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Morning Briefing for pub, restaurant and food wervice operators

Tue 24th Sep 2019 - Update: Tasty, JD Wetherspoon, Shepherd Neame, Hotel Chocalat and Everyman
Tasty reports reduced loses on lower turnover: Wildwood operator Tasty has reported sales dropped to £21m in the 26 weeks ended 30 June 2019, compared to £23m in the same period the year before. It made a loss after tax of £800,000 compared to £10.7m in the comparable period. The company, which trades 51 Wildwood and six dim t restaurants, stated: “In May 2019, we successfully raised £3.2m through an institutional placing and open offer to existing shareholders and have reduced bank debt to £1.9m as at 30 June 2019 (1 July 2018: £7.0m). The casual dining market continues to face headwinds and the uncertainty of Brexit means that 2019 remains a challenging year. The group’s sales performance has been weak despite benefiting from weaker comparatives following last year’s extreme weather conditions and the World Cup. However, despite sales being down, our adjusted Ebitda performance for the first six months is in-line with expectations due to tighter cost control. Over the last 18 months we have made significant changes to the structure of the group including finance and operational team enhancement. The changes to the operational structure combined with the group’s increased focus on the financial reporting and cost management, has mitigated the impact of the difficult market conditions. We continue to make progress and have undertaken various initiatives to improve the food and drink offering, customer engagement and the development of our employees. However, along with other restaurants and retailers, we are exposed to the well documented high street challenges. Our focus is on optimising the current estate and turning around underperforming sites. We have generally found landlords to be co-operative and supportive and our collaborative approach has been well received. We have been successful in achieving rent reductions and lease concessions. We have disposed of three trading sites in the first six months of the year. In addition, we have sub-let two sites that were not trading; one in the first six months and one post the period end. The group continues to review the estate and further disposals will be made if appropriate. The board firmly believes the group’s focus should remain on the existing estate and no openings are planned for the remainder of 2019.” On current trading, it stated: “The market conditions for the UK restaurant sector remain challenging. However, the group is well positioned, with a rationalised estate, new operational structure and a heightened focus on cost controls. The refreshed Wildwood and dim t offerings continue to be attractive to consumers, with encouraging trading in the first few weeks of the second half. The group is traditionally weighted to the second half, with December being the most important month of the year, which will significantly dictate the group’s overall performance. However, the board currently expects adjusted Ebitda performance for the full year to remain in-line with expectations.” 

Shepherd Neame unveils new chairman, Kevin Georgel to join board: Shepherd Neame, Britain’s oldest brewer and owner and operator of 322 pubs in Kent and the south east, has announced that after 15 years as chairman and 18 years as a director, Miles Templeman has informed the board that he intends to step down as chairman. He will do so at the company’s AGM in October 2020. At that time Richard Oldfield will succeed Miles as chairman. The company stated: “Richard currently is a non-executive director, a position he has held since in 2016. Richard brings significant skills and expertise in finance, investment and governance to complement the wide range of skills and experience of the board. He is the founder and chairman of Oldfield Partners, an investment management firm with a global client base, a director of Witan Investment Trust and former chairman of Keystone Investment Trust plc. He was previously chief executive of Alta Advisers, the investment office of the Rausing family, and before this a director of Mercury Asset Management. With Richard taking the chair in 2020, a further non-executive director has been sought to ensure that we retain extensive pub and brewing industry skills and knowledge amongst the non-executives. The board is pleased to announce the appointment of Kevin Georgel from July 2020. Kevin has spent over 20 years working in the UK brewing and pub sector. Appointed chief executive of Admiral Taverns in 2014, Kevin joined Admiral Taverns in 2010 as managing director with responsibility for the operations and commercial aspects of the business. He was previously operations director at Punch Taverns with responsibility for the leased and tenanted estate. Prior to this he held various senior sales and marketing positions within Molson Coors. Kevin is a non-executive director of St. Austell Brewery and in January 2020 becomes its chief executive. He is also deputy chairman of the British Beer and Pub Association.” Miles Templeman, chairman of Shepherd Neame, said: “It has been a pleasure to serve as chairman of Shepherd Neame. This is a unique independent family business and I have enjoyed every moment of my time with the company. I am proud of the transformation it has gone through to become the modern, forward-looking, organisation it is today. The strength of the company’s position is testament to the hard work of the executive team, my colleagues on the board and the staff across each of our divisions. I look forward to continuing to work with them over the next 12 months before handing the reins over to Richard who I know will do an excellent job in taking the business on the next phase of its development and I look forward to welcoming Kevin to the board next year.”

