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Morning Briefing for pub, restaurant and food wervice operators

Tue 19th Dec 2023 - Update: Knoops trading, interest rates, property company merger talks
Knoops ‘positioned for higher profits in FY2024 with trading continuing to be strong’: Luxury hot chocolate shop brand Knoops has said it is “positioned for higher profits in FY24” with trading continuing to be strong. It comes as the business reported revenue in the six months to 30 September 2023 was up 90% to £3.31m (HY 2022: £1.74m), or 20% on a like-for-like basis. Operating Ebitda was up 433% – or 309% on a like-for-like basis – to £192,748 (HY 2022: £36,311). Since the period end, the business has added two more sites, taking its portfolio to 15, with plans in place to take the number of outlets to 20 nationally by April, including new openings in Edinburgh, Leeds and Exeter. The business said it has seen sales growth across all stores, with like-for-like drinks sales up 17%, and cold drinks up 33%. Knoops said margin growth has continued as the chocolate drinks category “becomes established” with a three times increase in operating Ebitda margin on a like-for-like basis. It comes as the business reported revenue for the year ending 31 March 2023 was up 67% to £4.43m (FY 2022: £2.64m), or 18% on a like-for-like basis with operating Ebitda up 206% – or 19% on a like-for-like basis – to £269,093 (FY 2022: £87,557). The company stated: “Current trading continues to be strong with excellent consumer demand for barista prepared hot chocolate drinks instore and Knoops chocolate flakes at home in the run up to Christmas. Chocolate flake sales have more than doubled on last year, up 139% year to date, with hot chocolate selection boxes a bestseller for Christmas so far, up 197% year to date. The company also enjoyed its best online sales day of the year on Black Friday with gifting sales up 162% on last year.” As previously reported Knoops is planning to more than double in size in 2024 following a £8.3m fundraising in November this year that leaves the business debt-free and “positioned for higher profits in FY24”. The business will now press ahead with its 12 month pipeline of an additional 20 openings from April 2024, targeting major cities and university towns, with medium-term domestic ambitions for 200 stores across the UK. In 2024, the company has plans to expand internationally and believes it has the ability to pass 3,000 stores around the world by 2030. William Gordon-Harris, executive chairman and chief executive of Knoops, said: “These are hugely exciting times for Knoops, and our financial performance illustrates the outstanding growth that we are achieving as our stores continue to showcase the joy of drinking chocolate throughout the year with customers of all ages. Not only are we creating a market for exceptional chocolate drinks on the high street, but our chocolate flake range means that our customers can enjoy Knoops at home, just as they do with coffee. There is so much depth to the market given the broad appeal of our product and the scalability of this business, and we’re more ambitious than ever before for the future of Knoops both here and abroad. In only four years we've gone from our original site in Rye to being selected as the brand partner of choice for Wonka, one of the biggest films of the year. We’re well placed for our best Christmas ever with record sales throughout November, continuing into December. Black Friday was our best online sales day ever, and sales of our hot chocolate selection box are significantly up on last year in recent weeks and likely to sell out. We also recently launched a highly sophisticated ‘next generation’ app that allows customers to tailor and pre-order their favourite Knoops drinks on their smartphones. Looking ahead, 2024 is already shaping up to be another exceptionally successful year for us. The whole team is fully engaged and ready for the challenge and it’s such an exciting place to be.”

Premium subscribers to receive next UK Food & Beverage Franchisee Database tomorrow: The next edition of the UK Food & Beverage Franchisee Database will be sent to Premium subscribers tomorrow (Wednesday, 20 December), featuring ten new entries and updates to existing entries. The database is updated every two months, and the latest version features 120 businesses and almost 50,000 words of content. Among the new entries are multi-brand franchisees KBeverage, which owns 48 Starbucks and this year also became a Domino’s and Slim Chickens franchisee, and Racz Group, which operates 59 Domino’s and 18 Costa stores and is also a franchisee for Grounded Kitchen. Also included are RTL Enterprises, which operates nine Chopstix sites across London, and Square Burgers, which became Wendy’s first franchise partner when it relaunched in the UK in 2021. 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 Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor 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 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.

Bank of England ‘needs jobs clarity before cutting interest rates’: The Bank of England has yet to see convincing evidence that wage growth and the labour market have cooled enough to move it towards reducing interest rates, a member of its rate-setting committee has said. Ben Broadbent, deputy governor of the Bank of England and a member of the monetary policy committee (MPC), said that impaired labour market data could force the bank to keep interest rates in restrictive territory for longer to make sure pay growth is kept in check, reports The Times. Speaking at London Business School, he said: “Given the volatility in the official [labour market] estimates, and the disparity, such as it is, among the various indicators we have, it will probably require a more protracted and clearer decline in these series before the MPC can safely conclude that things are on a firmly downward trend.” The Office for National Statistics has paused the release of its usual monthly labour force survey over concerns that the accuracy of the release has been hindered by a sharp reduction in response rates. Instead, the statistics agency has mined alternative data sources, such as benefit claimant numbers and tax information, to produce a temporary snapshot of the labour market. Under these latest estimates, wage growth was judged to have hit 7.3% in the three months to October, down from 7.8%, but still among the strongest increases since records began 20 years ago. Broadbent indicated that uncertainty over the true state of the labour market and pay settlements meant that the MPC was minded to keep borrowing elevated for longer rather than cutting it soon and risk feeding price pressures. Last week, the bank elected to leave borrowing costs on hold for the third meeting in a row at a 15-year high of 5.25%, although the decision on whether to tighten them again or keep them unchanged was “finely balanced”. Financial markets expect the MPC to lower rates by about one percentage point in 2024.
 
Alton Towers landlord LXi Reit in talks on LondonMetric merger: Property groups LXi Reit and LondonMetric are in talks to merge in a tie-up that would create the fourth-largest landlord on the London stock market. LXi Reit, which owns the land on which Thorpe Park and Alton Towers sit, has confirmed “is in discussions regarding a possible all-share merger” with LondonMetric. Between them, the pair own about £6.4bn of commercial property across the UK. If they were to combine, their joint stock market value of £3.9bn would be greater than some of the industry’s better-known and more established players, including British Land. LXi doubled in size in summer 2022 after merging with Secure Income Reit. It was through that deal that LXi came to own Thorpe Park, Alton Towers and Warwick Castle. The group also owns dozens of Travelodges as well as drive-thrus, supermarkets and pubs. LondonMetric used to own lots of retail parks, offices and residential blocks, but it has pivoted away from those and is now almost exclusively focused on warehouses. In the statement confirming talks, the two parties said the plan was to create “an internally managed REIT [real estate investment trust]”. LondonMetric has until 15 January to table a formal offer.

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