As with previous years’ lists, the 2015 AlixPartners Profit Tracker has thrown up some interesting nuances, showing continued, concerted growth for the more established brands and a further strong showing from traditional brewers and pub operators.
In the midst of the new entrees and the fast-growing brands in this year’s AlixPartners Profit Tracker, sits a group of companies proving that longevity should not be a barrier to significant growth.
Take a look at this year’s list from 25 to 30 and you have a group of businesses that between them oversee c1,400 sites, with a combined turnover of £1.5bn. Nando’s, Carluccio’s, Pret A Manger, TGI Friday’s and Caffè Nero have become perennial mainstays in the Tracker, consistently achieving yearly growth of more than 10%. All five will continue to add to their estates this year, with both Carluccio’s and Caffè Nero looking to gain traction in the US, where the former will open its first site later this year and the latter made its debut in 2014.
The successful turnaround of TGI’s over the past few years under the stewardship of Karen Forrester resulted in its acquisition by Electra Partners from Sentinel Capital Partners and TriArtisan Capital Partners, in a deal valued at c£225m last December. It is thought the new investment will help the 66-strong brand expand to 100 sites over the next five years, with expansion the main focus over bolt-on opportunities.
Private equity continues to stalk the industry, especially casual-dining formats, and a number of the companies listed this year are expected to change hands before the end of the year. Ed’s Easy Diner, Loungers, Le Bistrot Pierre, Bill’s, Las Iguanas and YO Sushi! are all expected to be in the shake-up over the next year to 18 months as momentum in the M&A market increases.
Robinson’s, the c340-strong, north-west-based company is this year’s flag bearer for the traditional brewer and pub operators, which again underpin the Tracker. St Austell, up nine places in this year’s list, Everards (up 10 places), Hall & Wood-house (up 1), plus new entries Wadworth and Timothy Taylor highlight the growing renaissance in the sector, driven by investment in food and consumer’s thirst for craft beer.
Positioned 17th in last year’s Tracker, Patisserie Holdings made the switch to the public market last year in a move that valued the company at £170m. The Luke Johnson-chaired business, which showed a three-year CAGR growth of 24.6% in 2014’s list, has continued to show impressive growth on AIM of 23.5% (see adjacent table).
The performance of Wasabi, the London-based sushi and bento chain led by Dong Hyun Kim, has yo-yoed over the last couple of years. The high expansion recorded across the capital in 2012 and 2013, led to the group jumping 43 places to number 6 in last year’s list. However, a slower rate of growth, a focus on growing its pipeline outside the capital and the UK and a breach of banking covenants at the end of 2013, has seen its growth stymied.
The company said that this year should see it explore additional funding options to complete anticipated store openings “in order to achieve the best commercial advantage to the company” and that it continued to have the support of its bank, HSBC, despite breaching some of its banking covenants.
The appearance of Krispy Kreme at number 10 in this year’s list also highlights this company’s recent turnaround and that despite all trends pointing to consumers wanting healthier options, they still crave some form of indulgence. The doughnut retailer, which received new backing from Alcuin Capital Partners, returned to profit in the year to 2 February 2014, on the back of an increase in underlying sales and a return to the expansion trail.
2015 Profit Tracker
We are excited to be partnering AlixPartners in producing the UK eating and drinking-out market’s first Profit Tracker, which has become a major talking point in the industry and the key indicator for those seeking to identify the companies that are leading the market in terms of profit growth.
Next year will see further movement on the Tracker, especially as the recovery in the economy gains further momentum, the flight to the regions continues and M&A activity increases, which will undoubtedly provide additional talking points and shed more light on those groups shaping the industry.
If you would like to take part in the 2016 Profit Tracker, please get in touch either on 01293 846553 or at mark.wingett@wrbm.com. I look forward to hearing from you and hopefully seeing your company in next year’s list.
For the full top 50 list click here http://www.mandcreport.com/operators/brewdog-tops-2015-alixpartners-profit-tracker/515620.article
