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Morning Briefing for pub, restaurant and food wervice operators

Fri 3rd May 2024 - TGI Fridays operator substantially narrows losses in transitional year
TGI Fridays operator substantially narrows losses in transitional year: Hostmore, the parent company of TGI Fridays, has reported revenue fell to £190.7m for the year ending 31 December 2023 compared with £195.7m the previous year. Group Ebitda fell to £22.2m from £31.1m the previous year. Loss from operations fell to £11.1m from £95.8m the year before. Pre-tax losses narrowed to £25.5m from £108.3m the year before. Full-year annualised expense savings of £8.4m are on track to be achieved in FY24. New store openings deferred for FY23 have now been done so until the end of FY24, saving approximately £15m in cash expenditure. The company said the successful operational and portfolio management of loss-making stores reducing annual Ebitda losses of £4.2m to less than £0.5m run rate at end of 2023. The group added it has seen continued improvement in guest opinion score and net promoter score, resulting from renewed focus on guest experience. In addition to new store opening deferrals, further extended deferral of requirement for new store openings under franchise agreement has been made until FY26, saving a further £4.5m of cash expenditure in FY25. The company has also reached agreement to exit two stores that contributed an aggregate Ebitda loss of £0.5m in FY23. The company stated: “Our strategic business measures are yielding promising results, with each month of the second half of FY23 producing positive Ebitda returns. We have consolidated our approach, building on the evolution of our journey outlined in the FY22 results. The progress includes organic growth and cost reduction initiatives, menu price increases and revised capital allocation strategies, all contributing to our improved performance across the TGI estate. Our dine-in experience was our primary focus for 2023 and is continuing to be so in 2024. This has produced further menu evolution, underpinned by quality, relevance and simplicity. 2023 saw the iconic ‘TGI’ put back into Fridays, regaining our brand equity. TGI Fridays has always been associated as a place of fun and celebrations where delicious food and drinks can be enjoyed. It is pleasing that these elements of investment in our menus and service improvements have delivered a positive impact on the overall guest experience as evidenced by our guests’ feedback. We have sought to achieve this by maintaining pricing discipline, as demonstrated by the roll out of our value proposition ‘Kids Eat Free’, which acknowledges the pressures on our core family disposable income. This has been received extremely positively and continues to be a component of our offering. To complement this and widen our appeal to new audiences, we continue to embed our ‘Raising the Bar’ strategy. This has been a headline initiative for TGI Fridays as we seek to build on Fridays’ heritage and values. This has included introducing fun and innovative offers and concepts, such as TGI Fridays bottomless brunches, cocktail masterclasses, and new celebration packages, showcasing the very best of our brand. This has attracted many new guests.” As previously reported, Hostmore has reached an agreement on a proposed all-share acquisition of TGI Fridays Inc (including affiliates TGI Fridays), the global hospitality business that owns the American-themed casual dining brand, which is the company’s franchisor. The company also previously reported a 7% decline in like-for-like revenue in the first quarter of 2024, “due principally to reduced consumer demand across the sector”. Ebitda in the quarter was £300,000, an improvement of £3.2m on the previous year, with March 2024 being £1.8m ahead of the same period in FY23. Consolidated net bank debt at the end of the first quarter of 2024 was £26.1m, in line with expected seasonality and consistent with the forecasted position for the end of FY24. Stephen Welker, chair of Hostmore, said: “2023 was a transitional year for Hostmore during which we successfully implemented a turnaround of the business. The turnaround reduced costs, deferred cash outlays for new store openings, and improved the operations of our existing stores, while introducing a revised capital allocation policy to focus on high return on investment organic growth initiatives and prioritising the full repayment of our borrowings and initiating shareholder distributions. Following the period end, we announced a proposed all-share acquisition of TGI Fridays, Inc, the company’s franchisor that operates through franchising and licensing agreements in 44 markets and a network of company-owned stores in the US. Subject to completion, the transaction will give the group increased scale, flexibility and re-rating potential that will allow us to accelerate our existing strategy of prioritising debt reduction and enhancing the scope for shareholder returns.”

Variety of quick service restaurant operators to feature in next New Openings Database being released to Premium Club members today: The next Propel New Openings Database will be sent to Premium Club members today (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 quick service restaurant sector such as a second site for Master Bao, opening in London’s Westfield Stratford in May. Also included is US better burger brand Shake Shack, which is to further strengthening its footprint in the capital with an opening in Notting Hill Gate, and Temper, the modern barbecue brand, which has launched a sister smash burger-focused concept called Temper Burger that has opened on the former Patty & Bun site in White City, west London. 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.
 
Roadside Real Estate to dispose of remaining four pubs ‘in due course’: Roadside Real Estate, formerly known as Barkby Group, has announced it expects to dispose of the remaining four pubs in its Barkby Pubs estate “in due course”. For the year ending 30 September 2023, the company reduced its pub operations with the disposal of one freehold and lease surrenders agreed with the landlord of two other pubs. Two further leasehold sites have been sold post year end.
 
Time Out Market to open in Porto today: Time Out Group will open its new Time Out Market in Porto in Portugal today (Friday, 3 May). Time Out Market Porto is the company’s eighth food and cultural market with a further eight signed and due to open between 2024 and 2027, including Time Out Market Budapest, which was announced earlier this month. Located in the south wing of São Bento station, Time Out Market Porto spans about 2,000 square metres and is home to 12 kitchens, two bars, an outdoor space and a tower with views over the city and a shop and a restaurant offering wine experiences.
 
Diageo hires new CFO: Diageo has hired Nik Jhangiani as its new chief financial officer. Jhangiani will join in the autumn, replacing Lavanya Chandrashekar will step down after three years as chief financial officer and six years with the company, and will return to the US. Jhangiani is currently chief financial officer at Coca-Cola Europacific Partners, the world’s largest Coca-Cola bottler with revenues of more than €18bn in 2023, a role he has held since 2016. He has more than 30 years of finance experience gained in roles in the UK, Europe, India, Africa and the US, including 20 years as chief financial officer; and has spent most of his career in consumer and beverage industries including 20 years within the Coca-Cola system. Prior to his current role, Jhangiani was chief financial officer and senior vice-president at Coca-Cola Enterprises from 2013 to 2016, having joined in 2012. From 2009 to 2012, Jhangiani was group chief financial officer at Bharti Enterprises, an Indian business group with operations in 21 countries and interests in telecoms, food, retail and real estate. Diageo chief executive Debra Crew said: “Nik is a highly experienced chief financial officer with a proven global track-record of generating growth across multiple consumer businesses and industries. Nik’s experience and international mindset will make him a strong addition to our leadership team. I am grateful to Lavanya for her leadership over the last six years and her contribution as Diageo successfully expanded our business through a global pandemic and delivered major productivity savings. With a strong focus on execution, we will continue to invest behind our world-leading brands to create value for shareholders and maintain our position as an industry leader in total beverage alcohol, which we strongly believe is an attractive sector with a long runway for growth.”

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