Propel Newsletter Archive Page

M&B reports year-to-date like-for-like sales up 10.5% on pre-covid levels with growth driven by spend per head: Mitchells & Butlers has reported year-to-date like-for-like sales are up 10.5% on pre-covid levels, with growth driven by spend-per-head. Like-for-like sales were up 9.7% in its fourth quarter compared with last year “reflecting an increasing outperformance of the market”. The like-for-like increase was driven by food sales where like-for-likes were up 11.6% while drink like-for-like sales were up 6.4%. For the year ending 23 September 2023, like-for-like sales are up 9.9% with food like-for-like sales up 8.6% and drink like-for-like sales up 9.9%. The company stated: “Strong trading has continued through the fourth quarter, bringing year-to-date like-for-like sales growth to 9.1%, with total sales growth now of 10.5%. Like-for-like sales in the fourth quarter increased by 9.7% supported by sustained growth in both food and drink volumes and reflecting an increasing outperformance against the market. Against FY 2019, year-to-date like-for-like sales are up 10.5%, with growth driven by spend-per-head. We continue to focus on investment in the estate and in the year to date we have completed 142 conversions and remodels, including two to the newly acquired Ego brand, in addition to opening four new sites. Cost headwinds are abating and remain at the bottom end of the range previously identified. We remain mindful of the challenging macroeconomic environment and pressures on the consumer however, as trading continues to be strong, we have confidence that the current year out-turn will be at the top end of consensus expectations, with momentum into FY 2024. The current financial year will be a 53-week accounting year to 30 September 2023.” Chief executive Phil Urban said: “We are delighted to have continued our strong like-for-like sales performance through the fourth quarter, underpinned by volume growth and reflecting increasing outperformance against the market. Going forward we shall remain focused on executing the drivers of this strong performance, our Ignite programme of growth and efficiency initiatives and our capital investment programme which, combined with our diverse portfolio of established brands and enviable estate locations, leaves us well positioned to continue to outperform the sector and see improved profitability.”

Pret shops and franchise director – we try to be transparent on pricing, see us having more than 500 sites outside London: Guy Meakin, shops and franchise director at Pret A Manger, has said the JAB Holdings-backed business tries to be as transparent as possible on pricing, after the brand came under fire for increasing its prices. Reports this week said the brand had raised its prices by up to five times more than the increase in the average takeaway sandwich price over the past year. Pret said the price rises were due to higher energy costs – up by 300% this year – wages and raw material costs. Talking at Lunch! 2023, Meakin pointed out that some of the prices quoted were typically higher from being at train stations or transport hubs, due to higher operational costs, and like all food-to-go retailers, dine-in prices are subject to 20% VAT. He said in a challenging cost environment the business tries to be transparent when it comes to pricing, and pointed to the visibility of the brand’s loyalty scheme Club Pret, in which subscribers who pay £30 a month received a 20% discount and free drinks, as a good example of that. He said: “We still need to be competitive and continue to offer great value for high-quality, freshly made food and organic coffees. Like our competitors, different formats mean different prices.” Meakin said the business had seen strong growth this year, helped by its new franchise partnerships across the country, and hoped to open a further 100 sites in 2024. Meakin said: “We’ve now got more than 130 shops outside London, which is great, but we want many more, and I see us having well over 500 outside of London.” The business recently launched its first store in the Lake District on a Motor Fuel Group forecourt. Meakin said it is looking to expand to other parts of the UK which have similar opportunities, such as Cornwall, Scotland, North Wales and Cheshire. He said: “One of the things that we’ve been guilty about is that we want a similar look and feel to what we’re doing in the city. But what those shops might need is more comfy seating than our city centre shops, for example. So, I think we need to continue to refine that, and that’s a big priority of the team.”

