Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Paul's Twitter Link Paul's Twitter Link

BrewDog Banner
Morning Briefing for pub, restaurant and food wervice operators

Thu 14th May 2015 - Update: Loungers, Marston’s, M&B, Gideon Joffe, Restaurant Group
Loungers to open ‘flagship’ Cosy Club in Birmingham: Loungers, the all-day dining group backed by Piper Private Equity, will open its ninth Cosy Club site tomorrow (Friday) in a Grade II listed former banking hall in Birmingham. The latest Cosy Club opening, which is the groups’ 62nd site overall, is located in a former Midland Bank on Bennetts Hill. It comes after a £1.1m investment, which is Loungers’ largest investment in a single site to date. The 7,000 sq ft site includes a large bar area, 140-cover dining area and two private rooms and is being billed as a flagship site by the group. Loungers confirmed that another three Cosy Club sites are due to open this year, with openings in Manchester and Coventry already confirmed. It is understood that, of the 25 sites the group intends to open in 2016, up to seven will be Cosy Clubs and that sites in Worcester and Bournemouth have already been secured. Nick Collins, Loungers’ managing director, said, “We’re really excited about the Birmingham Cosy Club opening and have high expectations of the site. We already have five Lounges in Birmingham so it’s a city we feel we know well and we’ve got a fabulous site in a rapidly developing part of the city. While the primary focus of the business is the continued roll-out of the Lounge cafe/bar brand we are beginning to ramp up the expansion of the Cosy Club and we believe there are comfortably 100 Cosy Club locations in the UK.” Collins said while the capex required to open a Cosy Club was significantly greater than that required to open a Lounge, there was “significant upside” on the performance. “Average net sales for a Cosy Club are £1.5m and average site Ebitda is £350,000. We fully expect both figures to rise, particularly as more Cosy Club sites are opened,” Collins said. Loungers, which opened its 53rd Lounge site in Epsom last month, is due to open Palacio Lounge in Falmouth on Thursday 28 May followed by Toro Lounge in Cirencester on Wednesday 10 June. Further Lounge openings are lined up for 2015 in Wilmslow, Clevedon, Orpington, Urmston, Egham, Amersham, and Newport.

Marston’s looks to expand premium estate as revenues and profits rise: Marston’s is seeing good opportunities to expand its premium estate, Pitcher & Piano and Revere, and invest further in pubs with accommodation, chief executive Ralph Findlay said this morning as the company unveiled its interim results for the 26 weeks to 4 April 2015. Marston’s said underlying group revenues were up 3% on the same period in 2014 to £384.5m, as underlying profit before tax rose 2% to £29.6m, despite an impact from disposals of around £3m and a £2m accounting increase in pension costs. Underlying operating profit increased by 1% to £66.5m. The company completed eight new-builds in the half year, while 37 pubs were converted to franchise, a division that now totals 520 pubs. Disposal proceeds came to £26m, including the sale of 65 mostly smaller, wet-led pubs. A re-valuation of its estate revealed a £54m increase to £2bn, with values up 2% on 2012, Marston’s said, and the valuation of its new-build pubs, at £69m, showed they were worth 40% more than their build costs. Among the company’s destination and premium pubs, like-for-like sales were up 1.5%, underlying operating profit was up 10%, and the operating margin up 0.5%. Among taverns, managed and franchised pubs, like-for-like sales rose 1.4%, while profit per pub was up 19%. In the leased pub division, profit per pub was up 4%, while in the brewing operation, underlying revenue was up 9%, ale volumes up 4%, including growth of 9% in premium ale volumes, with Hobgoblin, its largest brand, seeing sales growth of 11% in the period. Underlying operating profits in the brewing division were up 10%, and the operating margin rose 0.1%.Trading in the five weeks to 9 May showed managed pub like-for-like sales up 2.0%, with like-for-like food sales up 1.8% and wet sales up 1.7%, while Taverns like-for-like sales were up 2.8%. Profits at leased pubs and own-brewed volumes were “in line with expectations”, Marston’s said. Findlay said in a statement accompanying the results: “Profits have increased in each of our trading segments, excluding the impact of disposals, and we remain on track to complete 25 new-builds this year with excellent visibility on our site pipeline in 2015 and 2016. We are also seeing good opportunities to expand our premium estate, Pitcher & Piano and Revere, and invest further in pubs with accommodation. We expect to complete the majority of our disposals programme this year, and our momentum gives us confidence of achieving further progress in the future.” Marston’s said that from 2016, it anticipates building around five lodge developments a year, an expansion of around 135 rooms per year to its existing total of 600 rooms in 34 “destination” pubs. It will also continue to develop accommodation within the Revere estate, which has around 130 rooms in 10 pubs. It expects to realise around £60m from the disposal of 200 or so smaller wet-led pubs in the current financial year, mainly from the Taverns estate. Marston’s said it was looking at a “broader” allocation of investment, including two Revere or Pitcher & Piano openings each year dependent on site availability. In 2015 it expects two conversions to Revere from its existing estate. It also expected to have converted the majority of its remaining tenanted pubs to the franchise model by the end of 2016, resulting in a core portfolio of 800 high-quality community pubs operating principally under the franchise model.

