Deep Blue Restaurants expands after reducing debt: Fish and chip brand Deep Blue Restaurants is adding an expected eight sites to its 21-strong portfolio after reducing debt. The company converted loan notes to new shares in October 2017, reducing debt from circa £4.4m to £200,000. The company stated: “The debt reduction allowed us to progress discussions with Barclays Bank regarding a banking facility of £2m that will allow us to acquire eight new sites and rebrand the acquisitions and existing sites that are not currently operating under the Deep Blue brand. The acquisition of a chain of six of these sites was completed on 14 November 2017 and one site in Southsea was completed on 5 December. Two remaining acquisitions are expected to take place in the early part of 2018. Enhanced cash flow resulting from the acquisitions should provide the necessary funding for additional acquisitions over the course of the current financial period. Our intention is to rebrand all existing sites not carrying the Deep Blue brand by the end of December 2018.” The company reported sales increased 26.4% to £7,541,402 in the year to 26 September 2017, with like-for-like sales up 4.6%. Ebitda decreased 6.2% because of a lower gross margin (68.5% versus 70.3% the year before) caused by a reduction in the value of sterling, new sites opening costs and increased infrastructure costs to support growth. Its Spanish franchise partner opened another Deep Blue in Alicante airport and the company’s events business enjoyed “a record year for sales operating primarily at the Oval”. The company reported a loss before tax of £411,742 compared with a loss before tax of £192,425 the year before due to higher depreciation charges.

Hunky Dory Pubs reports sales of £3m in first year: Hunky Dory Pubs, the “managed expert” joint venture that is 51% owned by Ei Group and 49% owned by Oakman Inns & Restaurants, led by Peter Borg-Neal, has reported sales of £3,002,104 in the period to 30 September 2017 – the company was incorporated on 11 May 2016. It made an operating loss of £135,821 and a loss before tax of £193,041. The first Hunky Dory pub, The Beech House in Solihull, opened in August 2016. Solihull was the third site to open within Oakman’s fledgling Beech House brand and was the 16th within its wider existing stable. Ei Group chief executive Simon Townsend said at the time: “The opening of our first Hunky Dory site marks a significant milestone in the development of our ‘managed expert’ model. We’ve worked closely with Peter to find the right venue and create the perfect retail offer to ensure the business will thrive.” Two other Hunky Dory pubs are in the pipeline – the Four All, Welford-upon-Avon, and The Walter Arms, Sindlesham. Oakman’s average site volume across its estate exceeds £30,000 per week.

EAT reports increase in Ebitda, operating loss rises: EAT has reported Ebitda increased 19% to £4.3m in the year to 29 June 2017 – like-for-like sales grew 4.9%. Turnover dropped to £99,214,536 compared with £101,079,357 the year before. The company stated: “Tight cash management delivered an improvement in net cash flow before financing of £4.4m compared with 2016 and we closed the year with £5.2m of cash. We have opened our first two stores with the Compass Group, one of our key new partners. We will also open our first international store in Madrid airport with Group Ibersol, followed by a new flagship store in Liverpool Street station in conjunction with our long-standing partner, The Restaurant Group. During the year, the company launched Pretzel Subs, a new category with five flavours; launched new modern packaging; simplified its food preparation and till lay-out to improve speed of service; launched a new website plus in-store ticketing and menu screen; and refurbished its Long Lane store to test a ‘sleek, new look’.” The year produced an operating loss of £3,705,741 compared with an operating loss of £1,489,800 the year before. It had an exceptional costs of £1,473,452 in relation to “restructuring costs”. Earlier this month, Sky reported EAT is considering a wave of shop closures as it becomes the latest retailer to be forced to react to a rising high street cost-base. KPMG is understood to have been brought in by EAT’s management several months ago to advise on restructuring options.

City Pub Company gets go-ahead for new Cambridge train station pub: City Pub Company has been granted approval to open a new pub within Cambridge railway station, fronting the city’s new-look Station Square. Under the plans, which were lodged with Cambridge City Council in December, the grade II-listed unit one of the station will be transformed into The Old Ticket Office. City Pub Company has also proposed the installation of a new kitchen, toilets and a new mezzanine floor. The outside of the property will feature al fresco seating. The City Pub Company also owns The Mill, Cambridge Brew House, The Old Bicycle Shop, The Punt Yard, The Petersfield and The Red Lion in Cambridge, as well as venues across London and the south east of England. Planning officers said the new venue “adequately respects the residential amenity of its neighbours and the constraints of the site”. Approval is subject to a number of conditions, including the pub only operates between the hours of 7am and midnight. The Old Ticket Office will join the Station Tavern, Wasabi and Chill#2 coffee shop at Station Square. The area of the city has undergone significant redevelopment in recent years as part of the CB1 project, which is aiming to breathe new life into the station and the surrounding spaces. Station Road, Hills Road and Station Square now comprise student accommodation, apartments, bars, restaurants and offices, which are home to companies such as Deloitte and Microsoft Research. A revamp of the station’s interior was completed in 2016.

Peel Hunt – pubs continue to outperform restaurants: Leisure analysts at Peel Hunt have noted pubs continue to outperform restaurants according to the latest figures from the Coffer Peach Tracker. A note stated: “The Coffer Peach Business Tracker rose by 0.6% in January, with like-for-like sales up 1.0% in managed pubs and at 0.0% for restaurants. In both cases, this was exactly in line with their 12-month average. Trading continues to be strongest in wet-led pubs, followed by food-led pubs, and weakest in restaurants, continuing the inverse relationship with supply growth. Wet-led pubs have continued to outperform food-led pubs. This may be partially due to adverse weather which typically favours local pubs over destination food pubs. However, we believe it is part of an established trend that is connected to premium pubs outperforming lower-priced segments. London outperformed, with managed pubs like-for-like sales up 2.0% and managed restaurant like-for-like sales up 1.0%. In comparison, managed restaurant like-for-like sales fell by an average of 0.3% outside London. ‘A string of site closures announced by some of the sector’s more high-profile casual dining brands has done little to bolster confidence in the sector and some would say ‘an adjustment’ in the restaurant sector was overdue following a ‘lemming-like expansion programme’, according to CGA. Excess restaurant expansion has undermined like-for-like sales. Operators have responded by increasing low-margin discounting and delivery activity, subsequent to which restaurant sector like-for-like sales have deteriorated at an even faster pace. We expect there will be more casual dining casualties. We expect the ongoing trends to favour Ei Group (‘Buy’; target price 165p), Fuller’s (‘Add’; target price 1,150p) and Shepherd Neame (‘Add’; target price 1,325p).”