Wetherspoon scraps plan for 69-bedroom hotel near Glasgow nightclub: JD Wetherspoon has changed its controversial plans to open a hotel near one of Glasgow’s best-known nightclubs. A scheme had been approved for land next to the company’s Crystal Palace pub on Jamaica Street, despite concerns raised by the owners of popular Sub Club. However, a new application has been submitted which would replace the original plans. It still includes turning empty floors above the pub into a 28-bed hotel but no longer involves a nine-storey, 69-bed hotel on adjacent land. Instead, the chain has asked Glasgow City Council for permission to open a beer garden on the land between the pub and Sub Club. The whole scheme would see a £3m investment from JD Wetherspoon, creating 20 jobs. Company spokesman Eddie Gershon said: “We have submitted plans to build a 28-bedroom hotel above the pub. We would also be looking to build a beer garden in the vacant plot by the pub which is owned by the company. We believe the plans highlight our commitment to the pub and its customers and to Glasgow itself. Hopefully it would also act as a catalyst for other ­businesses to invest in the area.” A petition against the original application was submitted to the Court of Session by the owners of Sub Club, asking for a judicial review of the decision due to concerns that consideration wasn’t given to how late night music would affect hotel guests. Court proceedings were suspended on the agreement that JD Wetherspoon would apply for a change to planning conditions to take into account how late-night venue noise could affect hotel guests. That was approved by planning bosses in November last year despite objections from music industry leaders.

Hotel Chocolat reports sales and profit boost: Hotel Chocolat Group has reported sales rose 14% to £132.5m for the 52 weeks ended 30 June 2019. Profit before tax was 11% to £14.1m. The company opened 14 new UK and ROI stores – and it now has 900,000 members signed up to its loyalty scheme. Angus Thirlwell, co-founder and chief executive, said: “I am pleased to report another year of significant progress for the group with profits growing slightly ahead of expectations. In the UK, our physical locations performed well, reflecting their allure and relevance. Growth was underpinned by the combination of leisure, gifts and experiences including Chocolate Lock-in tastings, as well as new ranges of drinks and chocolate-dipped ice lollies. The launch of the innovative Velvetiser, our in-home hot chocolate system, supported strong sales growth and received fantastic customer reviews. Our new VIP ME loyalty scheme attracted over 900,000 active members during the period and we continued to bring new and exciting products to market. Profit from existing group operations increased faster than sales growth, enabling us to invest in new markets. We are confident that our international expansion will continue to develop well. Our focus on USA and Japan, two of the three largest economies in the world, led to four locations opening, with a further five opening over the next six months. The brand, what it stands for, and our “More Cacao Less Sugar” taste have proven attractive in Tokyo and New York, as well as our refreshing price versus quality ratio. Key imminent product launches include exciting new Velvetiser chocolate flavours, including Maple & Pecan and Gingerbread, and Dark Mint Chocolate Cream Liqueur, followed by new variants of a product the Japanese in particular have fallen in love with, the all-Chocolate Macaron.” Of the company’s international progress, he said: “FY19 was a significant year for our global aspirations, opening Hotel Chocolats in two of the three largest economies in the world. In both markets the brand has been well received by customers, with our approach seen as refreshing and attractive and our prices perceived as fair value. With only a part-year of data, our initial site-level sales are tracking in line with our expectations, a level at which we believe we can deliver Ebitda profitability once supply chain costs are normalised. We are making continuous improvements to our sea-freight supply chains driving higher availability and higher gross margins. Both our 100% owned business in the US and the JV in Japan remain sub-scale in this test phase but we have invested in high calibre local teams to ensure the brand is well presented and the foundations are being laid for potential roll-out, with a clear success criteria for our ‘test, learn, grow’ approach.”

Everyman Media Group reports sales and Ebitda boost: Premium cinema operator Everyman Media Group has reported sales up 16% to £28.8m in the 26 weeks ended 4 July. Adjusted Ebitda increased 61% to £6.6m. Admissions were up 9.4% to 1.5m. The company reported continued growth in average food and beverage spend, up 13.2% to £6.95 (H1 2018: £6.14). It reached a market share of 3% – new venues were added in Horsham and Newcastle, expanding the current estate to 28 venues and 92 screens. It is committed to a further 15 new venues of which four are expected to open in H2 2019. Crispin Lilly, chief executive of Everyman Media Group, said: “The appetite for Everyman has never been stronger with our continued roll-out allowing us to deliver exceptional experiences to more audiences across the UK with our increasing footprint. As a result, we have seen progress across both our financial and operational KPIs, with growth in revenue and operating profit driven by increasing admissions and F&B spend. This has resulted in the record market share we are reporting today. Our ambitious roll out continues both in the UK and with our first international site, which is due to open in Ireland next year. We are confident that there is significant room for expansion. We look forward to delivering our proven model to additional communities in both countries in the current period and beyond.” During the period the Group exchanged contracts on further venues at Kings Road, Chelsea, Dawson Street, Dublin and Egham. This is in addition to the pre-existing contracts for London Broadgate, Cardiff, Manchester, Clitheroe, Northallerton, Plymouth, Lincoln, London’s Borough Market, Tunbridge Wells, Durham, Wokingham and Edinburgh.

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