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Morning Briefing for pub, restaurant and food wervice operators

Tue 25th Oct 2022 - Update: Various Eateries, Whitbread and New World Trading Company
Various Eateries reports strong revenue, significant increase in build costs: Various Eateries has reported a solid trading performance in 52 weeks ending 2 October, with sales for the year expected to be slightly ahead of market expectations at over £40m. In a year-end trading update, the company said advantageous property opportunities had to be considered in the context of significantly increased build costs. The company stated: “Prior year performance comparisons remain difficult given the extended periods of covid-related restrictions between March 2020 and January 2022. However, for the last six months of the financial year (4 Apri – 2 October 2022), a period of relatively normal trading, the like-for-like sales performance of the Coppa estate was ahead of the same period in 2019 (the last year with uninterrupted comparable trading). Given challenges such as the impact of the cost-of-living crisis on consumer sentiment, unusually hot weather, train strikes and the death of the Queen, the board believes this is a positive result. The 2022 performance of Tavolino has also been encouraging, with central London footfall increasing as workers returned to the office. Noci, our new neighbourhood specialty pasta restaurant in Islington, has performed strongly since opening in March 2022, quickly becoming a firm favourite in the local community with demand steadily increasing and excellent reviews. We are actively seeking opportunities to grow the brand’s estate and are confident it will form an important part of the group’s future. We have had considerable success in mitigating many of the well-publicised challenges affecting the industry. However, we have not been totally immune to inflationary pressures and, to date, have deliberately resisted passing on price increases to customers in full. We firmly believe that this is the right strategy for the business, at least until there is more certainty around the future trajectory of inflation. While this strategy has resulted in reduced profitability over the 52-week period compared to market expectations, we are confident that, if the inflationary pressures do not subside soon, we can restore margins via a combination of menu engineering and modest price rises, without significantly affecting our overall customer value proposition. During the period, the group opened four new venues: Coppa Club Putney, Coppa Club Haslemere, Coppa Club Bath as well as the group’s first Noci in Islington. Terms have been signed to open Coppa Club Cardiff and Coppa Club Guildford in the first half of calendar year 2023. The performance of our townhouse Coppa Club in central Bath since opening in August 2022 has been particularly encouraging, attracting city centre workers and residents through all parts of the day and night. Our Cardiff and Guildford sites will boast similar formats, and enjoy similarly healthy footfall, giving us a high degree of confidence in their prospects. There is an increasing number of high-quality sites available on increasingly advantageous terms. However, build costs have increased significantly and the economic picture remains uncertain. We will therefore continue to exercise caution in our expansion plans as we move through the new financial year, only proceeding with prospective sites that meet very strict criteria for long-term, sustainable success. We are confident of delivering further progress in the new financial year. These are uncertain times and inflationary pressures are set to continue, but management is experienced at navigating adversity, and will continue to respond to challenges as and when they emerge while moving the business and its brands steadily forwards. The diversity of our brands, site formats and locations, as well as the pricing points we operate at, put us in a strong position relative to many. Looking ahead, we will continue to be proactive in addressing rising costs, as we have by the hedging of commodity utility costs through to summer 2025, and are confident of being well-positioned when the economic situation stabilises. Notwithstanding the near-term challenges, our proposition is aligned with long-term consumer trends and demand continues to grow at a healthy rate. While we have been conservative in the rate at which we have rolled out new sites to date and will continue in a similar vein in FY23, our confidence in the future of our brands and the efficacy of our long-term growth strategy is as high as it has ever been.” Yishay Malkov, chief executive of Various Eateries, said: “The board and I are pleased with the sales outperformance in the year, particularly in the context of the well-documented challenges the industry has faced,. An uncertain reporting period impacted by first by covid and later increasingly material cost pressures, we navigated it successfully with all our sites remaining competitive and with costs under control. At the same time, we continued to deliver against our expansion strategy at a sensible pace. Looking ahead, we will continue to mitigate the effects of the inflationary environment to the best of our ability and remain confident of continuing to make good strategic and commercial progress despite it. Economic conditions will eventually improve and, with compelling and differentiated brands, a strategy designed to capitalise on a changing competitive landscape and evolving consumer tastes, a strong balance sheet and a vastly experienced management team, we believe we are plotting the right course to emerge strongly.”

