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Thu 1st Sep 2016 - Update: Pizza Hut UK full results, GBK sold for £109m
Pizza Hut UK reports pre-tax profit fall, exits 13 restaurants in 2015 with four closures planned this year: Pizza Hut UK, owned by private equity firm Rutland Partners, has reported pre-tax profit fell to £7,891,000 in the year ending 29 November 2015, compared with £9,008,000 the year before. The company exited 13 restaurants during the year with another four closures planned in 2016. Operating profit, excluding exceptional items, increased 150% to £8,337,000, compared with £3,340,000 the previous year, according to accounts filed with Companies House. Turnover was down slightly to £225,286,000, compared with £225,464,000 the previous year. Restaurant Ebitda, excluding exception items, increased 57% to £24.7m, compared with £15.7m the year before. Like-for-like sales grew 6.2% year-on-year. The company stated: “The performance of the company continues to be strong with the continuation of the restaurant refurbishment programme across the financial year. With almost half of the estate refurbished at year-end, a proportion of which took place part way through 2015, the sales and profit impact of the programme will continue to build across 2016 and 2017. The overall profit for the financial year was £6.91m (2014: £7.94m), which was £1.03m lower than last year. The prior year includes non-cash profit relating to the liquidation of dormant companies within the group. Excluding these adjustments, the profit for 2015 was £9.1m higher than last year (adjusted 2014: £2.15m loss). The strong financial position of the company is reflected by a cash balance of £27.1m at balance sheet date (2014: £27.9m). The sales for the financial year were £225m (2014: £225m), which was in line with last year. On a like-for-like basis sales were 6.2% higher than last year reflecting the benefits from the restaurant refurbishments and related initiatives with 13 restaurant closures during the year. Pizza Hut UK measures like-for-like growth against the industry using CGA Peach data, and during the financial year Pizza Hut UK was ahead of the industry measure for 46 out of 52 weeks. Sales growth will continue to build in 2016 and 2017 as the company benefits from both the full financial year trading impact of the 2015 refurbishments and the additional refurbishments that will take place over the next two years. Restaurant Ebitda, including central costs and excluding exceptional items, was £24.7m (2014: £15.7m), which was 57% ahead of prior year. Factors driving the favourable performance included volume and spend growth, direct cost synergies and savings across a range of variable and fixed costs. Management has continued with the strategic objective of consolidating the estate and exiting restaurants that are underperforming or at date of lease expiry are not regarded as core to the business. Each closure decision considers the historic performance of the restaurant, the rent payable under the existing lease and whether there are any mitigating factors that would support a continuing operation. During the financial year the business exited 13 locations (2014: 22). During 2016 the business will continue with the reimage programme with approximately 75 restaurants included in the plan. This will result in over 75% of the total estate having been reimaged by the end of 2016. Further cocktail bars and evening vibe opportunities will be tested and rolled out. The programme of closing underperforming stores will continue with a further four restaurant closures planned for 2016, which will further improve profitability and cash generation. We will continue to invest in training with a focus in 2016 on driving a growth mind-set and unlock growth-on-growth opportunities. We will also continue to invest in restaurant IT infrastructure and staff training to support the various initiatives referenced above. Significant progress has been made in reshaping the restaurant estate for the future, and these innovations and initiatives will deliver strong performance growth opportunities for the business.”

Famous Brands buys Gourmet Burger Kitchen for £109m, plans to double amount of stores in five years: South African fast food group Famous Brands has acquired Gourmet Burger Kitchen from Nando’s owner Capricorn Ventures for 2.1 billion rand (£109m), saving nearly a fifth on the price due to a weaker pound in the wake of Brexit, the company said. Famous Brands, which also owns casual dining chain Wimpy UK, plans to double the gourmet burger chain’s 75 British stores in the next five years. Private equity house Capricorn Ventures acquired Gourmet Burger Kitchen from Clapham House for £30m in 2010. Famous Brands group adviser for mergers and acquisitions Kevin Hedderwick told Reuters: “Brexit has had some upside for us.” Famous Brands started negotiations with Gourmet Burger Kitchen earlier this year and saved as much as 700 million rand on the acquisition, according to Hedderwick, as the pound slumped following the UK’s referendum decision to leave the EU, while South Africa’s rand firmed after relatively peaceful local elections. Hedderwick said he expects to open ten to 15 new Gourmet Burger Kitchen restaurants a year in the UK, with plans to expand further into Ireland and take the gourmet burger concept to South Africa. He added: “The fast-casual premium environment is pretty recession-proof.”

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