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Morning Briefing for pub, restaurant and food wervice operators

Mon 6th Nov 2023 - Update: Pace of closures slows as managed segment sees site net growth
Pace of closures slows as managed segment sees site net growth, sector contraction ‘masks evolution of market’: The pace of closures of licensed premises has slowed in the last three months while the standard of offer across the sector “has never been higher”, according to the latest Hospitality Market Monitor from CGA by NIQ and AlixPartners. While the sector has contracted overall, “it masks an evolution of the market as it has become more varied and more innovative”, the report said. The monitor recorded a fall in licensed premises over the third quarter of 2023 of only 0.3% – equivalent to just under three net closures a day. The report flags a particularly robust quarter for the managed hospitality sector. In the three months to September 2023, this segment achieved 0.5% growth, in contrast to a 0.6% drop in the number of independently run venues. Many of Britain’s biggest city centres also saw a net quarter-on-quarter increase in sites, including London, Manchester and Edinburgh. It comes after figures previously revealed the number of licensed premises had fallen 3.6% over the last 12 months to 99,916 sites. The total at the end of September 2023 marked the first time it has dropped below 100,000 in the monitor’s history. The 3,766 drop over the 12-month period is equivalent to more than ten net closures every day. Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “It is pleasing to see a slowdown in closures over the third quarter of 2023, though whether it is the beginning of a sustained positive trend or a lull remains to be seen. High inflation and interest rates are keeping a lid on consumer confidence, but the healthy growth in venues from multi-site managed groups is a positive sign of confidence from business leaders and investors. Despite the contraction in size in recent years, the long-term outlook for hospitality remains very good.” Graeme Smith, AlixPartners’ managing director, added: “While it is never nice to see the number of licensed premises in the UK continue to fall, what the figures don’t show is that, whilst the sector has contracted overall, this masks an evolution of the market as it has become more varied and more innovative. In addition, the standard of offer across the full spectrum of the hospitality industry has never been higher. Recent figures show that the contraction in site closures has slowed, this comes after a period of significant estate consolidation. It also marks a period when many operators have tentatively returned to the expansion trail, coupled with the continued entry of new concepts and international brands into the sector. If consumers continue to spend on hospitality and experiences in the face of more challenging economic conditions, we could see site numbers begin to expand again in 2024.” 

Next edition of Propel Turnover & Profits Blue Book shows 68% of companies in profit, up from 60% six months ago: The next Propel Turnover & Profits Blue Book, to be sent to Premium subscribers on Friday (10 November), shows 68% of the 789 largest sector companies are now in profit, up from 60% six months ago. The Blue Book shows 536 companies in profit and 253 reporting losses. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. For the first time, Propel group editor Mark Wingett has chosen the best videos from the Propel conferences in 2023, picking out a selection of talks and interviews that resonated with delegates from across the breadth of the hospitality sector. The 12 videos will be made available to Propel’s Premium subscribers at 9am on Friday, 24 November. 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 Mark Wingett.

Baton Berisha – Wolseley City is not about fine dining: Baton Berisha, chief executive of Wolseley Hospitality Group, has said its new eponymous site in the city is not about fine dining as it looks to attract a new audience. The original Piccadilly branch, opened in 2003 by Jeremy King and Chris Corbin, has been serving finger sandwiches, Battenberg cakes and scones with jam and cream for two decades, but its new sibling, which opens this week, is targeting an audience that does not have hours to while away on afternoon tea. Berisha told The Times he didn’t think afternoon tea would be “quite the thing” in the City. “We’ll have sandwiches, and other offers to make sure people can come in during the afternoon, read the newspaper, have their meetings, have a coffee, pastries and the like,” he said. The King William Street building is appreciably bigger than the original, with 260 seats compared with 160 in Piccadilly, while the £10m fit-out has also created private dining for 24 guests. Berisha is aiming to match its sibling in attracting 1,000 customers a day, which would mean turning the tables four times, although if The Wolseley City can match the six times achieved by the Piccadilly restaurant, that would equate to 1,500 guests a day. The key will be whether it can get anywhere near the 40% of walk-ins at the original branch, but experts are largely positive. Sam Fuller, managing director in Houlihan Lokey’s consumer group, said: “For me it comes down to this being an acid test of life post Jeremy King – can you and should you repeat a London restaurant icon?” Graeme Smith, managing director of AlixPartners, added: “There has been quite a bounce-back in activity around the core City area and I think there is an increasing tendency to arrange face-to-face client meetings on the days people are in the office, particularly around breakfast and lunch. The Wolseley would be perfect to help service this type of demand. Evenings may be a little tougher than in the West End with less non-corporate demand around so it may need to be creative, particularly to drive footfall on a Friday and Saturday night.” Berisha is already running the rule over other potential locations for Wolseley restaurants. He said he was only targeting tier one cities around the world, including New York, Hong Kong and Paris, while Café Wolseley, a pared-back concept that was briefly used in Bicester Village, the designer outlet shopping centre, would be deployed in smaller cities like Amsterdam and Lisbon.
Upmarket hostel operator Generator completes €750m refinancing: Upmarket hostel operator Generator Group, owned by Queensgate Investments, has completed a €750 million global refinancing. The London-based investment firm has opted to continue holding the business and to accelerate expansion after it quadrupled profits in the six years since acquiring it. The refinancing, involving 13 jurisdictions, included European debt facilities, private bonds and US debt facilities. It was backed by Ares Management in Europe and Generator’s existing US lenders, Waterfall Asset Management and Värde Partners. Queensgate bought Generator, then consisting of 12 properties, in 2017 from Patron Capital for €450m and has grown to 21 hostels with 12,000 beds in ten countries and delivering profits “significantly above” pre-covid levels. Generator, which has properties in cities across Europe and the US, recently reported record revenues of €225m, up from €180m in 2019, with underlying earnings rising from €50m to €75m. Jason Kow, chief executive of Queensgate, told The Times Generator’s performance since the pandemic had enabled it to refinance in a challenging market, adding: “We’re holding the assets because they are continuing to deliver significantly for us, both in terms of earnings and capital values.” Although Generator sells some “plain vanilla” hotel rooms, most have four or six beds and Kow said that by selling the product on a “per bed” basis, starting from about €40, the brand was able to generate room rates equivalent to a four or five-star rate. He said that because it owned the bricks and mortar of most of its hostels as well as the operations and intellectual property, this translated into “the most fantastic cash generation” and a gross operating profit of up to 50%. The focus will remain on “young affluent travellers” in their mid-20s but Generator has also started selling to the corporate market and families.

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