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Thu 4th Oct 2018 - MOD Pizza UK loses £11m, TGI Friday’s UK sale, Tim Martin defends staff policy
MOD Pizza reports £11m loss in the UK: MOD Pizza UK, the joint venture rolling out the US concept in the UK, has reported a loss of £11,079,000 in the 53 weeks to 31 December 2017 (2016: £5,020,000 loss), reflecting ‘the cost of the support team, impairment charges and other costs associated with closing a restaurant’. It stated: “During the year the company opened one and closed one restaurant, ending the period with five restaurants in operation. As the company builds brand awareness in the UK it is primarily focused on driving sales growth and its key performance indicator is like-for-like revenue. Sales have increased significantly since opening and like-for-like revenue growth was 28% for the period. The company will seek to drive performance of its five existing restaurants in the coming year as well as rolling the concept out further with up to four openings planned in 2018 and the intention to build a significant pipeline for future years.” Turnover was £3,689,000 (2016: £640,000). The company made a £2,817,000 onerous lease provision, a £1,721,000 impairment of property, plant and equipment and £1,165,000 impairment of lease premia. Staff number rose to 132 from 32 the year before. 

Electra Private Equity reports TGI Fridays ‘performing well’ as it seeks to sell asset: Electra Private Equity, which is looking to sell all its assets and return cash to shareholders, has reported its TGI Friday’s business in the UK is performing well. It had sales of £210m and Ebitda of £27m in the 12 months to the end of August 2018 – it values the business at £149m. Electra stated: “TGI Fridays has followed a strategy of sustainable growth for several years with revenue and Ebitda CAGRs of 11% and 16% between 2010 to 2017. Whilst the business has been impacted by the heavy discounting that has been prevalent in the casual dining sector over recent months, TGI Fridays’ focus on differentiation, customer experience and maintenance of brand value has allowed it to continue to perform well at Ebitda level and the company is now well positioned for growth following its return to like for like sales growth. TGI Fridays’ recent and future growth is expected to be self-financing.” The company added: “The board has concluded, and recommends, that it is in the best interests of shareholders to conduct a managed wind-down of the portfolio over a period of time, allowing optimisation of returns, the return of cash to shareholders, and ultimately the winding up of the company. The board intends that until it is finally wound up, the company will continue to be listed on the London Stock Exchange in its existing listing category and will pay annual dividends funded by cash generated by the portfolio.”

Wetherspoon defends treatment of staff in wake of strike action: JD Wetherspoon has defended it record on the treatment of staff in the wake of strike action. The company stated: “Wetherspoon announced in September that it had increased pay rates by £20 million in the year ended July 2018, and that they would increase by a further £27 million this year. Last year, Wetherspoon also awarded bonuses and free shares to employees of £43 million, equivalent to 51% of net profits. £35.3 million of the £43 million was paid to pub employees. Wetherspoon has 38,384 employees. 10,508 are shareholders in the company. The average shareholding is 385 shares. Last year was not unusual. Since 2004 Wetherspoon has awarded bonuses and free shares to employees of £380 million, equivalent to 47% of profits. In total, Wetherspoon has awarded 13.7 million shares to employees since 2004 – 13% of the company’s share capital today. In addition , approximately 15% of the company’s shares were allocated to employees under ‘share option’ schemes which operated before 2004. The government-approved “free share” scheme, currently used by Wetherspoon, was introduced by Labour in 2003. A similar SAYE (‘save as you earn’) scheme, used by many companies today, was introduced by the Conservatives in 1980. Wetherspoon provides other benefits: for example, 50% food discount on duty and 20% food and drink discount off duty.” Wetherspoon chairman Tim Martin said: “Wetherspoon intends to increase pay in real terms in most years, subject to economic conditions, as we have tried to do in the past. Everyone in the pub and restaurant industry works very hard and the late and early hours are extremely demanding. The people who work in the business are our most valuable asset. It is understandable that there is pressure on pay with low unemployment and a housing shortage. However, bonuses, free shares and other benefits should be taken into account in assessing pay. Wetherspoon is also a major taxpayer – about 43% of the price of a pint or a meal goes in taxes, including VAT, excise duty, business rates, climate change levies and so on. Wetherspoon paid total taxes last year of £729 million – nearly one thousandth of all government income . This equates to an average of £825,000 of taxes per pub. I don’t think it would benefit employees overall if, as some suggest, Wetherspoon ended bonuses, free shares and other benefits, and increased the basic rate of pay. It’s easy to be cynical about business , but companies like McDonald’s, TGI Fridays and thousands of other individuals and businesses make a big contribution to the economy, and provide valuable work and experience for many people.”

CrepeAffaire plans US openings: CrepeAffaire, the UK-based fast casual crepe café chain, plans to open its first US locations in the first half of 2019. According to founder and chief executive Daniel Spinath, the company is in early discussions to identify potential US food and beverage joint venture partners for the concept’s launch into the US market. Based in London, CrepeAffaire currently has 20 locations open and 12 under development in four countries in Europe and the Middle East. “We are enthusiastic to introduce CrepeAffaire’s unique concept to the US consumer,” said Spinath. “The brand’s sweet and savory crepe menu is highly relevant and versatile, with delicious and wholesome meal and snack options that attract an all-day client following. This includes a growing volume of take-out and delivery. Combined with our coffees and juices, CrepeAffaire offers a universally pleasing product selection that earns a steadfast, repeat clientele.” In its plan to crack the US market, CrepeAffaire sees several key business advantages. First, while independent crepe cafes attract wide appeal among American customers, the US market has no branded chains at a national level that focus on crepes. CrepeAffaire sees an opportunity to become the leading crepe concept to fill this service gap. Secondly, CrepeAffaire has a proven business track record as a fast casual leader, with average build out costs of under $250,000 and unparalleled financial performance in its category. “Recent research indicates that the best-in-class café chains are lucky to see an Ebitda of 15%, compared to CrepeAffaire locations, which consistently average over 20% Ebitda and range up to 30%,” states Spinath. Finally, CrepeAffaire offers a wide flexibility of formats, resulting in lower overhead and better options for site selection. Spinath added: “With London’s extreme real estate costs, CrepeAffaire learned the importance of space utilization with our early locations. Since our crepes are prepared on hot plates, we avoid the build-out costs and space requirements of full kitchens and complicated hood ventilation systems.” CrepeAffaire operates in malls, retail travel centres and main street locations in the UK, The Netherlands, Kuwait and Saudi Arabia, with further expansion planned in other international markets. Its menu includes a variety of sweet and savoury crepes, waffles, coffees and juices, which are suitable throughout the day. CrepeAffaire launched fully gluten-free options in 2017 and is now launching a comprehensive “free-from” product offering.

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