9th February 2019
Chopstix, the Asian quick service restaurant company, has identified “significant opportunities” to expand both its eponymous and Yangtze brands as it reported a boost in turnover and sales.
Turnover increased to £24.5m for the year to April 2018, compared with £15.6m the previous year. Like-for-like sales during the year for its core eponymous brand increased 3.5%. During the year the group opened ten Chopstix restaurants and acquired The Wok, a portfolio of nine restaurants trading as Yangtze. During the period Yangtze contributed £2.9m of sales.
At the year end, Chopstix operated 41 branded Chopstix restaurants and nine Yangtze restaurants. An additional 17 Chopstix sites are operated under franchise, ten with Applegreen in Ireland, six with Welcome Break in motorway service areas in England and Scotland, and one in Germany with Westfalen. The company reported gross profit margins of 67% (2017: 75%) for the full year. Adjusted Ebitda after pre-opening and exceptional costs but before fixed-asset impairments stood at £2.2m (2017: £2.6m). The margin reduction in the period was driven by a “significant number of new openings where sites require some time to mature, lower margins in the Yangtze division, and new product development and stock adjustments”.
During the period the group reviewed the trading performance and carrying value of the sites that were held under licensing arrangements and, as a result, after the period ended, disposed of the sites and the related group companies to a third party for nil consideration. As a consequence of the strategic review and underperformance of the sites, an impairment has been recognised within the period of £1.0m. Since the year end the company has continued to trade in line with expectations. The group is on track to open eight to ten company-owned sites in the current financial year with four already open. The Chopstix units at Westfield Stratford and Nottingham have both benefited from a new-generation design template, which will be incorporated into all new units in future, and two Yangtze units at Bluewater and Manchester Arndale have given the company reassurance about the potential of the Yangtze brand. All these sites have significantly exceeded expectations with Westfield Stratford now the company’s highest-turnover unit.
Applegreen has increased its Chopstix estate since the financial year end, with openings at Rathcoole and Ballymount in Ireland. One unit at Mountgorry was closed. The business, which is owned by its founders Sam Elia and Menashe Sadik appointed a new senior management team in January 2017 led by managing director Jon Lake. He said: “The Chopstix business has continued to grow and deliver positive results as the market has evolved and been impacted by macro-economic and political factors. The year saw the company continue to refine its approach, strengthening its image to convey our core attributes while emphasising how ‘different’ we are to other quick service restaurants in the space we occupy. It has also seen us strengthen our relationships with landlords, especially those with high-footfall, destination shopping schemes, and we look forward to adding to that part of our estate in the coming months. We believe there are still significant opportunities to expand both the Chopstix and Yangtze brands. As with the wider market, we have not been immune to the challenges currently being faced but we have and continue to invest in making sure we have the best people and systems in place to drive further improvements and efficiencies across the business.”