Loungers will take on multiple kitchen projects as soon as it can after confirming it fully intends to maintain its strategy of opening 25 new sites a year.
The chain, which currently operates 167 restaurants, has been prolific in its quest for expansion in the last few years, opening new sites at a rate of almost one every two weeks.
Loungers chairman Alex Reilley said yesterday that it will take “some months” to get back up to that sort of roll-out schedule, but said it has enough quality sites within its pipeline – and also expects to benefit from an “extremely soft” property market – for it to resume.
Loungers operates two brands – Lounge and Cosy Club – and management at the firm, which completed an IPO last year, think they have barely reached 30% of their potential scale in the UK.
In the case of Lounge, they have described its stated target of 400 sites as feeling “increasingly conservative”.
The business had opened 16 Lounges and five Cosy Clubs in the current financial year, putting them on track to meet their annual target had it not been for Covid-19.
CEO Nick Collins said that over the past five years, they have become “comfortable” with opening sites at such a rate.
“Clearly we don’t know what is around the corner. We anticipate further interruption to trade on either a local or regional basis in the short-term and have the balance sheet and liquidity to withstand significant further Covid impacts.
“Covid has, however, strengthened our belief in the potential scale of both brands in the longer-term and the behavioural shifts being witnessed further underline this. In the second half of the year we will cautiously restart the roll-out and we are excited about the property opportunities available to us and getting back to opening 25 sites a year in due course.”
Loungers has gained confidence from the fact that it has benefited from an increasingly tenant-friendly property market in the past two years and that is set to become even more favourable following industry-wide closures.
The company typically converts A1 retail premises to A3 use and the increase in retail CVAs has meant it is seeing more opportunities in targeted locations where it has demonstrated it can perform strongly. Examples of this include Fosso Lounge in Wells and Cobrizo Lounge in Newbury.
A lack of exposure to central London and travel hubs in favour of suburban and small town locations has also proved astute.
New openings in Wells, Carmarthen and Chorley illustrate a useful ability to trade successfully in towns with relatively small populations across the country, while the launch of Cosy Club at Mermaid Quay in Cardiff saw it operating two Cosy Clubs in the same city for the first time.
As the market went into lockdown it exchanged contracts on no fewer than on eight sites which have not yet opened.
These include Lounges in Sittingbourne, Wolverhampton and Welwyn Garden City and a Cosy Club in Chelmsford.
Loungers’ rent to revenue ratio in the year was 5.3%, which the business says is “significantly lower” than the sector overall.