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Morning Briefing for pub, restaurant and food wervice operators

Thu 7th Dec 2023 - Update: Leon, McDonald's and Comptoir Group
Leon looking to open new restaurants, review existing estate and explore new formats, Asda buyout ‘opportunity to further expand brand’: Leon has said it is looking to open new restaurants, review its existing estate and explore new formats, and that its buyout by Asda will give the opportunity to further expand the brand. Retailer Asda took full ownership of the healthy fast-food chain in November after completing the acquisition of EG Group’s UK business for an enterprise value of £2.07bn. In its accounts for the year to 25 December 2022, the business said the transaction “will allow Asda to explore opportunities to further expand the Leon brand”. On current trading, it added: “Trading continues to recover from the impact of covid-19 pandemic. Management will continue to actively open new restaurants, as well as reviewing the existing estate performance, and explore new formats and opportunities. It is the board’s intention to continue the development of the business with a view to helping more people live well and eat well, more innovation in our naturally fast-food category, and continuing UK expansion.” It comes as the business reported its pre-tax loss widened during the period from £9,177,342 in 2021 to £13,268,097, as costs grew by more than £6m. Turnover from owned sites was up from £37,515,376 in 2021 to £52,179,430. Of this, £50,440,944 was restaurant income (2021: £36,639,304), £1,663,353 from franchise income (2021: £852,887) and £75,133 from other royalties (2021: £23,185). When franchise sites are added in, total turnover grew to £82.6m (2021: £53.5m), for adjusted Ebitda of minus £5.1m (2021: £1.1m). Owned units totalled 56 in 2022, up from 46 in 2021, while franchise sites stayed at 29, for a total of 85 compared to 75 the previous year. The company received no government grants (2021: £1,145,304) and no dividends were paid (2021: nil). The net liability position at the end of the financial period totalled £9,413,531 (2021: net assets £5,494,147). During the year, in February 2023, the company exited its two-year company voluntary arrangement, which it entered into in December 2020. Exceptional administrative expenses included store closure costs (£467,000), onerous lease costs (£1,500,000) and impairment costs (£1,000,000). Exceptional administrative expenses incurred included interest arising from acquisition related bonuses and fees (£2,030,000), impairment of fixed assets (£2,149,000), USA exit fees (£539,000) and re-organisation costs (£335,000). The company added: “Throughout 2022, the business saw continued recovery from covid-19. Weekly sales and footfall to our restaurants improved week by week, although the year remained challenging. Covid-19 restrictions were eased at the beginning of the financial year; however, the economy began to slow down, which was exacerbated by the war in Ukraine. This led to inflationary pressures, particularly seen with electricity costs and cost of sales. Industrial action, particularly rail and tube strikes, further affected the business, given the location of many Leon restaurants to transport hubs, resulted in lower footfall and sales on strike days. Furthermore, working-from-home trend has impacted many Leon restaurants, particularly ones based in office centric locations, and these have seen a slower recovery. Management remain confident that sales will continue to recover, and this is supported by continual improvement seen throughout 2023.” Leon features in the Propel Turnover & Profits Blue Book, the latest edition of which will be sent to Premium subscribers on Monday (11 December). Its turnover of £52,179,430 for the year to 25 December 2022 is the 174th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. 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.

Next Propel Turnover & Profits Blue Book shows 829 largest sector companies turning over total of £60.2bn, up from £56.9bn last month: The next edition of the Propel Turnover & Profits Blue Book, which will be sent to Premium subscribers on Monday (11 December), shows 829 of the largest sector companies are turning over a total of £60.2bn – up from £56.9bn the previous month. A total of 564 companies are making a profit while 265 are making a loss. The profit being made by sector companies is now outstripping losses by £1.87bn. The Blue Book shows the total profit of the 829 companies in the list is £3,826,075,567 and losses are £1,952,918,651. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. 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. Premium subscribers are to also receive access to ten videos from up-and-coming operators as they explore the “white space” opportunity for their concepts. The ten operators, who presented this year at our Multi-Club Conference series, show that there is always uncrowded and unexplored areas of the UK food and beverage scene – where innovative operators can chart new territory with a fresh concept. Propel managing director Paul Charity said: “These ten operators prove what an exciting sector this is – they have brilliant new ideas and are tapping into novel parts of the market.” The videos will be sent on Friday, 15 December at 9am. 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 Propel group editor Mark Wingett.