Three days to go before release of updated Premium Database of Multi-Site Companies, 30 businesses being added: A total of 30 new multi-site companies, operating 190 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday (28 October), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes regional restaurant and hotel operators, growing bakery brands, and expanding franchise operators. Premium subscribers will also receive a 2,200-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. The database now features 2,704 companies. Premium subscribers will also receive the next edition of the New Openings Database on Friday, 4 November, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes an 8,000-word report on the new additions to the database. Premium subscribers also receive access to the Propel Turnover & Profits Blue Book, which is 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.

Whitbread passes pre-pandemic profit in First Half, increases UK room target to 125,000 rooms: Whitbread has reported profit before tax of £307.4m in the six months to 1 September, above pre-pandemic levels (£209m in the six months to 29 August 2019) and ahead of expectations. The company stated: “A declining independent sector is increasing our growth potential in the UK and Ireland to 125,000 rooms. In Germany, demand has recovered, we are seeing good trading momentum and are confident in reaching our long-term return on capital target of 10-14%. Premier Inn UK: continued outperformance with total accommodation sales 25.9pp ahead of the midscale and economy (‘M&E’) market in H1, driven by our scale, the strength of our brand, direct distribution model, operational excellence and our winning customer proposition. Total UK accommodation sales were 101% ahead of H1 FY22 and 35% ahead of H1 FY20. The UK value pub restaurant sector remains challenging and F&B sales continue to lag H1 FY20; we have launched a series of initiatives to return sales to pre-pandemic levels, although this is unlikely to be achieved in the current financial year. The combination of additional inflation in areas such as labour, utilities and F&B, together with brought forward investments in IT and marketing, will result in increased costs of £60m in FY23. Following a contraction of total supply in the UK and Ireland we have increased the size of our long-term target from 110,000 to 125,000 rooms.” Alison Brittain, Whitbread chief executive, said: “We remain focused on maintaining our position as the UK’s number one hotel chain and are well on the way to replicating that success in the German market. We delivered an outstanding trading performance in the first half of the year, with revenues and profit before tax above pre-pandemic levels. Our UK hotels traded well-ahead of the market, benefiting from our ‘investing to win’ commercial and operational initiatives that are continuing to drive growth. We are making good progress in Germany and remain focused on realising our full potential in this large and exciting market. I am incredibly proud of the dedication of our team members who continue to deliver a fantastic service for our guests. The strength of our balance sheet underpins our success and has given us the confidence to continue to invest, even through the periods of great uncertainty that we have seen over the past few years. Our investment in growing our estate, our customer proposition, commercial initiatives, IT systems and Force for Good sustainability programme has meant we have been able to take advantage of improved market conditions and extend our market leading position. Despite macroeconomic uncertainties, our current trading performance is strong and our business has proven its resilience in previous downturns. With a robust balance sheet and significant growth potential in both the UK and Germany, we remain confident in the full year outlook and our ability to deliver long-term value for all our stakeholders.”

New World Trading Company unveils new concept: New World Trading Company has unveiled a new bar and restaurant concept, which has been inspired by Chester, due to open in the city early next year. North Light aims to support the local community, shine a light on up-and-coming artists and champion Chester’s rich history and unique creative scene. The concept, developed by New World, which already operates 35 unique bars and restaurants across the country under eight brands including The Botanist, The Florist, The Club House, The Oast House, The Canal House, The Trading House, The Smugglers Cove and The Furnace, will replace The Florist which was expected to open in the city and will offer a more modern, distinctive, Chester-centric venue with a creative edge. At the heart of the concept, North Light will continually look to emerging regional artists to showcase their work throughout the venue, providing a platform for local talent and creating an ever-evolving look and feel for the site. North Light takes its name from the optimal light for creativity, combined with the beautiful light from its unique glass building, the rich history of Northgate and its proud northern location. Once the city’s arts centre back in the 70’s, the building’s interior design will be influenced by Chester’s unique architecture and rich history, incorporating warm colours of clay and terracotta, present in the Coachworks Arcade frontage, organic and angular finishes and an interesting use of glass, allowing natural light to stream into the venue. Natasha Waterfield, chief operating officer at North Light said: “Chester is home to a fantastic creative movement and some amazing, unique arts and leisure concepts. Our aim with North Light is to support this forward-thinking sector and deeply connect with residents, offering a new and modern space where all are welcome. Supporting the local community and the talented rising artists of the city is so important to us and we can’t wait to open our doors next year and be a part of the city’s exciting future.” North Light will occupy an 8,600 square foot space in the Coachworks Arcade element of the scheme fronting Northgate Street and the new public Exchange Square at the heart of the Northgate development.

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