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Mon 21st Nov 2022 - Update: Wendy’s to beef up UK presence, Leon, Compass Group
Wendy’s burger chain hungry to beef up its UK presence: The Wendy’s burger chain is hoping that it will be second time lucky as it prepares to go nationwide in the UK with its famous square patties, two decades after scrapping its first assault on the British market. Wendy’s previously left the UK in 2001 mainly because of high operating and property costs but since its return last summer it has opened 25 outlets and believes that it could comfortably reach 300 to 400 restaurants over the next few years. Abigail Pringle, president of Wendy’s international operations and chief development officer, told The Times lessons had been learnt and the company had taken “a fresh look at our overall international growth strategy” before deciding to return to Britain. “We felt we could compete very successfully in the UK market, particularly in relation to the competition that was there,” she said. “We felt that the customers were not being served the best-quality experience. Our brand is based on high-quality fresh ingredients like British beef in contrast to the frozen beef most of our competitors use. In the past, we did the same but we’ve made the investment this time.” Of the 25 opened so far, ten are dine-in restaurants owned and managed by Wendy’s itself and 15 are delivery-only kitchens that are franchised. “We felt we needed some skin in the game,” Pringle said. “We’ll open two more by the end of the year in Uxbridge and Kingston.” Pringle said that the company would probably end up with 20 to 25 of its own restaurants and the remainder would be franchises. It has approved six franchisees who will take on territories including Scotland and Wales. The present focus is on the north of England where, as previously revealed by Propel, its first franchise partner, Square Burgers, will open the first franchised dine-in restaurant next month in Sheffield with a focus on South Yorkshire and Lincolnshire. Meanwhile, company-owned units will open in Liverpool and Greater Manchester. Pringle said that the first drive-through outlets would open in the new year and the company was actively recruiting franchise partners to expand the brand into Ireland and Spain. She said that although the chain was not immune to inflationary headwinds they were not affecting the pace of the expansion.

Fifth UK Food and Beverage Franchisor Database released tomorrow: The fifth UK Food and Beverage Franchisor Database will be sent to Premium subscribers tomorrow (Tuesday, 22 November) at midday, featuring more than 75,000 words of content and 170 companies. It will provide insight on the offer, locations, cost and other key details of companies offering a food and beverage franchise in the UK. Among the new entries is halal burger and pizza concept Mak Halal, founded in Birmingham in 2016 and which has since grown to eight restaurants. Also featured is Canadian bakery cafe concept Cinnzeo, founded in 1987, which has grown to 18 domestic sites and 29 overseas, and is now targeting the UK market. Premium subscribers also receive access to The New Openings Database; the Propel Multi-Site Database, produced in association with Virgate; and the Turnover & Profits Blue Book, produced in association with Mapal Group. Premium subscribers are also to be given exclusive access to the recording and slides from this month's Propel Multi-Club Conference. The videos will be sent on Wednesday, 30 November, at 9am. 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 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. They 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.

Leon to more than double self-serve coffee kiosks in the UK: Natural fast food brand Leon has announced it is to more than double its self-serve coffee kiosks in the UK to over 200 before the end of January, primarily in additional convenience stores of owner EG Group and a large rollout in Asda supermarkets. It said that four additional self-serve coffee kiosks will arrive in EG sites ahead of Christmas with over 100 launching in Asda stores early next year. The business currently has 65 coffee-to-go kiosks in EG’s stores on its forecourts and 33 in Asda, and it said its rollout plans reflect the growing popularity of its organic and Fairtrade coffee and how busy consumers increasingly want it on the move. Glenn Edwards, managing director of Leon, said: “Today’s announcement marks another milestone in our expansion programme – and shows how Leon’s coffee is fast becoming a favourite with coffee drinkers across the UK. We continue to invest and innovate, with the intention to make Leon more accessible to more customers. Whether in our drive-thrus, restaurants, self-serve or through our grocery offer, we continue to make it easier for everybody to eat well, live well and be kind to the planet.” Alongside the rollout, Leon has started selling grocery coffee beans and grounds in 385 Asda stores. Leon currently has over 80 restaurants throughout the UK, as well as in the Netherlands. Combining stores and restaurants, this now gives customers over 680 locations to buy Leon coffee. EG Group completed its circa £100m acquisition of Leon in May 2021 and at the end of last year unveiled an investment plan to continue opening more restaurants, creating additional jobs over the next few years.