McDonald’s to open first spin-off beverage-led format CosMc’s this week: CosMc’s, the new, small-format, beverage-led restaurant concept from McDonald’s, will open its first site in the US this week, as the fast-food chain looks to take a piece of the $100bn (£79.6bn) specialty beverage category. The first location, opening in December, is located in Bolingbrook, Illinois, and is part of a limited test run. By the end of 2024, McDonald’s plans to open approximately ten CosMc’s pilot locations, including sites in the Dallas-Fort Worth and San Antonio metro areas of Texas. McDonald’s said CosMc’s menu is “rooted in beverage exploration, with bold and unexpected flavour combinations, vibrant colours and functional boosts”. CosMc’s is also set to offer what McDonald’s calls a “seamless digital and drive-thru experience,” where customers can use a dynamic menu board and cashless payment devices to “breeze through” ordering and payment processes. Drive-thru pickup windows will be assigned once your order is ready. The name for the new brand comes from CosMc, a McDonaldland mascot who appeared in advertisements in the late 1980s and early 1990s. CosMc is an alien from outer space who craves McDonald’s food. McDonald’s is positioning CosMc’s as a fast, convenient way to grab a pick-me-up snack or coffee. McDonald’s chief executive Chris Kempczinski told investors: “We asked what would happen if a McDonald’s character that was part alien, part surfer and part robot would open a restaurant in 2023. This is a $100bn category growing faster than the rest of the (informal eating-out segment) and with superior margins. Let me emphasise again, we’re talking about ten stores. The big story isn’t about CosMc’s, per se. The big story is what it says about McDonald’s and our potential. To think a little over a year ago, this was an idea, and this week we’re opening the first test site.” He also hinted that if successful it could be expanded internationally. Kempczinski said: “It’s not worth our time to develop an idea that will only work in one market. This won’t work unless it can work across multiple markets.” The format will feature a line of customisable beverages that are unique to the brand. It includes specialty lemonades, teas, blended beverages and cold coffee, along with energy drinks such as the sour cherry energy slush. Customers can customise these beverages with flavourings, boba or energy shots. Flavours include a churro frappe, s’mores cold brew and a blueberry ginger boost. The concept has a limited menu but includes McMuffin sandwiches and the McFlurry, plus unique items such as the creamy avocado tomatillo sandwich and the spicy queso sandwich.
Comptoir Group secures Royal Festival Hall site: Comptoir Group, the Comptoir Libanais and Shawa operator, is to open a new restaurant at the Southbank Centre, London. Propel understands that the Nick Ayerst-led business has acquired the former Le Pain Quotidien site opposite the entrance of the Royal Festival Hall. The restaurant is expected to open around Easter 2024. Comptoir Libanais’ 23rd restaurant will feature 135 covers internally and a 48-cover outside seating area and will offer an all-day menu to eat in or takeaway. Tony Kitous, founder of the Comptoir Group, said: “We are proud to be a part of the fabric of London’s diverse culinary landscape as we open the doors of another new restaurant, this time in London’s South Bank. We are excited to have the opportunity to continue to share the flavours and cultural richness that have won the hearts of our guests, in an environment that captures the essence of Middle Eastern heritage”. In October, the business returned to the expansion trail after opening on the former Bread Street Café site in London's Ealing Broadway. Ayerst, chief executive, said: “Following the successful recent opening in Ealing, we are pleased to announce the continued strategic growth in an area of London we have long desired to be in. The location on the South Bank captures an immensely high footfall of both workers, visitors and tourists who we know will be hungry for our well-loved authentic Middle Eastern food and culture.” Brandon Elmon, of Genius1 Group, acted on the Southbank Centre deal.

Brits no longer eating three meals a day: For centuries it has been drilled into Brits to sit down to three square meals a day: breakfast, lunch and dinner. But hybrid working patterns and the strains of modern life mean they are ditching tradition in favour of regular snacking, reports The Times. Almost a third (30%) of the nation sits down for two meals a day and replaces the third with snacks, a survey for the Waitrose Food and Drink report found. For others, days are blurring into one long meal: 10% said they ate only one meal a day and grazed the rest of the time. A further 1% said they simply grazed all day. Splitting work between home and the office was partly responsible, the ­report said. Some 43% of those who work from home admitted nipping into the kitchen and helping themselves to snacks throughout the day. Researchers, who questioned 2,000 adults of all ages, also found that 9% ate while walking or commuting. The most popular time to snack was after 3pm (43%), followed by the noon to 3pm slot, which suggested that people were skipping lunch. Among the most popular snacks were crisps (eaten by 29%) cakes and biscuits (22%), chocolate (19%) and nuts or fruit and veget­ables (17%). The report said this had been the year of comfort food as some 32% of respondents said they regularly tucked into old favourites such as shepherd’s pie and macaroni cheese.

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