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Morning Briefing for pub, restaurant and food wervice operators

Tue 30th Apr 2024 - Whitbread to exit 126 branded restaurants and convert 112 more into hotel rooms as it seeks to optimise F&B offer
Whitbread sets out plans to exit 126 branded restaurants and convert 112 more into hotel rooms as it seeks to optimise F&B offer, plans to cut 1,500 UK jobs: Whitbread has set out plans to exit 126 of its lower-returning branded restaurants as it seeks to optimise its food and beverage offer and is set to cut 1,500 UK jobs as part of its 'accelerating growth plan'. The Premier Inn owner said it also plans to convert 112 lower-returning branded restaurants into new hotel rooms “having first transferred the delivery of food and beverage to an integrated restaurant”. Whitbread stated: “The 126 lower-returning branded restaurants will continue to operate as they do now so that they can be sold as going concerns and we have already agreed to sell 21 of these restaurants for £28m. We plan to unlock 3,500 new room extensions, that will see us reach at least 97,000 open rooms in the UK by the end of FY29; the plan will require circa £500m of investment over the next four years which will be funded through our existing annual capital expenditure programme. The 'accelerating growth plan' will result in the reduction of around 1,500 roles out of a total UK workforce of 37,000. While these plans are still subject to consultation, we will seek to find alternative opportunities wherever possible through the roles created by this plan and our existing recruitment process that makes circa 15,000 hires each year. This plan will drive increased margins and returns for our UK business. A one-off impact of £20m-£25m reduction to UK adjusted profit before tax in FY25 will be fully recovered in FY26 and deliver incremental adjusted profit before tax of £30m-£40m in FY27; by FY29 the plan should deliver increased adjusted profit before tax of £80m-£90m.” It comes as Whitbread reported its food and beverage sales in the seven weeks to 18 April 2024 were 2% behind last year, with a “strong performance in our integrated restaurants offset by softer trading in a number of our branded restaurants”. Total UK accommodation sales were 1% behind the previous year. The company stated: “While midweek demand has been robust, the phasing of public holidays impacted weekend demand in certain leisure locations; this meant that total accommodation sales were 1% behind FY24. However, the strength of our brand and commercial programme meant that we continued to outperform the midscale and economy market with total accommodation sales 1.2 percentage points ahead and a revpar premium of £5.68. We are expecting a positive step-up in demand across business and leisure over the next few weeks supported by our forward booked revenue position which is ahead of last year. This, together with our strong commercial programme, means that we remain confident in continuing to outperform the market. Premier Inn Germany: total accommodation sales up 21% versus FY24 and revpar was €54; Revpar for our cohort of 17 more established hotels was €57, ahead of the wider midscale and economy market. As previously announced, we continue to expect net inflation on our £1.72bn UK cost base of between 3% and 4% in FY25, after £40m-£50m of efficiency savings. In Germany, we remain on course to break-even on a run-rate basis during calendar year 2024. We expect a £20m-£25m reduction in net finance income versus FY24 reflecting lower cash balances and based on the current outlook for Bank of England rates. In FY25 we expect to open 750-1,250 rooms in the UK and circa 400 rooms in Germany. We expect gross capital expenditure in FY25, including our 'accelerating growth plan', to be between £550m-£600m, partially offset by proceeds from property transactions of £175m-£225m, including sale and leasebacks and disposals.” Whitbread also announced a further £150m share buyback. It comes as Whitbread reported UK food and beverage sales in the 52 weeks to 29 February 2024, were up 7% “driven by strong occupancy in our hotels that has supported strong breakfast sales”. The company reported total statutory revenue for the year increased 13% to £2.96bn compared with £2.63bn the previous year. Adjusted profit before tax was up 36% to a record £561m compared with £413m the year before. The company stated: “The drivers of this strong performance include our scale, brand strength and our vertically integrated operating model. We have continued to build on our advantage across all areas of our operations, with a determined focus on growing our revenues, managing our costs and ensuring a high-quality service for our guests.” Chief executive Dominic Paul said: “We have delivered an outstanding set of results in FY24, led by the strength of our UK hotels business. Our increased levels of profitability, operating cash flow and return on capital reflect the power of our unique operating model. Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply. Against this backdrop, we are increasing our momentum to deliver long-term profitable growth. In addition to our strong commercial programme, we plan to optimise our food and beverage offer at a number of our sites to unlock up to 3,500 room extensions that will enhance the service for our hotel guests and deliver increased operational efficiencies. We recognise that our transition will impact some of our team members so we will be providing support throughout this process and we are committed to working hard to enable as many as possible of those affected to remain with us. The short-term impact on our profit performance this year will be more than offset by an uplift from FY27 with further increases thereafter in both margins and returns as we open more of the new extensions. In Germany, we are encouraged by our progress to date and the opportunities we now have to both build our brand awareness and refine our trading strategies further. We are on track to break-even on a run-rate basis during calendar year 2024 and with 10,500 rooms now open and a further 6,000 in the pipeline, we are on course to fulfil our ambition of becoming the number one hotel brand in Germany. Our scale and vertically integrated model mean we have the commercial and operational levers to underpin long-term profitable growth, strong cashflow and increasing returns on capital. We are on course to deliver a step change in our performance and look forward with confidence, as reflected by our increased recommended final dividend and proposed further share buyback.”

Variety of cafe bakery operators to feature in next New Openings Database being released to Premium Club members on Friday: The next Propel New Openings Database will be sent to Premium Club members on Friday (3 May). The database will show the details of 130 site openings, including which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location, and there will also be a website link to the businesses. The database is published on a monthly basis and Premium Club members will also receive a 6,700-word report on the 130 new additions to the database. The database includes new openings in the cafe and bakery sector such as social enterprise Old Spike Roastery, which is set to open its sixth site near London’s Chancery Lane. Also featured is Blank Street Coffee, which is gearing up to launch in Birmingham, and Bewiched Coffee, which will open its third franchise site later this year in Wellingborough. Premium Club members also receive access to five other databases: the Multi-Site Database, in association with Virgate; the Turnover & Profits Blue Book; 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.

Former The Fat Duck junior sous chef reveals opening date for first permanent site for his modern Welsh pop-up concept: Tom Waters, former junior sous chef at Heston Blumenthal’s flagship The Fat Duck restaurant, has revealed the opening date for the first permanent site for his modern Welsh pop-up concept, Gorse. Waters – who has also worked under Bryn Williams at Odette’s, Phil Howard at The Square and at Bonham’s in Mayfair – has operated Gorse as a pop-up at various independent venues including Ground Bakery in Pontcanna, Insole Court in Llandaff and Waterloo Tea in Roath. As reported in March, Waters is opening its debut bricks-and-mortar location, at 186 Kings Road in Cardiff, in the former site of dog-friendly cafe, Fido. The restaurant, which will have 24 covers, will open on Tuesday, 28 May. Multi-course tasting menus will showcase the best of Welsh produce.

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