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Morning Briefing for pub, restaurant and food wervice operators

Fri 29th Sep 2023 - Update: TGI Fridays parent reports 2% increase in LFL revenue after building ‘a leaner and more focused business’
TGI Fridays parent reports 2% increase in like-for-like revenue after building ‘a leaner and more focused organisation’: Hostmore, the parent company of TGI Fridays, has reported its like-for-like revenue between 2 July 2023 and 24 September 2023 is up 2% after building “a leaner and more focused organisation”. The group also said previously announced annualised cost reductions of £5.9 million now increased to £8.2m. It said cost reductions were benefiting FY 2023 by £5.8m, an increase from the previously announced £4.0m, with £4.3m of benefit in the second half of 2023 versus the second half of 2022. Hostmore said a refinancing process has commenced with existing and potential new lenders and is expected to be concluded by end of first quarter of 2024. It is on course to repay borrowings and commence shareholder distributions. It added successful operational and portfolio management of bottom 20 loss-making stores has reduced latest 12 months’ (to end of first half 2023) losses of £4.2m in 2022 to less than £1.5m at recent annualised rate. New openings deferred until at least 2025 is saving approximately £15m of cash expenditure. Cost inflation of purchased inputs, including food, drinks, and utilities, has now stabilising with a significant portion under long-term contracts or hedged at favourable prices, Hostmore said. The company stated: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation. In particular, the actions taken have reduced costs, as we have adopted a much tighter capital allocation policy and put in place a diversified array of organic growth measures. The effects of these initiatives are already coming through in our results. Our like-for-like revenue in the second half of 2023 to 24 September is already up 2% versus the second half of 2022. We continue to evaluate a number of measures relating to costs and productivity. During the first half of the year, trading conditions remained challenging across the leisure and hospitality industry, impacting our financial performance. We have however started to see early signs of progress from our strategic and operational initiatives as we have moved into the second half of the group’s financial year. While there remains much to progress, it is clear that TGI Fridays is a highly recognised brand with a rich heritage. We are broadening our guest appeal beyond our core families demographic, becoming a destination of choice for guests from all walks of life. As a group, we are focused on delivering an improved performance from our core TGI Fridays estate, divesting unprofitable sites where the opportunity arises, reducing costs, prioritising debt reduction and executing on controlled, measurable organic growth initiatives that support our objective of building a platform for future growth and shareholder returns.” For the 26 weeks to 2 July 2023, total revenue was down to £93.6m (2022 £98.5m). The company stated: “On a like-for-like basis, adjusted for the impact of the lower VAT rate in the equivalent period last year, our revenue performance was 2% lower than 2022, partly offset by higher average spend per head. The warm weather in June impacted footfall into our restaurants, given our estate’s limited outdoor space and with our core family market spending time outdoors and entertaining at home. We are examining ways to differentiate TGI Fridays’ offering with new initiatives, such as our ‘Raising the Bar’ project, to ensure that we diversify our appeal across a broader range of customers enabling us to improve sales volumes when the weather is warmer.” Ebitda FRS102 was negative £3.8m (2022: positive of £7.1m). Hostmore said the first half of 2023 was adversely impacted in comparison by the reduced VAT rate to 12.5% for the first quarter of 2022, grants issued by the government in the same period and rent concessions received from landlords. In addition, during the first half of 2023, Hostmore “experienced some comparative volume decline” while inflationary pressures continued to impact the group during the period. Chief executive Julie McEwan said: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation. As we move through the second half of our financial year, it is encouraging to see the effects of our strategic and operational actions coming through in our results. Leveraging our distinctive, trusted brand as the home of celebrations, our teams are passionate and committed about delivering an exceptional TGI Fridays guest experience. Notwithstanding the challenges facing the sector, the early success of our turnaround programme enables us to look to the future with confidence. The leadership team we have in place is focused on building a platform for future growth and shareholder returns, with the group well placed for the remainder of 2023 and in the years ahead.”