M&B sees first-half LFL food volumes climb: Mitchells & Butlers saw like-for-like food volumes across its estate rise by 2.9% for the 28 weeks to 11 April 2015 compared to the same period last year, an acceleration on the 0.2% rise seen in the first half of 2014. Total revenue rose to £1.113bn, up 9.5% on 2014, with overall like-for-like sales growth up 1.7%, adjusted operating profit, at £153m, up 4.1%, and net cash flow up £4m to £47m. Profit before tax for the period was up 10.3% to £75m. Food sales growth was primarily driven by volume growth, with a small increase in average spend per head, which affected margins. Drink sales growth, by contrast, resulted from higher average spend growth of 2.7% partially offset by volume declines of 2.2%. Operating margins slipped to 13.7% from 14.5% in 2014, reflecting the impact of the acquisition of the Orchid estate and volume-driven sales growth, M&B said. Orchid contributed operating profit of £6m to the Group in the first half, but extra costs meant it was dilutive to percentage margins. Ebitda before exceptional items rose to £213m from £204m. However, staff turnover fell to a historical low of 77%, from 78% in 2014, and the company’s net promoter score rose to 65% from 63%. Capital expenditure rose to £94m from £86m in the first half of 2014, comprising £70m spent on maintenance and infrastructure projects, up from £70m, with the increase mostly on a new epos system, with was now live across the whole estate, and £24m on new site openings, down from £28m in 2014, which nine new site openings, two freehold and seven leasehold, and 23 conversions. Net debt fell from the year end to £1.9bn, representing 4.4 times Ebitda. M&B’s chief executive, Alistair Darby, said: “We have made good progress in the first half with continued strong food volume growth driving improved sales. Our Orchid integration plan is being successfully executed; the office is now closed and the first sites have been converted to our brands with encouraging sales uplifts.” The closure of the Orchid head office will bring £6m of annual cost savings.

Douglas Jack – we’re holding our forecasts on Marston’s: Numis Securities’ leisure analyst Douglas Jack said this morning that he was holding his forecasts for Marston’s to a profit before tax of £91.8m for the full year, after the company released its interim results for the 26 weeks to 4 April. Jack said: “H1 PBT rose 2% to £29.6m (we forecast £29.5m), held back by an anticipated £2m increase in pension costs (all occurring in H1) and disposals taking £3m off Ebit. After adjusting for these factors, underlying H1 PBT growth was 15%, the same pace of growth we forecast for H2. We are holding our 2015E forecasts (PBT £91.8m; consensus £91.5m) which assume 2.5% LFL sales growth in P&D, 2% LFL sales growth in Taverns, 1% LFL profit growth in Leased and slightly positive Brewing volumes. D&P LFL sales were up 2.0% during the five weeks to 9 May, with a 0% comp for the rest of H2 (vs 5.7% in H1). Similarly, Taverns’ LFL sales were up 2.8% during the five weeks to 9 May, with a 0% comp for the rest of H2 (versus 3.8% in H1). We forecast 33% earnings growth over the next three years, with net debt/Ebitda falling by 0.5x over this period despite strong expansion and attractive dividends, yielding over 4%. We estimate that Ebitda growth/dividends should drive a 27% equity return over the next two years if the EV/Ebitda rating holds.” Numis has a recommendation of ‘Add’ on Marston’s shares, with a target price of 180p.

