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Morning Briefing for pub, restaurant and food wervice operators

Fri 8th Sep 2023 - Update: TRG chairman to step down, Hostmore CFO to leave, ‘tourist tax’
Ken Hanna to step down as chairman of TRG: The Restaurant Group (TRG), the Wagamama and Brunning & Price owner, has announced that its chairman, Ken Hanna has informed the company of his intention not to seek re-election at the group’s next AGM during 2024 “due to personal reasons”. The company said it would now initiate a comprehensive search process to identify a new chairman and will update the market as and when appropriate. Hanna will remain with TRG as chairman until his successor is appointed in “order to allow for an orderly handover”. Earlier this week, TRG’s reported strong interim results, with group revenue up 10% and adjusted Ebitda up 15%, driven by the performance of Wagamama, its pubs business and Concessions. The company also announced a moderate increase in management’s FY23 adjusted Ebitda expectations and “excellent early progress in executing its medium-term plan”. Hanna said: “It has been a privilege to work at TRG and I will be leaving the company in great shape with the business trading really strongly, outperforming the market and making good progress on its strategic options. I would like to thank the board and management team as well as our brilliant colleagues across the business for their great work and support during my time with TRG. I wish them and the group much continued success.” Andy Hornby, chief executive of TRG, said: “On behalf of the board I would like to thank Ken for his outstanding contribution to the business. He has been an exceptional chairman and a hugely valued colleague during a critically important period for TRG as we have successfully recovered from the covid pandemic and made good progress with our strategy. Ken’s leadership of the board will be greatly missed by all his colleagues at TRG and we wish him well.” It comes after Sky News reported that the exit of Hanna, a respected City figure who has chaired companies including Aggreko and Inchcape, was understood to have been motivated by a desire to enable Hornby and colleagues to focus on steering the company through a challenging economic environment. Oasis Management, a Hong Kong-based activist fund, owns nearly 15% of the restaurant operator, and has been vocal in demanding a board seat and a number of directors to step down. “Ken clearly wants to avoid a prolonged and distracting dispute with Oasis when the company’s just reported a sector-leading set of results and another [profit] upgrade,” said a person close to the company. Jason Molins, an analyst at Goodbody, described the trading statement as “another reassuring update from the group”, while Douglas Jack at Peel Hunt wrote: “Our view is that the greatest value will be realised by allowing the company more time to rebuild profitability.” On Thursday, shares in TRG closed up nearly 4% at 44.2p, giving it a market value of £334m.

Next edition of Propel’s Turnover & Profits Blue Book to be released today: The next edition of Propel’s Turnover & Profits Blue Book will be sent to Premium subscribers today (Friday, 8 September), at midday. It now features 754 companies that are turning over a total of £51.2bn. A total of 514 companies are making a profit while 240 are making a loss. The profit being made by sector companies is now outstripping losses by £1.34bn. The Blue Book shows the total profit of the 754 companies in the list is £3,471,432,286 and losses are £2,135,077,847. 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 five other databases: the Multi-Site Database, which is produced in association with Virgate; the New Openings Database; the UK Food and Beverage Franchisor Database; the Who’s Who of UK Food and Beverage; and the UK Food and Beverage Franchisee 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 being given exclusive access to the recording and slides to Propel Multi-Club Conferences. They 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.

Alan Clark to step down as Hostmore CFO: Hostmore, the parent company of TGI Fridays, has announced that Alan Clark has informed the board of his decision to resign as chief financial officer and executive director of the company to pursue other interests. He will step down from both positions immediately, but will continue as an employee of the company for six months to ensure a smooth transition for the business. Matthew Bibby, currently the company’s finance director, has been appointed interim chief financial officer. Bibby joined Hostmore in 2019 as head of finance and in 2022 became the group’s finance director. Prior to this, he was at Whitbread for fourteen years, latterly as head of finance, procurement and supply chain having held management roles within the finance department. Stephen Welker, chairman, said: “On behalf of the board, I would like to thank Alan for the contribution he has made to Hostmore in his time as chief financial officer. He leaves behind a strong team and we wish him well for the future. We are pleased that Matthew has accepted the role of Interim chief financial officer. His financial, commercial and operational experience, as well as his knowledge of our business, make him well placed to take up this position and together we look forward to delivering on the company’s key objectives.” Clark, outgoing chief financial officer, said: “I would like to thank the board and the senior management team for their support in my time as chief financial officer. I have every confidence in the future success of the business and, as a significant shareholder, I wish the team the very best for the future.”

Treasury refuses to back down on tax-free shopping: The Treasury has signalled its commitment to the “tourist tax” after backbench MPs put the case for reinstating tax-free shopping for international visitors to the government in a parliamentary debate yesterday. The Times reports that Victoria Atkins, a Treasury minister, told MPs that tourists “come to the UK to look at our beautiful architecture, to visit theatres, to visit wonderful historic locations…we do not just look at what we can do to encourage tourism in terms of tax levers”.Sir Geoffrey Clifton-Brown, the Conservative MP who led the debate in Westminster Hall, disputed the Treasury’s reliance on Office of Budget Responsibility (OBR) figures suggesting that restoring the scheme, which was scrapped in 2021, would result in only 50-80,000 extra visitors. The scheme had allowed tourists to claim back VAT on their purchases while visiting Britain. Clifton-Brown said the calculations were “based upon the wrong methodology that does not consider the major upside to the economy”, and that data from retailers showed “the OBR figure is being proved significantly wrong”. A report by Oxford Economics estimates that the move would attract more than 1.6 million extra visitors to the UK. The campaign to reverse the policy, labelled a “tourist tax” by supporters, has gained backing from more than 350 retailers and cross-party support. Sir Ed Davey, leader of the Liberal Democrats, said: “This self-defeating move has deprived our cities and town centres of millions and has put the UK at a disadvantage compared to our international competitors.” The Treasury says it will cost £2bn to restore the scheme, which does not “directly benefit” Britons.

Third man arrested in Crooked House arson investigation: A third man has been arrested by police investigating the fire which destroyed the Crooked House pub last month. The Times reports that Staffordshire police confirmed on Thursday that a 51-year-old man from Buckingham was arrested on suspicion of conspiracy to commit arson with intent or being reckless as to whether life was endangered. It came after police began an arson investigation into the fire that destroyed the 18th-century pub, known as Britain’s wonkiest, in Himley, near Dudley, on 5 August. Two other men, aged 66 and 33, were arrested on suspicion of arson with intent to endanger life on 24 August. All three suspects have been released on conditional bail. The force said: “Officers have been trawling through CCTV footage and speaking to those who have come forward with information since the fire on 5 August. We would like to thank everyone who has already come forward with important information about this investigation and those who are continuing to engage positively with officers. We understand that speculation is still widespread, both locally and online. We’d like to reiterate that we are working hard to get through an extensive list of inquiries at this time. We are still asking those people who might have information which can help us to get in touch if they haven’t already.” Andy Street, the mayor of the West Midlands, called for the pub to be “rebuilt brick by brick” in a letter to the council, and a group on Facebook campaigning for its reconstruction now has more than 18,000 members. The building was built in 1765 and was originally used as a farmhouse on Oak Farm. Following mining subsidence in the 19th century, one side of the building was about 4ft lower than the other.

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