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Morning Briefing for pub, restaurant and food wervice operators

Tue 12th Apr 2022 - Update: Deliveroo, Adnams and Pret
Deliveroo reports ‘solid growth’ in first quarter with UK and Ireland orders up 20%: Deliveroo has reported ‘solid growth’ in the first quarter of 2022 with gross transaction value (GTV) up 12% year-on-year in constant currency and orders up 18% to 82.4m. The business said this was a strong performance against a first-quarter 2021 comparison base that included lockdown restrictions in many markets. Both the UK and Ireland and international segments contributed to growth, with UK and Ireland GTV up 12% and orders up 20%, to 40.7 million, and international GTV up 11% and orders up 16% to 41.7 million. At the end of the period, Deliveroo worked with more than 160,000 restaurant partner sites (fourth quarter 2021: more than 148,000) and had close to 13,000 grocery sites live (fourth quarter 2021: more than 11,000). Deliveroo has continued to expand its offering with the Deliveroo Plus collaboration with Amazon Prime expanded to France and Italy. Further sites of its Deliveroo Hop grocery service have opened with Waitrose in the UK and Carrefour in Italy while a pilot was launched with WHSmith to trial delivery from ten stores across the UK. The company maintained full-year 2022 guidance – GTV growth is expected to be in the range of 15% to 25% (in constant currency) with higher growth rate in the second half than in the first half, “given the challenging comparison base in the first half”. Adjusted Ebitda margin (as a percentage of GTV) is expected to be in the range of minus 1.5% to minus 1.8%. Will Shu, founder and chief executive, said: “Our first quarter performance was in line with the guidance we provided in March. We delivered solid growth of 12% in the first quarter of 2022, against a tough comparison base in the first quarter of 2021, when many of our markets were still experiencing lockdown restrictions. I’m delighted that we continued to strengthen our offering for consumers this quarter: we expanded existing relationships in grocery with Waitrose and Carrefour, widened our offer of 12-months free Plus subscription for Amazon Prime members to include France and Italy, and launched a new pilot with WHSmith in the UK. Consumer behaviour may moderate during the year, and this is reflected in our guidance. We remain confident in our ability to adapt financially to any further changes in the macroeconomic environment. We continue to be excited about the opportunity ahead and our ability to capitalise on it.”

Host of coffee shop concepts among franchisors in first UK Food and Beverage Franchisor Database, released on Friday: A host of coffee shop concepts expanding in the UK and abroad are among the franchisors featured in the first UK Food and Beverage Franchisor Database, which will be sent to Premium subscribers on Friday (15 April), at midday. The first edition will feature 100 companies and 27,000 words of content, providing insight on the offer, locations, cost and other key details. Among them is Northampton-based cafe operator Bewiched Coffee, which signed its first franchise partnership in March 2022 as it plans to expand its estate to up to 40 sites by the end of 2026. Also featured is Black Sheep Coffee, which received a £13m cash injection from a group of investors, including Spotify investor Tellef Thorleifsson, in 2019. Coffee-Bike, a mobile bike-based coffee shop concept from Germany which has developed into an internationally successful franchise and started to expand in the UK, is also featured. So too is EasyCoffee, which currently has 14 cafes and is rolling out vending machines offering premium coffee from £1 a cup. In addition, Soho Coffee Co, which since 1999 has since grown to circa 40 sites both in the UK and abroad, mainly in travel hubs, will be featured. Meanwhile, Sweden-based Wayne’s Coffee, which through its franchising model has more than 150 coffee houses in multiple countries in Europe and Asia, will also feature. Premium subscribers also receive access to The New Openings Database, the Propel Multi-Site Databaseand the Turnover & Profits Blue Book. 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 Propel group editor Mark Wingett.

