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Thu 12th Jan 2023 - Update: M&B sees Q1 lfls up 10.4%, Whitbread reports positive Q3 trading
M&B sees Q1 lfls up 10.4% helped by strong trading over the festive season: Mitchells & Butlers (M&B), the All Bar One, Toby Carvery and Harvester operator, has reported that continued strong trading over the festive season increased its like-for-like sales in the 15 weeks to 7 January 2023 to 10.4%, with total sales growth of 13.3%, versus the prior year. During this period, food like-for-like sales increased 6.4%, with drink sales up 15.5%. For the five weeks to 7 January, like-for-like sales were up 19%, with food sales up 15.8% and drinks sales up 23.4%. Total sales for this period, excluding VAT benefit, were up 23.9%. For the ten weeks to 3 December 2022, like-for-like sales were up 6.5%, with food sales up 1.9% and drink sales up 12.1%. Total sales for this period, excluding VAT benefit, were up 11.1%. As previously announced, the company made a strong start to the year, with like-for-like sales growth of 6.5% over the first ten weeks, primarily driven by drink sales growth. It said that, as expected, growth significantly increased in the last five weeks due principally to last year being impacted by the emergence of the Omicron variant, which resulted in a downturn in activity across much of the festive season. Compared to the same period in FY 2019, the last full financial year before covid-19, the company’s like-for like sales were up 8.9% over the first 15 weeks to 12 January 2019, with 9.2% growth in the first ten weeks followed by 8.5% growth in the last five weeks, despite key recent weeks being negatively impacted by industrial action. The company said it continued to focus on investment in its estate, “premiumising where possible as well as improving amenity”. In the year to date, it has completed 43 conversions and remodels and opened one new site, a second All Bar One at Edinburgh Airport. It said the latest triennial valuation of the pension schemes, as at 31 March 2022, has now been completed, with an improvement in the combined actuarial funding position to a marginal surplus (FY 2019: £293m combined deficit), with all future contributions to be made by the company until September 2023 being paid into blocked escrow accounts. Phil Urban, chief executive of M&B, said: “We are encouraged by a strong performance through the first quarter and delighted to have been able to welcome our guests back over the festive trading season after three years of disruption due to covid-19, setting sales records as we did so. However, we are mindful that the trading environment for the hospitality sector remains very challenging with inflationary costs putting sustained pressure both on the industry’s margins and disposable income of our guests. We remain focused on our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increased sales. Combined with our diverse portfolio of established brands, value proposition and enviable estate locations, we believe we are well positioned to meet the challenges of the year ahead.”

Next edition of Propel’s Turnover & Profits Blue Book to feature updated figures for 99 companies: The next edition of Propel’s Turnover & Profits Blue Book will feature updated figures for 99 companies. Premium subscribers will receive the next edition of the Blue Book tomorrow (Friday, 13 January), at midday. It now features 692 companies that are turning over a collective £35.4bn. The Blue Book shows 406 companies in profit and 286 reporting losses. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Propel is to add a fifth major database to its Premium service this month. The Who’s Who of UK Food and Beverage will be the first time full profiles of the UK’s top 650 food and beverage operators will be available in one place. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database has taken 16 months to pull together, merging Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. 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. Premium subscribers are also to be given exclusive access to the recording and slides to Propel Multi-Club Conferences. 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.

Whitbread reports positive Q3 trading driven by strong performance in UK, accommodation sales ahead of pre-pandemic levels: Premier Inn owner Whitbread has reported positive trading momentum in the third quarter of FY23 driven by a strong performance in the UK, with accommodation sales ahead of pre-pandemic levels. In the UK, accommodation sales were 24% ahead of the third quarter of FY22 and 37% ahead of the third quarter of FY20, driven by a combination of increased occupancy, higher average room rate and estate growth, with a strong performance across both London and the regions. Food and beverage sales were 8% ahead of the third quarter of FY22, and while it remained 4% behind the third quarter of FY20, the company has launched a series of initiatives to help increase sales. In Germany, continued growth in revenues for Premier Inn was led by its more established hotels. It now has 45 open hotels in Germany, with a further 36 in the pipeline. Strong operating cashflow continued to fund Whitbread’s ongoing investment in both the UK and Germany while maintaining a healthy balance sheet, and net cash at 1 December 2022 was £284m. The company said: “Strong trading momentum continued, with total UK accommodation sales up 25% versus FY22 and up 36% versus FY20, representing a 26.3pp outperformance of the M&E market. Given the decline in market supply and the success of our own commercial initiatives, we expect pricing to remain strong. UK F&B sales were 13% ahead of FY22 and 6% behind FY20. In Germany, our trading performance remained well ahead of both FY22 and FY20. Our more established hotels are competing well in the German midscale and economy market, and we remain comfortable with our improved FY23 guidance of a pre-tax loss between £40m -£50m. While there is no change to FY23 cost guidance, looking ahead, we expect net cost inflation on our circa £1.6bn UK cost base to be between 7% and 8% in FY24, including labour, F&B and utilities that are now 75% hedged for FY24, partially offset by lower business rates. With an encouraging forward booked position in the UK, pricing expected to remain strong, further estate growth and our ongoing efficiency programme, we remain confident in the FY24 outlook.” Chief executive Alison Brittain, who will next week hand over the reins to her replacement, Dominic Paul, added: “Premier Inn UK delivered another excellent quarter with a strong performance, both in absolute terms and also relative to the broader midscale and economy sector. The uplift in accommodation sales was driven by a strong performance across London and the regions, with both remaining significantly ahead of last year and pre-pandemic levels and with a well-balanced mix of business and leisure guests. These revenue trends have continued into the fourth quarter, with good occupancy and high average room rates sustaining strong RevPAR growth and UK food and beverage sales remain well ahead of last year. Premier Inn Germany had another robust quarter, led by our cohort of more established hotels that are performing particularly well and are attracting excellent guest scores. This performance underpins our enthusiasm about the market opportunity and our confidence in being able to achieve a long-term target of 10-14% return on capital. Despite a more challenging period for the UK economy, our winning business model continues to deliver outstanding value and quality for our guests. The strength of our forward booked position, robust pricing, estate growth and efficiency programme all underpin our confidence in the outlook for FY24. In Germany, our potential remains significant, and we are well on the way to unlocking substantial value in this large and exciting market. It has been an enormous privilege to lead Whitbread over the last seven years, and I am pleased to be handing over to incoming CEO Dominic Paul at a time when the business is performing well and when prospects for the future look bright. We have a strong balance sheet and compelling growth opportunities both in the UK and in Germany, and having worked with Dominic, I know that he will bring great energy and drive to delivering them. I wish him and all my Whitbread colleagues every success for the future.” Former Domino’s Pizza Group chief executive Paul officially joined Whitbread on Tuesday and will join the board next Tuesday, although Brittain will remain on the board as a director until 2 March to ensure a smooth transition and orderly handover.

