Just Eat Takeaway reports Q1 sales down 6% in UK & Ireland, efforts to improve profitability ‘running ahead of plan’: Just Eat Takeaway has reported first quarter sales down 6% in UK & Ireland, but chief executive Jitse Groen said efforts to improve profitability are “running ahead of plan”. First quarter gross transaction value (GTV) sales of £1,544,000 in the first three months of 2023 were down from £1,648,000 in the same period of 2022. Groen said: “Just Eat Takeaway.com continues to recover from last year’s deceleration, with the Northern Europe and the UK and Ireland segments leading the trend. While the year-on-year GTV decline in Q1 2023 is significant, the comparison is with the quarter with the second highest GTV of the pandemic. Our efforts to improve profitability are running ahead of plan, allowing us to upgrade the 2023 Adjusted Ebitda target to approximately €275m (previously approximately €225m in 2023). We now also expect to turn free cash flow positive by mid-2024.” The company said it expects GTV growth to be in a range of -4% to +2% year-on-year in 2023, with a return to growth skewed towards the end of the year, given the lower absolute order level of H2 2022 versus H1 2022. It said a strong balance sheet and increased visibility on free cash flow generation will allow the company to initiate a share buyback programme of up to €150m to improve future earnings per share. The repurchased shares will be used to cover the company’s obligations under share-based compensation arrangements or will be cancelled to reduce issued share capital. The programme will commence today (19 April) and to complete no later than December 2023. The company added: “The long-term objectives for Just Eat Takeaway.com remain unchanged. Management, together with its advisers, continues to actively explore the partial or full sale of Grubhub. There can be no certainty that any such strategic actions will be agreed or what the timing of such agreements will be. Further announcements will be made as and when appropriate.”

 

Premium subscribers to receive two updated databases and access to videos from latest Propel Multi-Club Conference this week: Premium subscribers are to receive two updated databases and access to the videos from the latest Propel Multi-Club Conference this week. They will receive the latest UK Food and Beverage Franchisor Database today (Wednesday, 19 April), at noon. The database now features 200 companies and 90,000 words of content. It is an exhaustive guide to the companies offering a food and beverage franchise in the UK and is updated every two months. The next edition of the Who’s Who of UK Food and Beverage will be sent to Premium subscribers on Friday (21 April). It is the first database where full profiles of 667 of the UK’s top food and beverage operators are available in one place. It features more than 174,000 words of content, including 74 updated entries, while 16 new companies have been added. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Also on Friday, Premium subscribers are to be given exclusive access to the recording and slides from the latest Propel Multi-Club Conference. They will be sent 12 videos at 9am that will include Martin Williams, chief executive of Gaucho and M Restaurants, and Peter Marks, chairman of Rekom UK. Meanwhile, Robyn Black, head of content at Fleet Street Communications, leads a panel on how the next generation of sector leaders are approaching issues including growth, staffing, diversity, sustainability and technology. The panel includes: Patrick Marrinan, chief executive of Pho; Richard Ferrier, chief executive of Brasserie Bar Co; Amber Wood, managing director of Cosy Club; and Caroline Ottoy, managing director at WatchHouse. Premium subscribers also receive access to three other databases: the Propel Multi-Site Database, produced in association with Virgate; the New Openings Database; and the Propel Turnover & Profits Blue Book. 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. 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.

 

