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Mon 7th Jun 2021 - Update: Prezzo, Caffe Nero, Wagamana, rent arrears
Prezzo to open first restaurant since 2018 at Islington Square: Cain International, the privately held investment firm led by Jonathan Goldstein, has agreed a new lease with Prezzo for 8,432 sq ft at its Islington Square development in north London. This space will house both a new Prezzo and the business’s Support Centre offices. Prezzo Islington will be the first new restaurant opened since 2018, demonstrating Prezzo’s confidence in the rebound of the brand and UK high streets as lockdown restrictions ease across the UK. The new Prezzo will be located in Islington Square’s South Arcade and will open in late Summer 2021. The 4,319 sq ft restaurant will also be the first to feature Prezzo’s new energy-efficient kitchen plan which will increase the energy efficiency of its cooking by 47% and reduce CO2 emissions by up to 75%. The new kitchen set up combined with Islington Square’s ground-source temperature system will ensure that the Islington restaurant will be the most environmentally-friendly Prezzo yet. The national Italian restaurant chain, which was acquired by Cain in December 2020, will also be moving its Restaurant Support Centre to the development taking 4,113 sq ft. joining other creative occupiers including Fullwell 73, the production company which counts James Corden as one of its partners. Resting just off the iconic Upper Street, Islington Square brings together a strong mix of restaurant, retail and leisure concepts including an ODEON Luxe & Dine cinema, Megan’s, Omnom and Jiji, as well as a Third Space health club. Jonathan Goldstein, chief executive of Cain International, said: “As we emerge from the restrictions of lockdown and enjoy increasing freedom to socialise, we are confident that Prezzo will benefit from the pent-up demand for hospitality-driven experiences. Islington is an iconic destination for retail, culture and dining in London, making it the perfect location for Prezzo’s headquarters and a new restaurant location. There is an exciting pipeline of opportunities ahead for the team and we look forward to introducing the Prezzo brand to a new market, as well as continuing to work closely with Karen and her team as we re-open sites across the UK.” Karen Jones, executive chairman of Prezzo, said: “It is truly exciting to be opening a new Prezzo restaurant. The new Prezzo Islington will be the greenest Prezzo to date and will serve as a test bed for sustainability initiatives that we can roll out across all our restaurants. The location of the restaurant in Cain’s Islington Square development demonstrates the ambition of Prezzo’s partnership with Cain and the confidence both companies share in the resilience of the British High Street.”

Propel Premium subscribers to receive first edition of new sector turnover and profit database this Friday, most profitable UK companies revealed: The first edition of a new database for Premium subscribers, The Blue Book, to be released at midday on Friday (11 June), shows 52 companies convert 7% or more of their turnover to pre-tax profit. Of these, 22 companies convert 15% or more of their turnover to pre-tax profit. The Blue Book shows McDonald’s has been the most profitable company in the UK for the past five years by some distance. The company has a total pre-tax profit of £1.7bn in its five most recent years. In its most recent full year, it made four times more pre-tax profit than any other company in the UK. The new database, which will be updated and expanded each month, ranks the top 215 sector operators by turnover and then by profitability. It also has a five-year overview of turnover and profit and shows what percentage of turnover is converted to pre-tax profit – or otherwise. The first edition of the Blue Book shows there are 106 companies in the sector turning over more than £30m, with 76 of them turning over more than £50m and 43 turning over more than £100m. The Blue Book shows companies with franchise and tenanted operations converting turnover to profit very efficiently, with family brewers for example also performing well. The Blue Book also sees strong performances from some of the outstanding UK restaurant brands and operators. Each month Propel we will be expanding the scope of The Blue Book – we want to add any company either turning over more than £5m or making a £1m pre-tax profit. Email paul.charity@propelinfo.com to add your company to the Blue Book universe. Charity said: “The Blue Book will start to show the devastating impact of the pandemic on company profitability but in due course will chart the sector’s bounce back. It’s a fascinating document.” Propel Premium subscribers have just received their monthly update to the multi-site database, which has had 108 companies added since the last release at the end of May. They not only received the database as a PDF and an Excel spreadsheet, they were also sent a 14,000-word report on the businesses added during May. The go-to database, which now features 1,822 companies that collectively operate 59,197 sites, provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. A single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. Email jo.charity@propelinfo.com to sign up.

