City Pub Group Q1 lfls up 13%, company now ‘in the best shape it’s ever been’: City Pub Group, the owner and operator of 43 premium pubs across southern England and Wales, has reported an encouraging trading performance in first three months of 2023, with like-for-like sales versus 2022 in excess of 13%, as chairman Clive Watson says company “is now in the best shape it's ever been in”. It comes as the business reported that for the year ended 25 December 2022, revenue rose 63% to £57.8m (2021 £35.4m), reflecting “a year without disruption from the pandemic”. Adjusted Ebitda in the year was up 111% to £8m (2021 £3.8m), while adjusted pre-tax profit was up 280% to £3.8m (2021 £1m) and reported profit/(loss) at £1.1m (2021 (£2.9m). Despite the impact of Omicron, the business said that like-for-like gross sales for FY2022 were up by 3%, improving to 7.8% in Q4. It said that for the first three months of 2023 it had traded “ahead of expectations which, whilst early in the year, provides confidence in the outlook”. It said its performance “was underpinned by increasing our pubs’ retail intensity as a result of the operational improvements implemented over recent years” and that “inflationary pressures in some areas are beginning to abate”. It completed its estate refurbishment programme during the year and has acquired two pubs since its interim results announcement in September 2022. The business said its balance sheet strengthened, with historic lows of £4m of net debt at year end, following the £16m sale of six pubs in June 2022. Estate further fine-tuned through disposal of three non-core leaseholds. It said that it had also increased its investment in Mosaic Pub & Dining Group to 48% this month (April 2023) for a cost of circa £2.2m, with the intention to take operational control in the next two months. It said: “The Mosaic estate comprises nine pubs situated in London and Birmingham, of which seven are freehold.  We welcome the Mosaic employees to our group. There are many cultural similarities between the two companies and we anticipate a smooth, effective and efficient integration process. This is a great step forward for the group, now with 52 operational sites located in great cities or fantastic destination locations.” Watson said: “The group has achieved a pleasing performance through 2022, demonstrating the strength of our adaptable model and ability to recover following covid and through the challenging conditions of the last year. Our premium estate is now fully refurbished creating, together with the strengthened management team, a platform for expansion when the time is right. Our near-term ambition is to continue to premiumise the pub estate to deliver additional organic sales and profit growth. We have seen an encouraging start to the year, with trading ahead of expectations which, whilst still early in the year, provides confidence for the coming year. Following significant change over the last three years, head office has been revitalised with an enthusiastic and ambitious team who will drive future growth. The Mosaic acquisition gives us further scale with more than 50 sites trading, the highest number the group has ever had. The platform has been created for expansion when the time is right. The pub estate is now fully refurbished – the focus can now be on primarily organic growth as we continue to increase our optimisation of capacity. There are a number of further acquisition opportunities which we are evaluating and should they meet our strict criteria, price expectations and maintenance of a strong balance sheet, we will continue growing our estate. If we can achieve organic growth and acquire new pubs at the right price, I am confident of strong progress in both the short and medium term. For the first time in three years, I am confident about crystallising enhancement of shareholder value. The Company is now in the best shape it’s ever been in.” City Pub Group features in the Propel Turnover & Profits Blue Book. Its turnover of £57.8m is the 114th 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 £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.

 

Sponsored message – WMT Troncmaster Services launches TroncBox: WMT Troncmaster Services – the UK’s leading provider of tronc advice, support and management services to hospitality businesses – has launched its new software package, TroncBox, exclusively available for use by its clients and their employees. Managing director Peter Davies said: “TroncBox is unique in that it is designed to give unprecedented functionality, analytics and visibility to businesses helping them operate a legal, fair and beneficial tronc system, but with its unique smartphone app also gives employees transparency into both their own awards and their tronc system. It’s designed to help businesses meet all of their obligations and record-keeping requirements under the forthcoming Employment (Allocation of Tips) Bill. Hospitality workers will have visibility like never before through TroncBox along with the reassurance of knowing that their tronc awards are always paid to them and shown alongside their wages on a single payslip, and that they’ll never be charged a penny to access or draw their tips.” WMT Troncmaster Services works with about 900 businesses day-to-day – including pubs, bars, hotels, members’ clubs, casual and fine dining that hold in excess of 30 Michelin stars between them – and makes tronc awards to more than 60,000 staff every month. Further information can be found at www.troncbox.com and at info@wmtllp.com. If you have a sponsored story you would like to see featured in this newsletter position, email paul.charity@propelinfo.com.

Blumenthal’s restaurants return to profit as turnover almost doubles, CEO steps down: Heston Blumenthal’s restaurant empire returned to profit in the year ending 29 May 2022 as turnover almost doubled. SL6, the parent company for Blumenthal’s Michelin-starred Fat Duck and Hind’s Head restaurants, reported turnover of £11,500,717, up from £5,341,538 in 2021. This compares to £13,356,870 in the last full year before the pandemic, ending 31 May 2019. Of the 2022 figure, £11,195,394 came from UK operations (2021: £5,341,538) and £305,323 from the rest of the world (2021: nil). The group turned a pre-tax loss of £1,008,994 in 2021 into a profit of £2,352,339 (2019: profit of £17,473). Group Ebitda also recovered from a £0.9m loss in 2021 to a £2.4m profit. It received £69,655 in government grants (2021: £1,262,614) and £34,242 in insurance claims (2021: £1,338,707). No dividends were paid. The accounts also revealed that chief executive Richard Turnbull stepped down from his position in January. In his statement accompanying the accounts, director Ronald Lowenthal said: “After the lifting of the pandemic restrictions, our businesses, like many in the hospitality industry, benefited from a much-needed business uplift. Sales grew rapidly from 60% of the pre-pandemic 2019 level to 90%. Throughout the year, the greatest challenge to business operation has been staffing, with unprecedented challenges in relation to recruitment. The director is of the opinion that the company is well placed to consolidate the businesses and ready to navigate future challenges. The company will concentrate on the continued strengthening of its brands by focusing on delighting our customers and managing costs. There is a high retention of staff and talent. Career development and training remain a business priority for us. Employees are the key enabler for all past, present, and future successes, particularly in the current challenging labour market.” Lowenthal said a hedging strategy on utilities has “helped to mitigate inflationary impact”, while “pressure on the labour market is expected to ease a little”. He added: “The businesses will continue to innovate, manage costs, develop new businesses and develop talent and organisation capability. There will be strategic investments in innovation. We remain leaders in the sphere of culinary development. We source the finest ingredients. We value how you eat and guests’ dining experience.”

