TGI Friday’s sees Ebitda grow to £27.7m prior to lock-down, reopening 12 more sites, restaurant footprint means business ‘well positioned to trade under social distancing’: Electra, which is looking to sell its assets and return cash to shareholders, has reported Ebitda in its TGI Friday’s business increased to £27.7m in the past 12 months prior to the lock-down, with like-for-like sales up 3% in January and February. The private equity firm said the value of the business stood at £119m as of 31 March 2020, down from £141m in September last year. Electra said it considered the significantly reduced valuation to be “reasonable” given all the circumstances in effect, and anticipated it would recover “as we emerge from covid-19 disruptions adapted to future market conditions and opportunities”. Electra paid £142m for its 99% ownership in TGI Friday’s, having made its initial investment in 2014. TGI Friday’s will open another 12 sites next Wednesday (27 May) for click-and-collect and delivery having been “very encouraged” by the performance of the 24 sites that reopened at the start of May. Selected outlets will also offer alcohol. TGI Friday’s closed all 87 sites in March as the country went into lock-down. In its half-year update, Electra said it was putting plans in place for a phased “sit in” at TGI Friday’s sites from July – as permitted – but said its large restaurant footprint meant it would be “well positioned to operate successfully with social distancing in effect”. Electra stated: “TGI Friday’s entered March 2020 with £36m of cash, and with ‘in lock-down’ cash utilisation of £4mi per month after government support and property rental deferrals of £2m per month has significant resilience as long as government support through furlough arrangements continues to match trading restrictions. With its physical store footprint, averaging more than 6,860 square foot, significantly larger than most restaurants/bars, TGI Friday’s is well positioned to operate successfully with social distancing in effect. Peak capacity will be reduced by about 45%, however historical utilisation at close to capacity is limited to about 15% of the trading week and existing plans to extend periods of optimal utilisation will support the evolution and adaption of TGI Friday’s operating model for as long as is necessary. TGI will maintain its sustainable site development plan and we will ensure it is well positioned to optimise future performance and grow long-term value in what may be a very different market.”
Costa to reopen all standalone drive-thru sites by end of next week: Costa Coffee, which is owned by Coca-Cola, will reopen all its standalone drive-thru sites by the end of next week. The company reopened another 75 outlets on Thursday (21 May) and will reopen the remaining 58 next Thursday (28 May). Last weekend the business reopened a further 29 sites, comprising 12 delivery only – through UberEats – and 17 drive-thru outlets having reopened 31 drive-thru outlets and another 15 stores for takeaway only a few days earlier. It comes after Costa initially reopened four sites on 24 April – in Manchester, Bristol and Mansfield – two of which were delivery only and two drive-thru.
Northamptonshire-based Buddies USA goes on market: Northamptonshire-based American diner Buddies USA has put its five sites on the market, Propel has learned. The company has three sites in Northampton – at Dychurch Lane, Grange Park and Sixfields – and one each in Old Stratford, near Milton Keynes; and Rushden. It is understood CDG Leisure is marketing the sites and is inviting offers for the whole group. The sites range in size but are ground-floor units of between 1,300 and 2,600 square foot. It is understood the Old Stratford, Rushden and Sixfields sites have leases until September 2029 and the Grange Park outlet until December 2037. It is thought the lease for the Dychurch Lane site has current expired, but a new five-year lease is being agreed with a transfer of business clause in year one and a rent review in year three. The total rent bill for the sites is understood to be about £201,000 per annum, with the Dychurch Lane site having a passing rent of £23,500; Grange Park at £55,000; Rushden at £33,288 with a review in July 2020; Old Stratford at £22,080; and Sixfields at £67,000 with a rent review due this month.
