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Morning Briefing for pub, restaurant and food wervice operators

Thu 19th May 2022 - Update: Young’s managed house revenue up 17%, Soho House owner targets $1bn revenue this year
Young’s managed house revenue up 17%: Young’s has reported that its managed house revenue for the last 13 weeks, against the pre-pandemic levels of 2019, were up 17% and for the last five weeks versus a year ago up 38.5%. The company said that despite the storms, floods and tube strikes, or the unwelcome arrival of the omicron variant which hampered its Christmas trading, its total revenue for the 52 weeks to 28 March 2022 was up by 251.1% to £309m (2021: £88m), with managed house sales ahead of the two-year comparative by 2.9%. Total group adjusted operating profit from continuing operations was £51.4m (2021: adjusted operating loss from continuing operations of £33.2m), with operating profit from continuing operations of £51.7m (2021: operating loss from continuing operations of £34.5m). The company said that total managed house revenue was up by 253.7% to £307.7m (2021: £87m). During the year, it invested £73.7m, including £24.7m in its existing managed estate and £36.8m adding nine new pubs, including the acquisition of six pubs and hotels from the Lucky Onion group in February. In June last year, it completed the sale of 56 tenanted businesses for £53m to Punch. It said that its group strategy is now entirely focused on the development of well invested, premium managed pubs and hotels in the south of England. During the year its net debt has reduced by £74.9m to £173.8m and, with adjusted Ebitda of £82.5m, net debt to Ebitda is conservative at 2.1 times; Including cash balances this leaves the company with £134m of headroom on its committed bank facilities for future investment. The company said that across its tenanted business, which now just comprises three pubs, continuing business revenue was £1m (2021: £700,000) and an adjusted operating profit of £400,000 (2021: £0.0m). Due to the small nature of the continuing business, the company said this will be the final period in which it reports on the tenanted division separately. The company said: “During the period we were able to move on from measures introduced to steer us through the covid-19 pandemic. In May 2021, we began by repaying the £30m borrowed under the Bank of England’s Covid Corporate Financing Facility and then didn’t need to extend the £20m bilateral revolving credit facility with NatWest that matured in November. This marked an important step away from temporary finance support measures. The sale of most of the tenanted estate to Punch Pubs & Co for £53m was a defining moment in our strategy to focus on operating predominantly freehold, individual, differentiated and premium managed pubs and pubs with rooms. The sale left us with seven tenanted pubs, three of which we have now sold. One of the remaining pubs, the Grand Junction Arms (Harlesden) now operates as a managed pub following a major investment. This significant strategic move gave us cash to further strengthen our balance sheet and extra capacity both to invest in our existing estate and capitalise on attractive acquisition opportunities that present themselves. £30.4m on our existing business and new head office.” Patrick Dardis, chief executive of Young’s, said: “We have found ourselves navigating challenges at nearly every turn, whether it be storms, floods and tube strikes, or the unwelcome arrival of the Omicron variant which hampered our Christmas trading. I am delighted to announce a strong set of results that marks a return to normalised profitability with unrestricted trading towards the end of the year. After a quiet period on the acquisition front last year, we have made some exciting investments. The most significant of these was the acquisition of six pub and hotel assets from the Lucky Onion group in Cheltenham and the Cotswolds in February 2022. These predominantly freehold premium pubs and hotels perfectly complement our existing businesses in the area. It’s been a great start to the new financial year, for the last 13 weeks revenue was up 17.0% versus pre-pandemic levels of 2019 and up 38.5% for the last five weeks against 2021. The Easter sunshine was a real boost, with some record weeks. We are looking forward to the extended Jubilee weekend where we hope to break more records. Young’s are firmly back in business, with the firepower to deliver further growth. Having announced my intention to step down as chief executive after six years in the role, I am pleased to hand over the reins to my successor, Simon Dodd and the rest of the executive team, at the coming AGM in July. Simon was recruited three years ago with succession planning in mind, his excellent leadership skills, vision and operational experience will be great assets to Young’s.”

