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Fortress increases offer for Loungers, chair and CEO would find ‘their positions untenable’ if deal voted down: US private equity firm Fortress has increased its offer to takeover café bar operator Loungers from 310p a share to 325p a share, now valuing the 283-strong operator of the Lounge, Cosy Club and Brightside brands, at £354.4m. The “increased and final cash offer” implies an enterprise value of approximately £366.6m and a multiple of approximately 8.4 times Loungers’ FY24 adjusted Ebitda (before site pre-opening costs) and of approximately 9.4 times Loungers’ FY24 adjusted Ebitda (after site pre-opening costs). It also represents a premium of approximately 4.8% to 310p per Loungers share, being the original cash offer for the acquisition and a premium of approximately: 36.6% to the closing price of 238p per Loungers share on 27 November 2024, being the last business day before the original announcement date. Alex Reilley, chairman of Loungers, said: “We are very pleased that Fortress has decided to increase its offer, making it even more compelling for Loungers shareholders and reinforcing the Loungers directors’ recommendation that they should vote in favour of the acquisition.” Domnall Tait, managing director of Fortress, added: “This increased offer for Loungers reflects our continued belief in the business and its management team, and we look forward to supporting them through the next stage of growth. Notwithstanding the recent challenges, Fortress remains a strong believer in the UK.” Last month, opposition to a planned takeover of Loungers gathered pace as more shareholders said they intended to reject the original deal. Gresham House, which has an 3.9% stake in the AIM-listed café-bar group, said it would vote against Fortress’ original 310p-a-share offer for Loungers, which valued the company at about £338m, saying the bid “looks opportunistic and substantially undervalues the long-term prospects of the business”. The comments came after Slater Investments, which owns more than 10% of Loungers, and Axa Investment Management, with more than 4%, said they were opposed to the takeover. However, Canaccord Genuity Asset Management, which has a 1.7% stake in Loungers, said it would vote in favour of the deal. With this shareholder’s approval, it means that now almost 42% of voting shareholders had signalled approval of the original deal. The company said if the acquisition were to fail to complete, the consequences could, in the opinion of the Loungers directors, be “materially detrimental to Loungers and Loungers shareholders”. It said: “It would undermine both the recommendation of the Loungers directors and, in particular, the positions of executive chairman Alex Reilley and chief executive Nick Collins, both of whom are fully supportive of the acquisition and both of whom would find their positions untenable if it was voted down by Loungers shareholders. Investors and other market participants acknowledge that one of Loungers’ key strengths is its strong management team. The Loungers directors consider that Loungers’ team morale stems, in large part, from its executive leadership and that should any of the management team leave Loungers as a result of the acquisition being voted down at this stage, it would undoubtedly impact the Loungers business, potentially materially.”

Propel 500 report – delivery and QSR strongest performers overall: Delivery remains a standout performer, while quick service restaurants continue to perform well, writes Mark Bentley, business development director at Hospitality Data Insights, in the introduction to the Propel 500 report. The comprehensive report showcases the UK’s 500 leading hospitality operators ranked by turnover, providing more than 90,000 words of analysis – delving into company histories, leadership structures, site numbers and financial performance, making it an essential resource for industry professionals. Bentley’s is just one article in a report that is delivered in two parts: an introductory PDF, featuring deep dives into the top 25 companies and 6,500 words of insight from Propel’s expert writers, and a fully searchable Excel sheet, offering easy access to all the data. Further analysis includes Mark Wingett’s exploration of mergers and acquisitions shaping the Top 500’s future, Tim Street’s view of the UK’s franchise market and Phil Pemberton’s insights into experiential leisure as a hospitality cornerstone. Katherine Doggrell examines developments in UK hotels, while Maria Vanifatova, founder of Meaningful Vision, analyses trends in QSRs. Together, the Propel 500 companies generate more than £30bn in turnover across 51,000 sites, and the report spans seven key segments: pubs and bars, hotels, quick service restaurants (QSR), casual dining, cafe and bakery, experiential leisure and fine dining. A list of these operators can be discovered now by visiting the Propel 500 page on Propel’s website. Propel 500 is available now for £595 plus VAT. Existing Premium Club members can purchase it for £395 plus VAT. Premium Club members will receive the report for free on Friday, 28 February at 9am. Order the Propel 500 report today by emailing: kai.kirkman@propelinfo.com.

