Market Cap£134.3m

Last Close 106.5p

Hostmore has been newly formed to provide a platform for the development of hospitality brands. Its current operations are Fridays, a UK nationwide chain of American-styled casual dining restaurants (85 sites), and 63rd+1st, a new cocktail-led bar and restaurant brand (two sites).

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Investment summary

The strategic transformation of the iconic Fridays brand operations in the UK provides Hostmore with not only the prospect of strong earnings generation but the model for future investments on the Hostmore platform. Fridays’ own resources (a coherent strategy, robust finances and experienced management with a record of delivery) should marry well with growth opportunities on COVID-19 fallout. An EV/EBITDA of 6x FY22e and at a sharp discount to that of its peers (we estimate c 11x average) ignores Fridays’ strong rejuvenation prospects, backed by our forecast of 2022 financials already well ahead of pre-pandemic levels.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 214.8 45.5 7.4 N/A N/A N/A
2020A 129.1 23.5 (12.2) N/A N/A N/A
2021E 150.0 35.0 (0.2) (0.16) N/A 5.9
2022E 242.0 50.5 15.0 10.15 10.6 3.0
Industry outlook

COVID-19’s exacerbation of longstanding structural difficulties in UK hospitality has shown up undeniable growth opportunities for well-funded operators, notably the increasing availability of prime sites at ever cheaper prices and on more flexible terms and the erosion of competition (industry sources estimate potential loss at up to 30% of restaurants). Current challenges of rising costs and staff shortages are being mitigated by scale and career initiatives.

Last updated on 07/12/2021
Content on Hostmore
Hostmore – Full menu!
Consumer | Initiation | 4 November 2021
Friends toasting with beer
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Share price graph
Balance sheet
Forecast net debt (£m) 29.5
Forecast gearing ratio (%) 25
Price performance
Actual (9.4) N/A N/A
Relative* (9.4) N/A N/A
52-week high/low 133.6p/95.0p
*% relative to local index
Key management
Neil Johnson Chairman
Robert Cook CEO
Alan Clark CFO