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Wed 12th Jan 2022 - Whitbread, Just Eat, Jamie Oliver, Marugame Udon, Danny Meyer
Total Q3 F&B sales down 11.1% at Whitbread: Whitbread, the Premier Inn, Brewers Fayre and Beefeater operator, has reported a 11.1% decline in total food and beverage sales in the UK, against a 10.6% rise in accommodation sales, during the 13 weeks to 25 November 2021 compared to the previous year. The company’s like-for-like food and beverage sales in the quarter fell 13.4%, with accommodation like-for-like sales up 5.5%, meaning its overall Q3 like-for-like sales in the UK were down 1%. Its total UK sales were 3.1% ahead of FY20. In the six weeks to 6 January 2022, the company reported “resilient” trading in the UK despite the onset of the omicron covid-19 variant with total UK accommodation sales growth 5.1% ahead of FY20. The company said: “The emergence of the omicron covid-19 variant dampened demand in December and through the festive period, however Premier Inn UK total accommodation sales continued to outperform the market (+20.8pp) with total accommodation sales 5.1% ahead of FY20 and occupancy levels at 65.7%. Total UK sales were 4.4% behind the same period in FY20 with total food and beverage sales 17.2% down, with recent weeks adversely impacted by the omicron variant and increased government restrictions on eating-out in Scotland, Wales and Northern Ireland. Increased government covid-19 restrictions in Germany are acting as a significant market drag, with Premier Inn occupancy levels at 36.4%, down from 59.9% in Q3, however still in-line with the market.” The business said it maintained its expectation that Premier Inn UK like-for-like RevPAR run rates will recover to pre covid-19 levels during 2022. The company said: “Sector cost inflation in FY23 is expected to be above historic average levels. The group expects to be able to largely offset these higher levels of inflation through cost efficiencies, estate growth and higher price (ARR). Government lockdown restrictions are acting as a headwind in the German market, with occupancy levels reducing to 36% in the six-week period.” The group’s 32 open hotels in Germany achieved occupancy levels of 59.9% in Q3, up from 47.5% in Q2. The group said it was operating cashflow positive in the period to the end of December, and retains a strong balance sheet and liquidity position, with net cash of £120.5m. Alison Brittain, chief executive, said: “Q3 represented another strong performance in the UK with Premier Inn continuing to trade significantly ahead of the market. High levels of leisure demand and improving business demand helped maintain like-for-like accommodation sales ahead of pre covid-19 levels. UK accommodation sales remained resilient in December, albeit softening as we moved through the month and into the festive period as a result of the onset of the omicron covid-19 variant. Whilst our hotel performance was excellent, the value pub and restaurant sector in which we operate remains more challenging.” The company said: “In the UK, January and February are traditionally our quietest months with low levels of forward bookings as we enter the new calendar year. While the impact of the omicron covid-19 variant has resulted in a softening of hotel bookings in recent weeks, it remains too early to assess what the impact on sales will be for the rest of this financial year. However as we look forward into FY23, and in the absence of any further material covid-19 restrictions, we maintain our expectation that Premier Inn UK like-for-like RevPAR run rates will recover to pre covid-19 levels during 2022. In our restaurants, we expect the rollout of new menus, combined with targeted marketing initiatives, to help drive an improvement in food and beverage sales as we move into the next financial year.”

