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Thu 10th Nov 2022 - Update: London sees lowest level of new openings in more than a decade, Young’s, Nightcap and Domino’s
Harden’s – London sees lowest level of new restaurant openings in more than a decade: London has seen the lowest level of new restaurant openings in more than a decade, according to Harden’s London Restaurants 2023. The guide now entering its 32nd year of publication and published today (Thursday, 10 November), notes that there has been no “twang back”, post-pandemic, with 136 newcomers recorded as opening in the year – the lowest level since 2011. This rate of new restaurants falls right at the bottom of the range of 134-200 noted in all but two of the last 20 years. There were 85 closures, which the guide said was not a high level, suggesting that in the year leading up to August 2022, a lack of custom was not yet a problem for the trade. Net growth (openings minus closures) was 51. The guide stated: “This is a low level by the yardstick of the last 31 years; and well out of the range of the 100-plus new openings recorded in 2014-2018, which the guide notes now feels like ‘a golden era’.” After modern British (26) openings, Italian cuisine was this year’s favourite with 18 debuts, beating Japanese cuisine, which was last year’s runner up, into third place with nine openings. This year’s most promising rising star cuisines were Middle Eastern (accounting for eight openings). Central London is where the action is in terms of location, accounting for 57 arrivals. In the suburbs, east London led the way with 25 openings, just beating south London with 23. West London had 16 openings, just exceeding north London’s 15. Editor Peter Harden said: “Many restaurants were already challenged post-covid. We saw that in reduced opening times; constant anguish in the trade about disastrous post-Brexit staffing problems; and – amidst rising prices – with consumers’ perception of value starting to dive. Yet, the trade had weathered the pandemic and was starting to attract investment again, albeit of a muted nature. How this will now play out with the increased challenge of mounting inflation remains to be seen. It is not a good sign that our data precedes the most recent spikes in prices, and yet diners in our poll were already expressing concerns related to these never-before-seen levels of expense. Travel has returned post-pandemic, and entrepreneurs continue to open exciting newcomers in the West End to capitalise on the boost provided by the return of tourism. But outside the centre, working from home may have been a boon to the existing restaurant trade, but working from home hasn’t yet inspired a rush to invest in new openings in those areas.”

Harden’s – record price rises at London restaurants mean £100 per head no longer enough for ‘top tier’ meal: Record price rises at London’s most luxurious restaurants means £100 per head is no longer enough for a “top tier” meal. The introduction to Harden’s London Restaurants 2023 notes a general rise of 8.1% in restaurant prices in the 12 months to August 2022 among the 1,675 establishments it reviews. Among the 58 restaurants charging more than £130 per head the rate of increase was 11.7%. The general rate of increase was a record in the last decade and the highest in the 20 years since 2000 when the guide started calculating price rise data; with the exception of a blip after the recovery from the great crash – when a rate of 11% was briefly registered in 2011. Fast-rising prices have necessitated lifting the top price category published in the guide to £130 per head, with £100 per head now reserved for the second tier. Editor Peter Harden said: “It was the post-Brexit, 2017 edition in which we first introduced a £100-plus top price band at the front of the book. At that time, there were 37 such entries, of which just one had a formula price more than £150 per head. Fast forward five years, and £100-plus is – in this edition – for the first time the delimiter merely of our second highest price category. Our highest band is now set at £130-plus. Now, there are 154 entries in the guide above the £100 level. And in a neat symmetry with the figures above, there are 37 restaurants with a formula price more than £150 per head. In fact, there are 17 entries now more than £200 per head and six above £250! It feels like everything is speeding up. That’s because it is.” Core by Clare Smyth again topped the poll for where most diners had their best gastronomic experience of the year. The highest average food rating went to Evelyn’s Table among restaurants charging more than £130 per head. The guide notes chef-patrons, the Selby brothers’, “very snug little basement venue for counter-top fine dining shows levels of skill and technique to compete with much better-known places that leave you with a far higher bill” and advise “file this under ‘one to watch’ as they plan to build out the ambition even further”. Theatreland seafood veteran, J Sheekey, was the poll’s most-mentioned restaurant while Bruce Poole’s neighbourhood star Chez Bruce in Wandsworth topped nominations as diners’ favourite for the 17th year in a row. Despite worries about Jeremy King’s departure, The Wolseley remained diners’ top choice for a business meal or breakfast and Covent Garden’s Clos Maggiore was again first choice for an important date. The Harwood Arms topped the category for best bar and pub. The Oxo Tower was again the restaurant registering the most disappointments, while the River Café yet again was voted the capital’s most overpriced establishment, with the guide noting that “no one can doubt the quality of the food, even so the gobsmacking prices are hard to justify”.

