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Morning Briefing for pub, restaurant and food wervice operators

Wed 27th Sep 2023 - Update: Shepherd Neame, Tasty, Everyman, XP Factory results
Shepherd Neame says recent trade ‘encouraging’ as it reports record full-year revenue: Kent brewer and retailer Shepherd Neame has said recent trade has been “encouraging” as the business reported record full-year revenue, but added significant inflationary pressure has increased costs across the business. For the 13 weeks to 23 September 2023, retail like-for-like sales (72 pubs) were up 5.6% on last year. Like-for-like tenanted pub income (217 pubs) for the nine weeks to 26 August 2023 was up 3.0% on last year. Total beer volume for the 13 weeks to 23 September 2023 was down 10.3% versus 2022. Own beer volume was down 15.9% versus 2022. The company stated: “The hospitality sector has faced an unprecedented series of crises in the last three years. We still have known cost increases to absorb, but the dust is settling, the outlook is more positive and the fundamentals of the business are good. Consumer spending has remained resilient all year, better than many had expected, and better than many other parts of the retail and consumer economy. People are prioritising going out over other types of expenditure. Pubs are generally performing better than restaurants. Premium and neighbourhood pubs are performing well. We have an excellent pub estate with considerable potential, a loyal customer base, and a high profile within the individual communities we serve. Shepherd Neame pubs have been performing in line with the best in the sector. All of which gives us confidence even if we go into a new phase of pressure on household budgets, as mortgage rates increase. We do face considerable inflationary and market challenges within our Brewing and Brands business, but, notwithstanding the inflationary pressures, we have a strong core of loyal and happy customers. After the wonderful June 2023 weather, wet, cool and windy conditions returned in July and August. This period compares with the record-breaking sunshine and heat in July 2022. Inevitably trade at our coastal sites has suffered somewhat, but was boosted by warm weather in early September. Nonetheless, trade has remained encouraging in our pubs, albeit the beer market remains challenging.” It comes as the business reported revenue increased 9.7% to a record £166.3m for the 52 weeks ending 24 June 2023 (2022: £151.5m). Underlying profit before tax was up 3.8% to £7.6m (2022: £7.3m). Retail like-for-like sales were up 12.9% on last year. Retail like-for-like sales inside the M25 were up 30.6%, driven largely by increased momentum in the return to offices. Outside the M25 like-for-like sales were up 6.6% versus last year. Food like-for-like sales were up 3.1% versus last year, drink like-for-like sales increased 22.4% and accommodation like-for-like sales (248 rooms) were down 4.2%. Like-for-like tenanted pub income was up 3.9% on last year. During the period the business transferred six tenanted pubs to retail, and two to investment property. It sold eight properties, including six pubs and two investment properties (six freehold disposals and two leases surrendered) and acquired four pubs (three freehold pubs and one leasehold). These disposals have realised net proceeds of £2.3m (2022: £9.1m). The business invested £17.2m in total, including £6.7m in new site acquisitions, including fees, and £10.5m in brewery and pub investments, of which the major projects have been £1.4m at the Crown at Chislehurst and a further £0.5m for partial completion of works at the Duke of Cumberland in Whitstable. Chief executive Jonathan Neame said: “Demand has been strong all year with recent trade in our pubs encouraging. We have a loyal customer base, a high profile within the communities we serve, and we have an ambitious investment programme ahead. The turmoil of the last few years is now settling and the outlook is positive. We have much to look forward to. The balance sheet remains strong and the business has momentum in our pipeline of investment. We are confident we have the team and skills to deliver good returns for our shareholders over the long term.”

Premium subscribers to receive two databases and access to videos from Propel Multi-Club Conference and summer party this week: Propel Premium subscribers are to receive two databases this week. The updated Propel Multi-Site Database, which is produced in association with Virgate, will be released on Friday (29 September), at midday. It will include 56 new multi-site companies, taking the number of companies featured to 2,983. Before that, the updated UK Food and Beverage Franchisor Database will be sent to Premium subscribers at midday today (Wednesday, 27 September). Ten new companies have been added, while five that are no longer franchising or trading have been removed, taking the total to 215 businesses featured. Premium subscribers are also to receive access to all the videos from this month’s Propel Multi-Club Conference and summer party. They will be sent 12 videos on Friday at 9am. Premium subscribers also receive access to four other databases: the New Openings Database; the Propel Turnover & Profits Blue Book; the Who’s Who of UK Food & 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 jo.charity@propelinfo.com to upgrade your subscription. 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.

