Hostmore to ‘almost double' estate in medium term
Hostmore, operator of American casual dining brand Fridays and cocktail-led bar and restaurant brand 63rd+1st, has revealed plans to "almost double" its number of sites in the medium term.
This growth will be self-funded and focus on a combination of its core Fridays portfolio, further roll-out of 63rd+1st and, in particular, the development of the recently launched town centre concept Fridays and Go.
The group opened its first Fridays and Go in Dundee in March, which it said was trading "ahead of expectations", with plans to open three further restaurants in this financial year, including an Edinburgh 63rd+1st due to open in July.
Hostmore added that continued cash flow generation, balance sheet strength and liquidity headroom provided a base for expansion, with plans to double its current estate of 89 restaurants across the UK and Jersey.
In an update on trading for the 20 weeks ended 22 May 2022, Hostmore's like-for-like revenue was around 6% lower than 2019 due to the more challenging consumer environment. The group said it believed this was primarily a result of consumer confidence weakening significantly since Russia's invasion of Ukraine, contributing to the cost-of-living crisis.
The group said the challenging consumer environment meant it was taking "a more prudent view on trading for the remainder of year", including the assumption that like-for-like dine-in volumes, as compared to the 2019 financial year, may reduce by 8% for the rest of 2022. It said improved customer satisfaction scores "demonstrate the success of our investment in improving the quality of our customer offer and now provides a strong basis for appropriate pricing adjustments… to mitigate approximately half of the impact of the lower volumes now anticipated".
However, it estimated the combination of cost increases and lower volume will result in an earnings before interest, tax, depreciation and amortisation (EBITDA) margin in low double-digit percentage growth for the year, compared with its medium-term targeted level of mid-teens.
Robert Cook, Hostmore's chief executive, said: "We are not where we expected to be, however, I am able to report a financial performance which, regardless of the arduous challenge and extreme economic headwinds being encountered presently, allows us to confidently continue with our development strategy.
"Our ambition remains that of almost doubling the size of our existing portfolio brands over the medium term as economic conditions improve. Our relationship with landlords, coupled with a prudently managed balance sheet, provides the basis for confidence in the success of our strategy over the longer term… Whilst we remain ever mindful of the ongoing economic challenges, the management team remains focused on delivering the appropriate returns to the benefit of all stakeholders."
