Hostmore reports stable performance despite macro-economic headwinds

rpbi-news.co.uk, 22 September 2022

Hostmore plc, the hospitality business with brands including 'Fridays', '63rd+1st' and 'Fridays and Go', has announced its interim results for the 26 weeks ended 3 July 2022.

Strong improvement in revenues (+147% over HY21 which was significantly impacted by the pandemic), with both volume and customer spend per head increasing. Increase in Group Adjusted EBITDA (+143% over HY21) due to improved revenues, cost mitigation activities and landlord concessions.

Cash generation enabled Adjusted free cash flow of £10.1m, before the settlement of £6.8m of accrued listing costs. Undrawn banking facilities of £27.5m presently available under the RCF which will support the business during a time of uncertain consumer demand and inflated utility pricing.

The impact of unhedged current utilities prices expected to have an impact on FY23 EBITDA (pre- IFRS).

<b>Good organic growth; focus on improving the customer and staff proposition</b>
Comparable LFL revenue up 145% compared to HY21, down 7% compared to pre-COVID HY19, in line with expectations. Focus on managing inflationary pressures, £2.4m of landlord concessions secured and 100% of gas hedged until 31 December 2022. Increase in electricity hedging to c.89% of FY19 comparable volume until 31 March 2023, and c.44% until 31 December 2023.

Creation and launch of the Fridays and Go fast-casual dining brand; three new openings across the Hostmore brands in  Chelmsford (Fridays), Dundee (Fridays and Go) and, subsequent to HY22, Edinburgh (63rd+1st).

Broadened senior management team: new COO to enhance operational standards and efficiencies and new CMO to evolve digital transformation and adopt a data-led marketing approach to broaden customer appeal and expand audience.

Improved guest satisfaction scores - Fridays' Guest Opinion Score at June 2022: 70 (December 2021: 68) and 63rd+1st's Guest Opinion Score at June 2022: 65 (December 2021: 44) – arising from the addition of vegan menu options and improved speed of service levels.

Robert B. Cook, Chief Executive Officer, commented: “We have delivered a stable performance for the first half of FY22 despite the undeniable and growing pressures on the consumer in the current environment. Against this tough backdrop, we have also taken swift action to manage the inflationary impacts that we and the rest of the sector face.

“We continue to develop our customer proposition and to apply a laser focus on our unique portfolio of iconic and vibrant hospitality brands. Nearly 200,000 customers per week visited our restaurants through June and July, showing the broad appeal of our attractive locations for consumers looking to have some downtime and enjoy a memorable occasion. Pleasingly, guest feedback is increasingly positive, with both Fridays’ and 63rd+1st’s Guest Opinion Scores improving since December; it is thanks to our incredible people that we are able to create such a fantastic experience for customers.

“We will continue to adopt a cautious approach, reflecting ongoing uncertainty in the UK trading environment and in particular utilities pricing, mitigating costs wherever possible, whilst continuing to invest in our proposition, our people and new sites.

“We, like many others in the sector, await further clarity on more Government intervention to support the hospitality industry in light of the inflationary pressures being felt by consumers and hospitality businesses alike, particularly in relation to energy.”