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Wed 3rd Oct 2018 - Results: McDonald’s UK, Soho House, Stringfellows
McDonald’s UK reports turnover and profits up: McDonald’s UK has reported turnover increased by £19m to £1.593bn in the year to 31 December 2017. The company’s operating profit rose to £43m (2016: £282m). Pre-tax profit was £341m, up from £287m the year before. The company stated: “As we continue with our strategy of franchising restaurants, our turnover reduces as we move from recognising sales to recognising income from franchises. However, due to strong sales growth from all store types, during the year total turnover has increased by £19m. The ongoing franchising strategy is also driving improved profitability, which is line with directors’ expectations and objectives. The company’s gross profit has increased to £564m (2016: £487m). The improvements are due to higher sales and margins within company owned restaurants and positive sales growth from franchised restaurants.” Turnover at McDonald’s own directly managed restaurants was £1.11bn (2016 £1.17bn) whilst turnover from franchise restaurants was £480.4m (2016: £401m). 

Soho House reports turnover up, still loss-making: Soho House has achieved faster revenue growth but it remains loss-making as it funds the costs of global expansion. Nick Jones, the founder, said the company was aiming to open four to five houses a year, with its first Asian outposts soon to launch in Mumbai and Hong Kong. In Europe new venues are being planned in Paris, Milan, Rome and Lisbon, and in Austin and Nashville in the US. “We are well on our way to becoming the first global club,” Jones told the Financial Times. Total turnover for the calendar year 2017 rose 23% to £360.1m. Member numbers rose 18% to 71,000, and 51,000 were on waiting lists for admission. Peter McPhee, chief financial officer, said the company made a loss before tax of £60m last year, roughly flat from a year before. It reported adjusted earnings before interest, tax, depreciation and amortisation of £50.5m, up from £31.7m a year earlier. Asked whether an initial public offering was being considered, as had been reported earlier this year, Jones said it was still a possibility although nothing was immediately in the works. “We’re still looking at options on that. We don’t have to do anything, and aren’t looking for new investors at the moment.” There have been concerns in recent years that Soho House was taking on too much debt to open up new clubs. That led to ratings downgrades by Standard & Poor’s and Moody’s in 2016 when the debt was still publicly traded. In 2017, Soho House signed a £275m refinancing agreement with Permira Debt Managers for a secured loan that will mature over five years, with the option of a further £100m of potential financing. The debt was taken private and now stands at £325m. Jones said he felt very comfortable with the level of debt. “Soho House is less of a hospitality business and more of a subscription business,” he said. “Growth comes from adding houses and adding members, and there is predictability when retention rates are above 95%. Our members love new houses since it gives them new places to visit. Each time we open in a new city it brings a new flavour to the whole community.”

Stringfellows reports a loss: Stringfellows has reported a loss for last year following a tough period that was ‘made worse’ by the death of founder Peter Stringfellow. Sales at the gentlemen’s club in Covent Garden, London, dropped 22% to £5.1 million, which it blamed on scaffolding on the adjacent building, saying it obscured the front of the club. Stringfellows said it was also affected by the closure of its Soho club in 2016 which reduced staff numbers from 118 to 81. Losses came in at just under £53,000 following a £1.6 million profit a year earlier. A Stringfellows spokesman told the Daily Mail: “As reported by many businesses in hospitality and leisure, 2017 has been a challenging year, made worse by the illness and subsequent death of Peter Stringfellow.” He died in June aged 77 from lung cancer which he had kept private. The company’s accounts state: “Peter Stringfellow’s contribution over the years to operating the company is incalculable and his personality was a major factor in building and transforming the company. He will be sadly missed and his legacy will live on for many years.” The company said it believed profitability will improve over the forthcoming year.

Costa Coffee advert banned by advertising standards watchdog: An advert for Costa Coffee has been banned for suggesting one of its bacon rolls or egg muffins was a better breakfast option than an avocado. The radio skit made fun of the fruit that’s become so fashionable among millennials, pointing out how difficult it is to get a perfectly ripe avocado. But the Advertising Standards Authority found it fell foul of a rule which states companies should not discourage people from eating fruit or vegetables.

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