Analyst Liberum has said it expects Loungers to “explode out of the blocks” once sites reopen, following the announcement by the operator this morning that it intends to resume its fast-paced opening rate once restrictions are lifted.

The note from Liberum said that Loungers’ agile, all-day, suburban-based model is well-suited to returning consumer demand. It noted that like-for-like sales were up 25.1% between 4 July and 4 October, “an impressive +30% above the industry average, highlighting its broad appeal to a wider demographic that its peers are unable to replicate”.

Liberum said it anticipates Loungers’ trading performance will continue to outpace the market following the end of the third lockdown, and it expects the group to be a key beneficiary of changing market supply dynamics, securing premium new sites “and winning over a new legion of loyal customers”.

It added that trading recovery would be aided by the extension of the VAT cuts, with its sales historically weighted 65% towards food and non-alcoholic drinks. It said the cuts are likely to provide around a 3% gross margin benefit while VAT stands at 5% and a c.1% benefit when VAT increases to 12.5% in September.

The analyst forecasts net debt of £42.3m as at FY21E year-end (18 April 2021), with a swift return to profitability driving this down to £27m in FY22E or 0.9x net bank debt/EBITDA.