Hostmore to defer new openings to 2025 amid challenging trading

Hostmore has revealed it has decided to delay any new restaurant openings until at least 2025, saving approximately £15m of cash expenditures, as it battles challenging trading conditions.

The news comes after the group reported improved cost reductions of £8.2m, compared with the £5.9m previously announced, for the 26 weeks ended 2 July 2023.

It said the reductions will benefit FY 2023 by £5.8m, an increase from the previously announced £4m, with £4.3m of benefit in H2 2023 versus H2 2022.

However, on a like-for-like basis, adjusted for the impact of the lower VAT rate in the equivalent period last year, revenue performance was £93.6m, 2% lower than 2022 at £98.5m. The group attributed this result to warm weather in June which impacted its restaurants due to the limited outdoor space available. 

The first half year of 2023 delivered a negative EBITDA of £3.8m in comparison to a positive £7.1m for the same period in 2022. H1 2023 was adversely impacted in comparison by the reduced VAT rate to 12.5% for the first quarter of 2022, grants issued by the Government in the same period and rent concessions received from landlords. In addition, during H1 2023, the group experienced some comparative volume decline.

Hostmore said that the significant inflationary pressures it saw in the first half are now starting to moderate, and the majority of the group’s EBITDA was earned in the second half of the year. 

Stephen Welker, chairman, said: “During the period we have undertaken a very thorough review of our cost structure and store estate. We are pleased that the actions taken have dramatically improved the financial outlook of the business, thereby keeping us on the path to repaying all of our borrowings and initiating shareholder distributions.”

Julie McEwan, chief executive officer, added: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation. As we move through the second half of our financial year, it is encouraging to see the effects of our strategic and operational actions coming through in our results. 

“Notwithstanding the challenges facing the sector, the early success of our turnaround programme enables us to look to the future with confidence. The leadership team we have in place is focused on building a platform for future growth and shareholder returns, with the group well placed for the remainder of 2023 and in the years ahead.”