During an investor presentation following the publication of its interim results yesterday (21 September), chief executive Robert B Cook said new openings in the group are on hold.
He continued that while the business was still on track to deliver its medium-term target of 100 Fridays restaurants and 25 63rd+1st sites, Hostmore will be slowing down until it begins to 'see some green shoots of recovery in the UK'.
Planned Fridays openings in Barnsley and Durham in the fourth quarter of this year will still go ahead, with the business not concerned that a pause in new sites will inhibit it reaching the development plan agreed with TGI Fridays in the US because the group is 'ahead of that curve anyway'.
Hostmore’s CFO Alan Clark added that the decision is about ensuring the stability of the company in the shorter-term.
The group will continue its efforts to find new sites, and if suitable opportunities arose it will look to 'contract them in such a manner than capital commitments can be deferred until a time which is more appropriate from a more normalised economic trading environment perspective'.
Hostmore saw like-for-like sales growth decline by 7% in the six months to 3 July 2022, compared to 2019 levels and is guiding at 11% down for the period through to the end of December.
Cook said: “Current trading reflects the enduring impact of a weaker consumer demand due to the measures of cost of living that we are enduring in the UK at the moment which has been materially offset by us mitigating costs, and savings initiatives, around all parts of the business, and is continuing.”
Clark said that there had been a negative impact on its cost of sales over the period due to the fact the business had deferred menu price increases 'as much as it possibly could'.
It implemented its first material price rise towards the end of June and will look to put through further rises 'in a very targeted manner' due to the continuation pressure on food and beverage input costs, with inflation running at around 10%.
“Contracts are in place for a number of products but there is threat of further price increases in the near term. We are optimistic though that moving into FY23 that this will then start to trend lower,” Clark said.
He added that utility costs remain a challenge for the group, although the forecasts for the presentation were made before the announcement of the Government’s support package for businesses.
At the time the presentation was compiled, Clark said Hostmore was looking at a utilities price increase for the 2023 financial year that is £6m greater than it would be paying the previous year.