The year ended 23 April 2017 has been another period of significant growth and progress for the business and the landmark of 100 sites was reached. Growth in the period has been driven by like for like sales growth of 5.3% (2016: 2.2%) versus the prior period and this growth has continued since. Another 20 sites (2016: 21) comprising 16 Lounges and 4 Cosy clubs were opened with some excellent performances from the recent openings.
Our financial performance for the 52-week period ending 23 April is very pleasing with revenues growing from £68.5m to £91.8m, representing a 34% uplift in net sales. Underlying EBITDA increased from £8.4m to £12.3m, which was an impressive 46% increase on the prior year, despite operating in an inflationary environment. The faster growth of profits over revenue was assisted by strong cost control, the renegotiation of a number of supplier contracts and benefitting from economies of scale as we grow.
The business continues to invest cash generated from operating activities into the development of new sites. During the period, £12.9m of capital expenditure was invested, less than the previous year but primarily reflecting improved control of our capex spend as average cost per unit decreased by 8%. Our site selection criteria has not changed and both lounge and Cosy Club continue to thrive in a variety of different location types, in an ever-widening geography. We now have sites from York in the North to Weymouth in the South and Southend in the East and Falmouth in the West.
Rent/revenue ratio improved to 5.8% from 6.0% in the prior year and maintaining this level remains a core objective of the business.
The company continues to benefit from the regional operations structure that has been put in place. Post the year-end we have added a fourth region in the Lounge business to ensure that we maintain our focus on delivering exceptional customer service. Most of Operational positions continue to be filled with internal promotions continuing to ensure the ethos and culture within the teams is strong.
The Group is developing rapidly and with growth comes change and evolution of the brands, operations and responsibility Post the year-end the head office structure was reviewed and Jake Bishop (previously Managing director for the Cosy Club brand) became the Commercial Director for the Group. Amber Wood became the Managing Director for the Cosy Club brand and Justin Carter (previously Chief Operating Officer) moved to be Managing Director for the Lounge brand. The business is operationally and managerially in a good shape and positioned well to continue its rapid growth trajectory.
We are proud the management of all site developments continues in-house and our three build teams successfully developed all 20 sites. A fourth build team was introduced in August 2017 which will enable further capacity to grow at pace. 2 sites were closed in the period.
People and our culture continue to be at the heart of our business, responsible for the everyday experiences which drive customers back to our restaurants. We have furthered developed our management development programme, introduced a new induction programme and have an online application where all team members can do their e-learning, complete appraisals, watch training videos, book training workshops and look at documents in the training library.
This year we held the fifth Loungefest, a celebration of our success, where more than 1,500 employees were rewarded for their efforts over the past year. The board really appreciates the crucial role ‘Loungers’ play in the on-going success of the business and are proud to have the reputation as an employer of choice within the sector.
Despite the wide reporting of a challenging and inflationary environment for casual dining restaurants, Loungers has continued to thrive with the board, ever cognoscente of the operating environment, actively ensuring that the product offering delivers value for money. Our strategy of regularly changing our menus ensures that our offering remains relevant to the market and takes account of consumer demand. The brands benefit from having a broad appeal from many cuisine types. Our economies of scale help offset inflationary cost pressures as Group profit margins improve as they have this last year.
Current trading and openings update
Loungers continues to perform well with like for like sales of + 7.4% for the current year to date (24 weeks to 8 October 2017). We have opened a further 11 sites (comprising 10 Lounges and 1 Cosy Club) with our most recent Lounge openings in Lewes, Bedford and Wokingham performing well. The pipeline of new openings remains very strong with Lounge openings in Beeston, Bury and Sudbury in the run-up to Christmas, alongside Cosy Club Leeds. The start of 2018 will see us opening Lounges in Melton Mowbray and Stockport and a Cosy Club in Lincoln. We remain on track to open around 24 sites this financial year.