Next edition of Propel’s Turnover & Profits Blue Book to feature updated accounts for 74 companies, another 18 businesses added: The next edition of Propel’s Turnover & Profits Blue Book, produced in association with Mapal Group, will feature updated accounts for 74 companies. Premium subscribers will receive the latest edition of the Blue Book tomorrow (Friday, 11 November), at midday. Another 18 companies have been added, taking the total to 656. They are turning over a collective £33.6bn. The Blue Book shows 354 sector companies reporting total profits of £2.1bn while total losses of £4.0bn are being reported by 302 companies. 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 access to three other databases: the Propel Multi-Site Database, produced in association with Virgate; the New Openings Database; 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 jo.charity@propelinfo.com to upgrade your subscription. Subscribers also receive access to Propel’s library of 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.

Young’s reports like-for-like revenue in last 13 weeks up 5.5% on pre-pandemic levels, London ‘bouncing back’: London pub operator Young’s has reported managed house revenue for the last 13 weeks was ahead of last year by 6.6%; on a like-for-like basis up 2.0% on last year and ahead of 2019 comparatives by 5.5%. The company reported its pubs in central London and the City were bouncing back with like-for-like sales in the last 13 weeks up against last year by 22.0% and 11.1% respectively. The company stated: “We are looking to the rest of the year with positivity. London continues to return to more normal levels of trade. Christmas bookings are looking strong, and we are excited by the prospect of our first full trading Christmas for three years on the back of the football World Cup, which begins in November. Our enhanced outdoor spaces, with comfortable heated areas, positions us perfectly for a prosperous Christmas and new year. However, during these uncertain times, we remain mindful of the potential impact that macroeconomic factors may have on consumer sentiment. We are also conscious of the impact further rail strikes could have on trade in the build-up to the festive period, an important time of year for the hospitality sector. We are hopeful that a suitable resolution for both sides can be reached in a timely manner. The steps we took last year to protect our business by forward purchasing our energy through to the end of March 2024 has limited the impact from utility cost increases.” It comes as the business reported total revenue for the 26 weeks ended 26 September 2022 was up 24.7% to £186.5m (2021: £149.6m). Adjusted Ebitda increased 5.4% to £45m (2021: £42.7m). Pre-tax profit was up 7.7% to £23.9m (2021: £22.2m). Like-for-like revenue was ahead of same period in 2019 by 6.2%, and up by 20.4% against last year. It reported its healthy cash generation reduced the year-end net debt by £5.7m to £168.1m. The company announced an interim dividend of 10.26p per share, an increase of 20.0% (1.71p) against the last interim dividend. The company stated: “We have continued to invest the proceeds from the sale of our tenanted businesses last year, with total capital investment of £28.7m in the period, including the addition of four freehold acquisitions. Three of these acquisitions, the Bedford Arms Hotel (Rickmansworth), Merlin's Cave (Chalfont St Giles) and the Half Moon (Windlesham) have created the opportunity to introduce Young's to new trading regions. In September we purchased our fourth pub, when we exercised our option to acquire the Wild Duck (Ewen) from the Lucky Onion Group, in addition to the six businesses we purchased from them in February, further strengthening our established position in the Cotswolds. Drink sales were the main beneficiary from the softer comparatives in the early months of last year, with total drink sales up 30.5%, or 28.0% on a like-for-like basis. Food sales in the period were set against some strong prior year comparatives that were boosted by last year's VAT benefit. Despite this, our food sales were up 7.0% in total, equating to 1.5% on a like-for-like basis, and up by 8.8% compared to 2019. Our focus on fresh, seasonal and locally sourced British ingredients with dynamic menus tailored to the individual pub, underscored by our core classics, continues to pay dividends. Over the course of the last 18 months, we have added a further 132 bedrooms to our estate, ending the period with a total room stock of 820. This recent investment coincided with a timely increase in hotel demand during the period, with strong occupancies and average room rates enjoyed across all geographies. The trend for holidaying in the UK remained positive, alongside a pickup in foreign travel towards the end of the period. Despite no longer benefitting from the reduced VAT rates of last year, total hotel sales were up 109.1% with like-for-like sales up by 72.7%. revpar was up to £77.11 compared with £59.48 last year. Despite the impact of rail strikes and extra bank holidays, central London and City areas continued to bounce back with returning workers and tourists, with sales returning to 2019 levels and growing by 81.4% and 46.5% respectively on the comparative period last year. Our more food orientated pubs and hotels in the Home Counties and West Country have understandably seen sales drop back compared to last period, a reflection of last year's lower VAT rates, but in a testament to how far these businesses have moved forward, like-for-like sales were 7.4% and 12.2% ahead of 2019 respectively.” Chief executive Simon Dodd said: “I am very pleased with the performance of the business and the hard work of our teams in the first half of the year. This has been the first time in three years we have been able to report on a period without any covid related trading restrictions, with the business returning to normality. Recent trading has been robust despite all the economic uncertainty, and we continue to see our pubs in Central London and the City bounce back as workers and tourists return, like-for-like sales since the end of the period were up against last year by 22.0% and 11.1% respectively. We have continued to reinvest the funds generated by the sale last year of our tenanted estate, with the welcome addition of four fantastic freehold pubs combined with the two recent acquisitions, the Carpenters Arms (Tonbridge) and the Griffin Inn (Fletching), both wonderful freehold pubs with rooms. Bookings are already strong for our first full trading Christmas in three years, which follows closely after the football World Cup. Although we are conscious of the current macroeconomic conditions, we have fixed contracts for both drinks and utilities, and, whilst not immune to the external cost pressures across our supply chain, we are taking steps to mitigate as far as possible. Our strategy of operating premium, individual and well-invested managed pubs is unchanged, and we are confident that it will continue to deliver superior returns for our shareholders.”

