Loungers holds profit despite lockdowns

Loungers saw its turnover fall 33% to £53.5m in the 24 weeks to 4 October, but still managed to turn a profit despite a raft of restrictions.

The Lounge and Cosy Club operator reported EBITDA of £13.2m, and profit before tax of £117,000.

The performance covers 11 weeks of lockdown, four weeks of phased re-opening, four weeks of Eat Out to Help Out, as well as the introduction of the Rule of 6, the 10pm curfew and local lockdowns in Wales.

Post-reopening, like for like sales growth was 25% between 4 July and 4 October.

During the period the group completed an equity raise of £8.1m and agreed an additional revolving credit facility of £15m.

The 168-strong brand reduced its non-property net debt to £13.6m, giving the balance sheet strength to withstand further lockdowns, and to resume its roll-out strategy.

This expansion programme has recommenced, with Cosy Club Brindleyplace and Ponto Lounge Hull having opened, while Sentado Lounge in Sittingbourne opening shortly after the half year end.

Stourbridge and Wolverhampton and scheduled to open early in the New Year.

The negative impact of the curfew and having 55 sites in tiers 2 or 3 saw like-for-like sales only fractionally impacted by 0.2 percentage points.

The group credited its strong performance to the evolution of its offer in reaction to coronavirus, which including an order at table app, which now accounts for 70% of sales.

The menus in both brands has been reduced significantly, which is expected to be a long term trend.

Meanwhile Eve Bugler, formerly of McKinsey, Nando’s and the founder of Bababoom, has joined as chief operating officer, and will take responsibility for the commercial, build and people arms of the business, and sit on the executive board.

Bugler’s appointment will allow CEO Nick Collins to focus on strategic objectives, while the MDs for the Lounge and Cosy brands are unaffected.

Collins said: “The last six months have been challenging, but I am immensely proud of how we have reacted and delivered such a strong performance. We are fortunate that due to our suburban and market town locations, the flexibility of our offer, and our fantastic team, we have been able to trade well when given the opportunity to open our sites. As we dare to look beyond covid-19, Lounge and Cosy Club have never seemed more relevant, and we approach 2021 with enthusiasm and optimism. Our strong balance sheet will enable us to get back to doing what we do best, opening 25 sites a year, creating over 500 jobs a year, investing in high streets across the UK and looking after our customers and teams. With the encouraging news on the development of vaccines, it certainly feels like that time is within reach and I would like to say a huge thank you to our teams for their commitment and engagement over these past difficult months.”

Collins praised the Government for its support initiatives such as furlough and Eat Out to Help Out, but criticised the latest restrictions for as “bewildering, unfair” and for appearing to “lack any scientific basis”.

He warned the cost would be hundreds of thousands of jobs, the demise of thousands of pubs, bars and restaurants and vacant properties across the UK.

He added: “The impact on the livelihoods and health of the sector’s predominantly young workforce and on communities and high streets across the UK will be felt for years to come.

“I would strongly urge the Government to engage with our sector, provide immediate, targeted support where required, and re-consider the ill-thought through policies that have brought much of our industry to its knees.”