Punch reports like-for-likes down 1.2%, doubles size of retail division, introduces new ‘front-of-house’ agreement: Punch has reported like-for-like net income in its leased and tenanted estate, including its Mercury divison, fell 1.2% in the 28 weeks to 4 March 2017. The company said recent market uncertainty resulting from the sale of the group has impacted letting activity, together with the previously reported impact of the new Pubs Code regulations. Punch has doubled the size of its retail pub division since the August 2016 year end, with 171 pubs open and trading as at April 2017. It said building on its learnings of the retail model, it had now created a new ‘front-of-house’ agreement, which is targeted towards smaller drinks-led pubs and opened its first site under the agreement last month. Underlying Ebitda was £88m (first half 2016: £94m) reflecting the impact of £53m of strategic disposals completed over the past 12 months. Average profit per pub across the entire 3,227 estate fell by 0.3%. Nominal net debt increased by £13m in the half year to £1,195m, reflecting the cash outflow in the period and the capitalisation of payment-in-kind interest. The company reported £131m of cash on the balance sheet, a reduction of £103m. This was largely due to £65m early repayment of junior debt, seasonal working capital outflow in the first half of the year, and the increase in capital expenditure to support the accelerated roll-out of conversion of pubs to the retail division. There was no bank debt and low scheduled amortisation at circa £36m per year until 2021. It increased pub investment to £41m of total capital expenditure (first half 2016: £25m, supporting the roll-out of the retail division. The company stated: “The projected underlying pub Ebitda for the 171 pubs operating under the Falcon retail contract is between £90,000 and £105,000. The Falcon contract has proved to be extremely successful in the right pubs, with its highest earning pub projected to make circa £300,000 in underlying pub Ebitda this year, and we now have a much clearer picture of which pubs work best under this retail model. Building on these learnings, we have recently launched our new ‘front-of-house’ agreement, which represents a much-simplified version of the Falcon retail contract, and is targeted towards smaller drinks-led community pubs, which represent the largest segment of our estate. The front-of-house agreement operates along a similar financial model to that of the Falcon retail contract, in that the retailer (the publican) is paid a percentage of the retail sales, out of which the retailer pays their staff costs. This agreement has been simplified in the areas of cash management, overhead and operational support requirements, management of pub consumables and flexibility on food (the publican retains the food business in pubs with limited food opportunity). These simplifications will allow this type of retail model to become financially attractive for smaller turnover pubs, and allow a faster roll-out, without the need for separate specialist field team resource.” Punch also reported a growing commercial free-of-tie lease division with 57 pubs in operation with an average rent of £71,000. Chief executive Duncan Garrood said: “During the period, we have doubled the size of our retail estate and continue to innovate our operating agreements. This has been achieved whilst managing through a period of significant change, ahead of the sale of the group which is now expected to complete before the end of August 2017.”

 

Loungers and Five Guys sign for University of Manchester development: Cafe bar brand Loungers and better burger brand Five Guys have signed for units at the University Green development, which is part of the University of Manchester’s £1bn Campus Masterplan. Both brands have signed for 3,175 square foot units, with Loungers to open a 120-cover site and Five Guys an 88-cover restaurant on the ground floor. Both sites are due to open in summer 2018, shortly after completion of the scheme, joining Pret A Manger and Manchester-based artisan coffee house Takk, which were the first foodservice brands to sign up. Loungers chief operating officer Justin Carter said: “We are thrilled to be a part of this landmark new development and sit alongside a growing line-up of brilliant brands. Loungers will provide a comfortable space for everyone, be it a family lunch, student study space or a place to let their hair down in the evenings.” James Tootle, retail surveyor at developers Bruntwood, added: “These new additions reflect our desire to provide an exciting retail and leisure line-up.” When complete, the scheme will provide 40,000 square feet of retail and leisure space. Metis Real Estate Advisors represented developers Bruntwood, Insight Retail acted for Loungers, while Five Guys represented itself.

 

Fledgling burger brand Shake N Burger to open debut site, in Doncaster: Fledgling burger brand Shake N Burger, which is part of NYC Partnership, is to open its debut site, in Doncaster. The company will open the site at the Frenchgate Shopping Centre on the site of the former Ed’s Easy Diner unit after agreeing a deal with The Frenchgate Partnership. The new 2,600 square foot restaurant, which will be on the upper level of the centre’s South Central Square, will have about 100 covers and is set to open at the end of May. It will offer freshly made, traditional American fare including fried chicken, burgers and pulled pork alongside a range of classic side dishes. Shake N Burger founder Lee Edwards said: “Frenchgate shopping centre is an ideal location for our debut site and we are excited to start sharing our fantastic and authentic food in Doncaster. We feel lucky to join the strong dining line-up at a time of great investment and redevelopment within the centre, which we are only set to benefit from.” Paul Devlin, of The Frenchgate Partnership, added: “We are thrilled to welcome another fantastic brand to Frenchgate, firmly cementing its strong appeal as a diverse retail and leisure destination. We are delighted Shake N Burger has chosen Frenchgate as the location for their debut site; it’s a clear sign of the centre’s attraction to this type of offer.” Time Retail Partners and Rawstron Johnson acted for Frenchgate while Shake N Burger acted for itself.