Cake Box sales recover in second half after business shows resilience, 20 new stores open to take estate to 205: Cake Box, the specialist retailer of fresh cream cakes, said its sales recovered in the second half after the business “showed resilience during a difficult first half”. In its full year trading update for the 12 months ended 31 March 2023, the group said it expects to report revenue for the year up circa 5% year-on-year (FY 2022: £33.0m), with adjusted profit before tax in line with market expectations. This reflects an improvement in trading in the second half of the year, with further new store openings and positive like-for-like sales growth despite tough comparatives from last year, following the easing of pandemic lockdowns. It said the cost of raw materials stabilised during the second half, primarily due to reduced freight rates, which led to a marginal improvement in group margins. Franchisees continued to face inflationary pressures but introduced measures to mitigate the impact of increased costs and, with the help of effective marketing initiatives, sales and margins levels were maintained. The company said: “We have been mindful to protect our value proposition with customers. On this basis, we have been highly selective with customer price increases, and as a result, we have seen increased customer retention and continued to attract new customers to the Cake Box brand.” The group added ten new franchise stores (H2 2022: 11) in the second half, bringing the total number of stores opened in the full year to 20 (FY 2022: 24). At the year end, the total number of Cake Box stores across the estate stood at 205. New geographical locations opened in the second half include Oxford, Kettering and Banbury. The group said its balance sheet remains strong, with a significant increase in its net cash position, which stood at £6.3m at the period end (FY 2022: £5.2m). Sukh Chamdal, co-founder and chief executive officer, said: “Just as during the pandemic, we have faced an unprecedented set of circumstances this year, with the war in Ukraine causing a rise in energy and raw material prices and a cost-of-living crisis impacting consumer confidence. The business showed resilience during a difficult first half and, encouragingly, we have seen sales recover in the second half, with raw material prices stabilising. We continue to strengthen our team and invest in our operations and processes, and with the dedication, determination and commitment of our staff and franchisees we continue to grow the Cake Box customer base and brand.” Cake Box features in the Propel UK Food and Beverage Franchisor Database, which this month celebrates its first anniversary since launching. In that time, it has doubled in size from an initial 100 companies to 200 in the latest edition, which will be released today (Wednesday, 19 April). 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.

Popeyes to launch four further London sites and new breakfast menu: Popeyes Louisiana Kitchen, the US fried chicken quick-service brand, has announced the launch of a further four sites in London – meaning it is now available across every corner of the city. The latest additions to the line-up are new in-line restaurants in Richmond, Woolwich and Kilburn, following the opening of its latest delivery kitchen over in Wood Green. The Richmond restaurant will be the first to arrive, throwing its doors open on Thursday, 4 May 2023 – located in the heart of the riverside town on The Quadrant. Richmond’s opening will also see the brand roll out its breakfast menu for the first time in the city. Londoners will be able to get their hands on The Big Breakfast Roll, cajun seasoned hash browns and a Nutella-topped take on its southern biscuit. Tom Byng, chief development officer at Popeyes UK, said: “London is naturally a key market for us, and we want to make sure no borough is underserved. We acquire and open sites based on market demand, and it turns out that every corner of the city loves flavourful, spicy chicken as much as we do. We’re looking forward to continuing our expansion.”

 

Report suggests UK should further increase minimum wage and set higher standards for low-paid jobs: The UK should further increase the minimum wage and set higher standards for low-paid jobs to match the protections extended to workers by international peers, according to an influential think-tank. The Resolution Foundation said that even though Britain had one of the highest minimum wages in the rich world, it lagged behind similar economies on standards for the quality of work. Among its proposals were more generous sick; giving employees more certainty over their hours and shift patterns; offering earlier protection against unfair dismissal; and raising the floor for parental pay and minimum holiday entitlements, reports the Financial Times. These reforms would raise the cost of labour, potentially leading to higher consumer prices — especially in sectors such as hospitality and leisure, which tend to employ people on low incomes and sell to higher earners. “Better jobs for some will mean higher prices for others,” said Nye Cominetti, Resolution Foundation senior economist, adding that there was no need to panic if rises led to shifts in patterns of production. He cited the relative cheapness of hotels and restaurants in the UK compared with Europe, noting that their share of overall consumption in the UK was therefore higher. Cominetti added that the reforms would not impair labour market flexibility because they would not have a big effect on companies’ decision to hire and fire. In its annual report on low-paid work, the foundation said the UK was on course to eliminate hourly low pay — defined as pay below 60% of the median — by the mid-2020s and had so far not experienced a significant loss of jobs as a result. But the country has one of the least generous systems of statutory sick pay in the rich world. Mandatory sickness benefit for a UK private sector worker taking four weeks’ absence is worth just 11% of average earnings, compared with an average of 64% in Organisation for Economic Co-operation and Development (OECD) countries, the Foundation said. Statutory maternity pay in the UK is also much lower than the OECD average, and in 2011, the government extended from one to two years the period employees have to work in a new job before qualifying for protection against unfair dismissal. This lack of protection mainly affects lower earners, with more than five in ten people with salaries below £20,000 expect to receive only the statutory minimum if they fall sick, compared with one in ten on more than £50,000, according to the report. Higher earners are also much more likely to benefit from employer schemes for maternity pay, which are considerably more generous than the statutory minimum. The think-tank warned that if employers looked for ways to cut costs to accommodate future rises in the minimum wage, these standards risked falling further. It also argued that the government should expand the remit of the independent Low Pay Commission, which advises ministers on minimum wage policy, to look at raising pay alongside other employment standards.

