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Morning Briefing for pub, restaurant and food wervice operators

Wed 1st May 2024 - Update: Domino’s Pizza trading and TGI Fridays parent temporarily suspends stock market listing
Domino’s reports slow start to second quarter after orders fall in first three months, at advanced stage to sell London corporate estate to franchisees: Domino’s Pizza Group has reported a slow start to its second quarter “against tough comparatives last year” after seeing orders fall in the first quarter. The group said it is at an advanced stage to sell its 31-strong London corporate store estate to a select number of existing and new franchisees. The group also revealed it has completed a £11m investment in Domino’s Pizza Poland and now owns approximately 12.1% of Domino’s Pizza Poland’s issued share capital, representing “a unique opportunity to re-enter international markets in a disciplined, capital light manner”. The company has opened 14 new stores by 12 different franchisees in its current financial year versus 15 at this point in FY23. The group said it has a strong pipeline, with 38 sites in construction or planning approved and still expects to open in excess of 70 stores in FY24. The company stated: “The second quarter is another tough comparative period. Reflecting that, trading in April was slower given the very strong comparative in the prior year. We continue to drive initiatives to improve trading momentum. Our £4 lunch offer launched in April, rounding out our offering in the lunch space at a compelling price point. We have seen continued acceleration of Uber Eats trial following strong initial results, now live in 1,170 stores across the UK and Ireland. We expect to benefit from the men’s Euro football tournament. As a result, we remain confident that our focus on our strategic priorities will deliver order count and like-for-like sales growth in FY24 and are reiterating our FY24 Ebitda guidance. Alongside investment in the core business, which remains our top priority, we have continued to focus on reallocation of capital within the corporate estate and joint ventures to improve returns and assess additional growth opportunities. As a result, the disposal of our 31 corporate stores in London to a select number of new and existing franchisees is now at an advanced stage. We will provide an update in due course. Separately, we completed a £11m investment in Domino’s Pizza Poland on 18 April and as a result, Domino’s Pizza Group owns approximately 12.1% of Domino’s Pizza Poland’s issued share capital. This represented a unique opportunity to re-enter international markets in a disciplined, capital light manner, and in partnership with a high-performing business, operated by an experienced management team.” It comes as the business reported like-for-like sales were down 0.5% in the first quarter compared with last year, with total orders down 0.8% to 17.7 million. On a two-year basis, first quarter like-for-like sales are up 8.4%. Delivery orders were down 5.0% “in a softer delivery market and we are focused on returning these to growth in FY24”. Collection orders continued to grow in the first quarter and were up 4.7%. System sales were down 0.4% to £385.1m. It said digital progress continues with a 37% increase in app customers and orders placed on the Domino’s app – up 11.3 percentage points versus last year. The company stated: “We acquired full control of Shorecal on 10 April which will unlock a significant opportunity for us in Ireland and we are now in an even stronger position to accelerate our growth, open new stores, and provide great service and great tasting products to our customers. Together with our franchisees, the focus on customer service has maintained average delivery times at 25 minutes and there has been a good progress in reducing the number of orders delivered ‘late’. In the first quarter, we launched the Cadbury Crème Egg Cookie, which was our biggest dessert launch for nearly ten years. We are committed to offering our customers compelling value and a new £4 lunch offer launched on 8 April, providing an incremental opportunity to target different parts of the day. Early signs are encouraging and we look forward to continuing to develop this offer. In January we started a trial with Uber Eats which is now live in 1,170 stores across the UK and Ireland. The data-led trial allows customers to order Domino’s Pizza via the Uber Eats platform, but the pizzas are delivered by our own Domino’s delivery drivers, which is the same approach as in our relationship with Just Eat. We will update on a full roll-out in due course.” Chief executive Andrew Rennie said: “We remain resolutely focused on executing our strategy and have made strong progress in the first quarter, both across the core UK and Ireland business and with our strategic growth ambitions. Following a slow January in part as we tactically held back marketing spend, I am pleased that we saw positive like-for-like sales and orders across February and March in an uncertain market. Like the first quarter, the second quarter is another tough comparative period but we remain confident of delivering order count and like-for-like sales growth this year and are pleased to confirm our full year profit guidance. I’m excited by the momentum we have in the business.”

Variety of pub and bar operators to feature in next New Openings Database being released to Premium Club members on Friday: The next Propel New Openings Database will be sent to Premium Club members on Friday (3 May). The database will show the details of 130 site openings, including which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location, and there will also be a website link to the businesses. The database is published on a monthly basis and Premium Club members will also receive a 6,700-word report on the 130 new additions to the database. The database includes new openings in the pub and bar sector such as New World Trading Company opening The Botanist in Lichfield, Staffordshire; Marylebone Leisure Group launching its 11th site called the Lock Inn located in Jamestown Road, Camden; and Mitchells & Butlers adding to its 26-strong Browns Brasserie & Bar brand with an opening in Exeter. Premium Club members also receive access to five other databases: the Multi-Site Database, in association with Virgate; the Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; the UK Food and Beverage Franchisee Database; and the Who’s Who of UK Hospitality. Plus, all members will be offered a 20% discount on tickets to five Propel paid-for events – The Excellence in Pub Retailing Conference (14 May), Social Media for Profit (18 July), the Talent and Training Conference (1 October) and Restaurant Marketer and Innovator (two days in January 2025). Operators will also be able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or a supplier. Email kai.kirkman@propelinfo.com today to sign up.

TGI Fridays parent temporarily suspends stock market listing following delay of annual report: Hostmore, the parent company of TGI Fridays, has temporary suspended trading on the London Stock Exchange following a delay to the publication of its annual financial report. The company stated: “The company was required to publish its annual report by 30 April 2024. However, the company’s auditors requested additional time beyond the originally planned timetable to complete their audit, relating to their review of non-cash items. As a result, at the company’s request, the listing of the company’s ordinary shares on the main market of the London Stock Exchange are temporarily suspended with effect from 7.30am today (Wednesday, 1 May). The company is working towards the publication of its annual report as soon as possible and will request a restoration of the listing of its ordinary shares on publication.” Last month, Hostmore announced it has reached an agreement on a proposed all-share acquisition of TGI Fridays Inc, the global hospitality business that owns the American-themed casual dining brand, which is the company’s franchisor, for an enterprise value of £177m.
 
Safestay acquires fifth Spanish site: Hostel operator Safestay, which owns and operates hostels across Europe, has acquired the Hotel Lineros in the Spanish city of Cordoba for €2m. The property has 30 freehold bedrooms and will be converted into a 100 bed hostel. The deal will be funded from the group’s existing cash balance. The property is currently run as a hotel, and while undergoing a conversion process, is expected in the eight months to 31 December 2024 to generate revenue of approximately €230,000 and Ebitda of €40,000. The property will continue to trade during the work. Last month, Safestay announced a management contract to run the resort-based 120 bed Calpe Seafront Hostel on Spain’s Costa Blanca. Hotel Lineros is the group’s fifth property in Spain alongside a hostel in Madrid and two in Barcelona and is the first in the popular tourist region of Andalusia. Larry Lipman, chairman of Safestay, said: “We are very excited with the acquisition of this unique and beautiful property in the historic City of Cordoba. It will open as Safestay Cordoba, paying homage to the UNESCO World Heritage status the magnificent city centre has. Cordoba will be our fifth property in Spain and 19th in our collection of upmarket hostels across Europe. Our guests are looking for ‘travel experiences’ and I feel confident that this unique property with its rooftop bar, central setting and Moorish charm will perfectly suit our customer base of travellers, families and schools.”

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