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Thu 18th Jun 2020 - Update: Wagamama, Greene King, Oakman, Gusto, re-opening
Wagamama sees encouraging sales performance from reopened sites: Wagamama, The Restaurant Group (TRG)-owned brand, has said it has seen an “encouraging sales performance” from the 81 sites its has so far reopened over the past few weeks. In an update to bondholders the Emma Woods-led company reported like-for-like sales up 8.4% in the first eight weeks of Q1, outperforming its peer group by 6.7%. The final five weeks of the period (March 2020) was inevitably impacted by slower trading with emergence of covid-19 in the UK, ultimately resulting in closure of all restaurants in the final week of the quarter, with full quarter UK like-or-likes at 0.9%. The company reported UK sales growth of 17.6% in first eight weeks of Q1 driven by both like-for-like growth and an additional 11 company operated restaurants, four delivery-only sites and its debut Mamago site. Group revenue stood at £82.3m, down 3.8% on the corresponding quarter last year, with UK revenue at £81.3m, down 1.2% on the previous year. Group adjusted Ebitda growth was 40.7% in first eight weeks of Q1 driven by “strong profit conversion from sales growth; continuing impact of investment made in people, product and property; strong operational discipline in managing cost challenges, together with the benefit of synergies achieved as part of the wider TRG group”. The company said it had put in place a “proactive plan to manage and mitigate risk during covid-19”. The first part was to secure “cost base and liquidity”. The company said as part of this it had taken advantage of all government support such as HMRC time to pay arrangement, business rates holiday and furlough scheme; and accessed the government furlough scheme to ensure the ongoing employment of over 97 % of its employees. It had also undertaken contract renegotiations with key suppliers, and agreed payment plans, and secured an additional £15 million increase in Santander’s super senior revolving credit facility from £20m to £35 million, which further improves our liquidity. The company said it had also carried out a site-by-site review of the estate to understand post covid profitability, and prepared a rent plan to “stabilise and recover the business”. Propel understands the company is talking to landlords around switching to a turnover-based rent in some places. It has also carried out some central staff redundancies; closing its Soho office in process and centralising to TRG head office in Borough. The company has so far carried out a phased re-opening of operations with 81 restaurants now trading, which it said has seen a “significant uplift on comparable sales pre covid-19”. From these sites it had generated “encouraging sales performance and well controlled costs.” It also said that its international business was performing well for delivery with certain markets now opening for eat in with social distancing measures in place. The company reiterated it would take a controlled approach to eat in re-opening with a test and learn phase before we accelerate openings. It said it had “clear plans in place to ensure that our restaurants open safely and legally” and that this would include “managing capacity to ensure that social distancing can be maintained; clear signage to direct the guest journey through the restaurant and to set out our safety measures; training for our teams to ensure that they are able to safely interact with guests; and reviewing the use of technology to facilitate re-opening”. It said taking these steps would ensuring that “our re-opening plan also makes commercial sense”.

Government review delays sector reopening announcement: The government’s plan to announce earlier this week that pubs and restaurants could open on 4 July was delayed by the review into whether it is possible to reduce the two-metre social-distancing rule. City AM writes that covid-19 operating guidelines for England’s hospitality sector have been drawn up by the government and are ready to distribute. However, the announcement to ease the lockdown further was delayed by Boris Johnson’s last-minute review into whether it is possible to reduce the two-metre social distancing rule. The Department for Business, Energy and Industrial Strategy (BEIS) told members of its hospitality taskforce – comprised of prominent figures in the industry – that it would announce on Monday or Tuesday this week that the lockdown would be eased for the sector on 4 July. However, multiple members of the taskforce told City AM that the announcement had been delayed as the government looked to see if it could reduce its social distancing rule to one or one-and-half metres. It is unclear if 4 July is still the planned date to allow pubs, restaurants and coffee shops to reopen. A source said: “Every day that goes by is costing the sector millions of pounds and at the end of the day we just really need confirmation of our opening date.” Another added: “The Prime Minister does not seem to be aware just how important it is to get the sector running by 4 July.” Draft guidelines revealed by Propel earlier this month, stated that pubs and restaurants were to be encouraged to keep the same shifts for teams and use radios to send orders to kitchens as part of proposals to reopen the sector. The guidelines drawn up by the government in consultation with the industry, also showed no specific requirement on distance between tables had been stipulated. It instead made reference to “wider spacing”, using screens and barriers where appropriate.

