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Mon 28th Jun 2021 - Update: Greggs, City Pub Company, Coca Cola, Escape Hunt and tipping legislation
Proposed law will enforce handing over of tips to staff: Restaurants would be forced to hand over all tips to their staff under new proposals tabled in Parliament following government delays. Several pledges have been made in recent years to stop employers making deductions from money left for their staff by customers, although legislative action has failed to materialise. A new Tips Bill has been brought forward by Conservative MP Dean Russell in a bid to make progress on the issue and put protections in law. The Bill would prohibit employers from retaining tips intended for staff and also enable arrangements to be made about how tips are divided between staff. Russell, MP for Watford, told the PA news agency: “When we look at the role that many people have when working in bars or restaurants and so on, the tips are often seen as part of the salary in a way – rightly or wrongly. It’s always felt wrong to me that businesses can take the tips that have been given by the customer directly to that individual or to the staff for businesses to go ‘Well, actually, that’s part of the payment for what they’re getting’.” He said there is a need to support the hospitality sector given its struggles during the coronavirus pandemic, and this includes helping staff via a tips guarantee. He added: “So, really, the idea of the Tips Bill was thinking, surely there must be some rule or regulation or law that means that, if someone is given a tip, they either can keep that tip and not hand it to the business, or there’s an agreement on how that tip is shared out – so if there’s a pool of tips, surely there must be an agreement in place that isn’t based on informality. The idea of the Bill, if I can hopefully get it through, is to make it so that effectively tips are protected for the people they’re given to, and businesses can’t assume they’ve got a right to decide what that tip is for.” He said the Bill aims to ensure “fairness”, noting: “I think for most people, when they do leave a tip for someone, they’ve left it for that person or for the staff, not for businesses to take an extra chunk of it.” A government consultation launched in 2015 found restaurant customers were overwhelmingly in favour of the tips they paid going to the people who served them. In October 2018, then prime minister Theresa May announced new laws to deal with tips but Brexit turmoil prevented the legislation going ahead. Prime Minister Boris Johnson also outlined his desire to proceed with the idea when his October 2019 Queen’s Speech committed to bring forward the Employment (Allocation of Tips) Bill.

Just two days until Premium subscribers receive updated database of multi-site businesses: The updated database of multi-site companies for June, which is available exclusively to Propel Premium subscribers, will be sent out in two days – on Wednesday (30 June) at midday. It will include 63 new companies since its previous update in May – making a total of 1,886 listed businesses. Collectively the 63 new companies operate 565 venues. Subscribers will not only receive the database as a PDF and an Excel spreadsheet, they will also be sent a 10,389-word report on the businesses added during June. The go-to database 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. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. Premium subscribers also receive access to a second exclusive monthly database, The Propel Turnover & Profits Blue Book. This database provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel insights editor Mark Wingett. Email to sign up.

The City Pub Group – we are trading at 90% of 2019 levels where we are open: The City Pub Group, the owner and operator of 48 premium pubs across Southern England and Wales and a further four development sites, has reported that trading since the reopening of pubs on 12 April has been encouraging at 90% of 2019 levels for the 42 pubs that have reopened to date. The company stated: “We are already benefitting from the hard work carried out over the past year with our cost base significantly reduced and consequently the group is trading profitably at today’s volumes. While our performance has been very pleasing, the continuing social distancing rules and absence of large bookings have limited trade. This became apparent at the start of the European Football Championships where many customers did not want to watch live sport at pubs because of the social distancing restrictions. We look forward to all restrictions being lifted on 19 July and we believe that once restrictions are lifted, trade will build over the remainder of the year to above 2019 levels, although it is difficult to predict at this stage exactly when this might happen. Whilst uncertainty remains, progress will be made on a step-by-step basis. The group has a very strong balance sheet, with over £16m of unutilised banking facilities, is cash generative, and is starting to – on a selective basis – identify new acquisitions. Our priority is to get the existing estate firing on all cylinders, have all four development sites open by spring 2022 and to deliver the identified cost reductions. The group is also pleased to announce that is has purchased the freehold of the Roundhouse in Wandsworth Common, where we only had four years left on the lease, for a total consideration of £1.1m. Clive Watson, executive chairman of City Pub Group said: ‘’We have been very encouraged by how we have traded since reopening despite the continuing restrictions. We are cash generative and trading profitably demonstrating the strength of our business model. I would like to thank personally all our staff and suppliers for their ongoing commitment. We have put in place a strong platform for growth, and we believe that when we are allowed to trade restriction free we will build to levels higher than 2019.”

Greggs reports stronger than anticipated sustained sales recovery: Greggs has reported stronger than expected sales. In a brief trading update, it stated: “Greggs last reported trading performance on 10 May, at which point we had seen a strong recovery in sales levels following the easing of restrictions on non-essential retail across the UK. Since then we had expected to see increased competition as cafes and restaurants were allowed to compete more effectively with our largely take-out offer. In recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between one and 3% when measured against the same period in 2019. This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year. We will provide an updated picture when we present our interim results on 3 August 2021.”

