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Mon 18th Jul 2022 - Update: Tortilla, Deliveroo, Barkby Group, new business loan scheme et al
Tortilla first-half lfls up 19%, new sites performing well: Tortilla, the fast-casual Mexican restaurant group, has reported a 19% increase in like-for-like sales in the six months to 3 July 2022 compared with the same period in 2019, with group revenue up 60% to £26.9m. The company said its performance was underpinned by “growing customer demand for Tortilla's healthy and value-for-money food as well as the group's roll-out of new sites”. The group completed the strategic acquisition of Chilango on 23 May 2022 for a total consideration of £2.75m, adding eight sites to the group's estate plus one delivery kitchen. It said the integration is progressing well. During the period the company opened a further six sites: Bath, Cheshire Oaks, Bournemouth, Portsmouth, Birmingham New Street, and a delivery kitchen in Maida Vale. SSP Group also opened a Tortilla site in Bristol airport and the company commenced a franchise partnership with Compass Group with four sites trading. Tortilla said all new sites are performing well and in line with expectations since opening. These openings bring the total number of Tortilla sites to 84 (first half 2021: 58 sites), with 41% of company-run sites located outside of the M25. The group said it remains on track to deliver against the target outlined at the time of its initial public offering (IPO) to open 45 new sites over the coming years, with the eight sites acquired through the acquisition of Chilango supplementary to this. The group's net cash position as at 3 July 2022 was £3.1m, providing sufficient liquidity to effectively fund its future expansion plans. The company said: “As has been widely documented, the period saw challenging operating conditions across the restaurant sector, notably significant levels of cost inflation, which became more pronounced towards the end of the period and these macro-economic headwinds are expected to persist over the coming months. As ever, the group's full year profit performance will be weighted towards the second half of the financial year. As well as maintaining tight cost control, the group has already taken proactive and decisive steps to help mitigate against these external pressures. This includes updating pricing, driving operational efficiencies, and adopting a multi-platform delivery proposition by partnering with UberEats and Just Eat, as well as Deliveroo, to access more customers choosing to stay at home. Notwithstanding the macro-economic backdrop, the board remains highly confident that Tortilla is well positioned in the competitive landscape, underpinned by its reputation for great value, strong delivery proposition, and successful roll-out strategy.” Richard Morris, chief executive of Tortilla, said: “We are pleased to report further strong growth and strategic progress during the first half supported by our strong reputation for great value and our growing UK presence. During the period we sold more than 3.2m burritos and completed the exciting acquisition of Chilango to bolster our leadership position in the UK's fast-casual Mexican market. Chilango hold leases in several strong London locations and provide a high-quality supplementary food offer. We have continued to outperform the sector according to relevant industry benchmarks and remain confident in the Group's long-term growth prospects. Our site-roll out continues as planned in line with the target set out at IPO, with further opportunities supported by the favourable rental environment. While the macroeconomic environment remains challenging, we are working hard to mitigate cost pressures as much as we can and are mindful of the impact on the consumer of the cost-of-living crisis. However, we remain very confident that supported by our strong reputation for outstanding value, excellent delivery proposition, and growing UK presence we are well positioned for long term growth.”

Several chicken shop brands among those added to third UK Food and Beverage Franchisor Database, released on Friday: Several chicken shop brands are among the 20 new franchisors expanding in the UK and abroad featured in the third UK Food and Beverage Franchisor Database, which will be sent to Premium subscribers on Friday (22 July), at midday. The second edition will feature 140 companies and more than 58,000 words of content, providing insight on the offer, locations, cost and other key details. Among them is Dallas Chicken, which first opened in Tooting, south London, in 1996 and has since grown to 23 branches. Also featured is Mary Brown’s Chicken, a fast-growing Canadian brand with circa 200 locations across Canada, and which is currently looking to recruit experienced UK partners to expand into the British market. AJ’s Piri, launched in 2016 by FFS Brands, whose flagship chain in Southern Fried Chicken, is also featured. So too is Chunky Chicken, which was founded in Rochdale in 2005 and now has 14 UK locations and a “healthy pipeline of development enquiries”. 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.