Tasty sees summer trading ‘exceed expectations’ but remains cautious as losses increase: Wildwood operator Tasty has reported trading this summer has “exceeded expectations” but the business remains cautious in its approach. Revenue increased 0.9% to £21.7m for the 26 weeks to 25 June 2023 (2022: £21.5m). Adjusted Ebitda for the period was £1.1m (2022: £2.7m). Operating loss before highlighted items was £1.0m (2022: profit of £0.4m). Pre-tax losses were up to £6.2m from £2.6m the year before. The company said it has reviewed the impairment provision across the right-of-use-assets and fixed assets and made a net provision of £4.0m allowing for a number of poorly performing sites (2022: £1.6m). After taking into account of all non-trade adjustments, the group reported a loss after tax for the period of £6.2m (2022: loss of £2.7m). The company stated: “The first quarter performed ahead of the board’s expectations, however, the second quarter slowed and was flat against 2022. Delivery sales continue to decline as expected, in line with the market as customer habits swing back to dine-in. The main reasons for the reduction in Ebitda are due to covid related support falling away in terms of VAT reductions, rent and rate concessions as well as utility price increases. 2023 traded ahead of 2022 for the corresponding period with like-for-like sales up 1.4% against the first half of 2022. The first quarter performed strongly, with like-for-like sales up 3.1% against the previous year which was impacted by Omicron, which unfortunately was not matched by the second quarter which disappointed with like for like sales down 0.3%. However, summer trading exceeded the board’s expectations. Nonetheless, the casual dining market continues to face inflationary pressures on food, labour and utility costs. The cost-of-living crisis and interest rates are at their worst for many years, directly reducing the discretionary spend of our customers. We continue to navigate through challenging times and although this is expected to continue through the second half of 2023 we are continuing to adapt the business to mitigate the cost increases and reduced trading performance. We have focused on optimising the current estate by selling or surrendering leases in the tail of the estate and seeking to turn around the underperforming sites. One under-performing restaurant was returned to the landlord after the period end in August 2023.”
 
Everyman expects full-year performance ‘to be in line with expectations’ as it reports strong summer trading: Cinema operator Everyman has said it expects full-year performance “to be in line with market expectations” as it reported strong trading through the summer on the back of release of Barbie and Oppenheimer. As of August, the business reported year to date revenue of £60.2m (2022: £53.1m) and Ebitda of £11.0m (2022: £9.8m). The business has agreed a new three-year loan facility of £35m with Barclays Bank and National Westminster Bank, extendable by a further two years subject to lender consent. Everyman said the facility “ensures the group is soundly financially structured and well-positioned to take advantage of opportunities moving forward”. It comes as the company reported revenue was down to £38.3m for the 26 weeks ending 29 June 2023 (2022: £40.7m). Adjusted Ebitda fell to £5.8m (2022: £7.5m, including a £0.9m VAT benefit). Gross profit margin increased to 65.6% (2022: 62.5%). Food and beverage spend per head was up to £10.25 (2022: £8.96). The paid-for average ticket price was up to £11.49 (2022: £11.32). Cash generated from operating activities was £7.2m (2022: £9.1m). The company opened four-screen venues in Salisbury and Northallerton and a three-screen venue in Plymouth. The group now operates 41 cinemas and 141 screens. It has agreed the sale and leaseback of the Crystal Palace freehold for a consideration of £3.9m. The company added continued innovation across the group’s food and beverage offering, “focusing on increased choice, investment into technology, and increased efficiency of service”. Chief executive Alex Scrimgeour said: “We are pleased to report that trading continues to be in line with the board’s expectations, having achieved robust interim results despite this year’s major film titles falling in the second half of 2023. The recent and resounding Box Office success of Barbie and Oppenheimer drove exceptional performance throughout July and August, highlighting the value of high-quality original content. Everyman’s strong year to date performance underpins our confidence in meeting market expectations for the full year, while equally demonstrating that the UK cinema sector is as vibrant as ever. We remain confident in our prospects as we continue to be supported by a slate of high-quality second half releases, a carefully expanded estate and new banking facilities which ensure we are well configured to take advantage of future opportunities.”
 
