Chopstix has revealed to MCA the details of five new sites to open under its eponymous brand as part of its target to achieve eight to 10 openings in the current financial year, but has also disposed of c23 units.
The Asian QSR brand will open in the former Wok & Go site in Bull Street Birmingham, the week after next, followed by Earls Court and Holborn – both high street locations – and Bristol Cribbs Causeway mall in March, managing director Jon Lake told MCA. It also has an opening lined up at Glasgow Silverburn Shopping Centre, which is likely to open August/September time.
Speaking on the back of its latest financial update, for the full year to 30 April 2018, he added: “We are also at heads of terms on one more and are likely to exchange before the end of February.”
Following the end of the financial year the group reviewed the trading performance and carrying value of c23 sites held under licensing arrangements and disposed of these sites and the related group companies to a third party for nil consideration, with an impairment of £1m recognised within this period.
“These were quite old units in tertiary locations,” explained Lake. “Historically the business had done one-off licensing agreements with local individual operators. When I arrived I took a look at the business and said this isn’t what we should be doing long term – it’s a difficult thing for us to control and not a proper franchising agreement so we took the decision to move them on, but we may well look to do franchising properly in the future.”
The group achieved increases in full year and like-for-like sales over what it described as “a pivotal year for the business”. Company turnover increased to £24.5m, from £15.6m the previous year, with like-for-like (lfl) sales for its Chopstix brand up 3.5%. Gross profit margins stood at 67% (2017: 75%) for the full-year, while adjusted EBITDA stood at £2.2m (2017: £2.6m).
Lake put the lfl increase down to a mix of price increases and innovation. “We had a restructuring of the menu this time last year. We used to do two sizes of boxes and move to three and priced that according, for example,” he said.
According to Chopstix the margin reduction during the period was down to a number of new openings where these sites require some time to mature, the Yangtze division and new product development and stock adjustments.
During the last financial year, the group opened 10 new Chopstix restaurants, and acquired The Wok Limited – a portfolio of nine restaurants trading as Yangtze, which contributed £2.9m in sales.
Lake said it was encouraging that where Chopstix and Yangtze sites have been opened in the same location – in Merryhill, Birmingham and Manchester, Arndale – it has had little or no effect on the other. “We are not rushing into anything, but we are encouraged by that and we may well look to do one or two more dual openings where they sit well alongside each other,” he said.
At the year-end it operated 41 branded Chopstix restaurants, with an additional 17 operated under franchise, 10 with Applegreen in Ireland, six with Welcome Break in motorway service areas in England and Scotland and one in Germany with Westfalen.
Since April last year the company said it had continued to trade in line with expectations and was on track to open eight to 10 company owned news sites in the current financial year – four of which are already open. Its franchise partner Applegreen has also added sites in Rathcoole and Ballymount in Ireland, while the unit at Mountgorry closed.
Its new Chopstix sites at Westfield Stratford and Nottingham were opened in its new generation design template, which will be incorporated into all new units in future. While its two new Yangtze sites in Bluewater and Manchester Arndale have given the company reassurance about the potential of the Yangtze brand in the future, it said.
The evolved looked includes the move from traditional Bain Marie to display the dishes, to the use of woks. It has also revamped its screens and its packaging and introduced new uniforms. “All new sites will be done in that way. We also have a string of refurbs to do in the second half of the year, and they’ll all be done in that way, and then as time goes on we will be bringing the entire estate up to that brand standard.
Lake added: “The year saw the company continue to refine its approach, strengthening its image to convey our core attributes, whilst also emphasising how ‘different’ we are to other quick service restaurants in the space we occupy.
“It has also seen us strengthen our relationships with landlords, especially those with high-footfall, destination shopping schemes, and we look forward to adding to that part of our estate over the coming months. We believe there are still significant opportunities to expand both the Chopstix and Yangtze brands.”