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Morning Briefing Strap Line
Mon 26th Nov 2018 - Update: The Restaurant Group, Loungers, Rule of Tum, Hotel Chocolat
Restaurant Group shareholder reports it is ‘likely’ vote against Wagamama deal: A Restaurant Group shareholder, Castlefield, which holds 2% stake in the company, has announced that it will ‘likely’ vote against the plan to acquire Wagamama. Keith Ashworth-Lord, of Castlefield, said: “My reaction is that: (a) the price is too high thus handing the synergy benefits to the selling shareholders; (b) what are we doing distracting management from the turnaround task on hand in the existing businesses; (c) why are we loading up on debt thus having negative implications for future dividend policy; and (d) how can we be undertaking a transaction where the return on the capital invested in it won’t cover the cost of that capital for three years? Concerns have been communicated to the company and it is likely that we will vote down the resolution unless the price is reduced to better reflect the risk to reward situation that we face.” A shareholder vote takes place on Wednesday with the result finely balanced.

The Times – Loungers eyes IPO after sales hit £121m: The Times has reported that a stock market flotation is one option for Loungers, after it unveiled another set of strong results. The Times reported: “Loungers, which runs 137 café bars under the Lounge and Cosy Club brands, reported a 31.9% jump in revenues to £121.1 million in the year to April 22 on the back of 22 openings, with like-for-like sales up by 6%, The group lifted underlying earnings by 31.4% on an adjusted basis to £16.7 million, while pre-tax profits rose from £3.2 million to £5.6 million. It said that its margins had been maintained. The business’s resilience in the face of tough market conditions is understood to have attracted interest from several brokers, who regard it as an ideal flotation candidate. Shareholders, too, are believed to be evaluating the potential for an IPO. One banker said that with strong like-for-like sales and up to 25 openings a year, Loungers should offer underlying earnings this financial year of more than £20 million, implying an IPO valuation of between £250 million and £300 million.” Loungers will have an estate of 139 sites by the end of 2018. Nick Collins, Loungers’ chief executive, said the group’s resilience to its broad appeal based on an all-day menu that “offers something for everyone”.

Young Britons yearn for experiences this Christmas: A survey has found that young Britons would prefer to be gifted an experience this Christmas rather than traditional offerings such as clothing and books. The Times reported: “Tickets for theatre and comedy shows rank among the most popular such purchases among shoppers, as do concert tickets, spa and beauty treatments, meal vouchers and culinary courses. Sports events and adventure activities like skydiving are also a hit. The fifth of adult Britons buying such gifts will spend an average of £129, up 115% on last year, with a total outlay of £1.6 billion. The surge, according to Barclaycard, which published the findings, is driven by millennials. 13% of those polled considered whether the gift they bought “would create exciting content for social media channels”, with those aged 25 to 30 more conscious of this than any other age group. A third of millennials said that they were likely to buy an “experience” gift for someone — possibly with the hope of an invitation to take part in it. Of the 2,000 adults questioned by OnePoll this month, 36% said that they worried about finding the perfect present and 56% said that they would prefer to receive an experience to a material gift because they had already “got it all”.”

A Rule of Tum overfunding after hitting £400,000 crowdfunding target: Herefordshire-based steak and burger company A Rule of Tum has hit its £400,000 fund-raise on crowdfunding platform Crowdcube to launch two concepts. Brothers Edwin and Dorian Kirk are offering 11.11% equity in return for investment, which gives it a pre-money valuation of £3.2m. So far, 278 investors have pledged £406,050. A Rule of Tum operates The Bookshop restaurant in Hereford and two Burger Shop joints – in Hereford and Worcester – as well as a fledgling events division. The company will use the funds to buy both properties in Aubrey Street that house its Hereford venues, refurbish and relaunch all its restaurants, open a butcher’s shop and launch a small plates concept in an arch next to its Worcester site. The pitch states: “When we started A Rule of Tum in 2013, we had no idea what we had set out to do would resonate with so many people. A Rule of Tum has never been about creating a faceless chain – it’s about great food, individuality, building a community and inspiring change. During the past five years we’ve constantly invested back into the business and our community – opening restaurants and our annual food festival – leading to our highest annual turnover of £1.6m to the year ending March 2018 and £96,000 Ebitda. We are now crowdfunding to take the business to the next level. We are generating capital with the aim to purchase and reimagine our Hereford sites. We hope this will allow us to accelerate our plans to launch two more concepts by 2020 – a butcher’s shop and another restaurant space in Worcester.”

Hotel Chocolat opens first store in Japan: Hotel Chocolat has announced the opening of the first Hotel Chocolat store in Japan, at the Aeon Lake Town shopping mall in Tokyo, the largest mall in Japan. Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said: “The reaction to Hotel Chocolat in Japan on our first day of trading last week was hugely encouraging. Customer engagement, media attention and sales performance were all well ahead of expectations. Our portfolio of products landed with aplomb. Hot chocolat drinks, our 8g sculpted chocolate batons, and our Selector range were all in high demand. We look forward to unfolding the brand further here.”

BigDish comments on share price movement: BigDish, the company which operates a yield management platform for restaurants, has provided a comment with regards to recent share price movement. Joost Boer, BigDish chief executive, said: “We note the recent share price volatility on the back of thin volumes but believe the overhang in the market has now been removed and we look forward to future positive market updates.”

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