Escape Hunt reports encouraging trading: Escape Hunt, the operator of escape rooms in the fast-growing experiential leisure sector, has reported trading in the five weeks to 20 June 2021 has been encouraging in both the company’s established sites and in its new sites. The company stated: “Revenue during the five-week period was 47% higher than in the same five-week period in 2019 (this being the most relevant comparison as all UK sites were closed in the same period in 2020 due to covid-19 related restrictions). On a like for like basis, revenue in the five-week period to 20 June 2021 from the company’s eight established UK owner-operated sites which were open in the same period in 2019 represented 87%. of the revenue in the same period in 2019. The company is benefitting from initiatives implemented during 2020 to improve site level margins and has also benefitted from the temporary reduced VAT rate which is expected to run until 30 September 2021. As a result, estimated earnings before interest, tax, depreciation and amortisation (‘Ebitda’) at site level for the five weeks to 20 June 2021 was 310%. of the site level Ebitda in the same five weeks in 2019. On a like-for-like basis, site level Ebitda from the company’s eight established sites was 189%. of the equivalent site level Ebitda in 2019. The company has opened five new owner-operated sites in the UK in the last twelve months. Two of these, Watford and Kingston, opened for the first time on 17 May 2021, whilst sites in Norwich, Basingstoke and Cheltenham opened in the latter half of 2020 but have had only a very short trading history due to government imposed restrictions. Performance from these five new sites together with the site at Birmingham Resorts World, which had only been trading for three months before the first covid-19 related restrictions were imposed in March 2020, has been extremely encouraging and provides confidence in the roll-out strategy which the company is pursuing. Further progress has been made on the group’s UK rollout; work has commenced at the proposed site in the Lakeside shopping centre and the company expects to exchange contracts imminently at a site in Milton Keynes. Games have already been ordered for both sites, with several already in storage awaiting installation. Management remains confident of achieving the target of 20 owner-operated sites well ahead of the original target date of June 2022 despite the impact of covid-19. Of the company’s non-UK owner-operated sites, the site in Dubai continues to perform well and in line with the board’s expectations, whilst the owner-operated sites in Paris and Brussels were only able to re-open in early June 2021 when lockdown restrictions were eased. There have been encouraging early signs of demand returning in Paris and Brussels, but it remains too early to provide any meaningful commentary for these sites. The company’s franchise estate has performed in line with the board’s expectations, with strong performance in Australia offsetting the prolonged period of closure at the majority of sites in Europe, most notably in France. Further progress has been made in the US with the group’s partner Proprietors Capital Holdings (‘PCH’), although completion of their master site in Houston has been slowed by international travel restrictions. PCH is seeing growing interest in the opportunity and the company remains positive about the prospects for North America. Throughout the period of lockdown, the company continued to manage its cash carefully. The cash balance at the end of May 2021 was £2.5m. In addition, the company has access to a £1m convertible loan note facility, details of which are set out in its 2020 Annual Report and Accounts. The facility remains undrawn. In view of the continuing risk posed by covid-19 and having regard to their own safety and that of others, shareholders and their representatives are respectfully asked not to seek to attend the AGM in person. As set out in the company’s announcement released on 23 June 2021, in order to ensure the safety of the limited number of people whose attendance is essential, the company does not propose to allow other shareholders or their representatives access to the AGM venue”. Richard Harpham, chief executive of Escape Hunt, said: “We are delighted to have seen a healthy return of demand from consumers in the short period since our UK sites have been able to re-open and are pleased that we are realising the benefits of the efficiency measures implemented, leading to a significant improvement in our UK site level Ebitda. The performance of our new sites in particular, gives us confidence in our strategy to continue to expand our network and we have a well-developed pipeline of attractive opportunities within a favourable property landscape. Where our franchisees have been able to operate without undue restriction, demand appears to be returning. Whilst there are undoubtedly still covid-related risks to trading in the near term, performance in the last few weeks gives us cause for cautious optimism.”

Coca-Cola strengthens its coffee portfolio with a minority stake in Caffè Vergnano: Coca-Cola has said that its wholly-owned subsidiary CC Beverages Holdings II has reached an agreement to acquire a 30% equity shareholding in Casa Del Caffè Vergnano, the premium Italian coffee company. Completion of the acquisition is expected in the second half of 2021 and is subject to approval. Furthermore, Coca-Cola and Caffè Vergnano will enter into an exclusive distribution agreement for Caffè Vergnano’s products in Coca-Cola’s territories outside of Italy. CCH Holdings will be represented on the board of Caffè Vergnano and have minority decision-making and governance rights. The parties have not disclosed the value of the deal. Caffè Vergnano is a family-owned Italian coffee company headquartered in Santena, Italy. It is one of the oldest coffee roasters in Italy with roots dating back to 1882. In 2020, the company sold approx. 7,000 tons of coffee in more than 90 countries worldwide. Coca-Cola said that Caffè Vergnano is “highly complementary to its existing Costa Coffee proposition” and will allow it to address an even wider range of consumer tastes and segments. The company said: “Furthermore, the partnership will increase Coca-Cola HBC’s relevance with its customers within the most attractive segments of the coffee category, while providing Caffè Vergnano with significant expansion potential through Coca-Cola HBC’s leading route to market network and commercial capabilities.” Zoran Bogdanovic, chief executive of Coca-Cola, said: “We are grateful for the trust being placed in us by the Vergnano family and are excited by the opportunities ahead with this terrific brand. With Caffè Vergnano, we are well positioned to build a total coffee portfolio that caters for a diverse range of consumer preferences. We are respectful of the company’s 140-year history and the dedication and passion of the four generations that created such a rich and renowned coffee brand, synonymous with the authentic Italian coffee experience. Our investment in Caffè Vergnano is aligned with The Coca-Cola Company as we have worked together on this opportunity.” Franco and Carlo Vergnano, chief executive and chairman of Caffè Vergnano, respectively, commented: “We are very pleased to welcome Coca-Cola HBC as our new strategic partner to help accelerate our growth ambitions and support the journey of our brands outside our home market. By combining Coca-Cola HBC’s expertise, know-how and critical mass, with our heritage coffee brand, great products and deep knowledge of the industry, we are confident this will prove a powerful partnership in growing our business further.”

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