M&B sees first-quarter like-for-likes up 3.9% boosted by ‘very strong’ festive trading: Mitchells & Butlers (M&B), the All Bar One, Toby Carvery and Harvester operator, has reported “very strong” trading over the festive season increased its like-for-like sales in the 15 weeks to 11 January 2025 by 3.9% with total sales growth of 3.8% versus the prior year. During this period, food like-for-like sales increased 4.0%, with drink sales up 3.6%. For the eight weeks to 11 January 2025, like-for-like sales were up 3.9%, with food like-for-like sales up 3.9% and drinks up 3.8%. For the seven weeks to 16 November 2024, like-for-like sales were up 4.0%, with food like-for-like sales up 4.1% and drink up 3.4%. The company stated: “The business traded very strongly across the festive season with like-for-like growth of 10.4% over the core three-week period, built on numerous record sales performances through the estate and the brand portfolio. Across the first quarter as a whole like-for-like sales remained well ahead of the market, growing by 3.9% despite the notable adverse, albeit temporary, impact of very cold and stormy weather over the last couple of weeks. We continue to focus on investment in the estate, and in the year to date we have already completed 40 conversions and remodels. We remain encouraged by returns being generated. Sales have remained strong throughout the first quarter, and we remain confident in our ability to tackle the circa £100m of year-on-year cost headwinds we expect to face this financial year, driven primarily by increased labour costs, to deliver continued profit growth and market outperformance.” Chief executive Phil Urban said: “We are delighted to have delivered another very strong festive trading period, with some excellent performances across our brand portfolio. Growth was particularly strong on festive key dates supported by volume growth, and with record sales on Christmas Day. Cold and stormy weather over recent weeks has subsequently had a material adverse impact on trading but we remain confident in the strength of underlying sales growth. Our focus remains on the effective execution of our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increased sales. We continue to leverage the strength of our diverse portfolio of established brands and enviable estate locations and believe we are well positioned to further grow profitability and market share in the year ahead.”

Fuller’s like-for-like festive trading up 10.2%: Fuller’s has reported like-for-like sales for the five-week Christmas and new year period were “excellent”, up 10.3% against the same period last year, with a consistent performance across all parts of the estate. The company said the strong festive trading continues the company’s strong momentum and maintains its market outperformance, which has delivered like-for-like sales growth of 5.9% for the 41 weeks to 11 January 2025. Chief executive Simon Emeny said: “We have delivered great results throughout 2024, and this has been enhanced with a really strong Christmas. These results would not be possible without the dedication and passion of our amazing team of people, and I would like to thank them all for their hard work and ongoing commitment. As we move into the last few months of this financial year, we continue to focus on delivering long term returns as well as preparing for the year ahead. Our share buyback programme is ongoing, with 5.7 million of the planned 6.5 million ‘A’ shares now repurchased. We also continue to invest in our estate – with a number of major projects planned for the final quarter of the current financial year, including a £4m investment at The Chamberlain Hotel in the City of London, which is already underway. We are confident of meeting market expectations for the full year. While we will be facing fresh cost challenges in the new financial year – with increases in employers’ national insurance contributions, national living wage and business rates – we are taking appropriate actions to manage the impact of these market challenges and remain confident and optimistic about the future for our business.”

Cave Castle Hotel and Country Club reports bigger losses: Cave Castle Hotel, the trading name of Etrickbank and located near Hull, has reported bigger losses in the year to 31 March 2024. The company saw turnover rise 3.85% to £4,064,483 in the year to 31 March 2024. But pre-tax losses increased to £408,049 from £383,066 the year before. The company blamed inflation, including the significant rise in the cost of energy and the rise in interest rates.