XP Factory expects full-year numbers ‘to be in line with market expectations’ as it reports trading rebounds strongly over summer: XP Factory, owner of experiential concepts Boom Battle Bar and Escape Hunt, has said it expects full-year numbers “to be in line with market expectations” as it reported trade in July and August “rebounded strongly after the typically quieter May and June period”. The company opened its international Boom site opened in Dubai on 21 July and said it is “performing well”. A new Boom site opens in Canterbury on Friday (29 September) and another in Southend in mid-October. A new Escape Hunt site opened in Woking in July has shown “strong early performance”. The owner operated estate now comprises 24 Escape Hunt sites and 15 Boom sites and its franchise estate now comprises 23 Escape Hunt sites and 14 Boom sites. The company said record pre-bookings for corporate sales provides confidence underpinning expectations for full year while the group’s financial year end has moved to 31 March. It comes as the business reported group revenue increased 130% to £18.7m for the six months ending 30 June 2023 (2022: £8.1m), “demonstrating the significant growth in scale”. Escape Hunt owner operated site revenue increased 41% to £6.1m (2022: £4.3m). Boom owner operated revenue increased 416% to £11.3m (2022: £2.2m). Gross margin was 62.1% (2022: 62.8%). Pre IFRS 16 group adjusted Ebitda increased to £1.05m (2022: £0.28m). Cash at 30 June 2023 of £3.7m (31 December 2022: £3.2m). Richard Harpham, chief executive of XP Factory, said: “We are delighted to have delivered such transformational growth compared to the same period in 2022, driven by the aggressive rollout of Boom. The performance in Escape Hunt has been outstanding and we are delighted to see the young Boom business continue to mature with ongoing improvements to its operating metrics. Performance since the end of June 2023 has been encouraging with both Boom and Escape Hunt delivering strong like-for-like growth over the summer months. Experiential leisure has displayed robust demand despite the current economic environment and our strategy to drive profitable growth and take market share continues to progress. Whilst mindful of ongoing short-term pressures on consumers and the second half weighting of the industry, we remain optimistic for the performance of both businesses over the short and medium term and expect to report full-year numbers in line with market expectations.”
 
Company behind Manchester’s Stock Exchange hotel reports 2023 figures ‘very encouraging’, losses widen despite record full-year turnover: The company behind Manchester’s Stock Exchange hotel owned by Gary Neville and Ryan Giggs has said its figures so far in 2023 are “very encouraging” and is achieving record average daily rates. It comes as the business reported losses widened despite record sales during its latest financial year. The business posted a pre-tax loss of £1,433,221 for the year ending 31 December 2022 compared with £1,039,726 the previous year. Turnover increased to £5,250,167 from £3,987,296 the year before – the highest since the company started making its full accounts public. The business also received £250,000 after a successful business interruption insurance claim. The hotel in Norfolk Street, which is based in a grade II-listed building completed in 1906, counts Gary Neville and Ryan Giggs as its sole directors. The results come after the company reported in August had issued a new lot of shares worth £3.45m. In July, the restaurant inside the hotel closed after just four months. Stock Market Grill had taken over from celebrity chef Tom Kerridge’s Bull and Bear. In his report accompanying the accounts, Neville said: “The directors have continued their policy of investing in the hotel to improve operational performance and to promote the ‘Stock Exchange’ brand even post the pandemic year. During this period, the hotel was open all year but the first six months of operation were hit drastically by the effects of the pandemic restrictions in place and this has obviously affected the financial figures of the business. For 2023, the directors are looking forward for the hotel to get back to the performance pre the covid pandemic with a healthy performance in rooms and food and beverage, where forecasts are showing a positive positioning for the hotel in terms of average room rate, occupancy, Ebitda and cash generation. Figures are very encouraging, whereby the property has achieved record average daily rates as well as outperforming competitors.” The business did not receive any government grants (2021: £343,499). No dividend was paid (2021: nil).
 
Chapel Down reports on-trade sales grow 20% in first half: Chapel Down has reported on-trade sales grew 20% “through increased distribution in premium outlets” as it reported continued revenue growth. Turnover increased 18% to £8.4m in the six months ended 30 June 2023 compared with £6.8m the previous year. Adjusted Ebitda was up 36% to £1.2m (2022: £913,000). Chairman Martin Glenn said: “In the first half of 2023 Chapel Down delivered an outstanding performance. We are pleased to confirm that we remain on track to double the size of the business between 2021 to 2026. We have grown our leadership position in the UK market with our outstanding wines consistently winning prestigious awards. We also have the strongest brand and the deepest distribution in the English wine industry, that continues to grow. Our expanding profitability is a core strength which, along with our strong balance sheet, gives us resilience, as well as an incredible platform for further profitable growth. We are the leading operator in the exciting and fast-growing English wine industry with circa 9% of all land under vine. We also remain committed to our sustainability pledge and look forward to sharing our ambitious targets and timeline to become net zero in due course. A strong and experienced executive team, led by Andrew Carter, is in place, developing a dynamic high-performance culture and delivering exceptional results. I have every confidence we will continue to lead the way in English wine.”

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