Propel Newsletter Archive Page

Shepherd Neame says demand encouraging but expects further cost pressures as it reports record first-half revenue: Kent brewer and retailer Shepherd Neame has said consumer demand has been encouraging but expects further cost pressures as it reported record first-half revenue. For the 12 weeks to 18 March 2023, retail like-for-like sales (67 pubs) were up 12.8% on last year and 13.0% on 2020, just prior to the impact of the covid pandemic. Like-for-like tenanted pub income (229 pubs) for the nine weeks to 25 February 2023 was up 4.9% on last year and 1.7% on 2020. Total beer volume for the period was down 5.5% versus 2022 and 6.5% on 2020. Own beer volume was down 3.0% versus 2022 and 1.8% versus 2020. At the end of February 2023, Shepherd Neame had total committed facilities of £114.3m and headroom of £32.8m. The company, which operates 301 pubs, stated: “Consumer spending has remained good throughout this period – and better than many had expected – albeit the underlying volumes of food and drink are still down on pre-pandemic levels. Costs are up in all channels, some significantly above the prevailing rate of the Retail Price Index, with further costs to be absorbed. The extraordinary rises in costs in the brewing business, in particular, are likely to impact margins in the short term. The second half will present further challenges to our cost base, but it seems likely that the specific energy and Ukraine-war related factors that have driven this inflation will start to abate in the next financial year. The consumer cost-of-living squeeze may also start to ease as wage increases close the gap. This has been a tough time for anyone in the hospitality sector, with one crisis rolling in to the next. The events of the last few years demonstrate how unpredictable such things can be, and we remain flexible and agile to respond to further events. The fundamentals, though, for the business remain good. With a strong balance sheet, and a cash generative business, we are now focused on maximising growth potential through delivering our investment and project plans. We have an excellent pub estate with considerable potential, well established brands, a loyal customer base, and a high profile within the individual communities we serve. All these factors will stand us in good stead as the cost of living crisis eases and the economy returns to growth.” Revenue for the 26 weeks ending 24 December 2022 increased 8.4% to a record £85.3m (2021: £78.7m) and was also above the £79.0m for the 26 weeks ended 28 December 2019. Statutory profit before tax was £5.5m (2021: £5.4m) and also up on the £5.3m. Net debt excluding lease liabilities as at 26 December 2022 was £82.8m (2021: £82.4m). Total retail sales were up 18.0% to £36.9m (2022: £31.3m). Retail like-for-like sales were up 11.9% on last year and also 1.2% above that for the 26 weeks ended 28 December 2019. Retail like-for-like sales inside the M25 were up 39.1%, outside the M25 and 3.4% inside the M25 versus last year, which it said reflected “increased footfall in London as people return to their offices”. It said retail sales growth was mainly driven by drink sales with like-for-like sales up 27.4% on last year. Food like-for-like sales reduced by 3.3% versus last year and accommodation like-for-like sales were down 8.6%. Like-for-like tenanted pub income was up 7.1% on last year and 1.5% on the 26 weeks ended 28 December 2019. Divisional revenue was £17.4m 2022: £16.4m) and operating profit was £6.9m (2022: £5.6m). Chief executive Jonathan Neame said: “We have an excellent pub estate with considerable potential, well established brands, a loyal customer base, and a high profile within the individual communities we serve. All these factors will stand us in good stead as the cost of living crisis eases and the economy returns to growth.”