Mark Wingett’s next quarterly pick of Companies to Watch to feature in updated Turnover & Profits Blue Book: The next edition of Propel’s Turnover & Profits Blue Book for Premium subscribers, to be published at midday on Friday (14 January), will feature group editor Mark Wingett’s next quarterly pick of the companies well-placed to grow in the post-pandemic era. His latest pick of companies are Brakspear, Simmons Bars, Hub Box, Park Holidays, Vaulkhard Leisure, Hostmore, QFM Group, Caprice Holdings and Ivy Collection. The picks are also accompanied by a 2,100-word report. The next edition of the Blue Book, which is updated monthly and produced in association with Mapal Group, will feature more than 500 companies. It shows the full damage done to the sector by the pandemic, with 321 companies making a combined loss of £8.17bn compared with 186 companies in profit – making a combined £797m. Losses now outstrip profits in the sector ten times over. Total turnover of the 500 biggest sector companies stands at £28.5bn. The Blue Book provides a five-year overview of turnover and profit, ranking companies according to turnover, pre-tax profit and profit conversion. It also provides details of directors’ earnings and highest paid directors. Premium subscribers also receive two other databases – the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. 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 single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. 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 Mark Wingett.

Just Eat sees orders climb 33% in 2021 driven by UK performance: Just Eat has this morning reported that it processed 1.1 billion orders last year, representing a 33% increase on 2020, including 274 million orders in Q4, representing a 14% increase compared with the same period 12 months previously. Gross Transaction Value (GTV) was €28.2bn for the full year of 2021, representing an increase of 31% compared with 2020. The company said that GTV amounted to €7.3bn in the fourth quarter of 2021, up 17% compared with the same period of 2020. It said that adjusted Ebitda margin improved substantially in the fourth quarter of 2021, and as a result its adjusted Ebitda margin for the full year of 2021 is expected to be at the midpoint of the guided range of minus 1% and minus 1.5% of GTV. The company said that full year order growth, excluding Grubhub, was more than 40% year-on-year, versus the targeted 45%, despite the dampening effect of restaurants reopening. The business said that the UK and Ireland was the fastest growing segment for both the quarter and the year, while significantly improving adjusted Ebitda. The company said it would continue to invest heavily, especially in its London network, while it expects to further improve profitability in 2022. In North America, it said that Grubhub continued to make good progress increasing restaurant selection for diners, most notably in New York, and drove meaningful expansion of GubHub-Plus users. The company said it remains in discussion with several potential strategic partners to strengthen its US position. In Northern Europe, Lieferando added 6.9 million incremental orders in Germany in the fourth quarter of 2021, and 47.5 million incremental orders in 2021, compared with the same period last year. Just Eat said it welcomes the EU Commission’s proposals to improve conditions for workers and help them access social protections. It said that since the company already employs tens of thousands of couriers across the EU, management believes the business will benefit from this legislation. Jitse Groen, chief executive of Just Eat “Following the merger of Just Eat and nearly two years ago, we made significant investments to grow our leadership positions and the company is now six times bigger in terms of orders. On the back of this success, we have markedly improved our adjusted Ebitda throughout the second half of 2021, and we will make further improvements this year. Meanwhile, we expect our market positions to strengthen further, driven by our superior network effects.”

Britain ‘will be among first’ to emerge from covid pandemic: Britain will be one of the first countries in the world to emerge from the pandemic, according to a leading public health expert. The Times reports Professor David Heymann of the London School of Hygiene and Tropical Medicine said that Britain’s very high levels of immunity seem to be “keeping the virus at bay” as he predicted coronavirus would soon settle down to normal patterns of spread seen with other infections. Hospital admissions have stopped rising across most of England. The northeast and Yorkshire is the only part of England where admissions are still clearly rising, with London seeing falls and the rest of the country broadly level or starting to decline, adding to confidence in weathering the omicron wave. Government sources pointed to “clear points that are cause for optimism. We need to see a more sustained trend, but it certainly doesn’t look like it’s getting worse”. Heymann told a Chatham House event: “The UK [is] the closest to any country of being out of the pandemic – if it isn’t already out of the pandemic – and having the disease as endemic as the other four coronaviruses.” With more than 95% of people now having antibodies, he said that the virus was “now functioning more like an endemic coronavirus than one that is a pandemic”. Heymann, a former chairman of Public Health England and senior official in the World Health Organisation and the US Centres for Disease Control, said that the virus was increasingly “not causing serious illness or death in countries where population immunity is high”. He cautioned, however, that the pandemic could not be declared over globally until all countries had gone through a similar process to “make this virus more tame”.