Oakman Inns to reopen all sites on 4 July, challenges PM tell it otherwise: Oakman Inns, led by Peter Borg-Neal, has said it will open all of its 28 pubs on 4 July, and has challenged the prime minister Boris Johnson to tell them otherwise. Dermot King, chief operating officer at Oakman, said: “We will be opening on 4 July, despite the lack of clarity given to the hospitality sector by the government. We cannot wait any longer and won’t change our plans unless the prime minister intervenes. The operational challenges of restarting a business are complex. We need to plan three weeks out to arrange supplies of, in our case, fresh food and cask ales. While the rules on furlough allow us to complete training, we cannot prepare menus – and that requires time. Unless the government performs another policy U-turn, we need to invest in that time now.” Oakman has used the period during lockdown to proactively prepare its pubs for reopening with safety measures and protocols such as screens between tables, reduced capacity, one-way systems through the premises and disposable menus. King said: “We have taken advice and done everything we can to make sure that when we do reopen, the health and safety of our customers and staff is fully protected.” With images showing a clear lack of social distancing in queues outside shops and onboard planes after both sectors returned to work this week, King also called on Number 10 to accelerate the release of its review into the possibility of reducing the guidance for social distancing. He said: “There is a huge difference for the hospitality sector when you compare the effects of operating with 2m spacing as opposed to 1m spacing. For many smaller premises, as well as those who don’t have significant outdoor areas, it simply will not be viable to open with the 2m rule. It’s no exaggeration to say that if the government does anything further to prevent pubs, bars and restaurants from opening on 4 July, and doesn’t reduce social distancing from 2m to 1m, then there will be large numbers of job losses in the hospitality sector – as well as premises that probably never open again. Everyone is looking forward to the day when some sort of normality returns to the country, but if the government doesn’t act fast then we won’t be toasting that moment in pubs and bars because most of them will have had to shut down.”

Greene King to make ‘substantial’ donation over slave trade links: Greene King is to make substantial reparations over its slave trade links. Records archived by researchers at University College London (UCL) show that one of Greene King’s founders, Benjamin Greene, held at least 231 human beings in slavery and became an enthusiastic supporter of the practice. When slavery was abolished in the British empire in 1833, the government agreed to pay compensation; not to the enslaved people, but to the slaveholders. The records show Greene was given the equivalent of about £500,000 at today’s rate when he surrendered rights to plantations in Montserrat and Saint Kitts. He handed over control of his brewery to his son three years later and it was given its current name after a merger in 1887. Several of Greene’s descendants went on to hold prominent positions in British society, including a Bank of England governor, Conservative MP and BBC director general. “It is inexcusable that one of our founders profited from slavery and argued against its abolition in the 1800s,” said Nick Mackenzie, Greene King’s chief executive officer. “We don’t have all the answers, so that is why we are taking time to listen and learn from all the voices, including our team members and charity partners as we strengthen our diversity and inclusion work.” MacKenzie added that the firm will “make a substantial investment to benefit the BAME community and support our race diversity in the business”. He added that the firm now employs people “across the UK from all backgrounds”, adding that “racism and discrimination have no place at Greene King”.

Former Carluccio’s CFO Bandura joins Gusto: Frank Bandura, the former chief financial officer at Carluccio’s and Gaucho, has joined Italian casual dining group Gusto, Propel has learned. Bandura, who stepped down from Gaucho last year to start his own advisory business Walpole LLP, joins the 18-strong Gusto, which has been backed by Palatine Private Equity since 2014, as chief operating officer. He was most recently interim chief financial officer at All Star Lanes. Bandura, who spent 17 years at Carluccio’s, replaces departing finance director Gemma Peel. Gusto managing director Matt Snell told Propel: “To have secured Frank’s services is a major coup for us. His experience in navigating hospitality businesses through difficult periods is unrivalled and I can’t think of many more difficult periods than the one we are in.”

Hancock: We don’t have replacement for the 2m distance rule yet: Ministers must decide on a replacement for the two-metre rule before making a change, the health secretary has said. Matt Hancock said that the guidance was “just another social-distancing rule” that could be relaxed as part of a wider easing but that the government was still considering how to do so, writes The Times. Hancock, asked on Today on BBC Radio 4 why the government did not simply say that the rule would be dropped, said: “The question is what to replace it with, as well as when and whether, formally whether, to make the change, so we have to get those decisions right. The two-metre rule is just another social-distancing rule, and so, it’s all a matter of the difficult judgment about how we can reduce the social-distancing measures, whilst keeping the virus under control.” As well as a cut to one metre, options considered in government include requiring people to wear facemasks or be back to back if closer than two metres. Prime minister Boris Johnson has said that he wants to change the rule as infections fall but scientists have warned that there is no clear level at which he could say one metre becomes as safe as two. In the Commons yesterday the prime minister said: “We will do what we can to flex the social-distancing rules but only as we make progress in driving the incidence of the virus down.” Pressed on the warning from pubs and restaurants that many will not be able to open if customers have to be kept two metres apart, he said: “Everybody understands the tension that the whole country is operating under and the trade-off that we have to make. We must continue to defeat the virus. We will stick ruthlessly to our plan to continue with the opening of hospitality sectors on July 4 at the earliest.”

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