Host of Asian-inspired concepts set to join updated Premium Database of Multi-Site Companies: A host of Asian-inspired concepts are among the 22 new multi-site companies being added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday, 31 March, at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, features Leeds Asian street food company Little Bao Boy, founded by former investment broker James Ooi in 2018, and operates two sites in Leeds and one in both Birmingham and Manchester. Also added this month is Japanese concept Oita, which is led by Fan Yi, and operates two sites in London, at the Green Rooms hotel in Wood Green, and in Chinatown’s Gerrard Street. In addition, pan-Asian restaurant and bar Geisha, which is based in Newcastle and will be opening two new restaurants in north Tyneside, will be featured. Premium subscribers will also receive a 3,000-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database features 2,769 companies. Premium subscribers will also receive the next edition of the New Openings Database on Thursday, 6 April, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 6,000-word report on the new additions to the database. Premium subscribers also receive access to three other databases: the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; and the Who’s Who of UK Food and Beverage. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Premium subscribers are also to be given exclusive access to the recording and slides to Propel Multi-Club Conferences. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Ten Entertainment Group sees like-for-likes up 2.7% in early 2023 as it reports record full-year sales and profits: Ten Entertainment Group, the operator of 49 bowling and family entertainment centres, has reported an “encouraging start” to 2023 with like-for-like sales up 2.7% on last year in the first ten weeks. The company, which reported record sales and profits for the year ending 1 January 2023, said it had maintained prices “to continue to deliver value for money and maintain sales”. It said 90% of its utility costs are fixed until September 2024 and the business is “operationally focused to minimise the impact of cost pressures and maximise revenues to maintain profitability”. The group said it has “several” more properties where it is close to finalising legal agreements and fully expects to strengthen the pipeline as the year progresses. The company stated: “FY23 has started well. We are pleased with this continued sales growth, and are cautiously optimistic for the year ahead. We are confident that we have a fantastic customer proposition and will continue to focus on providing the best value-for-money social experience in the market. However, we are mindful of the strain on our customers’ finances and will not be complacent in assuming that the success of the past two years will automatically continue. Our target is to maintain modest like-for-like growth, supplemented with our pipeline of new centres throughout 2023. We have already opened Crewe in February and are under construction in Milton Keynes and in Dundee. We fully expect to add more centres to our estate as the year progresses. We expect cost pressures to persist, but we are confident that we are operationally well set up to mitigate them where we can without compromising the value for money that we offer our customers.” Revenue for the year ending 1 January 2023 was £126.7m (2021: £56.9m) and up 50.6% on 2019. Like-for-like sales for the period were up 5.5% year-on-year. Group adjusted Ebitda after rental costs was up to £39.6m (2021: £14.6m) and up on the £23.6m in 2019. Group adjusted profit before tax was £26.1m (2021: £3.1m) and up on the £14.2m in 2019. Chief executive Graham Blackwell said: “2022 has built on the success of 2021 and we have taken the customer experience another step forwards. Our teams work tirelessly to deliver high-quality social entertainment and it is great to see those efforts rewarded by this record financial performance. We now have 49 centres across the UK and are in the process of building two more, with scope to continue rolling out our winning model to more customers over the coming years. Our model has broad appeal across the generations and for a wide range of customers, and our value-for-money proposition makes a visit to Tenpin an affordable treat. We continue to be mindful of the macro-economic climate and its effects. However, we remain confident that our investment strategy to deliver state of the art social entertainment together with our value proposition will continue to be very attractive to customers.”

UK inflation rate rises to 10.4%, driven by food costs: Surging food prices pushed up UK inflation unexpectedly in February, increasing the likelihood of another interest rate rise from the Bank of England this week. Annual consumer price inflation, which measures the difference in prices in February from the same point last year, increased from 10.1% to 10.4%, defying expectations of a dip to around 9.9% projected by economists. The Office for National Statistics (ONS) said the surprise strengthening in inflationary pressures was the result of higher price growth recorded in food, restaurants, and clothing. Food price inflation, which has been a record highs, rose again to 18.2% in February while price growth in restaurants and hotels was at its highest in 22 years at 12.1%. Food prices are now at their highest in 45 years, the ONS said, piling pressures on households who have been facing cost-of-living pressures over the last year. The largest upward effect came from vegetables with annual prices rising 18% – the highest rate since February 2009. There were shortages of salads and other vegetables in February after bad weather in southern Europe and Africa and higher electricity prices on produce grown out of season in greenhouses in the UK and northern Europe. Prices for bread and cereals, chocolate and confectionery, ready-meals and sauces, and hot beverages were the highest since at least 2008, the ONS said.