Premium subscribers to receive updated Database of Multi-Site Companies and conference videos today: The updated Propel Multi-Site Database, which is produced in association with Virgate, will be sent to Premium subscribers today (Friday, 29 September), at midday. It will include 55 new multi-site companies operating a total of 621 sites, taking the number of companies featured to 2,982. The database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. Premium subscribers will also receive access today to all the videos from this month’s Propel Multi-Club Conference and summer party. They will be sent 12 videos at 9am. Premium subscribers also receive access to five other databases: the New Openings Database; the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; the UK Food and Beverage Franchisee Database; and the Who's Who of UK Food and Beverage. 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 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.
Barkby Group exits three pubs as division delivers Ebitda loss: Barkby Group has exited three of its pubs, reducing its portfolio to six operating pubs. Two leases were surrendered in June 2023 and one freehold was sold in August 2023. It said revenue at the retained sites “remained steady in the period and labour cost percentages improved”. Overall, Barkby Pubs reported an Ebitda loss of £0.7m in the 12-month period to June 2023 (2022: Ebitda profit of £0.4m). Barkby Group also revealed Workshop Coffee, which was sold on 31 July 2023, made a net loss of £387,000 in the 12-month period to June 2023 (2022: loss of £785,000). The results were reported in the discontinued operations of Barkby Group as it focuses its operations on roadside real estate assets.
Public consultation launched to encourage buying of ‘no or low-alcohol’ drinks: The government has launched a public consultation to seek views on raising the threshold for describing a drink as “alcohol free” in a bid to encourage people to buy the alternative beverages. The Independent reported opinions will be sought on whether to label a drink “alcohol free” at 0.5% alcohol by volume (ABV) – up from the current UK threshold of 0.05% – in line with other countries including the US, Germany and Australia, the Department of Health and Social Care (DHSC) said. A higher threshold could see more no and low-alcohol products on the market and encourage more people to choose the alternative drinks, according to the government department. The Health Survey for England 2021 found a fifth of adults currently drink above the low-risk guidelines of 14 units per week, which the DHSC described as “significantly increasing their risk of ill health, poorer quality of life, and even premature death”. As part of the consultation, the government is also scoping out views on measures it can take with the industry to prevent children and young people from accessing and consuming these products, including potential age restriction warnings on beverages. Additionally, it will be seeking opinions on how to support those looking to moderate their alcohol consumption, provide them with greater choice when looking for alternatives and whether to update labelling guidelines. Public health minister Neil O’Brien said: “No and low-alcohol drinks are getting more and more popular, and we are looking to further support their growth. We want to encourage the growth of no and low-alcohol alternatives for those looking to moderate their alcohol intake.”
F1 Arcade secures second US site: Kindred Concepts, the parent company of F1 Arcade, has secured a second site in the US, in Washington DC, for its Formula 1-licensed experiential concept. The site will open next summer in the city’s Union Market District. Earlier this summer, Kindred Concepts secured £30m of new funding to fuel the next phase of international growth for F1 Arcade. The funding will support its international expansion plans, primarily in the US, with plans to open 30 locations globally by the end of 2027, including openings in the US, the UK, Australia and the Middle East. The business is to open its first US site, in Boston’s Seaport district in March 2024 and it is targeting more than 20 permanent sites in the US in the next five years. Adam Breeden, chief executive and founder of F1 Arcade, said: “We are excited to make our mark in the heart of the nation’s capital at Union Market District next summer with the opening of our second US location. We’ve left no stone unturned in ensuring the highest quality execution in every aspect of our concept, from the adrenaline-pumping sim racing to our outstanding hospitality and service. What truly sets F1 Arcade apart is its universal appeal and competitive thrill that welcomes everyone to take part, regardless of their age or experience.” Last year, Breeden signed a global agreement with Formula One to launch and roll out his new immersive, state-of-the-art racing simulation concept F1 Arcade. The debut site opened at the One New Change scheme in London’s St Paul’s last November and a second UK site will occupy an 11,000 square-foot unit at Two Chamberlain Square at Paradise Birmingham. 

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