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Morning Briefing for pub, restaurant and food wervice operators

Fri 9th Jun 2023 - Update: Wahaca covid insurance case, Coconut Tree pay issue, Diageo CEO, Barkby Group pub estate review
Wahaca wants payout over covid-19 interruption: Wahaca has sued its insurer for allegedly failing to pay out for losses incurred when the Mexican-style restaurant chain had to shutter sites during the covid-19 pandemic, becoming the latest hospitality business to take its insurer to court. Website Law360 reports that Oaxaca Ltd, which trades as Wahaca, said in a High Court claim on 24 May, that its insurer, QIC Europe Ltd, has refused to provide cover for the losses that came after then-prime minister Boris Johnson ordered businesses to close doors in 2020. The restaurant chain said the government orders, which forced it to shut its 29 locations across the UK, warranted indemnity from the Malta-based insurer. Wahaca said each interruption or interference, which included restaurant closures and stay-at-home orders from Whitehall, to its business justified a separate claim for loss with a separate limit of £1m. “The claimant is entitled to an indemnity with a limit of £1,000,000 with an indemnity period of 18 months in respect of each prevention and/or the hindrance of the use of each of the said premises,” the claim says. But the insurer “has refused to provide the indemnity to which the claimant is entitled or engage in any discussions as to its quantum and has wrongfully rejected the claimant’s claims,” lawyers for Wahaca wrote. QIC Europe agreed to insure Wahaca between October 2019 and October 2020, the claim says. This protection included cover for interference caused by a police authority or government, among other items. Johnson then introduced measures across 2020 to deal with the evolving threat posed by covid-19. Wahaca claims that the wide-ranging regulations, which prevented the use of its restaurants, were caused by government action, and it is therefore entitled cover from QIC Europe. The restaurant chain said the failure to payout entitles it to damages from QIC Europe. Wahaca said it also wants a declaration from the court that it is not entitled to account to the insurer for any grants it received during government-sponsored schemes rolled out during the pandemic. A representative for QIC Europe declined to comment.

Latest edition of Propel’s Turnover & Profits Blue Book to be released today: The latest edition of Propel’s Turnover & Profits Blue Book will be sent to Premium subscribers today (Friday, 9 June), at midday. It now features 736 companies that are turning over a total of £46.2bn. A total of 493 companies are making a profit while 243 are making a loss. Sector companies are making a collective profit for the first time since covid. The Blue Book shows the total profit of the 736 companies in the list is £2,834,963,916 and losses are £2,774,327,505. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Premium subscribers also receive access to four other databases: the Propel Multi-Site Database, produced in association with Virgate; the New Openings Database; the Who’s Who of UK Food and Beverage; 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 £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.

The Coconut Tree restaurant staff not paid monthly wages: Staff at a restaurant chain which employs more than 200 people have not received their monthly pay. BBC News reports that The Coconut Tree, which has nine restaurants across the UK, has told employees it could not pay their wages for May, because it was struggling with the high cost of goods. In an email sent to staff and seen by the BBC, it said it had “exhausted all UK borrowing options”. A Coconut Tree spokesman said: “We apologise to staff affected by delays. These were caused by unforeseen costs to the business and the wages for the staff affected will be paid by 12 June,” they added. The Coconut Tree sells Sri Lankan food at nine restaurants in locations including Bath, Cheltenham, Bristol, Bournemouth, Reading, Birmingham, Cardiff and Reading. One employee, who wanted to remain anonymous, said he is “extremely stressed” and is owed more than £1,500. “I already have direct debits bouncing, and my rent is overdue,” he said. “We were not notified until the day after pay day and the email was very concerning. I worry I will not be paid for some time,” he added. In the email to staff, the company said it had been “accruing losses” and is working on new funding options. “Our final battle with the bank to increase the overdraft ended in vain,” staff were told.

Diageo appoints Debra Crew as CEO: Diageo has appointed Debra Crew as its chief executive and as an executive director of Diageo, effective as of 8 June 2023. Earlier this week, Diageo appointed Crew as its interim chief executive, following the news that Sir Ivan Menezes was in hospital receiving treatment for medical conditions including a stomach ulcer. It subsequently announced that Menezes had sadly passed away following a brief illness, with his family at his side, with Javier Ferrán, chairman of Diageo, calling him “undoubtedly one of the finest leaders of his generation”. Before her appointment as Diageo’s chief operating officer last October, Crew ran Diageo’s operations in North America, the company’s largest market, and has previously held positions at consumer goods groups including PepsiCo, Kraft Heinz, Nestlé and Mars.

Barkby Group completes review of pub estate: Barkby Group has announced that it has completed a review of its pubs business, focusing on measures to return its estate to profitability in the next financial year. As part of the review, it said that cash neutral early lease surrenders have been agreed for the Harcourt Arms in Stanton Harcourt and the Ebrington Arms in Ebrington. The company said it has also received an offer for the Plough at Kelmscott, which has been accepted in principal and is now in the conveyancing process. Subject to a successful sale of the Plough at Kelmscott, the company expects the residual estate to comprise “six high-quality pubs with rooms located in the Cotswolds, Oxfordshire and West Sussex”. Charles Dickson, executive chairman, said: “The hospitality sector faces a significant combination of challenges from cost inflation, the frequency and value of customer spending and securing reliable, experienced labour. Our estate has delivered robust trading by offering excellent service, consistently high-quality food and attractive accommodation in areas of outstanding natural beauty.” The company said it aims to return its pubs business to profitability in the next financial year by improving labour planning and efficiency, stock control processes and reporting systems. It also believes there are several synergies between its pubs business and its Roadside Real Estate strategy. The business said that many of its pubs enjoy prominent roadside locations and management is exploring opportunities to create new sources of revenue through the installation of ultra-fast EV charging hubs. It said: “This would enhance the facilities available to guests, draw new footfall, (and spending) and attract new customer demographics to enjoy what these unique properties have to offer.”

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