Bob & Berts reports record year following expansion into England: Cafe brand Bob & Berts has reported a record financial year following its expansion into England. The business, co-founded by Colin McClean and David Ferguson, saw turnover up to £17,750,690 for the year ending 30 June 2022 compared with £11,222,452 the year before. Pre-tax profit was down to £1,103,318 from £1,646,892 following a year of rising costs as well as opening costs of £313,471 that included its breakthrough into the English market, where it opened four stores during the period. A decade on from opening their first shop in Portstewart, McClean and Ferguson are halfway to their goal of reaching 50 stores. The business had already hit ten shops when it was backed by BGF in 2017. Another 15 outlets have been added since BGF came on board. The portfolio includes 14 coffee shops Northern Ireland, six in Scotland and five in England. In his report accompanying the accounts, Ferguson said: “The group has come out of the covid pandemic strongly having developed its offer to included delivery as well as strengthening its traditional sit in offer further. In addition to the direct covid pandemic challenges, the group has had to navigate the additional economic challenges the hospitality industry is facing with respect to food and drink inflation and the global energy crisis. Again, the group has managed to treat it well and deliver excellent results despite these challenges. Looking ahead to directors per see that there will be further challenges with regard to food and drink inflation and energy costs. With respect to consumer spend pressures, the group has a strong position within the market in terms of value and offer and will trade through any downtime strongly, with the group focusing hard on great customer service and value to its guests.” The business received government grants of £219,258 (2021: £1,796,289). In November, Ferguson told the Propel Multi-Club Conference that Bob & Berts plans seven openings in 2023. Bob & Berts will feature in the next Propel Turnover & Profits Blue Book. Its turnover of £17,750,690 is the 301st highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.

The Naked Deli undergoes restructure: North east healthy eating concept The Naked Deli is undergoing a restructure in an attempt to recover from the pandemic. Three of its cafes will remain open – in Gosforth Shopping Centre, in Chillingham Road in Heaton and in Newcastle’s Grey Street. But a recently opened York outlet has been closed and there are negotiations about the future of the business’ outlet at Newcastle International airport, which is currently shut. Liquidators have been appointed to The Naked Deli and a new company – Naked Deli North East – was set up last month to take over running of the eateries and takeaways, which employ about 30 people. The Naked Deli co-founder Chris Jones told Business Live the “knock-on effects of covid” had led to the move. He said: “This is about restructuring to make the business more profitable. We’ve closed one of the units in York.” Launched in 2014 in Heaton, The Naked Deli offers healthy products such as juice, superfood salads, sandwiches and raw vegan cakes as well as gluten and dairy-free, vegan and paleo dishes. The business initially expanded with a concession in Fenwick food hall that has since closed. Later it transformed the former Post Office unit in Gosforth Shopping Centre into a restaurant and 2,000 square-foot kitchen, where dishes were prepared for the other outlets. In 2017, the company received £2.5m investment from Foresight Group that was earmarked to help The Naked Deli grow with as many as 15 new sites around the country. John Upton, the former managing director of natural fast food brand Leon and a former boss at McDonalds UK, joined the business in 2018 following the investment but is no longer a director. Jones had previously said he wanted The Naked Deli to become the “healthy equivalent to Greggs”, a business he said was a northern brand that had taken on the UK with a strong offering.

‘Dartford Disneyland’ calls in administrators after Kent theme park plan collapses: Developers behind a planned £2.5bn Kent theme park to rival Disneyland have called in administrators after running up £100m in debt. The London Resort Company has appointed Antony Batty & Company to restructure its finances. The company was formed 12 years ago to build a “world class” resort near Dartford that at one point had the backing of Hollywood studios Paramount. Developers planned to build roller coasters inspired by The Godfather and Mission Impossible across a 1,245 acre site that was more than double the size of Britain’s largest theme park, Alton Towers. Paramount London, as it was initially called, was originally scheduled to open by 2018. However, the “Dartford Disneyland” project has faced repeated delays as a result of environmental concerns and local opposition. The London Resort Company dropped its planning application 12 months ago after the site was named a Site of Special Scientific Interest because a rare spider was found. The company promised to submit new plans taking into account the habitat this year. Administrators have now been called in to oversee a company voluntary arrangement (CVA), a process by which insolvent companies can renegotiate their debts. A spokesman for The London Resort Company Holdings (LRCH) told The Telegraph: “LRCH have taken the logical and sensible step of launching the CVA proposal. We’ve spoken to many of our creditors who are very happy to support the initiative which would see their debts converted into shares. Many millions have been invested into the Swanscombe Peninsula over the last decade and there remains a fantastic opportunity to bring forward exciting proposals.” Initial plans for the site included rides inspired by Paramount films as well as BBC programmes Doctor Who and Top Gear, and ITV’s Thunderbirds. Developers planned to install some of the fastest rides in Europe, an indoor water park, theatres and a sports arena. However, the agreement with Paramount broke down in 2017 and both the BBC and ITV withdrew last year following local opposition to the project.