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Morning Briefing for pub, restaurant and food wervice operators

Tue 12th Sep 2023 - Update: Stonegate’s dynamic pricing, al fresco smoking, Fever-Tree and Gym Group results
Stonegate charging drinkers more during peak times through ‘dynamic pricing’ system: Britain’s biggest pub chain is charging drinkers more at the busiest times with “dynamic” surcharges that make a pint of beer 20p more expensive at the weekend. Stonegate Group is upping the price of a pint when its venues are busiest to help cover the cost of washing glasses, extra staff, supplying plastic cups and putting bouncers on the door, reports The Telegraph. The chain has introduced “dynamic pricing” at some 800 sites across the country, hitting drinkers with higher prices when footfall is high. The firm, which operates over 4,500 licensed businesses, initially brought in additional charges during major sports tournaments like the FIFA World Cup in 2018 and 2022 but has since made them permanent during “peak trading”. Prices were previously increased by as much as £1 at the time, according to reports. Stonegate did not disclose how much current prices can vary, but the manager of the Coach House in central London, a Stonegate pub, said its “dynamic” pricing system meant the cost of a pint of beer was 20p more expensive on weekends. It comes as sports fans are expected to fill pubs to watch the Rugby World Cup this autumn. Photos of signs in the chain’s pubs informing customers that surge pricing is in place have been shared on social media. The “polite notice” informs drinkers “dynamic pricing is currently live in this venue during this peak trading session”. The messages read: “Any increase in our pricing today is to cover these additional requirements” and go on to list needs such as additional bar and door staff, the use of extra cleaning and plastic pint glasses and “satisfying and complying with licensing requirements”. Another photo of the dynamic pricing notice was shared on LinkedIn from a pub in Manchester. The poster wrote: “We stumbled on this bar in Manchester to watch the football. It was packed until the last kick and then emptied almost straight away, which may explain the dynamic pricing. I get the pressures on costs and pubs, but the idea of not knowing the prices for sure at any time makes it a bit of a lottery and seems a bit uncomfortable. Not great for customer relations?” A spokesman for Stonegate was unable to say when prices typically went up at the venues, saying the cost changes varied between pubs and sometimes occurred around “events”, but stressed that any increases were “marginal” and much less than £2. He said that prices fell during normal trading hours. He added: “Stonegate Group, like all retail businesses, regularly reviews pricing to manage costs but also to ensure we offer great value for money to our guests. Across the managed business our dynamic pricing encompasses the ability to offer guests a range of promotions including happy hours, two-for-one cocktails, and discounts on food and drink products at different times on different days throughout the week. This flexibility may mean that on occasions pricing may marginally increase in selective pubs and bars due to the increased cost demands on the business with additional staffing or licensing requirements such as additional door team members.”

Next Who’s Who of UK Food and Beverage to feature more than 195,000 words of content: The next Who’s Who of UK Food and Beverage will feature more than 195,000 words of content when it is released to Premium subscribers on Friday (15 September). The database now features 730 companies, and this month’s edition includes five new additions and 25 updated entries. 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 merges 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 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 Propel Turnover & Profits Blue Book; 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.

Councillors call for smoking ban in pavement seating outside pubs and restaurants: Smoking would be banned from all pavement seating outside pubs and restaurants under a crackdown demanded by a group of London councillors. They are urging ministers to make al fresco drinking and dining spaces – introduced during the pandemic and kept in place by many venues – cigarette free. In a letter to health secretary Steve Barclay and communities secretary Michael Gove, councillors representing 16 London authorities have called for a national smoke-free edict. They say current bureaucracy stops many local authorities imposing an al fresco smoking ban and made the push ahead of a Parliamentary vote on the issue. Cllr Jim Dickson, joint cabinet member for healthier communities at Lambeth Council said: “Smoking places a major burden on many of our most deprived communities and costs our city £3billion every year in lost economic productivity and health and social care costs. London councils are committed to taking action to make our city smoke-free, but we can’t do it alone. The government should seize this opportunity to introduce national smoke-free pavement seating to improve the health of Londoners and people across the country.” Lord Young of Cookham has tabled an amendment to the Levelling Up Bill that would introduce the ban. He said: “There is a clear consensus among the public that outdoor eating and drinking areas should be free from cigarette smoke. This is also much more practical for businesses and councils who want clear rules that are straightforward to communicate. A national smoke-free pavement licence condition would protect public health, particularly child health, while cutting red tape for councils.” But Simon Clark, director of the smokers’ group Forest, said: “There is absolutely no justification for the government to ban smoking outside pubs and restaurants because there is no evidence that smoking in the open air poses a significant risk to non-smokers. At stake is the ability of small businesses, including cafes, pubs and bars, to choose policies that work best for them and their customers. Government should be reducing red tape, not adding to it with arbitrary regulations that can only hurt the hospitality industry.”

