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Morning Briefing for pub, restaurant and food wervice operators

Mon 30th Sep 2024 - Tasty and Brighton Pier Group results
Tasty – outlook ‘cautious’ for rest of 2024 but ‘optimistic’ about navigating current challenges, Harald Samúelsson steps down as NED: Wildwood operator Tasty has said its outlook remains “cautious” for rest of 2024 but that it is “optimistic” about navigating its current challenges. The business, which earlier this year agreed a restructuring plan and received a £750,000 loan to fund this and provide additional working capital, said: “In these uncertain times, we are maintaining a cautious approach. Prioritising staff retention and cost control remains crucial, and the board is cautiously optimistic about navigating the current challenges. Above all, we extend our heartfelt gratitude to our employees, shareholders, suppliers and other stakeholders for their unwavering support throughout the restructuring process.” Harald Samúelsson will also step down from his position as non-executive director and leave the company with effect from tomorrow (Tuesday, 1 October 2024), to focus on other business opportunities. “The board would like to thank Harald for his beneficial contribution over the last 3 years and wishes him well for the future,” the company said. “The board will commence the search for an additional independent non-executive director as soon as practicable.” It comes as Tasty reported revenue of £19.1m (H1 2023: £21.7m), a decrease of 12.0%, for the 26 weeks ended 30 June 2024. It reported adjusted Ebitda of £1.9m (H1 2023: £1.1m) and an impairment charge of £0.8m (H1 2023: £4.0m). Profit before highlighted items was £0.6m (H1 2023: loss £1.0m) and cash balance was £3.0m (H1 2023: £2.8m). The company started the period with 51 trading restaurants and 14 closed, ending the period with 37. It said the cost-of-living crisis, rapid decline in consumer confidence and interest rates are expected to further impact revenue in H2 2024, and while inflationary pressure on labour and food continues to adversely affect profitability, it is being kept under control. “H1 2024 was a period of significant change for the group,” chairman Keith Lassman said. “Following a period of external challenges which impacted the group’s business and trading performance, the board explored strategic and restructuring options available to it. The board concluded that it was in the best interests of the group to enter a court and creditor approved restructuring plan alongside a number of additional measures to be implemented across the group, to restructure the group to return it to profitability and secure its long-term future, in order to deliver the best outcome for stakeholders. The restructuring plan was launched on 9 April 2024 with the immediate closure of nine trading restaurants, and a further two restaurants closed in May 2024. Two non-trading restaurants and three sub-lets were also exited as part of the restructuring plan. Outside of the restructuring plan, two restaurants were closed earlier in the year and one lease assigned in June 2024. In total, 14 trading restaurants closed in H1 2024, unfortunately resulting in around 160 redundancies during the period. Despite operating in a challenging environment and facing disruptions from the restructuring plan, 2024 performance was only marginally behind 2023 for the same period, with like-for-like sales down -0.4%.  The first quarter showed a slight improvement of +0.7% compared to the previous year.  However, the second quarter, affected by the restructuring plan and various sporting events, saw a decline of -1.4% in like-for-like sales compared to 2023. The casual dining market continues to contend with several adverse factors, including ongoing uncertainty from the cost-of-living crisis, inflationary pressures on food and increases in the national minimum wage. Given these challenges and the ongoing restructuring of our estate, our outlook remains cautious for the remainder of 2024. Across the industry and the retail sector there has been a decline in consumer confidence and a discernible decline in discretionary spend. H1 2024 has been a period of significant change for the group with the reshaping of our estate and the wholesale changes to our operating structure. The national minimum wage has continued to rise, but staff shortages have eased somewhat due to contraction in the hospitality sector, alongside notable improvements in our recruitment, training and employee engagement efforts. As a result, staff retention and labour shortages are now less of a challenge than before. However, with the labour market remaining highly competitive, we remain committed to motivating and developing our teams through regular training, opportunities for progression and pay reviews to stay competitive. Inflationary pressures have remained significant, particularly due to increases in minimum wage and food costs. Despite the ongoing rise in food inflation, we have managed to improve our food margin by 1.6% compared to the first half of 2023. Our utility fixed contract, which expired in June 2024, has been renewed with an 18 month deal approximately 10% lower than the previous contract.”

Last chance to book today for Propel’s Talent & Training Conference with focus on how companies can build a culture to attract, develop and retain talent: Today (Monday, 30 September) is the last chance to book for Propel’s Talent & Training Conference. The all-day conference takes place tomorrow (Tuesday, 1 October) at One Moorgate Place in London and is open for bookings. The conference will showcase examples of outstanding people culture among companies within the sector and how the industry is attracting talent. Attendees will hear how businesses are developing their teams, dealing with talent shortages and keeping their staff energised. Also new for this year are “parallel sessions”, which offer the chance to deep dive into specialist subjects. For the full speaker schedule, click hereTickets are £345 plus VAT for operators and £395 plus VAT for suppliers. Premium Club members get a 20% discount. Email: kai.kirkman@propelinfo.com to book places.