Roadchef begins to reopen F&B operations, including Costa drive-thrus:Motorway services operator Roadchef has begun to reopen its food and beverage operations across its 30-strong estate, Propel has learned. As of Thursday (21 May) the Mark Fox-led company has reopened six Costa drive-thru-only units, two at Clacket Lane on the M25, two at Strensham on the M5 and two at Rownhams services on the M27. The remaining 15 Costa drive-thrus will open in two waves – on 4 and 11 June – if the initial six “trade acceptably and safely”. The company has already reopened the Chozen Noodle and Fresh Food Café sites at Strensham South as part of phase one of its three-phase return to a full offer. It plans to open the Chozen Noodle and Fresh Food Cafes at Watford Gap on the M1 and Clacket Lane within the next two weeks subject to traffic levels continuing to grow. Fox told Propel: “The phased opening – Chozen/Fresh Food Cafe in phase one, Costa/Leon in phase two and McDonald’s in phase three – will begin as traffic increases local to that site although we do intend to open our only McDonald’s drive-thru at Durham in line with other drive-thrus of McDonald’s in the first week of June. All units when open will be takeaway only and we will be controlling numbers of people in the building and practising social distancing. We have requested assistance from the government in allowing us to open our external seating with social distancing in place to enable people to consume their purchases outside the building and are awaiting confirmation as to whether this will be permitted. This is all quite fluid and dependent on traffic volumes increasing. As a benchmark, we saw footfall last week (which was up more than 20% on the prior week) at minus 88% versus last year having been down as low as minus 97% on some days earlier in the lock-down so we still have some way to go before we can expect to trade profitably again. However, we aim to manage our return to a full offer in line with traffic growth and hope further lifting of restrictions will give people the confidence to venture out.”
Starbucks sees like-for-likes improve in US and China as sites reopen: Starbucks customers are starting to return to its cafes in the US and China as the company reopens many sites that shuttered temporarily due to the coronavirus pandemic. Chief executive Kevin Johnson told employees in a letter the company has regained about 60% to 65% of its US like-for-like sales over the past week compared with the same period a year ago. Starbucks has reopened more than 85% of its US locations with modified operations. Johnson said the company was tracking slightly above its internal estimates for recovery. In China, where cafes have been reopened longer, like-for-like sales are down only about 20%, “reflecting gradual improvements over the past several weeks,” according to Johnson. He said: “Our recovery progresses each week, and we know that it will take time to fully recover and post positive comparable store sales growth.” In the first three months of the year, Starbucks’ global like-for-like sales fell 10% as the pandemic hit locations in China and the US – its two largest markets. The company estimated it lost $915m in sales during the quarter due to store closures, reduced operating hours and lower numbers of customers. Catastrophe pay for baristas, hourly pay increases and the cost of store safety items such as face coverings weighed on profits. Its fiscal second-quarter earnings were nearly cut in half as a result. Johnson also noted until customer levels return to pre-crisis levels, many baristas will be working shorter hours than they were before. The company is extended its pandemic unpaid leave policy through to the end of September.
Nando’s ramps up delivery and click-and-collect to almost 50 sites: Nando’s has ramped up its delivery and click-and-collect offer to close to 50 sites, after reopening an initial five sites for collection last week, Propel understands. The company has now made collection available in a further 41 sites across the UK. Earlier this month, the company reopened a further 32 sites across the UK for delivery only. It is understood this number has been increased by a further 14 sites. Last month the company reopened seven of its kitchens to help feed NHS workers, and subsequently opened them for delivery to the wider public. It is thought the company hasn’t publicised the reopened sites after the huge response it received regarding the initial reopened sites. It is understood the brand wanted to give these restaurants a “bit of breathing space to get up and running”.
Five Guys now operating from circa 70 sites: Five Guys, the US better burger brand, has now reopened 69 of its 100-strong UK estate, with more openings expected to come online next week. The company, which is offering a full menu available either for delivery and click-and-collect services through its reopened sites, reopened a further four sites on Thursday (21 May), in Swansea, Oxford, Worcester, and Peterborough. The group’s debut UK site in London’s Covent Garden is expected to come back online next week, with the brand hoping to have almost its entire 100-strong estate reopened by the end of June, where possible. John Eckbert, chief executive of Five Guys UK said: “We have adopted a phased approach to reopening Five Guys stores, adhering to government advice and ensuring the safety of our customers and crew is paramount.”
