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Fri 17th Aug 2018 - Update: Hakkasan results, McDonald's $6bn US investment, Crowdcube landmark
Hakkasan streamlines portfolio to focus on ‘core performing assets’ as pre-tax losses jump to $145.5m, UK revenue down 11%: UK-based restaurant and nightclub company Hakkasan Group has revealed it has been streamlining its portfolio to focus on core performing assets as it reported pre-tax losses jumped to $145.5m. The company saw turnover fall to $313,647,000 for the year ending 30 June 2017, compared with $338,930,000 the previous year. Adjusted Ebitda dropped 88% to $2,247,000 compared with $18,696,000 the year before due to the reduction in turnover and increased non-exceptional administrative costs. Pre-tax losses rose to $145,494,000, compared with a loss of $56,316,000 the previous year. UK revenue dropped 11% to $54,188,000, compared with $60,572,000 the year before. US sales fell 7% to $243,946,000 compared with $262,508,000 the previous year, while rest of the world revenue was down 2% to $15,513,000 compared with $15,850,000 the year before. Since year-end the company has closed or is in the process of shutting five restaurants. The portfolio streamline led to $31m of tangible and intangible assets being impaired during the financial year. In their report accompanying the accounts, the directors stated: “The year to 30 June 2017 has been a year of moderate growth within the owned-brand portfolio, with openings of two locations of the Yauatcha brand within the US. These were the first two instalments of the Yauatcha brand outside London. Since the year end, there has been some continued growth as we opened a Herringbone in Waikiki (August 2017) and a nightclub and restaurant within the Cosmo Entertainment associate venture (Poppy nightclub in September 2017 and Petit Taqueria restaurant in October 2017). Similarly, there has been growth in our managed portfolio, as multiple managed venues have been opened since the year end with development partners in Bali, Indonesia (Omnia Dayclub and Sake No Hana restaurant, both in early February 2018) and in San Jose del Cabo, Mexico (Omnia Dayclub, Herringbone, Casa Cafavera restaurant, and Shorebar, all in February 2018). By contrast, since the end of the year there has also been an active initiative to streamline the portfolio by closing certain venues to allow a greater focus on core performing assets. Furthering the streamlining efforts, the company also sold its interest in J2 Enterprises (Beautique restaurant in New York) in October 2017, and sold its remaining interest in Cosmo Entertainment, LLC and the Cosmo subsidiaries in June 2018. In the US, revenues fell 7%. The principal movement here was a reduction in revenue from social dining and some nightlife and daylife venues, where specifically Omnia Nightclub in Las Vegas saw a reduction in its revenue of 4%. In addition, the results in the prior year included $12.9m in relation to Cosmo, which has been deconsolidated in the year and is therefore no longer included in turnover. In the UK revenues fell 11%, primarily driven by the weak performance of a specific restaurant in the portfolio. Taking account of this, HKK restaurant was closed in October 2017. In the rest of the world, revenue fell 2% and while Shanghai Hakkasan continues to perform well with revenues increasing 7%, this contrasted with a 10% fall in revenues from our Dubai Hakkasan. The group continued to grow fees from managed services increasing other operating income from $12.4m to $15.1m, an increase of 22%. Going forward, the group intends to selectively fund development with an eye towards reducing upfront capital investment by focusing on brands that are less costly to open, such as Yauatcha. In addition, the group will work with select landlords and partners on deal structures that will showcase existing brands, build equity in new brands, and spur growth while minimising costs.” Earlier this month it was reported Hakkasan’s owner – Abu Dhabi sovereign wealth fund Mubadala Investment Co – was in talks to sell the company and had seen interest from Spanish dance-club operator Pacha Group and boutique investment firm Certares.

McDonald’s to invest $6bn in next phase of US restaurant refresh: McDonald’s has said it will invest $6bn to modernise its US restaurants by 2020, including new decor, self-order kiosks and kerb-side pick-up locations. The $6bn will be spent by McDonald’s and its franchisees in 16 states and the District of Columbia on refreshing interiors and exteriors, remodelling counters to allow for table service, providing new digital menu boards, providing designated parking spots for kerb-side pick-up and app orders, and expanding McCafé counters and display cases. The move is part of the company’s Experience Of The Future initiative, which was launched in 2016 with McDonald’s upgrading more than 5,000 restaurants, a third of the US total, so far. McDonald’s chief executive and president Steve Easterbrook told Nation’s Restaurant News: “Continuing to reinvest in the brand and keeping it relevant for customers is what it’s all about. We want to differentiate ourselves from the competition and believe we have some initiatives in place that will help broaden the gap between us and the others.”

Crowdcube hits £500m milestone for funds raised: Crowdcube has reported more than £500m has been pledged by investors on the crowdfunding platform since its launch in 2011. This has resulted in more than 700 successful fund-raises, with sector businesses such as Australia-inspired restaurant group Daisy Green Collection, Harts Group, and London-based coffee shop and wine bar concept Notes among those companies to benefit. Crowdcube said one common trait among the growing number of fund-raises was the increased participation by venture capital firms. The majority (60%) of pledged investment via Crowdcube’s platform comes from high net worth and sophisticated investors, who typically invest larger sums. The platform has also opened opportunities to everyday investors of all ages. Since Crowdcube was founded, there have been more than 40,000 investments worth £21m from under-30s and more than 25,000 investments worth almost £60m from people aged 60 or above. The levels of sophistication in crowdfunding investor strategy are growing, with the average portfolio on Crowdcube now holding six investments. Crowdcube stated: “We have investors from more than 100 countries and in 2018 so far more than 13% of investments have come from outside the UK. Last year, £6.5m was invested via Crowdcube from non-UK Europe, and that figure has already been exceeded in 2018. We can see investor demand is continually growing, with more than £95m of the £500m pledged invested in 2017 alone. Two record quarters mean we’re on track to exceed that figure by some margin this year.”

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