PAUL UK reports revenue rise in 2016: PAUL UK, the 36-strong French bakery and café brand, has reported sales rose 12.3% to £32.3m for the year ended 31 December 2016. Sales were up 3% on a like-for-like basis. Group Ebitda (before head office costs & management fees) was £3.2m. Two new bakeries opened in Notting Hill Gate and Earl’s Court, and both are ‘trading well’. A total of 11 stores refurbished, resulting in an uplift in sales in all. There was a significant development of the brand’s catering/delivery offer with investment in the central bakery, expansion of product range and improved online ordering portal. Investment in the estate has continued with five sites earmarked for refurbishment. A new format kiosk has opened at Tower 42 with two new opening planned by the end of the year. New products have been developed putting the spotlight on the heritage of our brand and authenticity of our French bakery and patisserie. The company continues to partner with the charity, the Felix Project, distributing unsold items to help the homeless. Chief executive Jean-Michel Orieux said: “The fall in the value of sterling, business rate increases and the absorption of the National Living Wage provide challenging trading conditions. Through the continued refurbishment of our stores, development of our product range and central bakery plus commitment to our team and processes, we are confident PAUL will continue to engage with our customers and perform well.”
Douglas Jack – Domino’s is a winner in a storm: Peel Hunt leisure analyst Douglas Jack has issued ‘buy’ note on Domino’s, arguing the company is a ‘winner in a storm’. He said: “In our view, the interim results had something for everyone. The bears can dwell on Q2’s weak like-for-like sales, H1’s lack of margin growth for Domino’s and the lower profits per store for franchisees. The bulls can highlight H1’s perfect storm, the potential of new initiatives, the business’ cash flow and franchisees choosing to accelerate expansion even though Domino’s has cut the incentives. We are with the franchisees and would prefer to look forward. Domino’s has almost matched the UK food delivery market’s strong rate of sales growth over the last three years. Collectively, the rest of the pizza delivery market is barely growing sales, with the aggregators taking minimal share (within pizza delivery). Over the last six years, Domino’s store count has grown by 54% versus a 23% decline for the rest of the pizza delivery market. With weekly sales more than double that of its competitors, Domino’s targets increasing its share of the pizza delivery market from 46% to 60%. Pizza delivery growth has been undermined by the availability of food delivery for other cuisines, although these other cuisines are now so established that the pace of the mix shift away from pizza should slow down. Thus, there is plenty delivery market growth, of which Domino’s should capture a good share aided by expansion, greater marketing and innovation. Restaurant competitors are struggling. In our view, demand and supply growth within the full service restaurant market is moving into negative territory. Our demand figures include low-margin delivery sales that are cannibalising and undermining the in-house restaurant experience. According to Nectar, 43% of consumers are now eating out less in restaurants as a result of delivery apps, and 42% say they prefer to entertain at home than eat out. Our Domino’s forecasts, which assume 1% like-for-like sales growth for the UK, are in line with consensus for 2017E. Facing softer comps, and with the benefit of numerous sales initiatives, our forecasts assume 2% like-for-like sales in both 2018E and 2019E. These too are in line with consensus. Domino’s P/E is highly influenced by like-for-like sales despite earnings growing by 10% in H1 without any like-for-like sales growth in the UK, and its ability to generate £0.7bn of excess cash flow over the next eight years. The US and Australian businesses, which operate in more saturated environments, are generating 10% and 17% like-for-like sales, respectively. We believe the UK is capable of recovering to c5% like-for-like sales, which should trigger a re-rating.”
Shake Shack takes Cambridge Circus site: Property landlord Shaftesbury has announced that Shake Shack has taken a prime 4,500 sq ft site at Cambridge Circus, on the junction of Shaftesbury Avenue and Charing Cross Road in the heart of London’s West End. The Cambridge Circus restaurant is a minutes’ walk from Tottenham Court Road station, which is set to become the busiest transport hub in the West End when the Elizabeth Line commences in late 2018. Cambridge Circus is a significant catalyst linking Seven Dials, Chinatown, Theatreland, Soho and Shaftesbury’s recently-completed Central Cross scheme. Julia Wilkinson, group restaurant and strategy executive at Shaftesbury, said: “Shake Shack’s game-changing re-interpretation of a fast food classic already has a strong and loyal following in the UK, and we are pleased to welcome their flagship London restaurant to Cambridge Circus, an iconic location in the heart of the West End. This new arrival is another example of restaurateurs and retailers clamouring for sites on our streets which will be major beneficiaries of expected footfall growth from the opening of the Elizabeth Line in around 500 days from now. With the axis of the West End tipping northwards, all our locations are within a short walk of the new major transport hubs at Tottenham Court Road and Bond Street.”
