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Morning Briefing for pub, restaurant and food wervice operators

Tue 21st Mar 2017 - Brighton Pier Group reports progress in ‘transformational year’
Brighton Pier Group reports progress in ‘transformational year’: Brighton Pier Group has reported sales of £17.74m (2015: £10.72m) in the half year to 25 December 2016. Company Ebitda before highlighted items was £3.51m (2015: £0.96m). Profit before tax and highlighted items was £2.65m (2015: £0.30m). Luke Johnson, executive chairman said: “This has been a transformational period for the group. The acquisition of Brighton Palace Pier has delivered a strong financial performance for the group with its first summer trading period in this half year set of results. I believe there are exciting opportunities to further develop the Pier business over the coming years. We continue to make good progress rationalising the bars division together with driving operational and financial improvements across the estate. We expect trading to continue to be in-line with market expectations through the seasonally quieter second half as management executes the group’s strategy. Our ambition is to become a leading experiential attractions business in the UK. I believe we now have the correct group structure and appropriate management team to deliver that ambition.” 

Of Brighton Pier, the company stated: “The Pier has now completed its first full summer under new ownership. We are pleased to report that trading has been in line with expectations announced at the time of the acquisition and that integration into the group was completed much quicker than expected. In September 2016, we reported on the new soft play trial in the Glitter Bar, the new take away fish and chip shop on the Pier head, and the launch of the new website. The success of the soft play trial has given us confidence to launch the largest soft play area in Brighton, with the creation of a new ‘Palace Play’ in the Dome, totalling 231m2 with a capacity for 140 children. There will also be a new café in the Dome, providing an area for parents and friends to relax whilst the children play. The soft play and café opened in March 2017, both will provide a leisure space to enjoy all year round. The new take away fish and chip shop opened in June 2016 and has been a great success, repaying its investment by the end of the first summer of trading. The new website has been a strong tool in driving online sales of wristbands and has helped to offset some of the negative effects caused by the disruption of train services over much of the summer. The quick and easy train service into Brighton from London is a major benefit to all businesses in Brighton, as well as the wider population, a resolution to this dispute is urgently needed. In December, we launched our first Christmas market on the Pier. Incorporating 20 stalls, it provided a reason to visit during the Pier’s winter season. The additional footfall created by the market benefited the restaurants, arcades and rides during what would be otherwise a quiet period. Our plan next year is to develop the market further and consider whether there may be other similar events we could add to the Pier’s calendar during the quieter months.As always, the months between September and March are an opportunity to catch up on general maintenance and embark on new projects ready for the busy period from Easter onwards. This year has been no exception; the dive survey and annual survey were both completed, resulting in no additional maintenance needs other than the budgeted requirements, so allowing us to commence a number of new projects. The first of these involved the move and replacement of the ‘Dolphin Derby’, a game that is a big favourite on the Pier but is now 25 years old. At the end of February, the brand new ‘Dolphin Derby was installed in its new location next to the ‘Wild River Ride’. This move makes way for the new ‘i-220’ children’s ride, (which opened in March) and for the improvements planned for Horatio’s Bar. The ‘i-220’ will elevate visitors skywards, offering scenic views of the seafront, however unlike its namesake (the ‘i360’), the new ‘i-220’ ride will take visitors to a less-dizzying height of eight metres. Looking further ahead, ambitious plans are now underway to create more capacity within the Palm Court restaurant and in Victoria’s Bar, both inside and outside. These changes are intended to improve the surroundings and provide more flexible space for conferences, functions, and weddings on the Pier, as well as extra seating during the busy summer months. At the same time, we are also developing plans for Horatio’s Bar, utilising the broader group’s expertise of bar management. These exciting developments will start in October and November of this calendar year, and impact trading from 2018. Finally, on 1 July 2016 we reported the plan to bring back the Palace to the Brighton Pier name, restoring it back to its original name – ‘Brighton Palace Pier’. A competition was held to design the new sign for the Pier, and our chosen winner was Lucy Williams, a local Brighton resident. Her design creates an archway of the word Brighton to reflect the Pier dome, with the remaining words ‘Palace Pier’ on the facade of the building. Work is underway to construct the first of these three new signs.”

