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Wed 28th Nov 2018 - Update: Patisserie Holdings prepares to drop auditor, Uber/Deliveroo deal stalls
Patisserie Holdings prepares to drop auditor: Patisserie Holdings is preparing to drop the auditing firm that oversaw its books before a £40m black hole was discovered in its accounts. The move to replace Grant Thornton comes days after the Financial Reporting Council (FRC) revealed it had launched an investigation into the accountancy group. Grant Thornton has been responsible for checking Patisserie Holdings’ accounts since 2006, but last month bosses uncovered the black hole, leading to its shares being suspended on AIM. The FRC has since launched an investigation into the accounts in 2015, 2016 and 2017, as well as former finance chief Chris Marsh, who was arrested after the discovery of “significant, and potentially fraudulent, accounting irregularities”. Grant Thornton has said it is co-operating with inquiries. At the same time, Patisserie Valerie bosses are said to have launched moves to ditch the auditor. Candidates for the role are thought to include firms Deloitte and EY, reports the Daily Mail. Before the crisis, Patisserie Holdings had been expected to announce its full-year results this month, but that is not expected to now happen until the spring. Chairman Luke Johnson stepped in after the discovery of the black hole pushed the company to the brink of collapse. The £20m investment from Johnson secured the future of 2,800 staff and 206 sites. The sale of £15m in new shares was used to pay Johnson back £10m of his emergency loan. Paul May stepped down as chief executive this month and was replaced by Stephen Francis, a turnaround specialist. Francis was recently chief executive of Tulip, the UK’s largest integrated farmer and producer of pork, where he led its rapid return from significant losses, rebuilt the management team and completed a major growth acquisition.
Uber and Deliveroo ‘miles apart’ on valuation: Uber’s attempt to buy Deliveroo has stalled because the two sides are “miles apart” on a valuation for the food delivery service. Uber is keen to buy or invest in Deliveroo, but a recent offer for the company valued it at less than $2bn while Deliveroo has pegged its value at $4bn. It was reported in September that Uber had held early-stage talks to acquire or invest in Deliveroo, as it expands its UberEats business. The two sides are still in talks, but there is such a “significant gap” between them that interest has cooled, reports the Financial Times. Deliveroo’s main investors, which include Fidelity and T Rowe Price, are understood to be seeking an investment or partnership rather than a full sale. Deliveroo is one of Europe’s best-funded start-ups and has ploughed millions into differentiating itself from rivals, including by building industrial kitchens for restaurants to use as hubs for orders. UberEats launched similar “virtual kitchens” more than a year ago, which encourage restaurants to use extra space to cook food from other menus for delivery. Deliveroo does not operate in the US and would offer Uber a chance to expand its business in Europe. The company has suggested it would be willing to strike deals ahead of a planned initial public offering next year. Deliveroo’s revenues more than doubled to £277m in 2017 but losses widened by 43% to £185m after it spent money recruiting 300 engineers, launching in new cities and opening kitchens.
McDonald’s slows pace of US restaurant remodels: McDonald’s is slowing the pace of US restaurant remodels that chief executive Steve Easterbrook has championed since he took the helm in 2015. The company, which had originally planned to update most of its freestanding US locations by 2020, is now giving its franchises until the end of 2022 to do renovations that include additions such as self-order kiosks, new systems for more delivery orders and even extra drive-thru lanes at some locations. The extended timeline comes as the company appears to face pushback from its franchisees, who own and operate more than 90% of global locations. Those owners gathered in October to discuss cash flow and financial concerns, and are scheduled to meet again next month. Although McDonald’s has said it will contribute more than half of the funds to upgrade the restaurant locations for remodels completed by the end of 2020 and 40% for projects that take another year or two, the costs are still high for restaurant owners. A McDonald’s spokeswoman told Bloomberg about half of its restaurants have been modernised already. She added: “Our growth strategy remains rooted in making positive food changes, offering new restaurant experiences and providing our guests better value. The adjustments we are making will allow us to continue on this path and provide greater local operator flexibility.” In 2017, Easterbrook said the company’s goal was to remodel most of its 14,000 US sites to the Experience of the Future look by 2020 but the company recently said the upgrades were taking longer than expected.

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