Caffe Nero warns that return of covid restrictions would threaten future of company: The Daily Telegraph has reported that Caffe Nero has warned that further covid restrictions could put the company’s future in doubt, despite a recent increase in sales. The newspaper reports: “In Caffe Nero’s latest accounts, directors including founder Gerry Ford said that a fresh wave of temporary closures and a legal challenge by landlords to a recent restructuring of the business cast ‘material uncertainties’ over its future. Meanwhile, Caffe Nero’s auditors, EY, raised a red flag over the company’s future due to uncertainty around the outcome of the restructuring and when trading would return to pre-pandemic levels. Caffe Nero’s landlords have challenged proposals to renegotiate rents after it emerged that the billionaire Issa brothers made an eleventh-hour bid to wrest control of the company last November. The company also cautioned that a third wave of the virus, and the potential impact on trading from another lockdown, risks leaving it unable to pay off its £390m of debt. The Issas, who acquired Asda for £6.8bn earlier this year, have bought £140m of Caffe Nero’s debts, leaving them in a position to seize control of the business if the company goes through a debt for equity swap, were it to default on its debt obligations. Caffe Nero’s accounts, seen by The Daily Telegraph, were filed shortly before a 31 May deadline and are expected to become available at Companies House in the coming days. The accounts showed that Caffe Nero recorded pre-tax losses of £82m in the year to 31 May 2020, equivalent to losses of £225,000 a day. The period covers just over two months of the UK’s first lockdown when cafes were forced to operate as takeaway only. Group revenues during the period fell to £324m from £366m a year earlier. The company said it had undertaken a number of stress tests to determine what level of decline in revenue would cause it to breach lending agreements with its banks and any resulting impact on cash flow in the event of further trading restrictions. The directors said that they had options available to address the breach of covenants – these include its owners injecting fresh capital or agreeing to refinance its debts with its lenders. A spokesman for Caffè Nero told The Daily Telegraph that the company achieved £13.4m in underlying profits during the period. The spokesman added: “As is the case for all other retail and hospitality businesses, we certainly hope the government will not impose additional lockdowns as that would create further uncertainty.” The spokesman also said Caffe Nero has repaid all loans taken out during the pandemic and that its forecasts showed “no covenant violations in the next 12 months”. He said the company has been cash flow positive each month for the last six months and insisted current trading is strong at around 70 to 80pc of pre-pandemic levels.”

Property chiefs call for more flexibility over rent arrears: Landlords and tenants should be given six months to agree a plan for rent arrears to be paid back before entering into a binding arbitration, according to the bosses of two of Britain’s biggest property companies. Mark Allan, chief executive at Land Securities, and Simon Carter, of British Land, want landlords and occupiers to work “constructively together as economic partners to resolve this situation”. A ban on evictions and debt collection from commercial tenants is due to be lifted in a few weeks. Writing in The Times today, Carter and Allan say: “We are convinced that a solution to the commercial property moratoriums and accrued rent arrears is within reach – a solution that would enable the market to return to normal operations from the end of June while still protecting those businesses that have been significantly impacted by the pandemic.” They call for tenants and landlords to be given six months to reach an agreement on how to resolve the £6 billion of arrears that have accrued since the moratorium was introduced in March last year. High street retailers, including H&M, JD Sports and Boots, took advantage of the policy to withhold rent and tensions have been building now that the ban is set to be lifted on 30 June. The British Retail Consortium has warned that thousands of shops could close if property owners push tenants for unpaid rent. Landsec and British Land say that if agreements cannot be reached in six months’ time then both parties should enter into a binding arbitration. The bosses of the two landlords have worked with the British Property Federation to put forward a proposal to withdraw the moratorium on evictions.

Pandemic loan repayments set to begin: Thousands of small businesses are due to start repaying covid support loans this week, when year-long payment holidays start to tail off, writes The Times. When bounce back loans were launched in May last year, there was a huge rush of applications from companies seeking support as the pandemic escalated. Repayments on loans made in the early days are due from today. Banks extended £46.5 billion to 1.5 million small businesses in bounce back loans, which are 100% government-backed. About a fifth of borrowers have already asked their banks for more time to repay, with most choosing to extend the term from six to ten years. However, the majority have stuck to the original terms, which should mean that they will start to repay after the 12-month payment holiday. Whether or not those payments start to flow in will provide the first indications of how businesses are faring and how many loans might have been fraudulent. One senior banker said: “Banks have already stopped fraud by identifying many non-eligible customers at the start. In terms of others, we will start to find out over the next couple of months.” Under the government’s pay-as-you-grow initiative, customers can still opt to extend their loans to ten years, reduce monthly repayments for six months by paying interest only or take a repayment holiday for up to six months.

Wagamama launches home-cooking supermarket range: Wagamama is launching a range of “cook at home” products for sale in supermarkets as part of the chain’s post-pandemic growth strategy. The Restaurant Group-owned brand will start selling its meal kits, pastes and sauces from today (7 June) in Waitrose, before expanding its ranges into Morrisons, Sainsbury’s, Tesco and Ocado in the coming weeks. It said that all the profits from the range, which will include Katsu paste and pad thai sauce among others, will be donated to mental health charity partner YoungMinds. The launch is one of the first strategic moves by new chief executive Thomas Heier, who formally took over from previous chief executive Emma Woods at the start of this month. “We learned a lot from Wok from Home and that connectivity with people was something we could really look at when thinking about the range,” Heier told the Press Association. “We don’t think it will cannibalise our restaurant sales because we had some concerns about that when we started click and collect options and we saw it attracted new customers as well.” Heier said he has been pleased by initial trading at Wagamama restaurants since it reopened its doors again to customers following the third lockdown. He said: “We’ve been able to trade with delivery and click and collect through a lot of sites during the lockdown but it was obviously still a fantastic lift to welcome all those customers and staff back. It’s been very busy, in a really good way, because there is a lot of love for the brand. Seasonally, we often do better in the cooler months, we think of that as ramen weather, but we’ve been really pleased by trading since 17 May.”

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