One of Travelodge’s biggest landlord offers alternative plan to avoid CVA: One of Travelodge’s biggest landlords is gathering support for an alternative payment plan in an effort to stop the operator going through a company voluntary arrangement (CVA). In a letter to landlords, seen by Property Week, Nick Leslau, owner of Secure Income REIT, said Travelodge’s negotiating stance is “unreasonable and revised terms are unacceptable to the vast majority of those property owners we have spoken to”. Secure Income REIT owns 123 Travelodge hotels and has a rent roll of £28.3m. Leslau is trying to prevent Travelodge forcing through a CVA, which it has threatened to do if landlords do not agree to a rent restructuring that cuts 80% of rent payments for some properties until the end of 2022. Leslau is proposing an alternative agreement, in which April quarterly rent is deferred, and the hotel operator pays 80% rent across all of its properties until the end of the year. He added: “Lease extensions reflecting the amounts written off will be required in December 2023. This would be a constructive step in a genuine attempt to reach agreement to support Travelodge’s business and should reduce the chances of a CVA in two ways – demonstrating the presence of a majority that might defeat any potential CVA vote, whilst tabling a generous offer worth some £70m to Travelodge in support of trade during 2020.” Travelodge, owned by Goldman Sachs and two New York-based hedge funds, owns more than 580 hotels and recently reported earnings of £129.1m with net debt of about £311m. In March, the hotel operator drew down £40m from a revolving credit facility.
The Coconut Tree takes next step in phased reopening: Sri Lankan restaurant group The Coconut Tree will reopen its Cardiff restaurant on Friday (22 May). The Mill Lane venue will be open on Friday and Saturday evenings from 5pm to 9pm for takeaways only. The Oxford restaurant will follow on Wednesday (27 May), offering takeaways from Wednesday to Sunday between 5pm and 9pm. The reopenings are part of a phased return to normality for the Sri Lankan street-food pioneers; they opened their Cheltenham and Bristol Gloucester Road sites up for takeaways earlier this month. After investing in new technology and procedures, customers will be able to pre-order directly through The Coconut Tree website for click-and-collect at the Cheltenham, Bristol and Oxford sites, allowing The Coconut Tree to cut commission costs and keep more revenue within the business. In Cardiff, customers will still be able to order via delivery apps UberEats or Deliveroo.
Deliveroo launches SME support package: Deliveroo has launched a support package for its small and medium-sized restaurant partners. The partnership with Visa has seen 200 restaurant partners across the UK provided with a £500 cash payment, which they can put towards anything of their choice to help them stay open. It is also offering bespoke, expert advice to support restaurants as they switch to a delivery-only model and help sustain their businesses. Deliveroo has also waived the £50 sign-up fee for all small and medium-sized restaurants across the UK, so it is free of charge for new restaurants to join the delivery platform. Other measures Deliveroo has already introduced include a new rapid payment service for restaurants that allows them to access money made from deliveries within a day, developed a new “contact-free delivery” feature in the app; and launched a micro-site for restaurant partners that provides information and links to help on how to operate during the coronavirus crisis.
C&C Group to open new Tennent’s warehouse and distribution centre in Edinburgh following operations review: Drinks company C&C Group is to open a new 50,000 square foot warehouse and distribution centre for its Tennent’s brand in Edinburgh. The site, located in Newbridge, is scheduled to open in October. It comes following a review of C&C Group’s supply chain and distribution operations across Scotland. As a consequence, it has been decided the Matthew Clark Glasgow warehouse and transport operation will be consolidated into the Tennent’s facility in Cambuslang and the new depot in Edinburgh. This is expected to be completed by April 2021. As part of the transition, the Matthew Clark customer contact centre will transfer to either Wellpark Brewery or the Tennent’s depot in Cambuslang. The Tennent’s and Matthew Clark brands and sales teams will continue to operate separately and are not impacted. C&C Group chief operating officer Andrea Pozzi said: “Extending our distribution operations is a positive step and will further strengthen our logistics capabilities, eliminate transport inefficiencies and enhance the service we provide to our customers across Scotland. While overall we are creating a small number of new roles, we recognise some colleagues in Glasgow may decide that they are unable to transfer to our new facility in Edinburgh. We have therefore engaged with those affected by these proposals and their representative organisations, to ensure any transition is managed effectively, employees are supported and the processes are clear.”