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Morning Briefing for pub, restaurant and food wervice operators

Tue 23rd May 2023 - Update: SSP, XP Factory and BrewDog
SSP reports full-year sales and Ebitda anticipated to be at ‘upper end of expectations’: UK-based transport hub foodservice specialist SSP Group has reported full-year sales and Ebitda are now anticipated to be “at the upper end of expectations”. The company stated: “The second half of the financial year has started well with sales strengthening further to an average of 111% of 2019 levels in the first six weeks (circa 34% above 2022 levels). This revenue performance includes the benefit from net contract gains as we accelerate the mobilisation of our significant pipeline, in addition to price increases compared with the same period in 2019. The strongest performing region is North America, where revenues are now at 124% of 2019 levels, reflecting the growth of domestic air travel and the scale of net gains in the region. In continental Europe, revenues are at 116%, driven by a strong performance across our air business and despite being held back by industrial action which mainly impacted our rail business. In the rest of the world, revenues rose to 112% as we saw further improvements in passenger numbers in Asia, most notably in India, Thailand and Australia, all led by domestic air travel. In the UK and Ireland, sales strengthened materially to 94% reflecting strong air sales over the Easter period. While we continue to face macroeconomic uncertainty, we believe that the travel food and beverage sector will remain structurally resilient to pressures on consumer spending and that our global footprint, with increasing exposure to the North American and Asia Pacific regions, will enable us to deliver sustained growth. Progress in the first half of the year has been encouraging as we have maintained revenue momentum and have actively mitigated inflationary pressures to deliver a strong conversion of sales to profitability. As we look ahead to the second half, driven by the pace of recovery of passenger numbers, we are now planning for revenue and Ebitda (underlying pre-IFRS 16) to be at the upper end of our previous expectation of £2.9bn-£3.0bn and £250-£280m respectively for the 2023 financial year. Performance in the year is expected to be particularly strong in our North America and rest of the world regions, where we typically operate with joint venture partners. The corresponding earnings per share (underlying pre-IFRS 16) for the 2023 financial year are expected to be in the range of 7.0p-7.5p. Our longer term plans include a benefit from our pipeline of secured net contract gains which is now expected to add circa £625m to annualised revenue by 2026 (compared with 2019), when fully mobilised. Based on our planned opening programme, the pipeline will contribute cumulative net contract gains of circa £200m in 2023, £350m-£400m in 2024 and £550-£600m in 2025 (compared with 2019). The additional revenues from our secured pipeline are planned to contribute incremental Ebitda, albeit the planned contribution initially will include, as normal, the impact of maturity and pre-opening costs. Furthermore, as a consequence of the strong trading trajectory, we have an increased level of confidence in the delivery of our planning assumptions for FY2024, namely revenues in the region of £3.2bn-3.4bn, with a corresponding Ebitda (underlying pre-IFRS 16) in the region of £325m-£375m.” It comes as the group reported revenue increased to £1,318.4m for the six months ending 31 March 2023 (2022: £803.2m), up 64.1% on last year and at 104% of 2019 levels, “underpinned by the continued recovery in passenger travel volumes”. Underlying Ebitda stood off £90.5m, on a pre-IFRS 16 basis (2022: £14.7m). Underlying operating profit was £34.4m, on a pre-IFRS 16 basis (2022: loss of £36.4m). Patrick Coveney, chief executive of SSP Group, said: “This has been a strong first half for SSP, and the ongoing revenue momentum across the business means that we are now expecting our performance for 2023 to be at the upper end of our previous assumptions. We are continuing to deliver against our strategic priorities. Firstly, we are increasing our focus on the higher growth markets of North America and Asia Pacific. North America is our strongest performing region with revenues in the first half at 127% of 2019 levels, and we were delighted to announce the acquisition of 40 units across seven airports in the USA from Midfield Concessions earlier this month. Secondly, the ongoing enhancement of our capabilities across our customer proposition, digital technology, people and sustainability is driving like-for-like revenue growth and helping us to win more new business. Thirdly, we are revitalising our efficiency programme to support profit conversion. As ever, I would like to thank our clients and brand partners and not least our outstanding teams around the world for their contribution to this performance. Their ability to provide compelling food propositions for both clients and customers across the world is what sets this business apart. This deeply ingrained skill set, along with the long-term structural growth trends in the travel markets that underpin our business model, means that we continue to look to the future with confidence.”

