Hostmore plc Business Update

RNS Number : 8969U

Hostmore PLC

08 December 2021

 

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Hostmore plc

Business update: progress on landlord concession agreements, current trading and update on new site acquisitions

8 December 2021

Hostmore plc, the hospitality business focused on American-themed casual dining brand, 'Fridays', and the cocktail-led bar and restaurant brand, '63rd+1st', is pleased to announce an update on its discussions with landlords, on its current trading in the build-up to Christmas and on new site acquisitions. This is Hostmore's first update since it listed on the main market of the London Stock Exchange on 2 November 2021.

Current trading and costs mitigation update

We are pleased to report that, for the months of October and November 2021, trading was ahead of the comparable EBITDA achieved in the 2019 financial year. The net booking rate for the Christmas season remains encouraging, with the week up to 5 December 2021 experiencing a net booking rate which was similar to the previous two trading weeks despite the onset of the new coronavirus strain and some inevitable cancellations.

At Fridays, since the launch of the themed promotion on 16 November 2021, we have recorded a weekly increase in overall reservations which has resulted in a total, as at 5 December 2021, of c. 205k bookings representing c. 676k dining covers for the period to 26 December 2021.

The Group has been able to navigate the well documented recruitment challenges faced by the hospitality sector. All the Group's restaurants have been actively trading, with only a small number having their operating hours reduced during the traditionally quieter times of the week.  Senior personnel vacancies are at their lowest level since the reopening of indoor dining in May 2021.

We pro-actively sought to mitigate both the present and future utilities cost inflation risk by contracting long term price hedges on both the Group's gas and electric supplies in Q3 of 2020. Using the 2019 financial year volumes as the basis for this decision, the Group has hedged:

· 100% of its gas until December 2023;

· 100% of its electricity until March 2022; and then

· 50% of its electricity until March 2023; and then

· 25% of its electricity until December 2023.

Further progress on landlord concession agreements

As disclosed in Hostmore's prospectus (the "Prospectus") published on 15 October 2021 (the "Prospectus Publication Date"), the Group has been holding constructive discussions with certain of its landlords regarding Covid-19 leasehold concessions and good progress continues to be made.

The Prospectus outlined that a further £971,284 in concessions had been agreed from 3 October 2021 to the Prospectus Publication Date. Since the Prospectus Publication Date, legal documentation for further concessions has been concluded with landlords on a further three sites resulting in an incremental concession value of c. £245,000 which will be recognised within the 2021 financial year results.

The Group continues with its efforts to secure further concessions with landlords and is optimistic that ongoing discussions will result in further concessions being agreed in the next few months.

Update on new site acquisitions

We are also pleased that the equitable approach taken to date with our landlords in respect of lease arrears liabilities is now working in our favour.  Working positively with our landlords has resulted in an increasing pipeline of new site opportunities from both existing and new landlords for both Fridays and our new brand 63^rd+1^st, in line with our objective to develop a multi-brand Group.

Since the Prospectus Publication Date, we have entered into a binding agreement for a new 63rd+1st site in Cambridge. The site, located on Trinity Street, is expected to open in H1 2022. This will be the brand's fourth site, following the successful opening of sites in Cobham in May 2021, Glasgow in September 2021, and Harrogate last month.

Four potential new sites for Fridays and a further new site for 63^rd+1^st are in solicitors' hands.  These new restaurants will increase our rate of expansion.

Robert B. Cook, Hostmore's Chief Executive Officer, commented:

"I am pleased with the progress we have made since the reopening of the sector to internal dining in May 2021. This includes the very positive sentiment of our guests as expressed by the improvement in our guest satisfaction scores, particularly in the categories of service, atmosphere, and drinks and food quality. This coincides directly with the launch of our new food and drinks menus which have been implemented across the whole portfolio. I am also pleased by the resultant average spend per head for the period which indicates guest appreciation of the quality improvement.

Our ongoing trading, considering the very many challenges faced by the sector, both past and present, is a testament to the hard work undertaken by my many colleagues to ensure that the guest experience is always enhanced. This result reflects the dedication of all levels with a special emphasis on those at the restaurant level who have tirelessly exhibited a cheerful determination to overcome the challenges for the good of all stakeholders in the Group.

With regards to the enduring negotiations with our landlords, I would like to signal our appreciation that they have respected this process by engaging with the Group in an open and meaningfully constructive manner, which bodes well for successful long-term relationships, post the ending of the rent moratorium which is scheduled to conclude by the end of Q1 2022. The conclusion of this process, combined with the expiry of the rent moratorium, will place the Group in a very strong position to take advantage of future opportunities for business development.

Finally, I am delighted to be bringing the fourth 63rd+1st location to Cambridge. The 63rd+1st brand represents the coming together of people, culture, tastes and styles, and we are excited to continue sharing this brand experience with a growing number of customers around the UK. We continue to explore further opportunities to build this brand, which has the potential for rapid expansion in light of the opportunities in the market, particularly those new sites which are brought to our attention by landlords who have respected the way in which we have sought to settle the remaining pandemic-related leasehold concession obligations."

ENDS

ENQUIRIES

Hostmore plc

Robert B. Cook, Chief Executive Officer

Alan Clark, Chief Financial Officer

[e-mail]

[phone]

Vico Partners

Sofia Newitt 

020 3957 5045

NOTES TO EDITORS

Hostmore plc

Hostmore is a growing hospitality business with its current operations focused on the American-themed casual dining brand, 'Fridays', and the cocktail-led bar and restaurant brand, '63rd+1st'.  While Fridays has been trading for over three decades in the UK, Hostmore was established in 2021 to provide a platform for the development of hospitality brands under the leadership of an experienced management team that has a track record of building businesses in the hospitality and leisure sectors.  Hostmore's businesses are defined by their iconic brand experience and vibrant heritage. As of 8 December 2021, Hostmore operates 88 restaurants in the United Kingdom and Jersey, a majority of which are located in high footfall locations, including retail parks, shopping centres and city centres.  Hostmore is exploring opportunities with TGI Friday's, Inc., the franchisor of Fridays, to expand its existing brands into new franchise territories and is seeking to add rapidly growing, early-stage businesses to its portfolio of complementary hospitality brands, as well as to extend its offering in other experience-led, leisure concepts.

 

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