Gail’s Bakery MD – data suggests there are 300-500 places where the brand could fit: Marta Pogroszewska, managing director of fast-growing bakery brand Gail’s, has said data suggests there are 300 to 500 places that the “brand could fit”. Speaking at Lunch! 2023, Pogroszewska said the 121-strong business had opened 30 sites in its last financial year to the end of March, and had opened another ten since. She said: “Year-to-date trading has been going really well. It is not an easy climate, but we have fantastic teams, who are producing great results. We have a few more sites in the build stage and hope to open another 30 sites in total in this current financial year. Opening new sites has become second nature to us, and we are opening a new site on average every two weeks. We try to learn from every shop opening so we can evolve further. We get loads of emails and messages from people asking us to come and open in their towns, which is encouraging for us in terms of further expansion. We launched in the north west this year, and now have four sites in and around Manchester, with a fifth set to open soon in Knutsford. We set ambitious targets for those sites, but the response has been delightful and really positive. We recently did some research on white space in the UK, and the data suggests that there are 300-500 places that our business could go into. Not to say we will, but that’s the potential. There are also other models we could explore. There is a good run in the UK ahead of us and a high demand for what we do.” Pogroszewska said the business was mindful of passing on price and managing costs, as “we open sites only through the profits we have made”. She said that people join Gail’s because we offer “opportunities to grow, impact (do the right thing) and because we are good, kind people”. She said the business promotes 500 to 600 people a year. In terms of sustainability, Pogroszewska said it is “super high on our agenda”. She said: “It’s part of our DNA. But we need to tell our sustainability stories better.”

McVeigh – experiential ‘may not be as durable as it claims’: Charlie McVeigh, the founder of Draft House and chairman of Butchies, has argued that experiential, which has enjoyed a huge surge in popularity post covid, could well have a limited shelf life. “I think actually there is a possibility that experiential is not going to be as durable as it claims,” McVeigh told the Investment Panel at Casual Dining 2023. “The trend that doesn’t go away is great food, great atmosphere and great service. There are some amazing experiential businesses out there, but a great experience doesn’t have to be competing with someone else – it can be sitting down having an amazing dinner or an amazing breakfast. I think the idea that you need something else is not necessarily essential. Some do it really well, but would I do it more than once or twice? I just wonder the extent to which people run out of steam constantly trying to find something new in that space, whereas a restaurant will constantly give you a wonderful service. You form a relationship with the team and so on, and if anything, it improves with the number of times you go there.” By coincidence, McVeigh was speaking as he “literally just signed a cheque” to bring a German experiential concept to the UK. Pocket Planet will launch in a 30,000 square-foot former New Look department store in Oxford Street in 2025. “Pocket Planet is a miniature world experience based on a concept in Hamburg that turns over €30m a year,” McVeigh said. “It was founded by twins and is a most extraordinary business, but they have no interest in owning a second miniature world.” Lizzie Ryan, partner at Imbiba, said the sector investor has “indexed experiential heavily” and that “for some people, going out to a restaurant to have a nice meal just isn’t enough anymore”. But she added: “Will they be around in 20 years’ time? We don’t know. If not, it’s about getting in at the right time, growing it and getting out again at the right time.” Ryan went on to say the fundamentals of investments haven’t changed but unit economics have become ever more important, adding: “Some of the best businesses are built during hard times.” Chris Miller, founder of White Rabbit Projects, said he feels it will be “a few years before you start seeing some of those really big transactions again”. He added: “It’s not the first time there’s been a recession, and the data shows it’s typically five to six years before the market comes back, so it will come back. There’s still money to be made in hospitality, and the joy of the sector is people will always need food and drink.”

Breddos Tacos returns to the expansion trail with Stoke Newington site: Breddos Tacos is to return to the expansion trail with the opening of a second taqueria in London, in Stoke Newington. Opening on Tuesday (4 October), the 36-cover taqueria above mezcal bar Doña will “emulate the much-loved atmosphere” of Breddos Clerkenwell and feature its “authentic but playful take on Mexican street food, well-loved tequila and mezcal cocktails and an eclectic, vibe inducing vinyl collection”. Ian Ciapara, head chef of Breddos, said: “One of the reasons why I moved to London was to share the cuisine of my country, but I never imagined that I would have a space to represent Tijuana with Breddos. Tijuana has it all, the Mediterranean climate for produce, the ocean for seafood, meats ripe for the parilla, craft beer and lots of fiestas. Breddos Stoke Newington will celebrate the bold flavours and laid-back vibe of the city, in a space that’s designed to create good times.” Breddos was founded by Nud Dudhia and Chris Whitney in 2011 in a makeshift car park taco shack in Hackney, east London. The pair also operate kiosk sites at Swingers City, Swingers West End, Flat Iron Square in Bermondsey and Goods Way in King’s Cross. They are also the founders of Madre in Liverpool and since 2019 have opened two taquerias in Oslo, Norway.