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Morning Briefing for pub, restaurant and food wervice operators

Thu 14th Dec 2023 - Update: KFC UK FY trading, sector tech investment, SSP
KFC reports 3% decline in FY turnover: KFC UK and Ireland has reported a 3% decline in turnover for the year to 25 December 2022, as it said its performance was impacted by the cost-of-living crisis. Turnover for the period stood at £284,274,000 (2021: £292,915,000), with a pre-tax profit of £89,927,000 (2021: £101,562,000). It said: The business continues to drive growth through focus on building culture and people capability, developing new restaurants, delivering great customer experiences and ensuring customers can access KFC in the way they want to. The comparative year showed an extremely strong financial performance as the business built on the growth seen in the second half of 2020, where the variety of sales channels (delivery, drive-thru, take away and dine in) allowed flex for KFC customers to access KFC in line with government covid-19 guidance. Furthermore, included within the comparative year was the continued reduction in the VAT rate for the Hospitality sector influencing on a higher sales performance. During 2022, when comparing to the recent performance in the comparative year, combined with the cost-of-living increases that incurred during 2022, the performance of the business shows a 3% decline in Turnover, nevertheless reporting a strong value of £284.3m. Operating profit has decreased compared to prior year to £86.5m (2021: (restated) £118.7m) impacting on the operating profit margin also decreasing to 31% (2021: (restated) 41%). The company has net assets of £331.5m as at the end of the 2022 financial period (2021: (restated) £275.4m).” Last week, KFC announced it is to acquire 218 restaurants from EG Group, its largest franchisee in the UK and Ireland, for an undisclosed sum. KFC said the transaction represents a “significant opportunity to accelerate KFC’s growth strategy in the large and growing UK and Ireland chicken market, with high average unit volumes and robust margins”. Once completed, all of EG’s KFC UK and Ireland business – more than half of which is made up of drive-thrus – and 7,800 team members will come under KFC UK and Ireland management. KFC’s parent company Yum! Brands said it anticipates finalising the transaction by the end of the first half of 2024. It said the transaction will be funded from Yum!’s cash flows and is expected to have an immaterial impact on Yum!’s 2024 financial results. KFC features in the Propel Turnover & Profits Blue Book. Its turnover of £292,915,000 in the year to 26 December 2021 is the 34th 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 kai.kirkman@propelinfo.com to upgrade your subscription.

Premium subscribers to receive ten videos tomorrow from up-and-coming operators as they explore ‘white space’ opportunity: Premium subscribers will receive ten videos tomorrow (Friday, 15 December), at 9am, 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. The videos will feature: Verity Foss, co-founder and Lina Blythe, operations director of Oowee Vegan; Asad Khan, founder of Snowflake Luxury Gelato; Lisa Buckley, chief executive of Leisure TV Rights, the experiential leisure operator; Laura Mimoun, co-founder of Kaleido Rolls; Shereen Ritchie, chief operating officer of Buns from Home; Yolk founder Nick Philpot; Sanjeev Sanghera, co-founder of Döner Shack; Razak Helalat, founder of Black Rock Restaurant Group; Meriel Armitage, founder of Club Mexicana; and Simon Hooper, international business director at street food cafe franchise Chaiiwala. Premium subscribers also receive access to six databases: the Multi-Site Database, which is produced in association with Virgate; the New Openings Database; the Propel Turnover & Profits Blue Book; 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 kai.kirkman@propelinfo.com 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.

People the main focus as hospitality leaders plan tech investment in 2024: Research from CGA by NIQ and Fourth shows three in five hospitality leaders plan to invest in new technology solutions in 2024, with employees their main area of focus. The latest edition of the Business Confidence Survey reveals 61% of leaders intend to implement new solutions over the next 12 months, while another 20% intend to do so within the next three years. Only 15% think all their required technology is already in place. Just over half (55%) say staff scheduling and rota management is a top-three benefit from investment in technology, and more than a third think it helps with payroll (41%) and employee onboarding (35%). Four in five (81%) leaders agree that it can increase productivity, while three in five (63%) think it improves employee engagement. It can also help businesses improve their stock efficiencies, with significant numbers citing better inventory management (43%), recipe and menu compliance (37%) and supplier management (24%) as top-three benefits. Sebastien Sepierre, managing director – EMEA, Fourth, said: “Following a year that has seen staffing challenges continue across the sector, our latest Business Confidence Survey reveals the essential role technology plays in supporting hospitality businesses with staff retention through engagement, scheduling and more. The current economic climate has also revealed the need for leaders to identify efficiency measures wherever possible, and investment in technology could hold the key to streamlining operations across the board. Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “Technology is at the heart of hospitality now and these numbers show leaders recognise the need for smart and sustained investment. With recruitment and retention such big issues for all employers, digital solutions are going to be especially important in delivering good experiences for staff and retaining top talent. Capital is squeezed at many businesses, and many areas will be battling for investment in 2024, but deploying the right tech from the right partners can deliver big competitive advantages in a tough market.”

SSP to introduce UK brands to Saudi Arabia: SSP, the operator of food and beverage outlets in travel locations worldwide, is to further expand its presence in Saudi Arabia, having signed a new contract with Jeddah Airport to operate three food and beverage packages, representing a total of 26 units, for an initial duration of between five and seven years. As part of its offer, SSP said it will be bringing an “exciting mix of international and local proprietary and franchise brands to Jeddah”. These will include the Saudi launch of Jamie Oliver Kitchen, PizzaExpress and the London-based gelato specialists Snowflake and Crêpeaffaire. The Jeddah-based Social Kitchen and Social Bakery will bring a sense of place, along with regional favourite Cafe Bateel, as well as the bespoke Falafel & Friends. SSP’s own travel brands will include Jaipur (Indian street food), Soul + Grain, Negroni, Ritazza and Camden food co, among others. At the same time, SSP has acquired Calgary-based ECG Ventures Limited (ECG), which sees it take over the leases of three units at Calgary Airport and an additional two at Edmonton Airport. The five new restaurant/bars – The Kitchen by Wolfgang Puck, Bistro on the Bow, Belgian Beer Café (two units) and The Canadian Brewhouse – complement SSP’s existing business at both airports Patrick Coveney, group chief executive of SSP, said, “Both the acquisition of ECG in Canada and the significant contract win at Jeddah are excellent examples of our business development strategy in action. We are clear that a combination of investing in organic growth and carrying out selective infill M&A will create sustainable long-term value and returns, and North America and the Middle East are important areas of focus for expansion. We very much look forward to welcoming the ECG team to SSP and to delighting passengers at Jeddah with our carefully selected mix of brands and concepts.”

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