Of its bars division it stated: “In September 2016, we reported on the division’s continued focus on reducing operating costs, improving gross margins, reviewing the potential disposal of marginal and unprofitable sites (where the opportunity arises), and the launch of ‘Smash’, a new venue within the group’s Reading Sakura venue. Progress continues to be made in these areas during the period. Gross margin has improved by 80 basis points against the same period last year. These improvements have occurred despite cost increases, which have been filtering through from the weak pound. Focus has been on regular reviews of competitor pricing, targeting customers into more profitable products, and supplier support. Labour and controllable costs continue to be tightly managed, with unprofitable nights being closed and underperforming or marginal venues being disposed. Six sites have been disposed of since June 2016. The street level bar of Reading Sakura was redeveloped and reopened at the end of May 2016 as Smash. The bar trades during post-work hours and in the evening with a menu that includes fresh-dough pizza and craft beer. In addition, the venue provides activity areas for customers to enjoy games of ping pong with friends and to watch major sporting events on large screens. Smash continues to trade ahead of management expectations and we are actively looking at other potential rebrands of locations within our estate. In December 2016, we started a programme to install new EPOS, all sites have now been fully installed. This upgrade provides integrated chip and pin, which massively reduces the risk of defalcation, as well as improved end of day routines that allow the General Manager to spend less time on back office duties and more time driving sales and improving the customer experience. The new software and hardware simplify the connectivity of new apps, improve speed of service and reduce annual maintenance costs. During the period, the bars division undertook a rebuild of the Eclectic websites. This was completed at the end of February, improving online bookings, mobile functionality and creating a single content management system for all the brands. At the end of January 2017, Manchester Lola Lo underwent an upgrade to develop and modernise its offering, with the addition of media screens, a dedicated ‘Master Class’ bar and changed seating areas. The new media screens enable the venue to display major sporting and other events throughout the venue. A similar upgrade is planned for Cambridge Lola Lo in the coming months. The group has continued to rationalise its estate, disposing of some of the smaller marginal sites together with any underperforming sites.(Our) Sheffield unit was assigned on 8 July 2016. All costs associated with this venue were provided for in prior periods. A surrender of the lease of Brighton Dirty Blonde was agreed on 23 November 2016 at no cost to the group. No residual risk remains on this site. The lease for Lincoln Lola Lo was held in a separate company. This company was sold on 23 November 2016 for a nominal sum. No residual risk remains to the group from the disposal of this company. After the period end, Edinburgh Lola Lo was sub-let to an existing Scottish operator on 31 January 2017. This lease expires on 6 June 2021. The lease for Brighton Lola Lo was held in a separate company. This company was sold on 13 March 2017 for a nominal sum. No residual risk remains to the group from the disposal of this company. After the period end, Oxford Lola Lo was assigned to another operator on 17 March 2017. This lease expires on 9 February 2021. Manchester Sakura remains closed. The landlord is in the process of making repairs to fix the water ingress from the railway track above the venue. No rent or rates are currently being paid on this closed site. We will seek to dispose of this site once the repairs are complete. These sites together make up £834k of the sales shortfall versus the same period last year. The trading loss from all of the above disposed sites in the period was £135k. The write-offs associated with the disposals – include goodwill and fixed asset impairments, legal and other costs – less any proceeds – totalled £706k.”

Fever-Tree reports sales pass £100m mark: Fever-Tree, the supplier of premium carbonated mixers, has reported revenue up 73% to £102.2m (2015: £59.3m) in the year to 31 December 2016. Gross profit margin was 55.2% (2015: 52.1%) and adjusted Ebitda was up 97% to £35.8m (2015: £18.2m). Charles Rolls announced his intention to transition from executive deputy chairman to become non-executive deputy chairman to the company at the AGM in May 2017. Chief executive Tim Warrillow said: “2016 has been another exceptional year of growth for Fever-Tree, with strong results achieved across all regions, channels and flavours, emphasising the global appeal of the Fever-Tree brand. As the pioneer and market leader of the premium mixer category, in both market share and reputation, our quality, award winning range of products continues to help drive the momentum towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide. As co-founder of Fever-Tree, Charles’ support and advice will continue to be invaluable to the company. We have an excellent and growing team in place and I personally look forward to continuing to work with Charles as we further build on the success of the brand that we created together 14 years ago. We have had an encouraging start to 2017 and remain confident that we are increasingly well positioned to deliver further growth across the business.”

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