Reilley – Rent situation the government’s Trojan horse: Loungers chairman Alex Reilley has said that the rent situation facing the sector is the government’s “Trojan horse” and unless it comes up with a plan it “will have wasted billions of pounds keeping people employed by businesses that you will have allowed to fail”. In a twitter thread, Reilley said: “The vast majority of hospitality businesses will have traded between 0-14 days since 4 November. On the (optimistic) basis they can trade again by early March, that’s 0-14 days trade in four months. That’s on top of more than three months of full lockdown. That’s at least seven months out of 12 where hospitality businesses have been ordered to close. The debt moratorium is going to end at the end of March. Thousands of hospitality businesses, who won’t have been able to trade for seven out of 12 months will be exposed to landlords who won’t accept anything less than 12 out of 12 months’ rent. They will serve winding up petitions, locks will be changed, and some will cut their nose off to spite their face. That will be the end for thousands of businesses. @AlokSharma_RDG @scullyp @RishiSunak @BorisJohnson this is your Trojan horse and unless you come up with a plan you will have wasted billions keeping people employed by businesses that you will have allowed to fail.”
Trade body – who does the government blame for sharp increase in covid transmission with the sector closed?: A trade body has pointed out that the hospitality sector can’t be blamed for the recent sharp increase in covid transmission rates. Michael Kill, chief executive of the Night Time Industry Association said: “The industry has relentlessly told government that the continued opening of schools and universities, alongside retail and other public facing sectors, with continued restrictions against the night time economy and hospitality industry over the festive period will result in an explosion of the transmission rates in January, leading to further, more stringent lockdown. Businesses within our sector are being shamelessly left to collapse, viable businesses and individuals have been abandoned by the government. While the majority of the night time economy and hospitality sector have been closed, who does the government blame now for the sharp increase in transmissions. Our industry wants to support the government in its public health strategy, to save lives and get businesses back open as soon as possible. We will continue to offer the government our support, our expertise and our spaces, for free to ensure that as many of the businesses and individuals within our sector survive this crisis. But to do this, these businesses and individuals need the government to compensate them for the revenue they have lost over the time they have been closed, nothing less will suffice.”
Nicholls – We have passed the tipping point where we can save all hospitality businesses: Kate Nicholls, chief executive of UKHospitality, has said that we have “past the tipping point where we can save all hospitality businesses”. Speaking to Sky News, Nicholls said that the new lockdown would “undoubtedly” cause businesses, that would otherwise be healthy, to fail. Nicholls said: “January is going to be a critical month, we really need an urgent signal from the government now that they will extend the Business Rates relief, they will extend the lower rate of VAT beyond the 1 April, so these businesses have a chance to be able to get investment in and sustain them. But I feel undoubtedly we will see business failure and we will see higher levels of unemployment as a result.”
Goodbody – recovery has been delayed at The Restaurant Group but risk to reward remains attractive: Paul Rudy, leisure analyst at Goodbody, has argued the risk to reward ratio at The Restaurant Group remains attractive despite the delay to recovery caused by the current lockdown. In a note, he stated: “An increase in covid related restrictions in late December concluded what was a terrible year for the eating and drinking out sector in the UK. The Restaurant Group did a good job in difficult circumstances, raising equity, achieving a CVA to right-size the estate and limiting cash burn in so far as was possible. The first quarter of 2021 will continue to be severely impacted by government restrictions. We would expect some early evidence of recovery in Q2, with a more robust recovery taking hold in the summer, given pent up demand and reduced restaurant supply. Forecasts are reduced meaningfully for FY21 as a result, with Ebitda reducing from £104m to £27m. For FY22, we expect a strong recovery in sales and margins, helped by the fact that the estate is smaller and more focused on growth. We forecast Ebitda in that year of £111m, at the lower end of the £110 to £125m illustrative range flagged by the company on recovered sales. Net Debt in FY22 remains elevated at 2.9x Ebitda, but we expect the company to generate c.£50m of cash flow that year. Our Price Target T reduces from 95p to 85p, as a result of continued government restrictions which results in higher net debt. The Restaurant Group will likely refinance its £225m Wagamama bond in FY21. A refinance on reasonable terms will be a positive catalyst, but risk remains around leverage and there will be cap on the equity valuation until completed. We continue to believe that the smaller, more focused RTN estate is well placed to capture the recovery in eating out which should take hold from mid-2021 onwards. Post-recovery, the Wagamama business has attractive medium-term growth prospects, both in terms of store rollout and increased delivery potential.”