Deliveroo first half gross transaction value up 7%, but sees slowdown in second quarter: Deliveroo has reported that its gross transaction value (GTV) was £3.56bn, an increase of 7% year-on-year in its half year. In the second quarter, its GTV growth in the UK was 4% year-on-year against a seconds-quarter 2021 comparison base that still included lockdown restrictions in many markets. This is a slowdown in GTV growth compared to the first quarter of 2022 (up 12%), which management believes reflects the impact of increased consumer headwinds during the second quarter. In the second quarter of 2022, growth in orders was 3% year-on-year, while GTV per order reduced slightly year-on-year, as basket sizes were elevated during lockdowns for part of the second quarter of 2021. By segment in the second quarter of 2022, GTV growth was 4% in UK & Ireland and 1% in International, both year-on-year in constant currency. The company said that based on the GTV development during the second quarter of 2022 and a more cautious economic outlook, it is today updating 2022 GTV guidance. It said: “Full year GTV growth is now expected to be in the range of 4%-12% (in constant currency) versus previous guidance of 15%-25% (in constant currency). The company is maintaining its adjusted Ebitda margin guidance and Deliveroo's balance sheet remains strong. Management is confident in the company's ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control. The company continues to expect 2022 adjusted Ebitda margin to be in the range of minus 1.5% to minis 1.8% as a percentage of GTV, an improvement against (2.0)% in FY 2021 and (3.2)% in the second half of 2021.”

Barkby Group to dispose of all assets apart from pub arm: Barkby Group has announced it is to disposes of all its assets apart from its premium gastropub arm. In the year to 2 July 2022, the company said that revenue across its eight-strong pub division was up 122% to £6.0m (FY2021: £2.7m) “benefitting strongly from normalised trading and pent-up demand post covid-19”, with Ebitda of £0.5m (FY2021: loss of £1.4m). During the period it added The Coach and Horses at Chiselhampton to take its pub estate to eight sites. The company said it was considering future strategy for Barkby Pub Co. The company said its board has resolved to sell and is actively marketing the following businesses and investments; Workshop Coffee, Cambridge Sleep Sciences and Centurian Automotive. It has also entered into a binding agreement for sale of the Group's stake in Verso Biosense Group for £2.6m. The company said: “In the short term the board has resolved to dispose of all the group's other businesses and investments, with the exception of Barkby Pub Co. The proceeds from these disposals will be used to invest in the real estate strategy and reduce the debt on the group's balance sheet. The disposals will also ensure that the group is clearly focused on roadside property development and is more likely to be attractive to new investors.”

Fresh loans for businesses to be unleashed as recession looms: A new £6bn business loan scheme is to be given the green light by ministers within days, providing firms more cheap debt to survive the looming downturn. The Telegraph reports Whitehall sources said a longer-term successor to the Recovery Loan Scheme (RLS) is expected to be signed off by the Treasury and the business department this week after the unveiling of the new state-backed lifelines was hampered by delays. The loan guarantee scheme, dubbed by insiders as RLS2, will be less generous than its predecessor but aims to provide up to £3bn a year over at least two years as recession fears mount. Approval of a final package will provide crucial financial help for businesses to cope with a downturn triggered by the cost of living crisis. The new loan scheme will allay businesses’ fears of policy paralysis in Westminster while the Conservative Party picks a new prime minister. The first RLS offered a 70% government guarantee for loans of up to £2m to small and medium-sized firms but ended on 30 June , leaving businesses in need of more debt support in limbo. A government source said the announcement had been held up by efforts to toughen up fraud protections following the loss of billions of pounds on covid support. Under the loan guarantee schemes, the government has pledged to swallow losses on loans made to businesses in a bid to boost lending by banks. The new scheme is designed to be longer lasting after several iterations of business loans support since the pandemic hit. Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said on a new scheme: “It must open soon and be promoted better by the banks than its predecessor which closed in June. As we head into more economic turmoil, having RLS in place could prove crucial. If lenders pull back on commercial lending as they did in 2008, RLS could be flexed up to be a lifeline." He said small businesses are reporting that available and affordable credit is “starting to dry up”.