McDonald’s to revamp core menu items: McDonald’s has announced it is revamping core items on its menu, weeks after a massive corporate restructuring in the face of challenges from increasingly popular rivals like Five Guys and Shake Shack. The fast-food giant said it will be tweaking the recipes on its classic Cheeseburger, Big Mac, Hamburger, and its Double Cheeseburger, to make the items “even better” than they ever were, reports The Daily Mail. Changes will include softer buns and a new grill design for better melted cheese and seared patties, along with onions being added while the burgers are still on the grill for a caramelised flavour. The Big Macs will also have more sauce on them. The new recipes have already been rolled out in certain global markets and parts of the US, and McDonald’s said they would be standard nationwide by 2024. It comes on the heels of major shakeups at McDonald’s, which have included corporate streamlining to consolidate its menu internationally, major ad campaigns featuring celebrity spokespeople, and automating drive-thrus at some locations. To help sell the new burgers, McDonald’s is re-introducing the Hamburglar, who hasn’t been seen in his classical form for about 20 years. “We found that small changes, like tweaking our process to get hotter, meltier cheese and adjusting our grill settings for a better sear, added up to a big difference in making our burgers more flavourful than ever,” McDonald’s senior director of culinary innovation, chef Chad Schafer, said in a statement. McDonald’s said they would be utilising the Hamburglar, who was hasn’t been seen since a branding overhaul in the early 2000s, to inform customers that the new burgers were available in their cities. “When you spot his notorious cape and striped outfit in your city, you’ll know that’s when you can head to your local McDonald’s to get your hands on our best-ever burgers,” the company said in its statement. In early April, McDonald’s closed its corporate offices while it meted out hundreds of layoffs as part of a restructuring intended to save costs as part of a move to consolidate operations internationally. In a January letter to staff, chief executive Chris Kempczinski said the corporate job cuts would be made help the business grow, warning that the company had begun unfocused and innovation had been stunted. Among the lay-offs were senior employees who had worked for the company for decades. Before the cuts, McDonald’s employed more than 150,000 people globally in corporate roles and its company-owned restaurants, 70% outside the US, the chain said in February.

Cineworld ends sales process for ‘rest of world’ businesses: Cineworld has ended the sales process for its “rest of world” division. It follows the announcement earlier this month that the company had ended the sales process for its UK and Ireland and US divisions as it entered into a restructuring support agreement to emerge from its Chapter 11 proceedings. It said: “The group received proposals for the RoW business from a number of prospective counterparties. However, the proposals did not meet the value level required by the group’s lenders. Cineworld and certain of its subsidiaries’ (together, the “Group Chapter 11 Companies”) continue to move forward with the proposed restructuring in the Chapter 11 cases, pursuant to the restructuring support agreement and the backstop commitment agreement entered into between the Group Chapter 11 Companies, and the lenders holding and controlling approximately 83% of the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 and approximately 69% of the outstanding indebtedness under the debtor-in-possession financing facility, as announced on 3 April 2023, (the “Proposed Restructuring”) to be implemented primarily through a plan of reorganisation in the Chapter 11 cases (the “Plan”), as announced on 11 April 2023. As previously announced, in light of the level of existing debt that is proposed to be released under the Plan, the Proposed Restructuring does not provide for any recovery for holders of Cineworld's existing equity interests. Cineworld continues to expect to emerge from the Chapter 11 cases during the first half of 2023. The Group Chapter 11 Companies are seeking to confirm the Plan on an expeditious timeline. Certain creditor approvals, among other requirements, will need to be obtained in order for the United States Bankruptcy Court for the Southern District of Texas, Houston Division, to confirm the Plan. During the restructuring process, Cineworld continues to operate its global business and cinemas as usual without interruption. Cineworld and its brands around the world, including Regal, Cinema City, Picturehouse and Planet, are continuing to welcome customers to cinemas as usual. The group continues to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the United Kingdom.”

Red Oak acquires Stockport pub: Red Oak Taverns, the national pub operator founded by Aaron Brown and Mark Grunnell in 2011, has acquired The Crown in Bredbury, near Stockport in Greater Manchester. It has bought the pub directly from owners Olwen and Peter Davies, who are retiring. The current long-term manager at the pub, Lisa Wejs, will continue to run the pub as the new tenant partner with Red Oak. Property and acquisitions director for Red Oak Graeme Bunn said: “This is our latest single site acquisition and it fits perfectly within our pub estate.  We are really pleased that Lisa is taking the tenancy ensuring continuity for this successful and well-liked community pub”. Wejs added: “I’m delighted to be able to continue to run the pub as the new tenant with Red Oak Taverns. It’s a brilliant opportunity in a business and community I know well.” Red Oak said it continues to seek single and multiple site acquisition opportunities. Fleurets handled the purchase on behalf of Red Oak.