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Morning Briefing for pub, restaurant and food wervice operators

Wed 8th Jun 2022 - Update: City Pub Group, Fulham Shore, minimum pricing, working from home
City Pub Group – like-for-like sales have “continued to strengthen faster than predicted”: City Pub Group, which owns and operates 42 premium pubs across southern England and Wales and a further two development sites, has reported that its like-for-like sales have “continued to strengthen faster than predicted”, with May 2022 5% ahead of May 2019. The company said that last week’s trade – which included the Jubilee Bank Holiday Celebrations – was particularly strong, with like-for-like sales up in excess of 20% versus 2019. The company said: “Whilst this is clearly a one-off event, it was great to see customers coming back to our pubs in force. Each pub organised its own activities and events, enhancing the individuality of the group’s estate. Following the delays caused by the pandemic, we are delighted to have recently opened The Oyster House in Mumbles and The Tivoli in Cambridge. Initial trading is encouraging at both sites. Two high quality additions to the portfolio, we are confident that in time they will be amongst our top performing assets within the estate. We are also benefitting from investments where we have either refurbished or achieved capacity gains, such as The Hoste and The Cliftonville Hotel. In addition, our new all-day trading concept in Bury St Edmunds, Damson and Wilde, is expected to open next week. Progress is being made on our remaining development at The Nest in Bath which is anticipated to open in August.” The business said it continued to seek ways of mitigating the increased cost inflation facing the wider sector and has reviewed “our cost base with renewed vigour, with particular focus on labour scheduling to maximise sales and efficiency”. It said: “Control of energy usage and procurement remains a key focus from both environmental and cost perspectives and we continue to evaluate our menu offering to provide best value and experience for our customers, whilst delivering great food in a cost-effective way for the group. Whilst we are mindful of the many economic challenges and cost pressures which currently persist, we now have strong sales momentum across the group following three months of restriction-free trading and we are keenly focused on ways to increase sales further. An example of this is our focus on promotion of national and local events which are translating into strong forward bookings, underpinning our confidence in a good second half performance. We will also benefit from the flexibility which our low net debt position affords – both in our customer proposition (making the right decisions on price) – and our ability to act decisively and quickly on acquisitions to create value. We remain on track to meet our expectations for the year.” Clive Watson, executive chairman of The City Pub Group, said: “We continue to see our sales growth reflecting the quality of our pubs and customer offering. With a strong foundation to build on, and momentum that has been created through investment in – and opening of – our development sites, we look forward to an uninterrupted Summer’s trading for the first time in two years. Despite the macro-economic headwinds, recent openings, tight cost control and a low net debt position leave us well positioned to continue to develop our business both organically and through selective high-quality acquisitions during the rest of the year as opportunities arise.”

Next edition of Turnover & Profits Blue Book to feature almost 600 companies: The next edition of Propel’s Turnover & Profits Blue Book, which is updated monthly for Premium subscribers, will feature 589 companies. Premium subscribers will receive the latest edition of the Blue Book, which is produced in association with Mapal Group, on Friday, 17 June at midday. The Blue Book shows the effects of the pandemic, with total losses of £5.9bn being reported by 348 companies. However, a further 241 sector companies are still reporting total profits of £1.1bn. Total turnover of the 589 companies is £28.6bn. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive 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. Premium subscribers also now have access to the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. 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 are also to be given exclusive access to seven videos where sector leaders and entrepreneurs offer their insights as they develop their businesses in a post-covid world. The videos, which will be sent to subscribers on Friday (10 June) at 9am, will include Paul Campbell, sector investor and non-executive director at Hawksmoor, Vinoteca, Hickory’s, Blacklock, Tortilla and The Alchemist; Colin Hill, chief executive of Nando’s UK; James Shapland, co-founder of Coffee#1, the Caffe Nero-owned brand, and new venture Coffi Lab; Jyotin Sethi, co-founder of JKS Restaurants; Jonny Boud, founder of Kitchen Ventures and Tom Snellock, founder of Clays. The videos will also include a panel session on solving the staffing, recruitment and retention crisis hosted by Mark Stretton with James Hacon, global chief marketing officer at Mapal Group; Sol Schlagman, co-founder of Stint; Roland Horne, founder of WatchHouse; Kate Daines, chief people officer at PizzaExpress; and Brian Trollop, managing director at Dishoom. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and 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.