McDonald’s to boost its chicken offer in the US: McDonald’s will launch a crispy chicken sandwich in the US on 24 February. The new sandwich menu item will feature a new crispy white meat chicken fillet served with pickles on a toasted potato roll. The new chicken sandwich will come in classic, deluxe and spicy versions. McDonald’s is hoping to capture some traffic from the specialist chicken brands Popeyes and Chick-fil-A with the new chicken offer. “Our chicken-only competitors here and abroad have strong brand equity and credibility. Developing a reputation for great chicken represents one of our highest aspirations,” McDonald’s USA president Joe Erlinger said at a recent investor event. The new McDonald’s strategy is founded in part on the long-term popularity of Chicken McNuggets, which it has sold since the 1980s, and 2020’s limited time Spicy Chicken McNuggets, which contributed to September US comparative sales that were the highest in nearly a decade.“As commonplace as chicken is, it’s a growth area. You want to participate in that growth,” said Mark Kalinowski, an independent restaurant equities analyst. McDonald’s also lacks equipment used by poultry specialists – pressure cookers and hand-breading stations inside stores. It is “very hard to do something with the equipment that they have and the complexity you have in the kitchen, it’s very hard to manage that,” Restaurant Brands’ chief marketing officer Fernando Machado said of McDonald’s. Popeyes’ chicken is also marinated for 24 hours in the restaurant, he added. “If it were easy to do, we could do it at Burger King,” he said of Restaurant Brands’ burger chain. “Customers have to drive past two or three McDonald’s to get to a (Chick-fil-A) or a Popeyes,” said Richard Adams, a consultant to franchisees. “That’s an opportunity to pull in those customers with a comparable product.”
Dark Hedges hotel on the market: A hotel named after the world famous Dark Hedges in Co Antrim has been put up for sale after falling into receivership last year. The Hedges Hotel near Armoy was acquired by two investors in early 2015 after Game of Thrones helped the site became a huge tourism draw.The hedges were believed to have been planted along the entrance to Gracehill House by the Stewart family in 1775, who owned the manor estate. The tree-lined route became a tourism hit after it was depicted as Kingsroad in the second series of HBO’s global TV series. It’s understood Stephen Gray and business partner Jonathan Gwynne invested around £5 million in the hotel, golf course and manor after they acquired the Gracehill House estate in 2015. Part of the estate, including the 16-bedroom hotel, was incorporated as Dark Hedges Ltd in 2016.The company reported shareholder funds of £1.6m for the year ending 30 April, 2019. But by June 2020, with the hospitality industry in lockdown, receivers were appointed.
Leon launches vegan subscription and burger at-home kit: Leon has launched a new vegan subscription service and burger at-home kit in a bid to help people eat more plants this January. Available from today (Wednesday 6 January), the new monthly subscription service (£6) will give guests 30% off every vegan menu item in Leon restaurants nationwide. In addition, Leon will be randomly selecting one in every 500 subscribers with an exclusive Green Card which will entitle lucky guests to free vegan food for a whole month. The Leon vegan subscription will also reward customers as they redeem their card throughout the month, with free Aioli jars and Leon cookbooks. The brand is also launching its first ever Leon Love burger at-home kit on the morning of Friday (8 January). In partnership with Meatless Farm, the new kit contains everything needed to recreate the popular vegan Love Burger. The burger kits will also be carbon neutral. The new Leon Love Burger at-home kit is available nationwide for £18 via www.loveburger.co, £19 for the gluten free box and an additional £5 delivery fee. Marketing director Rebecca di Mambro said: “These new launches are a celebration of the power of plants and bring to life our commitment to make it easier to eat well, live well and be kind to the planet.”
The Manor brand to double up: The Manor, the restaurant and cocktail bar brand operating in Aylesbury, is to open a second site in May, this time in Princes Risborough. It has agreed terms with the town council for a 20-year lease on the former NatWest bank site in the High Street on its commercial premises. The council-owned building has already undergone interior refurbishment works by the town council, and the installation of a new shop frontage. The plans were subject to a lengthy planning process and were given the green light. They include the addition of a roof top terrace area with panoramic views to the existing 1,369 sq ft building. The Manor’s owner, Peter Lee, said: “We are delighted to be expanding and coming to Princes Risborough, and contributing to the local economy. We expect to open by May 2021 and will serve both delicious brunches and tapas alongside an extensive range of alluring cocktails.”