Hostmore is “well placed” for the remainder of 2023, with its revised capital allocation policy and cost efficiency programme beginning to bear fruit, CEO Julie McEwan tells MCA.
The TGI Fridays UK operator announced H1 2023 results last week – with total revenue of £93.6m, down 2% on H1 2022 when adjusted for VAT was 2% - following a “huge transitional period.”
“The period was instrumental and proactive in building a really strong team,” McEwan says. “There was a clear focus on improving shareholder value.
“We had already been in the process of realigning teams in the support centre and stores, and fostering a greater turnaround.”
A mix of operational efficiencies and disposals are driving cost reductions, according to McEwan, albeit only a “couple of disposals” have been implemented. Input costs such as food contracts are primarily driving reductions.
“We’ve got a more engaged team in terms of being commercially estate, with an ‘every penny counts’ culture,” McEwan adds. “”We’ve closed a couple of loss-makers in H1 and further disposals are still under review.
“Every store is being looked at.”
Hostmore has also strategically realigned each store with its marketing approach, offering bespoke offers such as ‘kids eat free’ in shopping centres, while city centres sites are more wet-led.
“Last year, it was one generic approach that wasn’t delivering value.”
Part of the marketing strategy has been a focus on the rewards app, which is doing well in terms of offering value and seeing a “huge increase” in active members.
“The members we’ve got are collecting points and spending more with us. People are coming back because of our marketing and because we’re offering value.”
Other initiatives, such as TGI Fridays’ foray into experiential, have also served the brand well, with customers engaging with its cocktail masterclasses and bottomless brunch.
“TGI had never done experiential before. We’re getting strong feedback from corporate guests and also seeing new guests coming in for bottomless brunch.
Despite menu development, items such as fajitas, steak, ribs, and sesame chicken remain most popular on the menu, although TGI is focused on going back to its heritage.
“We were known as a family restaurant, but we’re repositioning ourselves as an authentic American cocktail bar and restaurant…we’re attracting a new type of consumer to TGI.”
The focus on post-8pm drinks-only occasions has added to net margin through offers such as 2-for-1 cocktails.
Hostmore has deferred new openings until at least 2025. It is “too early to say” whether this will involve a move into QSR, despite the Fridays and Go brand introduced in 2022.
“Now we’ve got a platform for success, we’re focused purely on the core estate,” McEwan explains. “We will have a full rollout plan nearer to 2025.
Inflation appears to be stabilising this year, but it is the “renewed focus on operations in a commercial manner that has materially improved outlook.”
“What we’ve done is give the best possible value and work on our supply chain,” McEwan adds. “One of the hardest hit segments has been our core market – families – and we’re offering kids eat free to support them.
“The revenue opportunities we’ve put in place with our stabilised leadership team are already producing incremental profits.”