Gideon Joffe opens second Monkeynuts site in north London: Restaurateur Gideon Joffe, the son of Juliette and Russel Joffe, founders of the Giraffe restaurant chain, has opened his second Monkeynuts venue on the High Road in Whetstone, north London. The 70-cover, 1,800 sq ft site is Joffe’s fourth North London venture, after Chooks in Muswell Hill, Chez Bob in Belsize Park and the original Monkeynuts in Crouch End. The nw venue is pen from 9am to 11pm seven days a week, with a casual, all-day menu from breakfast, brunch through to dinner. The focus is on steaks, burgers and fresh salads alongside craft beers, wines and cocktails. The menu will also include grilled chicken and salmon, ribs and fish tacos, with an emphasis, Joffe said, on good value. The interior, by Rosendale Design, has taken inspiration from retro American steakhouse and wine bars, with bench seating, vintage posters and ceiling fans to complement the look. Joffe said: “We’re delighted to open our second Monkeynuts in Whetstone, a growing neighbourhood with lots of potential. We now enter our next stage of growth with a rollout planned for Chooks and Chez Bob over the next two years.”

Restaurant Group plans 30-plus openings in second half: Restaurant Group chairman Alan Jackson said this morning that the company is planning between 33 and 41 restaurants openings over the rest of the year, to give a total of between 42 and 50 for the whole of 2015, two thirds in the second half. In a trading update issued for the company’s AGM, Jackson said trading for the 19-week period ended 10 May 2015 had been “good”, with total sales 8.5% ahead of the previous year and like-for-like sales up 2%. In the year to date the company had opened nine new restaurants, which were trading well and were set to deliver strong returns, Jackson said. “In total we expect to open between 42 and 50 new restaurants this year (2014: 40), approximately two thirds of which will open in the second half. The quality and visibility of our new site pipeline over the next three years remains excellent,” Jackson said. “The Group is trading in-line with expectations and we are on track to report a good first half performance. With an improving film release schedule and slightly easier comparatives in the last four months of the year, we anticipate momentum continuing to build well in the second half of the year.”

Douglas Jack – ‘prospects should build at Restaurant Group’: Douglas Jack, leisure analyst at Numis Securities, said this morning that the broker was holding its forecasts on Restaurant Group after the company’s AGM statement, and “prospects should build as the year progresses.” Jack said like-for-like sales rose 2%, almost all volume, over the 19 weeks to 10 May, ahead of the restaurant Peach Tracker, up 1.2%. “We believe restaurants in airports and those co-located with cinemas outperformed, and London underperformed, partly due to inbound tourism slowing,” Jack said. “For the full year, we assume LFL sales rise 3%, supported by a strong cinema release schedule and easy admission comps in Q2-4 of minus 6.1%. Customer cash flow is now improving, but to date this has been to the benefit of big ticket items (catch-up capex), with BRC retail LFL sales outperforming the Peach Tracker over the last two months. Eventually, eating/drinking out should benefit. We forecast margins rising by 15bps in 2015E, with lower food cost inflation (now flat) and increasing expansion offsetting higher labour cost inflation (3-4%). Margins should benefit if LFL sales volumes are higher than expected in H2 (menu prices rose by less than 1% in October), with each 1% of additional LFL sales worth potentially a 6% increase in PBT and earnings. Nine new restaurants opened during the first 19 weeks (versus 15 in H1 2014, and our full year forecast of 45), comprising: three (17 full-year target) Frankie & Benny’s, zero (nine full-year target) Coast to Coast, one (nine full-year target) Chiquito, one (four full-year target) pub restaurant, and four (six full-year target) concessions. Two thirds of this year’s openings should occur in H2. We believe there is upgrade risk to our 2015E forecasts (PBT: £86.3m; consensus £88.2m), which anticipate 11% earnings growth, based on 3% LFL sales, 15bps margin growth and no change in debt. We expect RTN to be a beneficiary of rising consumer disposable income and a strong cinema film slate in both H2 2015E and 2016E.”

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Pringles Banner
Les Vergers Boiron Banner
Lamb Weston Banner
Butcombe Banner
Howells Cardiff Banner
Monster Banner
Inch's Cider Banner
HDI Banner
Pago Banners
Peppadew Banner
Propel Banner
Pago Banners
Purple Story Banner
Propel Banner
Christie & Co Banner
CACI Banner
Sector Banner
Airship – Toggle Banner
COREcruitment Banner
Wireless Social Banner
Payments Managed Banner
Hospitality Rising Banner
Cynergy Bank Banner
John Gaunt Banner
HGEM Banner
Access Banner
BrewDog Banner