Multi-brand operators among those added to second UK Food and Beverage Franchisor Database, released on Friday: Two multi-brand operators are among the 20 new franchisors expanding in the UK and abroad featured in the second UK Food and Beverage Franchisor Database, which will be sent to Premium subscribers on Friday (20 May), at midday. The second edition will feature 120 companies and almost 47,000 words of content, providing insight on the offer, locations, cost and other key details. Among them is Peckwater Brands, which currently has a mix of owned and licensed brands spanning several categories, including Seoul Chikin, Flip the Bird, Wham Bam Wings, Ktsu, Nom Nyam, Cluck & Run, Locked ’n Loaded, Papi Taco, Fiesta Mexico and Rebel Rito. Also featured is Black & White Hospitality, which own the franchise rights to eight Marco Pierre White brands: Wheeler’s of St James’s, Marco Pierre White Steakhouse Bar & Grill, Koffmann and Mr White’s, Mr White’s English Chophouse, Marco’s New York Italian, Bardolino, Wheeler’s Fish & Chips and Marconi. Premium subscribers also receive access to The New Openings Database, the Propel Multi-Site Database and 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 jo.charity@propelinfo.com 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.

Soho House owner targets $1bn revenue this year: Membership Collective Group (MCG), the New York-listed company behind the Soho House chain of members’ clubs is targeting record revenues of $1bn (£810m) this year. The company, which operates 35 Soho House members clubs mostly in North America and Europe, said on Wednesday that it was targeting between $950m and $1bn in sales in 2022 as it introduced financial guidance for the first time since its listing in July last year. The group, which was floated last year, is forecasting underlying earnings of between $80m and $90m on an adjusted basis, with memberships rising by about a third to as many as 165,000. Revenues in the three months to 2 April were $192m, up 165% compared with the same period last year. The company, which has yet to turn a profit since it was founded in 1995, narrowed its net loss from $90.5m in the first quarter of 2021 to $60.5m. Founder and chief executive Nick Jones said: “We had exceptional membership growth in the quarter with 16,000 new members. The demand for members continues with the MCG wait list at an all-time high of 79,000. So naturally, we are very confident we will hit our membership target, which will be 40,000 new Soho House members by the end of the year. We saw continued growth in recurring membership revenues, up 45% versus Q1 2021. And 12% versus the prior Q4 2021. Retention remains at pre covid-19 levels. We opened two Soho Houses in the quarter and are on track to open nine this fiscal year. I got to say the new houses we’re opening; they are some of the best we’ve ever done. They really feel fantastic. Our in-house revenues saw a strong recovery, up 440% versus Q1 2021. Even April this year was 14% up on 2019 levels, which is very, very positive. We delivered adjusted Ebitda of $2.3m, which was up $25.1m versus Q1 2021. And I’m incredibly confident that our pipeline of between eight to ten Soho Houses per year is achievable. And this gets us to 85 houses by 2027.”

Time Out Group enters agreement to open in Japan: Time Out Group, the global media and hospitality business, has announced that it has entered into a management agreement with real estate developer Hankyu Hanshin Properties Corporation, to open a new Time Out Market in Osaka, Japan, its first location in the region. Time Out Market Osaka is expected to open in the Umekita Second Zone development in 2025. The Umekita Project, in the Umeda area of the city, is a large-scale development at the former cargo yard in front of Osaka Station. Once complete, it will establish an urban complex with offices, hotels, commercial facilities, a municipal park and housing. Time Out Market Osaka will showcase the city’s best food, drinks and culture, and will span over 31,000 square feet, and include 15 of Osaka’s best chefs and restaurateurs, and two bars. Under the agreement, Time Out receives a share of revenues and profits (subject to a guaranteed consultancy fee) but does not contribute to the capital cost of the site. Time Out’s primary responsibility is branding, curation and day-to-day consultancy advice on operations. Didier Souillat, co-chief executive of Time Out Market, commented: “We look forward to working with Hankyu Hanshin Properties Corporation to bring the best of Osaka’s homegrown cuisine and culture together under one roof. 2025 is set to be an exciting year in Osaka, with all eyes on the city as it hosts the next World Expo, so it is perfect timing for us to curate the very best of the city. Following a challenging two years for the retail and hospitality sector, we’re delighted that all seven Time Out Markets around the world are open, and we’re excited for Time Out Market’s pipeline of future openings, scaling this successful format globally and driving growth.”

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