Nightcap – recent trading impacted, to slow down expansion plans: Nightcap – the owner of The Cocktail Club, the Adventure Bar Group and the Barrio Familia group of bars – has said that trading in the first 13 weeks of its new financial year has been adversely impacted by record warm weather, train strikes and the cost of living crisis. It said that with the uncertainty in the economic climate in mind, it will slow down its expansion plans of new site openings during its current financial year and focus on maximising returns from its existing and newly opened sites and then continue its roll out programme as market conditions improve. The company said: “Trading in the first 13 weeks of the new financial year (period to 2 October 2022) has been adversely impacted by record warm weather, train strikes and the cost of living crisis. Warm weather over the summer (which reduced the demand for socialising in basement bars) was offset by record weeks at our outdoor venues, Bar Elba and Luna Springs, as customers enjoyed our large outdoor spaces. Unaudited group revenue was £10.3m for the 13-weeks ended 2 October 2022 (first quarter FY2023) resulting in a 35.5% increase compared to group revenue of £7.6m for the equivalent period in FY2022. Revenue for this 13-week period represents a 15% like-for-like decrease compared with the equivalent period for FY2021 and a 10.8% like-for-like increase compared with the equivalent period in FY2019. While trading in October 2022 has continued on the same trend as the first quarter of FY2023, we are greatly encouraged by trading at our new sites, with several of these performing better than expected. The board rightly remains cautious about the future due to the challenges presented by continuing train strikes, ongoing inflationary pressures, recent interest rate rises and the cost of living crisis. However, corporate bookings over the Christmas period for all our brands are at record levels, giving us encouragement for the important Christmas trading period. Since the beginning of the new financial year, Nightcap has seen a flurry of activity, with several of the sites planned and announced in the last financial year all successfully open and trading on time. This takes the group to 36 opened bars, in line with management's expectations. A lot of the recent openings are significantly larger than the group's historic sites, thus further increasing their revenue potential. In addition, many of these new sites are in enviable prime city centre locations with excellent trading potential and on attractive terms and incentives from landlords who are keen to work with us. We have opened multiple bar brands in Bristol and Cardiff, which are all trading very well alongside each other and we are excited to roll-out this model across the UK.” For the 53 weeks to 3 July 2022, the group’s revenue stood at £35.943m (2021:£5.969m), with adjusted Ebitda of £6.036m (2021: £958,000), and a pre-tax profit of £238,000 (2021: a loss of £5.296m). The company said: “We started the year with a net cash position of £8.5m (excluding IFRS 16 leases liabilities) which includes cash of £13.2m. The majority of this cash was earmarked for capital expenditure as we continued our roll out programme. With seven new sites opened, four sites refurbished and the additional five sites from the acquisition of Barrio Familia Group, along with further sites in various stages of fit-out, we ended the year with a net debt position of £0.2m (excluding IFRS 16 leases), which includes £5.4m of cash. As we embarked on our company and new site acquisition programme last year, we planned to consolidate our debt facilities with the right banking partner when the time was right.” Post year end, the company completed a refinancing with HSBC Bank increasing its debt facilities from £5.5m at year end to £10m, with the additional £4.5m earmarked to support its site expansion plans. It said the current financial position, alongside the cash generation from operations, puts Nightcap in a solid financial position as its continues to “deliver on our promise to create the leading bar group in the UK over the coming years”. Sarah Willingham, chief executive of Nightcap, said: “I am extremely proud to present these excellent audited results for the 53 weeks to 3 July 2022, representing Nightcap's first full year of trading. Our year has been eventful, fun and, at all times, rewarding. During the year the number of bars we operated increased from 19 to 31 and this reflects our strong growth, driven by both new openings and acquisitions. Going from £6m to £36m of revenue and £0.2m to £3.3m of Adjusted Ebitda is impressive growth, but what excites me the most is that we have defined our brands and fine-tuned their business models to optimise the roll out of the individual brands. We have opened several more sites post year end taking the total amount of opened bars to 36 and, whilst there are a growing number of outstanding sites available to us on increasingly advantageous terms, build costs have continued to increase and trading in the first 13 weeks of the new financial year (period to 2 October 2022) has been adversely impacted by record warm weather, train strikes and the cost of living crisis. With the uncertainty in the economic climate in mind, we will slow down our expansion plans of new site openings during the current financial year. Our focus will be to maximise returns from our existing and newly opened sites and then continue our roll out programme as market conditions improve.”

