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Morning Briefing for pub, restaurant and food wervice operators

Fri 12th Apr 2024 - Update: Busaba results, Hospitality Rising initiative paused
Busaba ‘well placed to meet challenges ahead’, latest opening at Lakeside profitable and ‘exceeding expectations’: Busaba, the ten-strong Thai chain founded by Alan Yau, has said it is “well placed to meet the challenges ahead” while its latest opening, at Lakeside in Essex, is profitable and sales are “exceeding expectations”. The company reported turnover fell to £21,073,957 for the year ending 17 September 2023 compared with £21,162,725 the previous year. Ebitda was minus £636,000 compared with a profit of £172,000 the previous year. Pre-tax losses narrowed to £1,813,221 from £3,093,377 the year before. An extraordinary gain of £2,236,651 was made relating to the release of rent free periods on closed sites, costs/income related to the closure of sites and intracompany loan write-offs. In their report accompanying the accounts, the directors stated: “Footfall in London has suffered from the cost-of-living impact on customers discretionary spend as well as the summer-wide disruption caused by industrial action on train and tube network. This coincided with significant input cost inflation for the business across food and beverage, employees and energy costs. Adjusted Ebitda fell from a profit of £0.2m to a £0.6m loss. Continued focus on cost efficiencies has helped to mitigate a 50% increase in energy prices and 9% rise in hourly rates of pay. We made the difficult decision to surrender our restaurant lease in Cardiff and sell the site in Oxford to help preserve cash and profit. Despite the challenging economic environment we continue to explore opportunities to expand the brand closer to London with the successful opening in the reporting period at Lakeside in Thurrock. The restaurant is profitable with sales above expectations. We believe Busaba’s much loved brand and product in prominent London locations means we are well placed to face the anticipated customer and market economic challenges ahead.” The company did not receive any government grants (2022: £30,000). No dividend was paid (2022: nil). Last month, Winston Matthews, who was recently promoted to chief executive of Busaba, told Propel the business was “trading well”. He added: “We are relocating our site at Westfield Stratford site into the vacant Omega store within the same block. This is planned for September. We are very excited about this, as it will be the first new purpose-built site that we’ve opened for eight or nine years. Our former site will be available for 18 months to two years for a new concept. It will be more wet-led, but still have an Asian influence behind it. We obviously can’t compete with Busaba, and this gives us the opportunity to create something that is more high-tempo and vibrant.”

Next edition of Propel Turnover & Profits Blue Book to be sent to Premium Club members today: The next edition of the Propel Turnover & Profits Blue Book will be sent to Premium Club members today (Friday, 12 April), at midday. The 901 companies in the database are turning over a total of £65.2bn. A total of 577 companies are making a profit while 324 are making a loss. The profit being made by sector companies is now outstripping losses by £1.81bn. The Blue Book shows the total profit of the 901 companies in the list is £3,966,230,136 and losses are £2,160,906,038. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Premium Club members also receive access to five other databases: the Multi-Site Database, produced in association with Virgate; 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. All Premium Clubs 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 that are Premium Club members are also 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 supplier. Email kai.kirkman@propelinfo.com today to sign up.
 
Hospitality Rising initiative paused, reaches 300,000-plus job application starts: Sector recruitment initiative Hospitality Rising has been paused as it seeks further funding, after it reached 300,000 job application starts. The initiative was launched by Mark McCulloch in October 2022, with its inaugural campaign, “Rise Fast, Work Young”. The initiative raised £1m from 300-plus operators and suppliers, which invested in the campaign. McCulloch said: “We are so proud to have reached another milestone number; 300,000 job application starts generated from more than one million views of the Hospitality Rising job board thanks to your investment, support, and the ‘Rise Fast Work Young’ campaign. Our vision is to attract the next generation of talent into hospitality by changing the deep-rooted negative perceptions of hospitality amongst UK nationals. To make this change will take a five to ten-year continuous national advertising campaign costing circa £1m-plus per year to get the reach and repetitional impact needed to truly turn perceptions around. Unfortunately, this funding is not available at present, which has led me to the decision to pause the Hospitality Rising campaign for now. However, should the funding become available we will be ready and waiting to jump into action as the campaign and the team will be ready to go. For now, I want to say a huge thank you to everyone who supported us in any way big or small and here is a reminder of what we all achieved together.” In terms of the campaign’s results, it said 50% of 18 to 30-year-olds were reached at least once, 46% of 18 to 30-year-olds recall seeing the campaign, while 75% of 18 to 30-year-olds said the campaign does encourage them to work in hospitality. Circa 90,000 jobs were posted on the Monster job board, which generated one million-plus views and the reached 300,000 job application starts. 
 
Inflation data lowers hopes of interest rate cuts: The Bank of England is set to cut interest rates only twice this year, financial markets are now forecasting, after a series of stronger than expected inflation figures sparked concerns that borrowing costs will stay restrictive for longer. Investors have scaled back their expectations for the pace of monetary policy easing by the Bank of England since the start of the year, when they were pricing in as many as six rate reductions, reports The Times. Higher-than-expected inflation data in the United States forced investors to reconsider how quickly the world’s foremost central banks would loosen monetary policy. Figures this week showed that US prices increased by 3.5% in the year to March, above Wall Street analysts’ forecasts and up from 3.2%, the third rise in a row. An article by Megan Greene, an external member of the Bank of England’s monetary policy committee, in the Financial Times reinforced speculation that borrowing costs will remain restrictive for some time. Greene said that she believes rate cuts “should still be a way off”. Stubborn US inflation has also prompted traders to curb their forecasts for the scale of rate reductions by the Federal Reserve this year to about one or two. Analysts have said that the Bank of England will not lower borrowing costs before the Federal Reserve to avoid weakening the pound. Typically, central banks tend to move in synchronised steps when setting monetary policy. However, the UK economy has performed much worse than the US since covid and slipped into recession in 2023. The UK is also much more exposed to swings in energy prices, which are set to put strong downward pressure on inflation over the second half of this year, while the US has an ample domestic supply of domestic energy. Rob Wood, chief UK economist at Pantheon Macroeconomics, a consultancy, said: “The UK experienced a minor recession last year while US growth powered ahead, suggesting the potential for earlier and deeper rate cuts in the UK.”

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