13 days of rail strikes last year has cost bar operator Nightcap an estimated £1.2m in sales the latest interim report reveals..
In its interim results for the six months to 1 January 2023, Nightcap reported revenue growth of 48.7% to £23.5m. Like-for-like revenue increased by 4.7% for the second quarter of the year compared to the prior year, and by 10.1% for the first half of 2023 against the equivalent period in the group’s 2019 financial year.
However, like-for-like revenue was down 5.8% in the first half compared to 2022, largely due to the rail strikes. The company also saw widening pre-tax losses to £900,000 for the six-month period, compared to £500,000 the prior year.
The company said: “Management estimates that the 13 rail strike days over the half year will have cost the company approximately £1.2m in Ebitda as a consequence of the deliberate targeting of mainly Thursdays and Saturdays as strike days, two of the three most lucrative weekly trading days for the company and the hospitality industry as a whole.”
During the half year, the group said revenues increased by 48.7% to £23.5m (2021: £15.8m). It said this represented a like-for-like revenue increase of 4.7% for Q2 FY2023 against Q2 FY2022 and a 10.1% increase for H1 FY2023 against the equivalent period in FY2019. It reported a pre-tax loss of £900,000 for the period (2021: £500,000).
It said: “The board considers that the 10.1% increase in like-for-like trading against FY2019, across the businesses acquired since 2021, demonstrates the successful implementation of the company’s strategy to acquire drinks-led hospitality groups that are considered to have significant potential for additional value creation through roll-out and efficiency savings. As well as rapid, sustainable growth, we continue to focus on our profit conversion, and in this respect, we are delighted to report a strong Adjusted Ebitda of £4.1m for the half year.
Whilst this is an increase of over 25% on the comparable period in 2021, we estimate that the rail strikes had an impact of approximately £1.2m on the business at the Ebitda level during the half year. Through very strong Q2 FY2023 trading, led by Christmas, we saw, for the first time, the underlying long-term potential of the group’s portfolio of 36 bars. We achieved a 60.9% increase in revenue compared to Q2 FY2022 and a 4.7% increase on a like-for-like basis and delivered a Christmas trading period exceeding expectations with a record amount of corporate Christmas parties, pre-sold events and New Year’s Eve almost entirely sold out across all bars.”
The company said that 30 bars traded throughout the half year period, with 36 bars being operated at the end of the half year period, reflecting the openings of six new sites – two The Cocktail Club bars, two Tonight Josephine venues and two Barrio bars during September and October 2022. It said that Christmas trading period “exceeded expectations with record amount of corporate Christmas parties, pre-sold events and New Year’s Eve almost entirely sold out across all bars”.
The company said: “13 new sites have traded on average just over six months at the end of the period, with an early trading and maturity profile that puts them on track to deliver the group’s target of 75% annual return on investment (ROI) on total capital invested in new bars in their third year of operation. Several sites are on track to beat the 75% ROI target in their first year of operation.”
Sarah Willingham, CEO of Nightcap, commented:
“Nightcap has had a fantastic half year. Our incredible team opened six bars in six weeks across the country, whilst also delivering a Christmas that exceeded expectations and records in terms of corporate parties, pre-sold events and a nearly sold out New Year’s Eve across all 36 sites. This was followed by a significant business integration and streamlining process, resulting in expected Group savings of £1.4 million annually, whilst preserving the much loved individual identities of our brands. The new sites have opened well with trading continuing to build week-on-week all the way through to the end of February 2023.
“Whilst rapidly building the leading premium bar group in the UK in a very attractive market for property deals, we continue our focus on strong cost controls, proven by our impressive cash generation of £4.1 million from operations during the period thanks to the unwavering dedication of our talented and highly motivated team.
“We look forward to the second half of the year with confidence and once again we thank our customers for coming to our sites and enjoying themselves with friends in a fun, relaxed party atmosphere and leaving knowing they have had a night to remember.”
