the possibility of taking over the old site, amazing emotions came over me and now we have Arlington restaurant!” However, yesterday he posted on Instagram: “With great sorrow I handed my notice this morning to Jeremy King, Arlington, it wasn’t a good fit for me and I decided it wasn’t right, #familytime.” Arlington is one of three new restaurant launches this year from King, the co-founder of Corbin & King and doyenne of London’s dining scene, along with a New York-inspired “Grand Café” called The Park in Bayswater and a relaunch of Simpson’s in the Strand.

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