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Morning Briefing for pub, restaurant and food wervice operators

Fri 29th Apr 2022 - Update: Merlin CEO Nick Varney to retire, Nightcap Q3 update, higher prices, empty shop numbers
Nick Varney to step down as CEO of Merlin Entertainments: Merlin Entertainments has announced that Nick Varney, its chief executive, intends to retire. Varney has a 12-month notice period during which the company said it will identify his successor and ensure an orderly handover. Merlin’s board is starting a process that will consider both strong internal candidates, as well as external talent, and it expects that a successor will have been appointed and an orderly handover will have taken place within this period. It said that Mark Fisher, chief development officer, has also decided to retire in the same time period. Merlin Entertainments was formed in 1999 following the £47m management buyout of Vardon Entertainments led by Varney, who subsequently became chief executive of the rebranded group. Since then, Varney has grown the business from 19 attractions to a global leader in location based, family entertainment, operating 140 attractions, 23 hotels and 6 holiday villages in 24 countries and across 4 continents. During this period, it grew Ebitda from £7m to £569m pre-pandemic. Roland Hernandez, chair of Merlin Entertainments, said: “I would like to thank Nick for his outstanding leadership of Merlin Entertainments over the last 23 years. He has created one of the best leisure businesses in the world through his passion, dedication, and talent. The growth has been incredible, particularly through a period of such macro change. He will leave Merlin in strong shape to continue creating and delivering memorable experiences to our millions of guests around the world. Nick and Mark will be in place and wholly focused for some time, and we are fortunate to have an exceptional team in place. On behalf of the board and shareholders, we are extremely grateful to Nick and Mark for their remarkable service to the company and wish them all the best.” Varney said: “Merlin has been my life for most of my career. I love the people, the attractions, the visitors and the industry and I am proud to have played my part as we built Merlin into an incredible business. I know that with our amazing attractions, as well as our committed and capable people, Merlin will go from strength to strength over the coming years.” Varney is set to join the board of Marston’s as a non-executive from the start of July. 

Updated Premium Database of Multi-Site Companies released today at midday, 31 businesses being added: A total of 31 new multi-site companies, operating 90 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released today (Friday, 29 April), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes growing bakery brands, regional restaurant and pub operators and a number of concepts set for UK expansion. Premium subscribers will also receive a 2,607-word report on the new additions to the database. The comprehensive database is updated monthly and 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. It features more than 2,000 companies. Premium subscribers will also receive the next edition of the New Openings Database, which is produced in association with StarStock, on Friday, 6 May, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 13,600-word report on the new additions to the database. Premium subscribers also receive the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated monthly, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers have also been given exclusive access to a new database. The UK Food and Beverage Franchisor Database is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. The first edition features 100 companies, providing insight on the offer, locations, cost and other key details. The first edition provides 27,000 words of content. 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.

Nightcap continues growth trajectory, Q3 lfl sales up 27.7%: Nightcap, the owner of The Cocktail Club, the Adventure Bar Group and the Barrio Familia group of bars, has said it continued its growth trajectory during the third quarter of its 2022 financial year, which included strong growth in the Barrio Familia business that it acquired last November. Unaudited group net sales were £9.6m for Q3 FY2022, resulting in a 52.7% net sales increase compared to the same period in 2019 and a 27.7% like-for-like increase compared to the same period in FY2019. For the 40 weeks ended 3 April 2022, unaudited group net sales were £25.2 million, resulting in a 48.6% net sales increase on the same period in 2019 and a 24.4% like-for-like increase compared to periods in FY2020 and FY2019. Nightcap said that both The Cocktail Club (TCC) in Exeter venue and Adventure Bar Group (ABG), Cardiff venue started trading just after the period end and that both have traded profitably from their first week of opening. In addition to these two new sites opening, the group has also announced the signing of four new leases – a flagship TCC site in Birmingham, another TCC site in Cardiff, a Blame Gloria site in Bristol and a Tonight Josephine site in Liverpool. The majority of these sites are expected to open and start trading before the end of June 2022. Nightcap reiterated it currently has a further 23 sites in legal negotiations or under offer across all of its brands, including its most recently acquired Barrio brand. The company said it expects for several new site leases to be entered into before the end of June 2022. The group said its balance sheet remains “solid”, with unaudited cash at bank of £7.6m as at 3 April 2022. Sarah Willingham, chief executive of Nightcap, said: “We continue to deliver on our promise to build the leading premium bar group in the UK. As seen from our Q3 revenue numbers, our run rate revenue is developing nicely. We are mid-build on several new openings, we continue to negotiate on a string of new attractive leases and we have the cash required for our incredible teams to deliver on the strategy for their individual brands. We are delighted with how Nightcap is progressing.”