Jamie’s Italian failure costs councils £1.3m: Hard-pressed councils are likely to lose more than £1.3m from the collapse of Jamie Oliver’s restaurant chain as administrators come close to winding up the stricken business. The Time reports that documents published by KPMG, which is managing the chain’s insolvency, show that unsecured creditors, including 19 councils, will see more than 90% of the cash they are owed wiped out. Jamie’s Italian owed local authorities £1.44m in unpaid business rates and taxes when it collapsed in 2019. This is in addition to the £1.25m that it owed to the taxman in unpaid VAT. The debts include tens of thousands of pounds owed to some of the poorest boroughs in the country. Newham council in east London – where half of children live in poverty – is owed £80,000. Over the past decade, Newham has had to close 13 of its 18 youth centres because of budget cuts. Jamie’s Italian also owes Tower Hamlets council £55,000, Liverpool city council £108,000 and Manchester city council £90,000. KPMG’s latest progress report on the administration estimates that less than £600,000 will be recovered from the business to return to unsecured trade creditors, such as councils and small businesses. Jamie’s Italian owed these creditors £6.86m. Small businesses that are set to lose out include five cleaning firms that are collectively owed £10,400, a waste management company that is owed more than £20,000, an electrical contractor that is owed £10,000 and a uniform supplier that is owed £11,500. The KPMG documents also show that several prominent brands will end up out of pocket. The Hilton hotel at Tower Bridge, for example, is owed £55,000 and Belu, the bottled water company, is owed nearly £18,000.

Marugame Udon to open two new London sites on the same day next month: International udon noodles and tempura restaurant brand Marugame Udon is opening two new sites in London on the same day next month. As previously revealed by Propel, the company will open at the former Byron site in Canary Wharf and also at St Christopher’s Place on Thursday, 3 February. They will add to the brand’s debut site, which opened last summer on the former Wahaca site in Middlesex Street in Spitalfields, and its other current restaurant, at The O2. Marugame Udon, which has more than 850 restaurants in Japan and a further 250 across Asia, the US and Russia, has also secured the former Frankie & Benny’s site in Argyll Street, near Oxford Circus, for an opening later this year. Propel understands Marugame Udon wants to build an estate of company-owned sites in the capital before exploring franchise opportunities for the concept across the UK. Capdesia Group, the backer of Wasabi, and Toridoll Holdings Corporation, the backer of Shoryu Ramen and Wok to Walk, and the owner of the Marugame brand, announced last summer they had formed a new joint venture to launch Marugame Udon in London. It is working with Marc Rogers, of MKR Property, on its expansion plans.

Danny Meyer’s Union Square Hospitality Group raises $332m: US restaurateur Danny Meyer’s Union Square Hospitality Group has closed its second investment fund with $332m (£243.3m) raised. Called Enlightened Hospitality Investments II, the fund will primarily look for minority growth investments between $10m and $30m in “high-growth, category-leading companies,” particularly fine-casual restaurants and technology companies. Potential targets must also share Union Square Hospitality Group’s “Enlightened Hospitality” mindset of prioritising employees among all stakeholders to drive customer satisfaction. Meyer said: “We are inspired by the resilience of the community of businesses in Fund I that have not simply endured the unprecedented challenges of the hospitality industry but have adapted and thrived. We consider it a privilege to build on this legacy and use Fund II to provide continued strategic growth equity for businesses built on a culture of hospitality to drive stakeholder success.” The inaugural fund, Enlightened Hospitality Investments I, closed in October 2017, with $220m raised. In the course of four years, the fund made 14 investments, including Joe Coffee, Salt & Straw, Goldbelly, Dig and most recently, Tacombi, a New York-based taco chain hoping to expand from 13 to 75 locations in the next five years.

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