EAT, the Lyceum Capital-backed chain, is due to complete its store refurbishment programme six months ahead of schedule in December and will target acquisitions from the start of 2015, chief executive Adrian Johnson has told M&C Report.
He said the company is currently running at like-for-like sales 3% ahead, and revealed that like-for-likes have grown more than 10% at invested sites.
EAT has been rolling out its new store concept after securing a new bank facility that has freed up a further £12m of funds. Johnson said: “We tested five sites with varying different sizes of site for each, and different fit outs and slight changes of look, to determine which was best for the brand. We decided on one and now we’re on schedule to complete the whole estate by December.
“We’re about to open site 31 this week; we’re on two a week at the moment.”
He said returns on investment are “well ahead of schedule”.
It follows news that pre-tax losses for the 113-strong group widened from £10m to £12.1m in the year to 27 June 2013, with EBITDA down from £7.8m to £5.5m and sales down 1.4% to £93.6m.
Johnson attributed this to a decline in like-for-like sales and the timings of rent reviews at a number of sites, combined with the site investments and other changes such as uniforms and packaging.
He said Eat has a “very loyal following” but added: “The fact is it was never invested into - its environment or its teams - in the last 12 years. In this market place it can look a little tired and behind the times. People, I think, are coming back in because the food is still very good and then they’re noticing the changed environment.”
Johnson said the company would look for acquisitions following the conclusion of the refurbishment programme.
“I wanted to make sure we had the brand platform correct, that we were back in sales growth, that we had a brand that looked right, had a right proposition for this time, and we’re well on track with that. The next stage will be to start rolling out new stores.
“I think it’s more likely to be next January when we should start to look at new store openings.”
New funding would be required for the acquisition programme, he said.
He revealed that sales were 6% ahead over Christmas and are currently at +3%. “We’re ahead of our plan at this moment in time and we’re very pleased with that.”
Accounts for EAT’s parent company Villiers Topco Limited for the year to 27 June 2013 stated that its operating loss widened from £766,912 to £2.9m.
“Food cost inflation continued to place pressure of margins during the year,” the firm said. “Despite this, active mitigation including product innovation, process improvements and procurements gains, enabled management to maintain full year gross profit margins in line with last year.”
The company raised £3.5m selling new shares to existing shareholders in the period. The money was used to repay £3m in bank debt and fund the investments.
