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Morning Briefing for pub, restaurant and food wervice operators

Wed 8th Nov 2023 - Update: JD Wetherspoon and Time Out Market
JD Wetherspoon reports like-for-likes up 9.5% as it outperforms market for 13 consecutive months: JD Wetherspoon has reported like-for-like sales for the 14 weeks to 5 November 2023 were up 9.5% compared with the previous year. Bar sales increased by 10.7%, food by 8.2% and slot/fruit machines by 10.0%. Hotel room sales increased by 6.2%. Total sales have grown by 8.1% in the year to date. In September, the latest month for which information is available, the Coffer CGA Business Tracker reported industry like-for-like sales up 5.9% compared with 9.4% for Wetherspoon. Wetherspoon said it has outperformed the tracker for 13 consecutive months. The company stated: “In October 2023, Which? reported that a survey of 4,611 of its members and the public had rated Wetherspoon hotels fourth highest of all large UK hotel chains (more than 31 hotels) for value. Wetherspoon achieved an overall customer score of 73%, which was higher than Sofitel, Hilton, Marriott, Radisson Blu and many others. On 22 August 2023, the company disposed of all interest rate swaps in place, receiving £14.8m. At the same time, the company fixed interest rates in respect of £200m of borrowings from 23 August 2023 to 6 February 2025 at a rate of 5.665%. On 25 September 2023, the company fixed interest rates in respect of £400m of borrowings from 6 February 2025 to 6 February 2028 at a rate of 4.225%. Interest costs for FY24, excluding IFRS 16 notional interest, are expected to be approximately the same as they were in FY23 (£51m), following the transactions noted above. The company has opened one pub at London's Heathrow airport during the period. Four pubs have been sold and six leasehold pubs have been surrendered to the landlord. The company currently has a trading estate of 816 pubs.” Wetherspoon chairman Tim Martin said: “Sales in the first 14 weeks of the financial year have continued the pattern of gradual improvement which has followed the ending of lockdowns and restrictions. Inflationary pressures have eased, but energy costs, in particular, remain at far higher levels than pre-pandemic, putting pressure on suppliers and the wider economy. The company is increasing investment in existing pubs in the current financial year to approximately £70m (FY23: £46.9m). Areas of investment include new staff rooms, changing rooms, glass racks above bars (to cater for increased usage of brewers' ‘branded’ glasses) and air conditioning. The company currently expects an outcome for the financial year in line with market expectations, and will provide further updates as the year progresses.”

Next Propel Turnover & Profits Blue Book shows 789 largest sector companies turning over total of £56.9bn, up from £53.3bn last month: The next edition of the Propel Turnover & Profits Blue Book, which will be sent to Premium subscribers on Friday (10 November), shows 789 of the largest sector companies are turning over a total of £56.9bn – up from £53.3bn the previous month. A total of 536 companies are making a profit while 253 are making a loss. The profit being made by sector companies is now outstripping losses by £1.82bn. The Blue Book shows the total profit of the 789 companies in the list is £3,754,189,462 and losses are £1,935,831,027. 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.

Time Out Market reports pipeline of management agreements in advanced negotiations as division shows strong growth: Time Out has reported it has a pipeline of managed agreements in advanced negotiations for new Time Out Markets. It comes as net revenue in its markets division increased 48% to £42.8m for the year ending 30 June 2023 compared with £28.9m the previous year following a year of uninterrupted trading. Adjusted Ebitda was up 94% to £4.3m compared with £2.2m the year before. The company stated: “Despite macroeconomic headwinds, we have increased confidence in future growth and further traction as we continue to deliver against our ambitious plans, with first-quarter FY24 performance in line with management expectations. The year saw travel rebound and across our open sites, footfall from tourists continued to recover at a faster rate than footfall from office workers. We continue to carefully manage operating expenses to drive greater profitability, alongside implementing operational improvements and optimisations of our commercial model. Central costs increased as a strengthened team is working on growing the markets business, preparing for several upcoming openings and negotiating further new sites. As part of our focus to build a profitable portfolio, it was decided that the Miami site would close on 30 June 2023. Following the launch of the first market in Lisbon in 2014, the Miami site was the first to open as part of the global expansion in 2019 and underperformed post-pandemic, contributing a reported operating loss of £2.7m to the group result in FY23. The decision to exit resulted in exceptional costs of £7.1m comprising £6.7m of non-cash asset impairments, and £0.4m of provisions for future cash liabilities. In addition to our six existing markets (Lisbon, New York, Boston, Chicago, Montreal and Dubai – the latter two being management agreements), new sites are set to open in Cape Town on 17 November 2023 and in Porto in FY24 – in both sites top local chefs have been curated. In the year, we accelerated the signing of new markets and contracted five sites including in Cape Town, Vancouver, Riyadh, Barcelona and Bahrain. This takes the pipeline of new sites in development to nine. We have a pipeline of management agreements in advanced negotiations and expect to sign more in the year ahead as we continue to optimise our systematic approach to sourcing high-quality leads. In February 2023, we confirmed that we will not proceed with the development of the site at 106 Commercial Street in London – although recommended for approval by planning officers, the Tower Hamlets development committee chose to defer its decision on our application in 2022 after a process which had already taken several years. With an expectation of the process being drawn out by further delays we decided to no longer proceed with our application, which resulted in exceptional costs of £1.0m arising from the write-off of sunk pre-development costs – in order to focus our resources on other opportunities.” The current pipeline is: Cape Town (management agreement) – November 2023; Porto (owned and operated) – 2024; Barcelona (owned and 0perated) – 2024; Bahrain (management agreement) – 2024; Vancouver (management agreement) – 2024; Abu Dhabi (management agreement) – 2025; Prague (management agreement) – 2025; Osaka (management agreement) – 2025; Prague (management agreement) – 2027 and Riyadh (management agreement) – 2027. Group net revenue increased to £76.0m compared with £55.4m the previous year. Group adjusted Ebitda was up to £5.3m compared with £1.2m the year before. Group gross profit was up to £61.9m from £44.6m the previous year.

Wine production to hit 60-year low as extreme weather dents harvests: Global wine production is on track to hit a 60-year low after extreme weather hit grape harvests. Wine merchants warned of Malbec shortages following a report from the International Organisation of Vine and Wine (OIV), which represents winemakers around the world. Poor harvests in the southern hemisphere and some crucial European regions mean the world’s wine output could fall to as low as 241.7 million hectolitres – its lowest point since 1961, the OIV said. The OIV highlighted losses of between 10% and 30% in Australia, Argentina, Chile, South Africa and Brazil in the southern hemisphere, reports The Telegraph. Grapes are extremely sensitive to temperature and season, which means that events such as snap frosts, floods or heat waves can be devastating. Southern Europe, for instance, was scorched by repeat heatwaves this summer, hitting the Italian harvest (but increasing the quality of the wine produced, according to producers). Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), said: “There are definitely some regions where you’re going to see less wine coming from there on a permanent basis.” As well as extreme weather, winemakers have had to contend with supply chain disruption during the pandemic. In the Northern Hemisphere, Spain and Greece suffered the worst from bad weather. However, the OIV said Italian wine production could drop 12% to 44 million hectolitres, its lowest point since 2017. WineGB said despite soaring temperatures making the UK more suitable to growing grapes, Britain’s temperamental weather remained an obstacle for the industry.

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