Adnams ‘well positioned’ for 2022 as it reduces losses: Suffolk-based brewer and retailers Adnams has said the business is well positioned for 2022 as it reported turnover increased to £57.4m for the year ending 31 December 2021 (2020: £50.7m), with positive Ebitda of £2.6m. Pre-tax losses narrowed to £900,000 from £3.8m the year before. Net debt at the end of the period increased to £11m as the business paid down prior year HM Revenue & Customs commitments, restocked following closure, undertook maintenance in its pubs and government support reduced. Beer volumes were level with 2020 while no final dividend will be paid. Chairman Jonathan Adnams said: “After the early months of the year where restrictions were at their most stringent, trading months operated ahead of expectations, delivering £7m higher revenues than 2020. Strong cost control and investment in our IT systems technology, enabled the business to mitigate the financial impact of the pandemic and position us well for 2022. As we begin to move from the pandemic to coronavirus being endemic and hopefully subsiding within the population, we can look forward to things returning to some normality. The year began with the country in lockdown and the hospitality industry closed. This meant the company had to continue to operate on a footing very similar to that which it operated for much of 2020, namely: focusing on its online and off-trade business and seeking to retain cash in the business. While this situation is very uncomfortable and incurs losses, the business has become highly competent at managing itself in this situation and adapting rapidly to changing rules, regulations and restrictions. In 2020 we were closed or operating under restriction for 280 days, in 2021 that number reduced to 220 days. The company traded well and was cash generative once restrictions really began to be removed from 17 May. The business undoubtedly benefited from foreign travel restrictions and was well positioned to take advantage of more people choosing to holiday in the UK. Given the strong trading position throughout the summer and our confidence in the Adnams brand, the board decided in January 2022 to pay an interim dividend to reward shareholders who have loyally supported the company through the pandemic. As the company continues to recover from the crisis and rebuild its balance sheet, this payment should be viewed as a one-off. Whilst the company wants to return quickly to a more normal cycle of paying a final and interim dividend, it cannot yet be precise around when this might happen although the board will keep the situation under continual review. Concurrent with paying the interim dividend, the company is repaying staff who took reductions in pay during the pandemic. I am proud to say that the company is also a living wage employer, as the cost of living crises disproportionately affects those on lower pay. As we moved into 2022 we were looking forward to the future with optimism. However,, a dramatic event is unfolding in Ukraine which besides being a catalyst for a humanitarian crisis has the potential to disrupt commodity markets around the world. Once again, I was delighted to see how our customers adapted to multiple changes to government restrictions as the year progressed and people enjoyed our pubs and hotels with good cheer and a generosity of spirit towards our frontline colleagues. The loyalty and support of our customers throughout the pandemic has been vital and I would like to take this opportunity to record my heartfelt thanks to them.”

Pret sees airport business soar as travellers return: Pret’s business in London’s airport terminals soared again last week, according to the latest Bloomberg Pret Index. Pret’s transactions there, which earlier in the pandemic had been anaemic relative to other more resilient clusters in the capital, are now among the chain’s strongest as leisure and business travel resumes. Sales were up 15 percentage points week-on-week to 120% of pre-covid levels. Pret sales in London’s entertainment and shopping district fell below pre-pandemic levels for the first time since March as residents began leaving the capital before Easter. They were down five percentage points at 97% of pre-pandemic levels. Sales in London train stations fell slightly but are broadly back to normal. The index showed transactions in the cluster that includes Wall Street are still less than three-quarters of what they were before the pandemic, despite banks’ best efforts to bring workers back to their desks. Sales there have stubbornly lagged the recovery observed in London’s financial districts, where Pret’s performance has been gradually climbing back to normal in recent months. In the UK, Pret’s new strategy to deal with the upheaval has been to chase growth outside of office-centric clusters. Bloomberg said Pret may eventually choose to do the same in the US, where its business in major cities such as Philadelphia and Washington is still well below pre-covid levels.

Britons more worried about the cost of living crisis than covid: Brits are now more worried about their finances than catching covid, according to a University College London (UCL) study that points to surging inflation becoming the public’s top concern. In March, 38% of UK adults said they were worried about their finances, the highest proportion since the launch of the covid social study run by UCL in March 2020. By contrast, the proportion concerned about catching or becoming ill from coronavirus fell to 33%, down from 40% in January, reports the FT. All age groups reported increased concerns about their finances, but the figure reached almost half of those aged 30 to 59, twice the share among older people. Of this middle-aged group, only about one-third were worried about covid. Prof Daisy Fancourt, the lead author, said the results “have seen a cost of living crisis emerge”. Household finances became the primary concern for Britons ahead of the energy bills cap set by the sector regulator rising by 54% in April. Even before that, consumer inflation rose to a 30-year high in February of 6.2% and the consensus is of a further rise in the March figures that are released tomorrow (Wednesday, 13 April). Inflation could accelerate further in the second part of the year reflecting increased gas and oil prices following Russia’s invasion of Ukraine. As a result, only about half of the population felt in control of their finances in March, down from almost two-thirds last October, the UCL study of 29,000 found. Much smaller studies published fortnightly by the Office for National Statistics showed an increase in the proportion of the population cutting their non-essential spending and energy use to cope with rising living costs.

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