Hakkasan plunges to £4m loss but receives £49.9m cash boost: Hakkasan, the international restaurant company founded in London by Alan Yau and owned by Abu Dhabi-based Tasameem since 2007, has plunged to a loss of £4,048,000 on turnover of £28,129,000 in the year to May 2012. The company made a small pre-tax profit of £58,000 on turnover of £20,933,000 the year before. The company is likely to have also seen losses in its most recent financial year after expenses incurred in opening its Chrysan Japanese restaurant site in September 2012 which closed in April this year – as well as other sites around the world. Hakkasan reported it is reviewing options for the Chrysan site but that its Chinese fine dining restaurant HKK, which opened in December 2012, is ‘trading satisfactorily’. Ebitda in the year reported at Companies House was minus £158,000 compared to £1,453,000 the year before. Turnover of £28.19m was a 34% increase on the year before driven by the first full year of operations from Hakkasan Mayfair, which opened in November 2010. The company said the Ebitda loss was £1.3m adverse to prior year because of higher central costs incurred in developing new restaurants worldwide. It added: “Overall profitability has been impacted by significant pre-opening and development costs as the Hakkasan brand is expanded.” The company operates 13 restaurants in total – nine Hakkasans, two Yauatchas, Sake No Hana and HKK. A Hakkasan opened in San Francisco in December 2012 followed by the first Hakkasan nightclub within the MGM Grand Complex in April and a restaurant the following month. A further Hakkasan opened in January this year within the St Regis complex in Doha, Qatar and is being operated under a management contract. Further Hakkasan restaurants are due to open in Los Angeles and Shanghai this year. Administrative expenses at the company increased to £14,942,000 from £9,457,000 the year before. The company has accumulated losses of £16.9m with current assets worth £32.8m. During the year the company received a £49.9m cash boost from its owner to finance working capital and fund the build of new Hakkasan operations in the US and China. The company also settled a long-running dispute with HMRC in December 2011 over its National Insurance contributions relating to its tronc system – a £546,000 provision was written back to profit. The accounts show that the Cha Cha No Hana restaurant had lost £484,000 in the six months prior to its acquisition by Hakkasan.
Propel Opinion: Hakkasan has an owner with deep pockets and an unshakeable belief in the power of its retail offer. For most companies, the huge investment in opening Chrysan and then closing it eight months later (whilst still paying the rent) would slow progress to a snail’s pace while cash resources recovered. For Hakkasan, it’s likely to prove little more than a speedbump in the road. The company may have accumulated losses of £16.9m since it was founded, but Tasameem just keeps topping up the cash reserves in the belief that it has a world-beating offer with brand extension potential. For some, it’s difficult to reconcile a nightclub offer in Las Vegas with the Michelin-starred offer that started life in London’s Bruton Street.
