Gordon Ramsay Restaurants planning further UK and overseas expansion as turnover surges to £78.9m, decisions being taken on underperforming sites: Gordon Ramsay Restaurants has said it is planning further UK and overseas expansion over several of its brands as turnover “increased significantly” to £78.9m in the year ending 28 August 2022. An uninterrupted year of trading and new restaurant openings (seven during the year in question) saw the business record turnover of £78,929,000, up from £26,235,000 in 2021 and above pre-pandemic levels (2019: £54,739,000). Of the 2022 figure, £75,845,000 came from UK operations (2021: £25,008,000) and £3,084,000 from the rest of the world (2021: £1,227,000). Adjusted Ebitda for the period was £6,219,000, compared to a loss of £1,129,000 in 2021 (2019: profit of £6,613,000). Pre-tax losses narrowed from £6,848,000 in 2021 to £1,062,000 (2019: profit of £15,186,000). The company received £20,000 in Coronavirus Job Retention Scheme payments (2021: £3,277,000) and £133,000 in other government grants (2021: £524,000). Average monthly staffing levels rose from 622 in 2021 to 1,138. In his statement accompanying the accounts, director Andrew Wenlock said the company plans to continue with the expansion of the Bread Street Kitchen & Bar brand “more widely across the UK” and that the Gordon Ramsay Academy, which opened in Woking in September 2021, is viewed “as a scalable asset both in the UK, currently sourcing suitable locations in Edinburgh, and internationally”. He said: “As the group continues to grow, the directors are actively managing the estate and identifying sites requiring improved performance or alternative uses. During the period, this has resulted in the decision to impair three additional sites alongside being able to reduce expected future cashflows for certain sites with onerous lease provisions. These actions have resulted in a net gain in the income statement of £300,000. New financing facilities were arranged in May 2022, and capital invested into new restaurants and into maintaining the existing estate was £8.6m (2021: £4.6m).” Wenlock said the group remains “committed to, and on course with, its growth strategy, both in the UK and internationally”. A fully refurbished Savoy Grill reopened last month, and a second Lucky Cat restaurant is scheduled to open in Manchester this month. This followed the acquisition of the Pizza East business in Shoreditch in February, and the restaurant reopening in March. Internationally, new restaurants including Street Burger, Street Pizza and other premium casual concepts “will continue to form a significant part of the licensed estate’s expansion”. The group has also forecast, due to current economic headwinds, a period “impacted by significantly reduced trade over a prolonged period through to May 2024”, and has modelled a “20% reduction in sales in those restaurants which had been opened before August 2022 period end, which equates to an overall reduction of 9% when including restaurants opened or planned to open subsequently”. It said: “The 20% reduction in sales that has been modelled is as severe as that which was seen over the Omicron period between late November 2021 and February 2022. Through a combination of reduced capital expenditure and cost reduction, the directors believe that impact of this magnitude would not leave the group with cash shortages, and that lending covenants would continue to be met. The directors arranged additional loans from lenders to support the group’s long-term growth strategy and committed to new restaurants leases with the objective of developing additional long-term revenues and profits. Further key decisions were made to continue to invest in growing central support teams, to enhance the service given to restaurants and their teams, and to support the business’s continued growth in the UK and overseas. Key areas of investment have been into recruitment, training and internal communications platforms, central procurement, and into marketing and social media capability.” Gordon Ramsey Restaurants features in the Propel Turnover & Profits Blue Book. Its turnover of £78,929,000 for the year ending 28 August 2022 is the 90th 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.

 

SA Brain – opportunity for debt free business with new financial backing to grow back into the hospitality sector: Welsh brewer and retailer SA Brain has said the remainder of its property disposal strategy will enable the repayment of its remaining debts, and that there’s an opportunity for a debt free business, with new financial backing, to “grow back into the hospitality sector”. It comes as the company reported turnover of £14,739,000 for the year ending 27 March 2022, compared to the restated figure of £52,625,000 for the 18 months to 28 March 2021. Pre-tax losses fell from £50,532,000 in 2021 to £1,086,000. It received £15,000 in government grants (2021: £11,204,000). During the year, SA Brain sold a 95-strong pub portfolio to investment firm Song Capital and its remaining 33% stake in Coffee#1 to Caffe Nero. In his statement accompanying the accounts, director Andrew Winning said: “In the year, the directors continued to execute the strategy to dispose of its property assets to repay bank debt after the year end. The execution of the remainder of the property disposal strategy will facilitate the repayment of the majority of our remaining obligations and liabilities. Once the term loan has been repaid, there may be an opportunity to support the ongoing debt free business with new financial backing to grow back into the hospitality sector.” The company also used some of the sales proceeds to make a £10,100,000 payment into its pension schemes to reduce the deficit position and support the progress of a buy-in deal. It has also scaled back its team to a “small team of 28 people”, which the directors feel is the right size to allow it to “brew and supply its customers” from the Dragon Brewery in Cardiff, which it has retained. “Following the decision to retain the brewery, it continues to evolve and grow following the disruption of the pandemic,” Winning said. “The key focus remains to ensure that Dragon Brewery continues to supply its customers in both the on and off trade with our award-winning beers, in a profitable manner, with a clear focus on managing the P&L tightly due to the current increases in raw materials, distribution and utilities costs. There is also a strong pipeline of contract brewing which supports the continued growth of profitability. The directors will strengthen the covenant to support its remaining pension scheme obligations by its actions and drive efficiencies and growth in its Dragon Brewery maximizing its existing and future customer base. With appropriate market research, if will evolve its offer to target a new generation of consumers through social media marketing and appropriate new product development complementing the heritage of the brand.” The group also undertook a review of the value of all fixed assets based on profit and loss forecasts, which resulted in an impairment in the year of £3,539,000. At 27 March 2022, the company had net assets of £31,951,000 (2021: £39,312,000), net current liabilities of £40,610,000 (2021: £2,429,000) and external bank debt of £76,387,000 (2021: £76,387,000), of which £48,987,000 is due within one year. It said: “The directors have continued to review the strategic objectives of the group alongside its ongoing financial obligations and has continued to positively engage with the banks over the last 12 months, and this has continued post the balance sheet date. The support included receiving covenant waivers for the periods April 2022 and July 2022.”