Loungers reports record year, lfls up 17.9%: Cafe bar operator Loungers has reported a record year, with sales of £237.3m in the 52 weeks to 17 April 2022, adjusted Ebitda of £53.6m, and 27 new sites opened. Pre-tax profit for the period stood at £21.6m. The company, which opened its 200th site earlier this week, when it opened a Cosy Cub in Chester, said since the year end its like-for-like sales have been up 17.9% on a three-year basis, representing a 15% out-performance of the Peach Tracker. The company said that on a three year basis – from full re-opening on 17 May 2021 to 17 April 2022 – for the 48 weeks to 17 April 2022, it’s like-for-like sales – including VAT benefit – were up 22.1%, and excluding VAT benefit were up 14.2%. The company said that during the period its balance sheet strength was significantly enhanced, with non-property net debt reduced by £33.2m to £1m. It also said it had increased to five build teams and now has the capacity to open around 32 new sites per year. The company said: “Whilst the short-term outlook is of course uncertain, we remain confident in the future prospects for Loungers given the quality and value of our all-day offering. In addition, our pipeline of new openings is well-developed and we continue to see a wealth of excellent opportunities to occupy prime pitches on the high street. This, combined with our recently expanded fit-out teams, means that we now have the capacity to roll-out over 30 sites a year and expect to have at least 500 sites in the UK across both of our brands in the future.” At the same time, the business has appointed Guy Youll, formerly of Inspired Education Group, Superdry and Premier Inn, as its new chief people officer. Nick Collins, chief executive of Loungers said: “These results demonstrate the extent to which Loungers has thrived over the past year, achieving a record number of openings, record underlying like-for-like sales growth and a record level of profits. We are benefitting from changes in consumer behaviour, with more people staying local, working from home, and supporting their local community and high street. We are delighted to have just opened our 200th site, and to be announcing today that we are increasing our roll-out target for site openings to 30 for this year. Whilst the short-term economic outlook is challenging, we are in an excellent position to weather the storm and to take advantage of growth opportunities coming out of it. We have a strong balance sheet, a very capable and highly motivated team and an affordable, value for money all-day offer with enormous scope for further expansion across the UK.”

JD Wetherspoon reports improving like-for-like sales – strong results in regional cities: Like-for-like sales in the first 11 weeks of JD Wetherspoon’s Quarter Four of the current financial year were minus 0.4% (-0.4%), compared to the same, pre-pandemic, period in 2019. This was an improvement compared to the previous quarter,when sales were minus 4% (-4%). The company stated: “Many people predicted a boom in pub sales when lockdowns and restrictions ended, due to pent-up demand, but recovery for many companies has been slower and more laborious than was anticipated. Sales of spirits (plus 4.4%), cocktails (plus 18.6%), food (plus 2.1%), hotel rooms (plus 8.4%) and fruit/slot machines (plus 16.6%) were positive in the quarter, but sales of draught ales, lagers and ciders, historically the largest contributors to pub sales, were 8.0% below 2019. Wetherspoon operates 48 pubs trading as Lloyds, which had sales of plus 6.0% in the period. These pubs play music, unlike the rest of the estate, mostly during weekend evenings. Contrary to expectations, sales in major city centres, apart from London have been stronger than suburban locations or smaller towns. For example, sales in the latest quarter in central Cardiff were plus 14.9%, plus 13.8% in Newcastle, plus 9.5% in Nottingham, plus 8.6% in Glasgow, plus 8.5% in Bristol, plus 8.3% in Coventry, and plus 7.0% in Manchester. Wetherspoon has invested heavily in labour, repairs and marketing, following the ending of restrictions in February in order to strengthen our position for the financial year beginning 1 August 2022. Losses for the current financial year (FY22) will therefore be higher than expected at approximately minus £30m on a post-IFRS 16 basis (approximately minus £23m on a pre-IFRS 16 basis). Although sales now match 2019, labour costs are far higher. The company is, with minor exceptions, fully staffed. Staff retention levels have improved: pub managers have average length of service of 13 years 11 months (FY19: 12 years two months) and kitchen managers ten years five months (FY19: Eight years one month), for example. Staffing levels, morale and retention are also reflected in the key area of hygiene scores. Local authorities run a ‘scores on the doors’ scheme, whereby environmental health officers award pubs and restaurants marks out of five. Wetherspoon currently averages 4.99 out of five, its highest ever result, and the highest level of any substantial pub or restaurant company, we believe. In Scotland, where a ‘pass or fail’ scheme is used, all Wetherspoon pubs passed. Although repairs were reduced to minimal levels during lockdowns, there has been an element of ‘catch-up’, so repair costs in FY22 will be around £99m compared to £76.9m in FY19. Marketing costs also increased substantially since changes in restrictions necessitated, for example, new menus. Wetherspoon has invested £128m in the acquisition of freehold reversions of 48 pubs since FY19, of which it was previously the tenant, bringing the number of freehold pubs to 582, 68.3% of the estate. In addition, the company has also ‘regeared’ the leases of 15 pubs in this period, usually at lower rents than previously applied, with fixed, five-yearly rent reviews, which are significantly below current inflation rates. Of the company’s 270 leasehold pubs, 116 now have fixed rental increases. Wetherspoon has contracts for energy supplies until the end of FY23 at fixed prices which predate the current spike in energy costs. As previously indicated, Wetherspoon has long-term contracts for many bar and food purchases, which will moderate the highly inflationary cost increases which have been widely reported. As has also been previously indicated, Wetherspoon has fixed the floating rate interest cost of £770m of its bank loans, using swaps, at between 1.02% and 1.61% until November 2031. Wetherspoon believes that its overall costs will increase by less than the current rate of inflation in FY23.” Wetherspoon chairman Tim Martin said: “When covid-19 struck in early 2020, most governments, with the exception of Sweden, abandoned their WHO-approved pandemic plans and copied China’s approach by ‘locking down’. There have been many unintended consequences. Large numbers of people, as has been widely reported, have left the workforce, mainly through early retirement. Many people now work from home, rather than from offices, which has had a significant impact on transport and hospitality businesses, among other examples. The ‘fear factor’, used by governments to encourage compliance with lockdowns and restrictions, has also had lingering after-effects, with many people remaining cautious about leaving their homes. Inflation, mainly a result of the ‘money printing’ which was activated by governments and central banks to finance lockdowns, has proved to be far higher and more intractable than anyone anticipated. Wetherspoon has tried to take a long-term approach to these issues, investing heavily in the workforce, in buildings, in marketing and in contracts with landlords and suppliers, which will hopefully create a solid base for future growth. The company remains cautiously optimistic about future prospects.”