Three days to go before release of updated Premium Database of Multi-Site Companies, 21 businesses being added: A total of 21 new multi-site companies, operating 145 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday (26 May), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes regional restaurant operators, growing café brands, and expanding franchise operators. Premium subscribers will also receive a 1,300-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 2,853 companies. Premium subscribers will also receive the next edition of the New Openings Database on Friday, 2 June, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 5,000-word report on the new additions to the database. Premium subscribers also receive access to three other databases: the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; and the Who’s Who of UK Food and Beverage. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email to upgrade your subscription. Premium subscribers are also to be given exclusive access to the recording and slides to Propel Multi-Club Conferences. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

XP Factory reports ‘strong’ trading for Escape Hunt and Boom Battle bar in first quarter of 2023: XP Factory, owner of experiential concepts Boom Battle Bar and Escape Hunt, has said trading in the first quarter of 2023 has been “strong”. The group reported like-for-like sales in its Boom sites are up 44% in last year in the first quarter of 2023 with “operating metrics maturing as expected”. It said Boom franchise sites “are performing in line with board expectations”. The group added like-for-like sales in its Escape Hunt owner-operated estate are up 32%, with overall trading “ahead of board’s expectations”. The group has three Boom sites and one Escape Hunt currently in build, “with a developed pipeline underpinning site roll-out targets for the year”. It comes as XP Factory reported revenue for the year ending 31 December 2022 increased 228% (2021: £7.0m). Owner-operated revenue was up 62% to £9.8m (2021: £6.0m). In its first year if operation, Boom revenue was £9.5m while franchise revenue was £2.9m. Group adjusted Ebitda pre-IFRS was £2.6m (2021: loss of £0.6m). Group franchise Ebitda increased 75% to £0.7m (2021: £0.4m). Group operating profit stood at £1.3m (2021: loss of £0.5m). The group had £3.2m cash at year end (2021: £8.2m) and £4.0m on 30 April 2023. A total of 27 Boom sites opened by the end of 2022 – 11 owner operated and 16 franchised. It acquired Boom franchise sites in Norwich and Cardiff. The group opened four new Escape Hunt sites and relocated one other, expanding UK estate to 23 venues (2021: 19). The business secured a £3.3m credit facility with fit-out providers for new Boom owner operated sites. Richard Harpham, chief executive of Escape Hunt, said: “2022 was a transformational year for XP Factory, delivering outstanding growth and performance, and underpinning our position as a leading operator in the experiential leisure sector. The bold expansion targets we set for ourselves were met, and we ended the financial year with a platform set for significant growth ahead. The strategic decision to buy Boom has been validated and Escape Hunt has continued to perform at levels far exceeding our initial investment assumptions. Trading in the first quarter of 2023 has been strong, with the group as a whole exceeding management expectations. Escape Hunt has performed incredibly well and the Boom estate has shown strong growth and continued progression towards the operating metrics we expect at maturity. The performance in the first quarter gives us cause for optimism.”

BrewDog partners with SSP to open bars in travel hubs: Scottish brewer and retailer BrewDog has partnered with UK-based transport hub foodservice specialist SSP Group to bring the brand to various travel locations in the UK. The partnership will see SSP Group operate a number of BrewDog bars at airport and railway stations in the UK to be opened over the next few years. The first outlet is scheduled to open in December at Gatwick airport’s North terminal. BrewDog said its move into the travel sector will expand BrewDog’s reach. James Watt, BrewDog co-founder and chief executive, said: “This partnership with SSP will bring brilliant new craft beer experiences to thousands of travellers. It’s part of our own journey as a business. We want to make everyone as passionate about craft beer as we are.” Kari Daniels, chief executive of SSP UK and Ireland, said: “BrewDog is a globally renowned brand with an incredible back-story and huge potential to do well in the travel space. It’s a brilliant next step in our growth to help BrewDog build its brand in the UK travel market, and we’re confident that our shared values and combined expertise will pave the way for a successful partnership. London Gatwick, which is a truly international airport and welcomes a particularly relevant passenger demographic, is an excellent starting place for our adventure together.” Jonathan Pollard, chief commercial officer, London Gatwick, said; “We are delighted to be welcoming BrewDog’s first London airport bar later this year. BrewDog is a fantastic brand and one which I’m certain will be well received by passengers.” BrewDog’s bar footprint is expanding around the world with new bars opening in the US, India and Australia in the past few months. Earlier this year BrewDog announced a partnership with Bud China to open bars in the world’s biggest beer market.

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