Loungers is well-positioned for growth in a post-Covid 19 world and has the potential to scale to as many as 1,000 sites over time, according to analysts Berenberg.

In a note to investors, the analyst said it believed Loungers format was “unique”, and the fact that its estate was spread across mostly smaller towns and residential areas of cities meant that it was well placed to bounce back once restrictions are relaxed.

“We note that it generated lfl sales growth of over 50% last August, versus the sector average of 0%,” it said.

“Loungers has considerably outperformed the market over the past five years, achieving consistent lfl growth of 4-7% pa (pre-COVID-19),” said Berenberg.

“The pandemic has far from dented its appeal, with lfl sales growth of c25% between July and October 2020, versus the market at -c18%. While we forecast same-site revenues only recovering to FY19 levels in FY23 (i.e. to April 2023), we believe this is likely to prove conservative.”

The analyst said that operating at a scale of approximately 1,000 sites could see its equity value grow to in excess of £2bn, from the c£260m it is today.

“Loungers is currently adding 25 sites per year, although we see scope for this to increase in the medium term, particularly considering the increasingly favourable rental landscape in the wake of the pandemic,” it added.

“All considered, we believe Loungers can prove a multi-year compounder, and we initiate with a Buy rating and a 320p price target,” it said.