Loungers: ‘It’s a great time to be growing the business’

Loungers is looking to capitalise on the “really strong new site opportunities” it is finding in the property market, as it gets back to its pre-Covid run rate of 25 new site openings a year, chief executive Nick Collins has told MCA.

The operator of 175 café/bar/restaurants, under its Lounges and Cosy Club brands, has already opened seven new sites since the beginning of its current financial year in mid-April, and has 23 on the cards over the course of it.

Collins said those sites, and the three it opened last year, have been performing very strongly and it is keen to open more like them and fulfil the strategy is set out at the time of its IPO. It has also been pleasantly surprised by the strength of performance from its Cosy Club sites, in city centres, “which we might not have expected”.

“Where we see the real opportunity is finding really prime pitch opportunities in strong target locations where we might have been looking for a number of years and have struggled to find fantastic sites. We are finding more of those now and that’s helping influence our strong performance in terms of the latest cohort of openings,” he said. “It feels like a really good time for the business to be growing.”

Its bread and butter still remains converting A1 premises into Lounges in particular, but it has benefitted from contraction in the hospitality market, picking up a handful of what were previously Pizza Express restaurants recently.

Normal growth expectations resumed

In terms of its growth split between Lounges and Cosy Club, the business has previously worked to the target of opening around five Cosy Club and 20 Lounges per year, which remains the goal. This year, of the 23 in the pipeline, Collins says two are likely to be Cosy Club, but that the opportunities do come in peaks and troughs.

It is also in the early stages of trialling a new Cosy Club food menu at five of its venues, with the broad goal to elevate the dishes in terms of the quality of the ingredients used and reduce the overall dish count. “It is quite a substantial change and we’ll see over the coming weeks how that trial progresses.”

The business, which reported strong like-for-like growth of +23.7% in the nine-week period from 17 May to 18 July 2021, compared with the same period in 2019, has been benefitting some of behavioural changes brought about by the pandemic, including the increase in footfall in local high streets and the number of people working from home.

While Collins doesn’t expect the benefits will be as marked as they currently are, once the sector recovers from the pandemic, he suspects they will continue to benefit from them to a degree as life returns to a different kind of normal.

Loungers capacity is also still 10-15% down on its normal level, with the furniture it has in storage not likely to return to sites until at least the end of the summer holidays, said Collins, with current table spacing, and other Covid safety measures, remaining in place for the time being.