Loungers CEO Nick Collins: ‘Our customers missed us’

All-day café-bar-restaurant operator Loungers is back to its market beating trading, with net like for like sales growth of 29.9% over the past nine weeks.

Boosted by Eat Out to Help Out and the VAT reduction, when stripped out, underlying like for like sales for the nine weeks were -1.1%.

Discussing the results, CEO Nick Collins spoke to MCA about beating expectations, welcoming customers, and maintaining company culture during lockdown.

 

Has Loungers’ performance since reopening been better than you expected?

I think it’d be fair to say we are performing better than we’d initially forecasted. As lockdown eased, we were out and about in the business an awful lot, preparing the sites for reopening, and that gave us a chance to understand what footfall was like in the locations we operate. Being out in June in particular, we were confident we were going to reopen pretty well, and then we were pleasantly surprised when we did.

 

You’ve said customers made a quick return to your venues – why is that?

Our customers missed us. It sounds fairly obvious but I think that’s probably the biggest driver for why they were so quick to come back. 

We’ve focused an awful lot on making sure our hospitality, the environment, the atmosphere is as strong as it was pre-lockdown. A lot of our work during lockdown was around making sure we incorporated all the necessary steps to be covid safe, and we’ve done that in a very diligent, detailed fashion.

But we wanted to make sure alongside that our hospitality was as good as it has ever been. Likewise the environment, look and feel, and I think we’ve done that well.

People have come back and they’ve missed the experience, it’s something that’s been taken away from them for three to four months. They’ve been looking forward to coming back, and then when they do come back they it’s as good as it ever has been.

 

Are there any differences in the demographics that you’re seeing?

Obviously we saw the more confident people come back first. I’m still receiving emails and feedback on a daily basis from people saying they have just had their first outing since lockdown. That’s still happening now. The more nervous proportion of people are just venturing out now and will continue to come up for the first time.

With the Lounges and the Cosy Clubs, our customers are a very broad demographic. Ageless and classless is the phrase we use, and that remains the case post lockdown.

 

What kind of behavioural shifts have you seen?

Home working is something that gets talked about a lot. We’re clearly benefiting from that because we’re don’t operate in very dense office locations. We’re likely to benefit because people that were working the city are now working from home. It’s not a case of us seeing more laptops in sites and people working, it more means because that person is working from home they are starting later and finishing earlier. They’ve probably got more disposable income because they’re not travelling into work. It means they can use us for more occasions, that might be coffee in the morning, an early tea with their family.

In the shorter term, we’ve got a number of sites in coastal locations, and we’ve benefited from the fact that a lot more people are having holidays in the UK. It’s also been a later summer, so even after schools were back we’ve continued to see a strong footfall in some of these coastal sites.

 

You’ve talked about emerging from the crisis as a better business.

We are clearly well positioned and we’re fortunate in that respect. Of course we didn’t plan our business model over the last 20 years with a with a pandemic in mind, but the geography works for us.

When we went into lockdown, we spent the first couple of weeks very focused on our balance sheet and liquidity and making sure we were in a position to withstand lots of different scenarios. I think as a management team, there was a realisation that, okay, we know we’re going to reopen at some stage, and these are the various areas we need to look at it. It bought out the very best in us. As an executive team we were constantly on Zoom calls talking together, and we were forced to look at aspects of the business that if it had not been for lockdown, we might not otherwise have looked at.

The app is a really good example of that. We were always being asked about whether we wanted to introduce order table technology. We’ve said no, because we had reservations about the impact it would have on the really important interactions that take place between our team and our customers, because that hospitality is our strongest attribute. We’re very protective over that but covid forced our hand, and we had to introduce an order table app because we didn’t want queues at the bar for distancing reasons. What we’ve seen since introducing the app is that it hasn’t removed that interaction at all, it’s just shifted it from taking place at the bar to the table. So our hospitality is as good as ever, if not better, but it’s introduced some really positive aspects to the business where we’re seeing more second drink sales, such as cocktails or coffees, because our customers no longer have to go out and queue at the bar.

The app means food orders flow through to our kitchens more quickly than they might normally do because customers aren’t in a queue, so that represents a challenge. We’re not controlling the flow of orders as much, but it’s a positive challenge because if we can adapt and react to that, then it can have a really positive impact on ourselves.

From a cultural perspective, the business became closer during lockdown. We engaged honestly and regularly with our teams, and their performance in reopening the business and their efforts during eat out to help out was phenomenal. It was such an extraordinary four weeks of trade that we hadn’t planned for. The way the way they came through, they were so committed and worked so hard it was astonishing and made us all very proud.

 

You’ve talked about cautiously restarting your rollout programme. Will your strategy remain the same? Are there opportunities for you following the closures of casual dining restaurants?

I think the results that we’re presenting now, both for the year to April 2020, and post reopening, demonstrate that the property strategy that we’ve successfully implemented for the last five years, is working, so we don’t expect that to change. Our rental revenue ratio of 5.3% actually came down pre covid. We’re already seeing softening property markets. And so we’re very excited about the opportunities that we’re currently being presented. Obviously we’re approaching opening new sites very cautiously because we don’t know what’s around the corner, we don’t know what trading looks like in the short term.

Typically, Lounges takes A1 retail premises and converts them to A3. That’s our bread and butter. We saw in the last couple of years we were benefiting from retail CVAs. In the majority of instance we don’t trade alongside casual dining, and so the closing of sites in lots of instances is not that relevant to us. That said, given the extent to which other operators are closing sites, I think we will see more opportunities from existing A3 premises than we have in the past.