Covid bounceback loan arrears worse than admitted: Almost a fifth of a million small businesses have fallen into arrears on their bounceback loan repayments, far more than the number officially published. The Times reports a Freedom of Information request to the British Business Bank (BBB), the state-run body administering the bounceback scheme, has flushed out a figure of 193,000 firms that have failed to meet their repayment terms as at 27 June. That is about one in eight of the 1.5 million small businesses encouraged to take part in the scheme, the centrepiece of former chancellor Rishi Sunak’s plan to help smaller firms during the depths of the pandemic when he was chancellor. It compares with the most up to date official number from BBB of 106,000 bounceback borrowers in arrears as at 30 September 2021. It said then that the “overwhelming majority of businesses” were meeting monthly repayments. It is not clear from the new numbers how much of the arrears is due to fraud and how much due to bona fide borrowers getting into difficulties and struggling to make scheduled repayments. Of those in arrears, 151,000 are behind by more than 90 days in making repayments, which is normally considered the benchmark for being in serious financial distress. They owe an outstanding £4.5bn. The new data is a fresh setback for the bounceback scheme, which has come under fire because of the scale of suspected fraudulent activity. Lord Agnew of Oulton resigned from the government in January over what he called the “cack-handed implementation and catastrophic follow-through” of the scheme by the BBB and the business department.

Business leaders’ confidence and profit expectations slide: Confidence among British business leaders has dropped to its lowest since at least 2009, but they remain more cheerful than their counterparts across the Channel. The Times reports UK firms predicted that profits would decline in the next year for the first time since the quarterly survey by Accenture, the professional services firm, and S&P Global, the analytics company, began. The survey uses the degree of optimism or pessimism with which companies responded to each question to calculate a net percentage balance, where a positive figure shows a rise in confidence and a negative figure shows a fall. A positive net balance of 28% of private sector firms forecast that their output would increase in the coming year, half the level recorded in the previous survey in February. About 1,400 British manufacturing, services and construction companies were surveyed between 13 June and 29 June. The average across the European Union was a positive 16%. British businesses expect inflation, which hit 9.1% in May, to squeeze profit margins, with profit forecasts recording a balance of minus 2%. Companies expect costs to continue to rise, but there are signs of a slowdown in wage rises and supply chain disruptions. Expectations for non-staff costs fell to their lowest level in a year. A survey of 1,300 firms by the Federation of Small Businesses (FSB) found that the rise in operating costs, the level of taxation and difficulties filling staff shortages were threatening the survival of its members. The main confidence measure in the FSB’s small business index fell to minus 24.7, down by more than 40 points from a year ago and to the worst level outside of the depths of the pandemic.

Almost Famous to close original Manchester site: Almost Famous, the hip burger joint which helped kickstart Manchester's 'dirty food' trend, is to close its original Northern Quarter restaurant. The Manchester Evening News reported its bosses have announced the High Street outpost will shut its doors for the final time on Saturday (24 July) ahead of a move to a new home. Almost Famous tweeted: “I'm like a sherbet dibdab of emotion telling this…AlmostFamousNQ is closing forever at the end of next week. The legendary hang out where it all began is moving home – thank you all for making it what it was – come say hey, party all week, last one Saturday.” The Northern Quarter restaurant first opened in 2012 in a blaze of self-generated hype. And, amid five-star reviews, a salacious social media campaign, cheeky marketing and a no reservations policy that meant punters were left queuing out of the door, it quickly became one of the city's most-hyped venues. Since then, the company has gone on to open branches in the city’s Great Northern, Leeds and Liverpool. 

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