Brighton Pier Group reports ‘encouraging’ summer but warns full year sales and earnings could be ‘lower than previously expected’: Brighton Pier Group has reported an “encouraging” summer but warned its full year sales and earnings for 2024 could be “lower than previously expected”. The company said in a trading update: “As reported in the 26 July 2024 trading update, adverse weather conditions in the early months of the year resulted in sales and earnings at the pier being lower than previously expected. Trading in the busier summer months was more encouraging, with like-for-like sales of £11.5m for the group in the 12-week period ending 15 September 2024, only £0.2m or 2% behind the equivalent weeks in 2023 (2023: £11.7m). Total sales at the pier for this period were £6.3m (2023: £6.0m), boosted by the successful introduction of the £1 admission fee for non-residents. Despite the performance of the summer trading period, the pier-led sales and earnings deficit to original expectations from the earlier months of the year has not been recovered, and the board’s current expectation is that this shortfall will persist through the remainder of the current financial year. As a consequence, the group’s outlook remains one of caution in the short-to-medium term. The board believes that if trading continues in line with the last few months, full year sales and earnings will be lower than previously expected for 2024.” Chief executive Anne Ackford said: “As previously reported, the group experienced disappointing trading conditions during the first half of the year. While a warmer weather spell during August and the successful implementation of a £1 admission charge on the pier for non-residents offered some respite, the overall demand across the estate has remained subdued as consumers continue to closely manage discretionary spend. Looking forward, the group is focusing on disciplined cost management, which will put us in the strongest possible position to capitalise once economic conditions have improved. We are also actively looking into longer term options that will reduce the pier’s reliance on good weather.” It comes as the group reported that for the six-month period ended 23 June 2024, on a like-for-like basis (excluding the impact of the three closed or disposed sites in the bars division) total revenues for the group were £13.9m (2023: £14.9m). As previously reported by the group, the majority of this £1m year-on-year shortfall arose from the pier, where adverse weather conditions led to lower footfall throughout the period. The remaining three divisions traded broadly in line with expectations. Total like-for-like revenue in the period was £13.9m (2023: £14.9m). Total revenue in the period was £13.9m (2023: £16.2m). Group Ebitda was £0.4m (2023: £1.4m). Profit before tax was £0.2 million (2023: loss of £3.9m). Net cash flow from operations was £1.1mi (2023: £3.2m). Net debt was £7.6m (24 December 2023: £7.4). Brighton Palace Pier sales of £6.4m were down £1.1m versus last year (2023: £7.5m), due to wet and windy weather throughout the first half of the year that forced rolling closures of higher-margin rides, and a general downturn in domestic tourism in Brighton. The bars division continues to operate in a challenging trading environment but has in large parts successfully mitigated the severity of the trading challenges through the closure and disposal of three loss-making sites in early 2024. As a result, on a like-for-like basis total sales of £2.6m (2023: £2.8million) were down only £0.2m versus 2023. The golf division delivered a consistent trading performance, with total sales of £3.2 in line with the previous year (2023: £3.2m). Lightwater Valley saw a 26% increase in visitor numbers during the period, which was driven primarily by successful marketing campaigns that targeted key dates. Sales of £1.7m were 16% ahead of last year (2023: £1.4m), with lower average admissions prices through targeted promotional offers partially offsetting the impact of the resulting larger number of visitors.

Signs that modern slavery victims were being forced to work at a McDonald’s branch were missed for years: Signs that modern slavery victims were being forced to work at a McDonald’s branch were missed for years, the BBC has found. A gang forced 16 victims to work at either the fast-food restaurant or a bread factory while well-established signs of slavery were missed. McDonald’s UK said it had improved systems for spotting “potential risks”, while the British Retail Consortium said its members would learn from the case. Six members of a family-run human trafficking network from the Czech Republic have been convicted in two criminal trials, which were delayed by the covid pandemic. Nine victims were forced to work at the McDonald’s branch in Caxton, Cambridgeshire. The victims, who were all vulnerable, earned at least the legal minimum wage, but nearly all of their pay was stolen by the gang. The exploitation ended in October 2019 after victims contacted police in the Czech Republic, who then tipped off their British counterparts. Warning signs missed for at least four years include victims’ wages were paid into bank accounts in other people’s names – at the McDonald’s, at least four victims’ wages were being paid into one account, controlled by the gang, and victims working extreme hours at the McDonald’s – up to 100 a week, with one victim working a 30-hour shift. “It really concerns me that so many red flags were missed, and that maybe the companies didn’t do enough to protect vulnerable workers,” said Dame Sara Thornton, the former independent anti-slavery commissioner.
 
Bank of England warning for businesses owned or backed by private equity: Businesses owned or backed by private equity are “more vulnerable to default than all other” large businesses, the Bank of England has warned. Companies involved with private equity are at greater risk of being unable to meet all their debts compared to corporates that primarily borrow from mainstream lenders such as banks, according to a report published on the Bank’s research website. The warning was underpinned by data gathered by Bank researchers who mapped out the scale of private equity-backed firms in the UK economy. It showed that more than two million people are working for a business engaged with PE funds and that these companies are liable for 15% of all UK corporate debt, reports The Times. The researchers said that companies backed by PE are more likely to be at risk of breaching their debt obligations as they tend to generate lower earnings and returns in proportion to their interest expenses. Just over one in five of these companies were at risk of default last year — down from one in four in 2022 — compared with around 11% of listed companies and 14% of all other businesses. The researchers said: “A larger proportion of PE-backed corporates simultaneously breach key thresholds for [debt sustainability] metrics than in the respective samples for all other corporates and listed corporates.” About a third of all jobs at PE-backed corporates are in London, the Bank of England said, by far the area with the greatest density of PE-reliant employment in the UK.

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