International coffee franchiser Cooks Global Foods says it is not concerned about its outlook over the next six months despite the United Kingdom's move back into lockdown.
The NZX-listed company, which conducts most of its business in Britain and Ireland, has 58 outlets in England and 14 in Ireland. It owns the master franchise rights for Esquires Coffee and Triple Two Coffee, and has franchised cafes throughout the Middle East, Pakistan, China, Canada and Indonesia.
Cooks Global Foods posted a $5.1m loss in the 12 months to March 31, in part due to a $2.5m non-cash write down associated with its China business. It had a revenue of $4.1m in the period.
But the cafe company says England's long, hard lockdown earlier this year had not had a material impact on its top line sales in the current financial year, and that Downing Street's work from home orders had provided a boost to the group's suburban neighbourhood outlets.
Cooks Global Foods chair Keith Jackson said the second half of the year was off to a good start thanks to England's "generous" government support packages, and sales were now ahead of those in the same period a year earlier.
The UK government had reduced VAT for hospitality, slashing tax from 20 per cent to 5 per cent until January, which had proven favourable with consumers, introduced the Eat Out Help Out programme offering dining discounts in the month of August and council rates had been abated for 12 months, which had benefitted the franchisees, Jackson said.
"For the first half of the year we had a period where we had virtually nothing happening with the cafes and that reduction [in trade] was offset by government support packages. We've gradually seen sales recover to a point where we are travelling more or less above last year's levels," Jackson told the Herald.
Overall store sales for the April to September period were down, but the current situation was strong, he said.
Earlier this week UK Prime Minister Boris Johnson announced strict measures to curb the spread of coronavirus after a sharp spike in cases this month. People are now advised to work from home where possible and pubs are required to close by 10pm.
That government has also introduced stricter fines for those breaching mandatory face mask use in public rules.
The return to lockdown for Brits would not likely have a significant impact on the group as most of the network's outlets were located in suburban neighbourhoods, which had benefited from consumers working from home during the first lockdown, Jackson said.
"In the last two months it has helped sales build even further than they were, and we've seen the same [trend] in Ireland. Our central city stores have been impacted more than our neighbourhood and rural stores.
"Outside of the centre of the city we've had very strong recovery."
The group had 11 new stores open and operating which was also contributing to stronger sales compared to this time last year, he said.
The group was "cautiously optimistic" about its outlook for the next year and the group would come out of the pandemic stronger than before.
"Cafes, as opposed to restaurants and hotels, are in a good space. They are very much meeting places, very social environments and we think [business] will continue to recover well in the cafe space. We're cautiously optimistic."
Cooks does no business in New Zealand, but operates its corporate office from Auckland. Two years ago it was looking to acquire Mojo for $19 million, however this fell through at the last stage.
The company is still "open to opportunities" in the New Zealand market.
Cooks Global Foods has "high hopes" for its Triple Two business, which it acquired in June for an initial payment of $7.5 million.
It plans to expand the Esquires and Triple Two networks through new store openings in Ireland and Europe, including in Norway, Sweden, Finland and Denmark.
It is also looking at the possibility of expansion into Italy, Germany, Poland and The Netherlands. Jackson could not provide any other further details.
"We're looking to continue to build the business, profitability and cash flow and build value for shareholders, and we'll do that through continuous growth."
He said the group would also continue to expand it UK-based store numbers. It has divided England into 11 regions and has so far sold franchisee rights in three regions.
Cooks Global Foods completed the sale of its Scarborough Fair Tea and Grounded coffee brands to Auckland-based Toasted Coffee Roasters in July.