Economic output slumps to its lowest since first covid lockdown: Output across much of the economy has fallen to its lowest level since May 2020 as inflation weighs on demand, according to analysis by Lloyds Bank. The Times reports twelve of the fourteen key sectors across manufacturing, services and construction experienced a drop in output in October, up from nine in September and the highest number to report contraction since the first lockdown. Soaring inflation was behind the decline, forcing businesses and consumers to cut back on spending to cope with rising costs, the data collated from purchasing managers’ indices showed. The technology sector was a rare bright spot, with providers of software services reporting a rise in new orders. It was followed by the food and drink industry, which had the slowest fall in demand of any manufacturing sector. Last week alongside the autumn statement the government’s independent financial forecaster the Office for Budget Responsibility gave a bleak assessment of the economy. It said that Britain was already in recession and it predicted that growth would shrink by 1.4% next year. In 2024 it said that the economy would grow by only 1.3%, a sharp downgrade from previous expectations. Jeavon Lolay, head of economics and market insight at Lloyds Bank commercial banking, agreed that the UK economy may already be shrinking. “With both our domestic challenges and global headwinds unlikely to materially recede in the short term, the key question revolves around how long this downturn may last,” he said. “However, it is worth highlighting that there are sectors and pockets of the economy that continue to perform well.” This economic downturn is unusual because it is coupled with record low levels of unemployment. For the three months to September the rate of those out of work stood at only 3.6%. The Lloyds Bank survey detected early signs, however, that this might be about to change. It found that employment had risen at the slowest rate in 20 months and the overall manufacturing sector had recorded its first drop in headcount since December 2020.

Compass Group reports strong FY revenue growth: Compass Group, the world’s biggest catering company, has reported that its revenue grew 37.5% to £28.5bn for the year ended 30 September 2022, as it reported record net new business, which accelerated through the 12 months. New business wins increased to £2.5bn, with strong contributions from North America and Europe. In Europe, the company said that organic revenue grew by 32% to £5.9bn, with net new business growth of 5.6%, driven by double-digit new business and a 160bps improvement in retention to 95.3%. It said that encouragingly, net new business growth accelerated in the second half of 2022 driven by improving trends in the UK, France and Germany. Overall, revenue for the year was 98% of 2019 levels, and 109% in the fourth quarter, reflecting the recovery in Business & Industry and Sports & Leisure. Dominic Blakemore, group chief executive, said: “The group’s performance surpassed our expectations both in terms of net new business growth and base volume recovery, with Business & Industry now operating above its pre-pandemic revenues. The strong growth trends seen in the first half have continued, with net new business accelerating through the year in all our regions. Our clients are continuing to face operational complexities and inflationary pressures, which are driving increased outsourcing, and we are successfully capitalising on the resulting growth opportunities. North America continues to perform strongly, and we are particularly pleased with our progress in Europe, which is benefiting from an increased focus on growth and retention, supported by investments in our people, brands, and processes. Thanks to the hard work of our teams across the world, Compass has emerged from the pandemic as a stronger and more resilient business, reflecting our clear strategy and market-leading growth enablers. While the macroeconomic environment is uncertain, we are working in partnership with our clients to mitigate inflationary pressures and supporting our colleagues during this challenging period by offering financial support and other benefits. For 2023, we expect underlying operating profit growth to be above 20% on a constant-currency basis, to be delivered through organic revenue growth of around 15%, weighted towards the first half of the year, and underlying operating margin above 6.5%. Having completed the previously announced share buyback of £500m, we have announced a further share buyback of up to £250m, taking the total to £750m. Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.”

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