MIDAS SHARING TIPS: Take a slice of Loungers pubs, bars and restaurants
The sun shone – intermittently – the Jubilee got us in the party mood and across the country pubs, bars and restaurants were packed with families and friends enjoying the long bank holiday weekend.
Lounge chairs are one of those activities. The casual dining chain expects to record its best week ever as customers of all ages flock for snacks, meals, cocktails and coffees.
Loungers was formed in 2002, when a group of friends from Bristol decided to open a neighborhood venue where they themselves would like to hang out.
National appeal: Loungers operates affordable outlets outside city centers that cater to young and old alike
Today, Loungers has nearly 200 locations, scattered in market towns, seaside resorts and urban suburbs across the UK.
Most of these sites qualify as lounges – light, bright and stylishly decorated places, usually open from 9am to 11pm or midnight.
A step up from a pub or cafe, but less formal than most restaurants, the lounges focus on providing good value food and drink, from full English breakfasts to salads, tapas and complete meals. There are plenty of vegan options, as well as coffees, teas and a huge range of cocktails, wines and beers.
Menus and pricing are common across the chain, but each location is individually designed and managed, with an emphasis on community belonging. Many customers are regulars, and the managers tend to know and be known to bettors and local businesses.
Loungers also has 34 Cozy Clubs – still offering good value for money but a bit more like conventional restaurants and often housed in historic buildings, such as former bank rooms, gentlemen’s clubs or even hotel wings. hospital.
The emphasis on an attractive setting, attentive service, decent food and reasonable prices has always worked since the group’s inception. Two of the three founders are still on board, including chairman Alex Reilley and chief commercial officer Jake Bishop, but the business is run day-to-day by chief executive Nick Collins. A qualified accountant, Collins has spent much of his career in the bar and restaurant industry and joined Loungers almost a decade ago.
In 2019, the management team decided to launch the company to facilitate expansion plans and offer staff shares in the company. At that time Loungers had 146 sites, it was generating sales of £153 million a year, but was loss-making on a pre-tax basis. The group has since increased the number of sites by a third and is expected to report sales of over £235million for the year to April 17, 2022, with profits of £18million.
Still, shares of Loungers are languishing. Priced at £2 at the IPO, the stock rose to almost £3 in April last year when indoor dining was not even allowed.
Today the price is back to £2, a drop that seems unwarranted.
Of course, Loungers is subject to many of the issues that other businesses in the food and beverage industry face. Raw material prices are rising, staff are scarce and customers’ disposable income is under pressure. However, the company has certain strengths that should enable it to do better than its peers and continue to grow.
First, its prices are often lower than other department stores and the group fortuitously covered energy costs last year under a deal that runs until 2024.
Menus can also be adapted quickly if ingredients run out, tastes change, or low-priced dishes become more popular.
Being locally located also helps, with consumers often choosing to stay closer to home when times are tough. And Collins works especially hard to attract and retain staff, with everyone from servers to senior executives being offered shares in the company after a year of service. More than 1,000 employees, or approximately 15% of the workforce, now own the stock of Loungers, which promotes loyalty and good customer service.
For the future, Reilley and Collins are optimistic. The pandemic has forced many shops and restaurants to close, leaving large voids on the main street and prompting landlords to recruit large, reliable tenants, such as Loungers.
Over time, the group hopes to reach at least 400 Lounges and 100 Cozy Clubs and the current environment allows it to take over well-placed sites at competitive prices. As the business grows, it can also become more efficient, generating higher profits and better deals for customers.
Midas verdict: Loungers offers affordable food and drink in well-designed venues that appeal to young and old alike. The format has worked steadily over the past 20 years and should help Loungers weather even tough economic conditions. At £2, shares are a buy.
Traded on: OBJECTIVE Teleprinter: LGRS Contact: loungers.co.uk or 0117 930 9971
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