Camm & Hooper adds Waterloo site to its venue collection: Imbiba-backed events and hospitality group Camm & Hooper has expanded its venue portfolio with the addition of 26 Leake Street, an 11,000 square-foot, post-industrial space located in London’s South Bank, Propel has learned. The venue features three renovated railway arches beneath Waterloo station and can accommodate up to 1,200 guests. The company said that with its “exposed brickwork and cool, eerie atmosphere, 26 Leake Street provides a blank canvas that can be transformed for a wide range of events”. The business said: “The venue’s unique aesthetic makes it the perfect setting for immersive and experiential events, such as film premier parties, brand activations, fashion shows, music events, or corporate functions.” It also said that its rapidly growing venue portfolio is a testament to the resilience of the events industry. Camm & Hooper operates venues including Tanner Warehouse in Bermondsey, the Victorian Bath House in Bishopsgate and Banking Hall in the City. Earlier this month, it entered into a partnership with Jeru Mayfair to add three new event spaces to its London-based venue collection. Camm & Hooper chief executive Derick Martin said: “We are delighted to have acquired 26 Leake Street, which joins our versatile London venue portfolio. We now have a venue to suit every occasion, from the grade II-listed Banking Hall and the award-winning Victorian Bath House to South Bank’s OXO2 and our newly launched Tanner Warehouse – all beautiful and unique in their own right. The aesthetic of the Waterloo arches provides that all-important dramatic backdrop for show-stopping events of every shape and size, with a capacity to cater for up to 1,200 guests. Whether it’s hosting film premier parties, brand activations, fashion shows, music events, or corporate functions, we are thrilled about this latest expansion to our venue portfolio. Its rapid growth is a testament to the resilience of the events industry and the great team behind the Camm & Hooper brand.”

Fever-Tree sales impacted by UK’s ‘unseasonably poor weather’ after achieving highest ever market share by value here: Fever-Tree, the premium tonic maker, said its sales have been impacted by the UK’s “unseasonably poor weather” after achieving highest ever market share by value here. In its interim results for the first half of the 2023 financial year, the business reported revenue growth of 9% year-on-year, with a standout performance in the US of +40% growth, which is now the group’s largest region by revenue contribution. It reported a strong market share performance globally, achieving its highest ever market share by value in the UK. Its UK revenue grew from £53.5m in the first half of 2022 to £53.8m in the six months to 30 June 2023, contributing to a total 9% revenue rise from £160.9m to £175.6m. Adjusted Ebitda margin dropped from 13.6% to 5.8%, “reflecting the lower gross margin and phasing of overheads, maintaining our strategy of investing for growth”. The group said it expect to drive an improvement on this in the second half of the year. It recommended an interim dividend of 5.74 pence per share, an increase of 2% year-on-year. The company said: “Fever-Tree extended its clear market leadership in the UK, with its highest ever value share and encouraging initial performance from our range of cocktail mixers and adult soft drinks. While we expect to deliver continued good growth in FY23, most notably in the US, our sales performance since period-end has been impacted by the unseasonably poor weather in the UK, which has subdued the wider category over the key summer trading period. Therefore, alongside the impact of the inventory buyback in Australia, we now expect to deliver FY23 revenue of between £380m to £390m. We are making good progress with the mitigation of inflationary cost challenges and are reiterating our gross margin guidance of 31% to 33% for FY23. We remain committed to investing in the substantial future opportunity for the brand across our regions and expect overheads to be in the range £88m to £92m resulting in FY23 EBITDA guidance range of circa £30m to £36m. Looking ahead to 2024, due to a combination of softening inflationary headwinds and the benefit of the actions we are taking this year, we are confident of delivering significant margin improvement, setting up the group for strong, profitable growth going forward. Reflecting the momentum in our key growth regions, we are comfortable with current market revenue growth rate expectations for 2024 and expect to deliver an improved FY24 EBITDA margin of circa15%, which is ahead of current market expectations. Chief executive Tim Warrilow said: “Fever-Tree delivered good revenue growth in the first half of 2023. In the UK, despite the challenging macro-economic conditions, we ended the first half with our highest ever value share of 45%, which is over 50% higher than our nearest competitor. I have been hugely encouraged by the response to our new innovation, specifically our range of cocktail mixers and adult soft drinks, as shown by the significant and growing listings across both channels. While the vagaries of the British summer weather have impacted sales since period end, contributing to our revised guidance for the full year, the group still expects to deliver good growth in the reminder of 2023. Looking ahead to 2024, with a stronger global market position than ever before, a broader product portfolio and our confidence in delivering significant margin improvement, the group is well set up for strong, profitable growth going forward.”