 

Inflation set to drop back below 10%: Inflation is expected to drop back below 10% for the first time since last August, according to a consensus of economists. The Office for National Statistics (ONS) is set to show that the rate of Consumer Prices Index (CPI) inflation fell to 9.8% last month, when the latest official figures are released today. It comes after it was claimed the average British household is only halfway through a two-year cost of living crisis, according to a financial report. It would be a return to inflation starting to decline after a shock increase to 10.4% in February, reports The Daily Mail. “Following the significant upside surprise in the February numbers, we expect a clear easing back to have taken place in March,” commented economists at Investec. They said a drop would be largely driven by lower petrol prices as demand continues to recover globally. Investec added that “supply chain disruptions and lower shipping costs” could also result in falling goods prices for the month. The Bank of England last month said there were signs inflation was peaking. Despite this, interest rates were lifted by 0.25 percentage points to a 14-year high of 4.25 per cent. There are expectations that the Bank’s Monetary Policy Committee will raise one more time to a peak of 4.5%. The inflation update will come a day after the ONS revealed that regular pay excluding bonuses rose by 6.6% over the three months to February, but was down 3.4% once CPI is taken into account.

Pret suppliers among those to have fallen victim to a ‘surge of insolvencies’ in UK food and drink sector: Suppliers to Pret A Manger are among those to have fallen victim to a surge of insolvencies in the UK food and drink sector after a global shortage of crops pushed businesses to the brink. The number of corporate insolvencies in the England and Wales food production sector nearly tripled to 173 in the year to February, from 64 in the previous period, according to government figures released on Tuesday. The sector’s increase was the biggest among major industries and much larger than the 43% rise recorded across the whole economy. Meanwhile, insolvencies in the beverage manufacturing sector jumped 136% to 66 in the same period, reports the Financial Times. An unusually low number of insolvencies during the pandemic, when businesses received billions in government support, as well as the relatively small number of companies in the food and drink sector, have contributed to the outsized recent rise. However, experts say the profitability of British food and beverage makers has been particularly hard hit by a “perfect storm” of business pressures. Russia’s invasion of Ukraine, a key grain exporter, and poor weather have hit food supplies globally over the past year, driving up the cost of ingredients. Post-Brexit trade barriers and price squeezing by UK grocers have only added to the strain on British producers. “You’ve had an immense cost shock,” said Clive Black, analyst at Shore Capital, who also pointed to the rising cost of energy, labour and interest rates. “Then you’ve had a demand shock [as people cut back on spending during the cost-of-living crisis]. It’s a perfect storm.” Orchard House Foods, which supplied fruit and juices to Pret A Manger, is among the small businesses known to have entered administration over the past year. Food and non-alcoholic beverage prices rose at an annual rate of 18.2% in the year to February, the fastest pace in more than 45 years, according to the latest data published by the Office for National Statistics (ONS). Industry data suggested food inflation accelerated again last month. Meanwhile, corporate insolvencies in England and Wales rose 16% in March compared to the same month last year, the FT added. The number of filings hit 2,457, according to the latest figures from the Insolvency Service, the highest monthly figure since the agency started producing comparable monthly data at the start of 2019. Compared to March 2019, before the covid-19 pandemic struck, the number of declarations jumped 55%.