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Morning Briefing for pub, restaurant and food wervice operators

Tue 28th Jan 2020 - Update: Just Eat and McDonald’s, Chipotle and AG BARR
Just Eat to partner McDonald’s: Just Eat, the online food delivery company, is to partner with McDonald’s across the UK and Ireland. Meanwhile, in a trading update, it stated that 2019 concluded in line with the board’s expectations. The company said: “We now expect to report uEbitda of around £200 million, with group orders of 254 million and revenue of approximately £1bn. UK order growth in 2019 was 8%. Order growth in our other markets during Q4 followed similar trends to those seen in Q3 2019, with good momentum in Australia, Italy and Switzerland and continued strong growth in Canada. We have agreed to partner nationwide with McDonald’s in the UK and Ireland which will see Just Eat becoming McDonald’s second exclusive delivery partner for McDelivery. The partnership will be implemented during 2020. McDelivery has proved extremely popular with customers in the UK and Ireland since its launch in 2017 and 2018 respectively. This follows the successful roll-out of Just Eat’s delivery capability in the UK, with broad geographic coverage being an essential prerequisite to partnership, and also follows the announcement of the partnership with Greggs.” Peter Duffy, Just Eat’s interim chief executive, said: “We are pleased to confirm uEbitda towards the top end and revenue broadly in line with the guidance range we provided at the start of 2019, notwithstanding the significant developments during the year. We are delighted to announce that we have agreed to partner in the UK and Ireland with McDonald’s. This partnership, along with our recently announced relationship with Greggs, will require significant investment but will accelerate our growth ambitions and enhance our market position by offering our customers the widest choice available.”

Chipotle fined $1.3m over child labour violations: Chipotle has been fined $1.3 million over more than 13,000 child labour violations at its Massachusetts restaurants, the state’s attorney general announced on Monday. Attorney General Maura Healey ordered the largest child labour penalty ever issued by the state against the Mexican restaurant chain after finding an estimated 13,253 child labour violations in its more than 50 locations. “Chipotle is a major national restaurant chain that employs thousands of young people across the country and it has a duty to ensure minors are safe working in its restaurants,” Healey said in a statement. “We hope these citations send a message to other fast food chains and restaurants that they cannot violate our child labour laws and put young people at risk.” The fine detailed that Chipotle had employees under the age of 18 working past midnight and for more than 48 hours a week. Teenagers told investigators their hours of work were so long that it was preventing them from keeping up with their schoolwork. The company also regularly hired minors without work permits. The settlement total is closer to $2 million, including penalties for earned sick time violations in which managers granted employees paid time off only for certain illnesses. The violations also include failure to keep accurate records and pay timely wages. Lastly, the company was ordered a voluntary $500,000 pay-out to a state youth worker fund dedicated to education, enforcement and training.

AG BARR reports it has “re-established its pricing position”: AG BARR, which produces and markets IRN-BRU, Rubicon, Strathmore and Funkin, has reported, in respect of the financial year ended 25 January 2020, that adjusted profit before tax performance is expected to be at the ‘top end of current market expectations’, just ahead of £37m. The company stated: “Revenue for the period is expected to be c. £255m (2018 : £279m). As previously communicated, we faced a combination of challenging trading conditions during the year, particularly across the summer period. In addition, following our 2018 volume-led strategy, across 2019 we adjusted our promotional and pricing position to align more closely with the market. While this had an expected impact on volume, it has delivered an increase in average realised price, re-establishing our consumer pricing position. Our Rockstar and Rubicon recovery plans are now being implemented, IRN-BRU has returned to growth in the final quarter and Funkin continues to perform strongly. We have completed the first phase of our business re-engineering programme. The associated exceptional costs in the period of £1.5 – £2m are expected to be almost entirely offset by a one-off exceptional gain related to the removal of a wind turbine at our Cumbernauld site. Our business remains strongly cash generative and, as planned, our £30m share repurchase programme completed during the period. Our balance sheet remains robust. The external landscape remains challenging, however we exit the year with encouraging trading momentum which we expect to continue into 2020.” Chief executive Roger White said: “Our focus remains the delivery of long-term value growth. We are taking action to reset our business and we enter the new financial year with confidence and a strong trading plan.”

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