Higher prices on way, warn leading bosses: Three of Britain’s biggest consumer businesses yesterday added to the gloom surrounding the prospects for inflation this year. The Times reports Simon Roberts, chief executive of J Sainsbury, said that “customers are watching every penny and every pound” as he warned that the supermarket would make lower profits. Sainbury’s is having to invest even more to keep its prices low in the face of rising costs and fierce competition from discounters, which are winning over cash-conscious shoppers. It said that it also expected food and grocery sales to fall this year as shoppers reined in their spending. Roberts said he believed that the market was in the “early days” of inflationary pressures as the impact on household budgets from higher heating bills would not be felt until the autumn, while rising food prices were only starting to trickle through as grocers battled for customers. One of Sainbury’s biggest suppliers, Unilever, the maker of Vaseline, Marmite and Cornetto, said that input cost inflation would add €4.8bn – more than expected – to its bills this year as raw ingredients, freight, energy and packaging prices soared. Alan Jope, its chief executive, called the situation unprecedented. The consumer goods group has raised prices by 5% in Europe this year and by 10% in emerging markets and bosses said that this was likely to accelerate. Whitbread, the Premier Inn hotel owner, said it expected industry-wide cost inflation to reach 8% to 9% this year, given higher utility and food costs because of the war in Ukraine. The FTSE 100 hospitality business said that it expected to raise prices and to make cost savings.

Fewer empty shops after reopening of economy: The number of empty shops in town centres and shopping malls fell again in the first three months of the year, but there are still significantly more than there were before the pandemic. The Times reports during the third lockdown early last year, 14.5% of the shops in Britain lay empty, according to data compiled by the British Retail Consortium and the Local Data Company. That figure dipped to 14.4% towards the end of 2021 and fell again to 14.1% in the first quarter of this year, according to their latest report. The closures include shops on high streets, in shopping centres and on retail parks. It is the first time since the spring of 2016 that the overall vacancy rate has fallen in consecutive quarters and is the biggest quarter-on-quarter decline since the consortium started collecting the data in 2015. However, there are still far more empty shops than there were before the coronavirus outbreak began, when the vacancy rate stood at about 12%. Helen Dickinson, chief executive of the consortium, said the improvement was because “the economy had fully reopened, with more city workers back in the office and more tourists out on the streets”. The BRC noted that there was “uncertainty ahead”, given the surging cost of living and the war in Ukraine, which have contributed to depressing consumer confidence to its lowest level since the global financial crisis in 2008. Vacancy rates at all types of retail location improved in the first quarter. Shopping centres have always had a greater proportion of empty shops than elsewhere, a trend exacerbated by the pandemic. Just over two years ago, about 14% of the retail units in Britain’s malls were unoccupied, whereas 19% of them are now. However, that is down from 19.1% in December and from 19.4% last summer. Vacancy rates on high streets fell to 14.1%, having peaked at 14.5% in the second quarter of last year. Retail parks remain the most popular destination for retailers, with an average vacancy rate of 10.6%, down from 11.5% a year ago. The biggest fall in vacancy rates came in the northeast, but at 18.8% it still has the highest proportion of boarded-up stores in the country. In London, the vacancy rate nudged up to 11.1% from 11%.

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