Fulham Shore – business continued to trade well and in line with management expectations during April and May: Fulham Shore, the Franco Manca and The Real Greek operator, has said that it continued to trade well and in line with management expectations during April and May 2022. It said: “We are now serving over 100,000 customers per week in Franco Manca and over 40,000 customers per week in The Real Greek, reflecting the popularity of the two businesses as well as their reputation for quality and value. Tourists seem to have returned to London’s West End and many cities around the UK. The small number of Franco Manca and The Real Greek restaurants that are located in areas with a high proportion of offices still have a way to go to return to pre-pandemic levels but are showing continued improvement. Industry-wide cost pressures have been mitigated by some menu inflation, successful negotiations on rent reviews and by the strong trading across the group’s restaurants located in suburban areas and shopping centres.” The group grew by ten new restaurants in the financial year ended 27 March 2022 and has opened three more since the year end: The Real Greek in Newcastle and two Franco Manca sites in Canterbury and Kingston upon Thames. Eight further Franco Manca are being fitted out throughout the UK including in Peterborough, The Trafford Centre Manchester, Hove, Didsbury, Stockbridge Edinburgh, Windsor and King Street in Central Manchester. The group confirmed it has exchanged contracts on a site in Lincoln for Franco Manca and a site for The Real Greek in Gloucester Quays. It said that overall, 11 new restaurants are on track to open in the first half of this financial year to March 2023 with two further locations already contracted. This will go some way to reach its total target of 18 sites for the whole year. The company’s net cash position before lease liabilities recognised under IFRS 16 as at 6 June 2022 was £3.6m. The group said it has undrawn bank facilities of £15.9m, providing substantial financial headroom of over £19m. The company said: “Trading has rebounded positively from the various covid-19 interruptions and new openings in both of the businesses are performing strongly. Our customer numbers continue to grow and we have an expansion programme targeting prime new locations benefitting from historically low rental levels, the likes of which have not been seen for many years.” David Page, executive chairman, said: “We are pleased to report good trading during the first two months of the current financial year. This performance continues to be underpinned by the outstanding reputations for great value and high-quality food enjoyed by both our restaurant businesses. Our new restaurant openings across the UK continue to trade very well, and we have an exciting pipeline of new sites for the remainder of the financial year. We continue to be very optimistic about the significant growth opportunities for new Franco Manca and Real Greek restaurants over the coming years.”

Minimum unit price not changing alcoholics’ habits: Drinkers who suffered the worst effects of alcoholism did not change their habits when Scotland’s minimum pricing was introduced, a study has shown. BBC News reports Public Health Scotland (PHS) reported minimum unit pricing (MUP) led to some people cutting back on food and energy. All licensed premises have had to charge at least 50p per unit of alcohol since MUP was introduced in May 2018. The Scottish government said it would review the final evaluation report from PHS before drawing conclusions. The level of alcohol MUP was initially set in 2012, with the introduction of the policy delayed until 2018 by a lengthy legal challenge in the years before its introduction. In May 2021, a study found MUP had already had a lasting impact in Scotland, and that alcohol sales had fallen by 8%. However, the latest study published by PHS found no clear evidence of a change in consumption or severity of dependence in those who suffered the worst affects of drinking alcohol. The poorest groups experienced “increased financial strain” as the price rises meant they were spending more on drinks. Some people then cut back on other expenditure, such as on food and utility bills. The study, by the University of Sheffield, the University of Newcastle (Australia) and Figure 8 Consultancy Services, looked at the “hard to reach” population of people who drank alcohol at harmful levels, including those dependent on alcohol and those accessing treatment services. In its final report on the study, PHS said researchers found there was also no clear evidence minimum pricing caused negative consequences – such as increased crime, a shift to illicit substances or acute withdrawal – among Scots drinking at harmful levels.

Three out of four Londoners vow never to return to the office full-time: Most Londoners believe they will never return to the office full-time, a major study has found, in the latest sign that covid has permanently changed working habits in the capital. The Telegraph reports three-quarters of London’s workers think they will never go back to commuting every day again, according to a study from the Policy Institute and King’s College London, with an aversion to rush-hour travelling cited as the top reason to spend more time at home. The forecast comes as Britain’s capital faces an existential challenge following changes in workers’ behaviour as few settle back into full-time office life more than two years after the first lockdown. Six in ten London staff are still working from home at least once a week, the latest research found. Former government adviser Mark Kleinman, a professor of public policy who worked on the study, said he was surprised that the 2,015 respondents showed such an “attachment” to home working “regardless of politics, age [and] seniority” as well as personality type, with little difference in answers between introverts and extroverts. Just 16% of people agree that home workers don’t work as hard as those who commute into a workplace. Most respondents (66%) also disagreed with the idea that employers should pay home workers less than those who go into the office, after staff at law firm Stephenson Harwood were last month told that those remaining at home must take a pay cut of 20%. Many bosses have already vowed to keep home-working with no loss to pay in the battle for talent. One chief executive in the legal sector, who is considering slashing office space, said he will never again tell his staff what they “must” do when it comes to going in. However, Paul Swinney, director of policy at Centre for Cities, said the world of work in five years time might look much more similar to pre-pandemic life than people currently predict. “There is a difference between what people’s expectations are and what we might see in reality,” he warned. “People are rational to say they don’t think they’ll do it ever again, but it’s hard to make that call. They don’t know what the world might look like in two years’ time.”

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