Domino’s reports like-for-like sales up 2.4% in third quarter, to roll out on Just Eat nationally and exercises option to sell German investment: Domino’s Pizza UK has reported a strong performance in its third quarter, with system sales of £344.7m, up 19.6% compared with the same period in 2019 and like-for-like sales excluding splits and the change in the VAT rate up 2.4% on last year. The company said it continued to gain UK takeaway market share, which rose to 7.2% in the third quarter of 2022 from 6.4% last year. Total orders in the year-to-date are up 0.7%, though third-quarter total orders were down 1.9% “due to a tough comparator”. Delivery was down 12.7% in the period “driven by a tough comparator”. Collections were up 28.1%, “reflecting strategic focus on this channel, 5.1 percentage points above 2019 levels”. FY22 Ebitda is expected to be in the range of £125m-£135m, in line with current market expectations. Domino’s said it has had a strong start to the fourth quarter, with like-for-like system sales (excluding splits and the change in the VAT rate) up10.4% in the first six weeks and total orders up 2.6%. The company stated: “Domino's is to be rolled out on Just Eat nationally following a very successful trial. In May 2022 we started a trial with Just Eat in 136 stores to assess whether we can reach an incremental customer base while delivering a similar contribution for our business. Early results were encouraging so the trial was extended to nearly one third of the store estate. Following continued success of the extended trial, which has delivered incremental orders and customers, we have now taken the decision to fully roll out on the Just Eat platform in the UK and Ireland and have recently accelerated the roll-out. As at 10 November 2022 1,061 stores are now live, and we expect the roll out to be complete by the end of FY22. A total of 21 new stores have opened this year, and a further circa 70 stores are to be opened by the end of FY23. Franchise partner appetite to open new stores remains strong and we are building a good pipeline following the growth investment framework we agreed with our franchise partners. As a result of strong recent momentum and confidence in the future, a new £20m share buyback programme will take place, effective immediately, in line with our capital allocation framework and commitment to distribute surplus capital to shareholders. We exercised our put option over our German associate investment. We had a put option exercisable from 1 January 2021 to 31 December 2023 and the majority shareholders, Domino's Pizza Enterprises, had a call option exercisable from 1 January 2023. We believe that exercising our put option and disposing of our interest in the associate will yield total cash receipts of £80m-£90m and will generate profit on disposal of between £40m-£50m. We expect to receive the cash proceeds in the first half of 2023 and will flow the profits through our capital allocation framework. From the date of the put option exercise, the share of profits from our German associate will no longer be recorded by the group.” Elias Diaz Sese, interim chief executive, said: “We continued to take market share and grew underlying sales in the quarter, despite the tough comparator. I'm pleased that we have made a strong start to our important final quarter. This has been driven by a focus on service by our franchise partners, our focus on digital, strong national value campaigns, collections growth and the initial benefit of being on the Just Eat platform. We're looking forward to our busiest weeks of the year with the men's football World Cup and the festive season to come. I am delighted to announce two important strategic milestones for our business. First, we have decided to roll out Domino's on Just Eat across the UK and Ireland following a very successful trial which delivered incremental customers and orders. I'd like to thank our franchise partners for all their hard work to make this a success. Secondly, we have exercised our option to sell our investment in Germany, which will allow us to be solely focused on accelerating our strategy in the UK and Ireland and delivering further cash returns to shareholders. Having been on the board for the past three years, and as a shareholder, I am very confident the current strategy is the right one and I am committed to execute it at pace. I've spent my first month travelling and meeting with our franchise partners, suppliers and colleagues, and I'd like to thank Dominic Paul and David Surdeau for their support during the handover, and for their tremendous contribution to Domino's during their time with us. As we look ahead to next year, we are well placed to succeed, with our franchise partners' focus on service, alongside enhancing our digital capabilities, offering our customers strong national value campaigns, and growing our collection business. Combined with the benefit of recent new store openings and the Just Eat platform roll-out, further product innovation and continued alignment with our franchise partners, we remain confident that our resilient, asset-light business model will deliver market share gains, further financial and strategic progress, and increased returns for our shareholders.”

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