Russian KFC franchisees seek to stop sale to local operator: A number of KFC franchisees in Russia have asked the government to stop the sale of the Yum! Brands restaurant business to the local operator, the RIA news agency has said, citing Russia’s restaurant market commissioner. Yum! Brands said in October that it had reached a deal to sell its KFC restaurants in Russia to Smart Service. According to RIA, some franchisees have asked the Russian government to suspend the sale as it could hurt the restaurant market. The deal needs a Russian government commission’s approval.
 
Striking train drivers set to reject pay rise, new offer to be tabled: Striking train drivers are to reject a £5,000 pay rise as leaked proposals reveal government plans to impose greater reliance on automation across the railways. Sector businesses saw festive trade decimated by a series of December walk-outs, and in a move that raises the spectre of further strike action, the executive committee of drivers union Aslef will next week vote against an 8% pay rise, The Telegraph reports. Train companies last week offered a 4% increase, backdated to the start of 2022, and a 4% rise in 2023. The offer was conditional on changes to working conditions, however. Under the new deal, staff will not be entitled to renegotiate pay to compensate for the introduction of “new technology or automation” where it has been introduced or has previously been in use. Other conditions include a commitment to work overtime on Sundays and handing new starters fewer days of annual leave. Although Aslef general secretary Mick Whelan stopped short of dismissing the pay deal in front of a House of Commons committee on Wednesday, industry sources said that there was “no chance” that the union’s executive will vote in favour of putting it to a ballot of members. In an interview with The Telegraph last week, he warned that strike action could go on for “months and months”. Meanwhile, a new offer will be tabled to the RMT rail union as early as today in a bid to halt their strikes, the Daily Mail reports. It is understood train bosses will make a new pay offer of at least 9% over two years to workers for 14 firms. This is up from the current 8% offer. They had looked at a 10% rise and this was considered by ministers, but officials are understood to have only approved an extra 1% increase. Rail minister Huw Merriman left open the possibility of an improved deal in a meeting with RMT boss Mick Lynch on Monday. The new offer would be for 2022 and 2023, backdated to the beginning of last year. The Rail Delivery Group (RDG), which represents the 14 train companies involved in the dispute, is scheduled to meet the RMT today and could table the new offer then.

Newcastle hotel group returns to profit as turnover passes pre-pandemic levels: Newcastle hotel group Edgeman returned to profit in the year ending 31 March 2022 as turnover passed pre-pandemic levels. It made a pre-tax profit of £2,187,149 compared to minus £1,625,902 in 2021, having made a £279,684 profit in 2020. Turnover rose by 641% from £4,653,494 in 2021 to £16,585,893 and exceeded the last full year before the pandemic, ending 31 March 2021, which was £15,743,121. It received £430,965 in government grants (2021: £1,939,813) and £2,237 in insurance claims (2021: £112,219). Occupancy rates were up from 24.8% in 2021 to 60.2%, while average occupancy rates were 54.5% compared to 11.6% in 2020. Room revenue rose by 475%. At the year-end, the group had £10,292,715 outstanding on several loans taken out between 2008 and 2017. A covid payment holiday was granted for 15 months from June 2020 and payments recommenced in September 2021. A further loan was drawn down in June 2021, of which £962,500 is outstanding and is due to be repaid by 26 March 2025. A Coronavirus Business Interruption Loan of £1.5m drawn down in February 2021 was repaid in full during the year.

Ronnie Scott’s hits the right note as revenues soar again: Legendary jazz venue Ronnie Scott’s has reported a dramatic upturn in fortunes in its accounts for the year ended 31 March 2022. The venue, which has operated in Soho, London, since 1959, and set up and managed by musicians Ronnie Scott and Pete King, saw its revenue jump to £10,459,469 compared to £1,401,793 for the year to March 2021, with a pre-tax profit of £4,478,929 (2021: loss of £212,346). The revenue figure came close to the last pre-pandemic total of £12,355,528 in the year to March 2020. The company received £277,245 in government grants, compared to £2,064,087 in 2021. An interim dividend totalling £500,000 was paid. In a statement accompanying the results, director Benjamin Bourne said: “The group has reported a significant rise in turnover and a return to profit during the year under review following the dramatic impact of covid-19 on the business in the previous financial year. The directors continue to monitor any further developments relating to covid-19. In the light of the strong return to trading in the year under review following the lifting of substantial covid-19 related restrictions in the early year, the directors are confident that 2022/23 will see a sustained level of profit on the proviso there are no further enforced lockdowns or other such onerous restrictions.”

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