The Gym Group reports growth in both membership and yield in first half of 2023: The Gym Group, the operator of 230 gyms across the UK, has reported growth in both membership and yield in the first half of 2023. Revenue grew 18.5% year on year, reflecting growth in average membership of 9.3% and yield of 8.4%, while like-for-like revenue grew 6.9% year on year. Membership at 30 June 2023 was 867,000, up 9.7% year on year (Jun 2022: 790,000) and up 5.6% since the end of 2022 (Dec 2022: 821,000). Yield continued to strengthen due to both the average price of a standard “Do It” membership increasing by 5.4% to £22.02 at 30 June 2023 and “Live It” penetration growing to 30.7% of total membership (Jun 2022: 28.7%). Ebitda less normalised rent was broadly flat – up from £17m in the six months to 30 June 2022 to £17.2m in the six months to 30 June 2023, in line with guidance – with revenue growth offsetting inflationary cost increases. Revenue grew from £84.2m to £99.8m, while adjusted pre-tax loss increased from £4.7m to £5.2m. Two new gyms opened in the first half, at Edinburgh and Accrington, and a further five are anticipated in the second half, while sites opened in 2021 and 2022 are maturing in line with expectations. Visit frequency is up 9.0% year on year in the first half and the trial of a three-tier price product architecture in 64 sites is showing early encouraging results. The group’s bank facilities are secured until October 2025, with covid-related covenants removed. Trading in July and August continued in line with expectations and the group is on track to deliver its plans for the year as a whole. Chairman John Treharne said: “The Gym Group has delivered a solid first half, driving growth in both membership and yield, and remains on track for the full year.” New chief executive Will Orr added: “As well as getting to understand all aspects of the business I’m already starting work with the team to deliver the next phase of The Gym Group's development and capturing our share of the undoubted market potential.”

Interest rates ‘need to rise further to crush inflation’: Interest rates need to rise further to crush inflation, a top Bank of England policymaker has warned. Catherine Mann, a member of the Monetary Policy Committee (MPC), said the Bank needed to prove “our commitment to do what is necessary to achieve the 2% [inflation] target, sooner rather than later”. Officials have already raised rates 14 times from 0.1pc in December 2021 to 5.25pc today, but Ms Mann said more increases are needed to ensure inflation does not get stuck at high levels, reports The Telegraph. “To pause or to hold the policy rate lower for longer risks inflation becoming more deeply embedded, which would then require more tightening in total,” she said. “The longer inflation remains way above target, the more difficult it will be and the activity costs greater to ultimately get inflation to target.” It comes ahead of the Bank’s latest rate setting meeting next week, at which financial markets expect another increase to 5.5%. Ms Mann acknowledged that further rate rises risked going too far and damaging the economy but argued that this was less dangerous than doing too little and allowing inflation to keep rampaging. Speaking at an event in Canada, she said: “I would rather err on the side of over-tightening. But, if I am wrong, and inflation decelerates more quickly and activity deteriorates more significantly, I will not hesitate to cut rates.” Inflation has fallen from last year’s peak of 11.1% in October 2022 to 6.8% in July. Economists anticipate an acceleration when August’s numbers are published next week, before the downward trend resumes. Ms Mann warned that her analysis indicated the Bank of England’s main forecast “looks quite optimistic on inflation”. She said: “We need to prepare for a world where inflation is more likely to be volatile in the future, and the neutral nominal rate is likely to be higher than in the past.”

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