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Morning Briefing for pub, restaurant and food wervice operators

Fri 7th Oct 2022 - Update: Wetherspoon reports like-for-like sales up 10.1% in the most recent nine weeks
Wetherspoon reports like-for-like sales up 10.1% in the most recent nine weeks: JD Wetherspoon has reported a loss of £30.4m in the 53 weeks to 31 July. Like-for-like sales were down 4.7% but have risen to plus 10.1% in the nine weeks to 2 October. Chairman Tim Martin said: “In the first nine weeks of the current financial year, to 2 October 2022, like-for-like sales increased by 10.1%, compared to the nine weeks to 3 October 2021. The company has improved its prospects in a number of ways in recent financial years – we own an increasing percentage of freehold properties; the balance sheet has been strengthened; interest rates have been fixed at low levels until 2031; we have a large contingent of long-serving pub staff and underlying sales are improving. However, as a result of the previously reported increases in labour and repair costs and the potentially adverse effects of rises in interest rates and energy costs on the economy, firm predictions are hard to make. Perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions. Those interested in the UK government response to the pandemic may like to read the reports by Professor Francois Balloux, director of the UCL Genetics Institute, in the Guardian, and by Professor Robert Dingwall, of Trent University, in the Telegraph. The conclusion of Professor Balloux, broadly echoed by Professor Dingwall, based on an analysis by the World Health Organisation of the pandemic, is that Sweden (which did not lock down), had a covid-19 fatality rate ‘of about half the UK’s’ and that ‘the worst performer, by some margin, is Peru, despite enforcing the harshest, longest lockdown’. Professor Balloux concludes that ‘the strength of mitigation measures does not seem to be a particularly strong indicator of excess deaths’. Indeed, as some commentators have noted, lockdowns were not contemplated in the UK’s laboriously compiled pre-pandemic plans. It appears that these plans were jettisoned, early on in the pandemic, in favour of copying China’s lockdown approach – an example, perhaps, of Warren Buffett’s so-called ‘institutional imperative’ – ‘everyone else has locked down, so we will, too’. The other major threat to the hospitality industry is the huge and unjustifiable tax advantage that supermarkets enjoy. The hospitality industry pays far higher levels of VAT and business rates than supermarkets. This competitive disadvantage has had an increasingly debilitating impact on the hospitality industry and will undoubtedly result in long-term financial weakness vis a vis supermarkets – which will also be harmful to employees, the Treasury and the overall economy. These caveats aside, in the absence of further lockdowns or restrictions, the company is cautiously optimistic, for the reasons we have outlined, about future prospects.” The company added: “The company is currently marketing 32 pubs, most of which are within a close radius of other pubs we own. The strategy of opening larger pubs, at a considerable distance from each other, reflects a long-term strategy, rather than a reaction to trading difficulties in the covid era, as some commentators have incorrectly said. As at 24 July 2011, the company’s freehold/ leasehold ratio was 43.4%/56.6%. As at 31 July 2022, as a result of investment in freehold reversions and freehold pub openings, the ratio was 68.8%/31.2%.”

Next edition of The New Openings Database to be sent to Premium subscribers today, 14,500-word report included: The next edition of The New Openings Database will be sent to Propel Premium subscribers today (Friday, 7 October), at midday. The database provides details about what company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location, and there is also a website link to the businesses. The database is published on a monthly basis, and the next edition features expanding restaurant and cafe operators, niche cuisine, and new experiential concepts. Premium subscribers will also receive a 14,500-word report on the new additions to the database. Premium subscribers also receive access to three other databases: the Propel Multi-Site Database, produced in association with Virgate, the Propel Turnover & Profits Blue Book, produced in association with Mapal Group, and the UK Food and Beverage Franchisor Database. 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.

Time Out Group signs deal to open in South Africa under management agreement: Time Out Group has entered into a management agreement with V&A Waterfront Holdings Ltd to open a new Time Out Market in Cape Town. The company stated: “This is Time Out Market’s sixth management agreement and its first location in Africa – a milestone for the company as it accelerates the global expansion of its successful food and cultural market. With seven Time Out Markets open and a further six signed, there are currently 13 Markets set to be open by 2025 across eight countries and four continents, with a significant pipeline of further locations in advanced discussions. Time Out Market Cape Town will be situated at the vibrant V&A Waterfront on the Atlantic shore and is expected to open towards the end of 2023. The oldest working harbour in the Southern Hemisphere, this is one of the city’s top destinations attracting over 20 million visitors per year who come here to live, dine, play, shop and work. Time Out Market Cape Town will showcase the city’s best food, drinks and culture across 27,000 sq ft. There will be a curated mix of 14 chefs and restaurateurs, four bars and one stage. With approximately 750 seats, guests will be able to sit indoors or quayside with the spectacular view of Table Mountain as a backdrop. Under a management agreement, Time Out Market 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 Market’s primary responsibility is branding, design, curation and day-to-day operational management.” Chris Ohlund, chief executive of Time Out Group said: “Bringing Time Out Market to Cape Town is an exciting step as we continue to drive the global expansion of our food and cultural market. The location at the V&A Waterfront is breath-taking alongside being one of South Africa’s most visited destinations. Time Out Market is about the best of the city and celebrating local culinary and cultural talent – both award-winning and up-and-coming. We are looking forward to bringing this to life in the wonderful city of Cape Town. We continue to receive interest from landlords around the world who want to bring Time Out Market to their city as part of a Management Agreement – the appeal of the Markets for the world’s leading real estate companies is proof of the strength of the format and the brand, and represents growth opportunities for Time Out Group.”

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