Various Eateries — Raring to go!

Various Eateries — Raring to go!

Various Eateries (VE) continues to deliver on its Q320 IPO aspirations with ‘extremely strong’ trading since reopening in April and confirmation of prime site expansion on advantageous terms. In particular, its main brand Coppa Club grew like-for-like sales by 28% on 2019 in its first five weeks of indoor and outdoor dining from 17 May (UK restaurant market like-for-like sales up 8% in June, per Coffer CGA Business Tracker). Similarly, in the half to March 2021, business was encouraging when allowed to trade, ie October saw 10% higher like-for-like sales at Coppa Clubs outside London. A current opening in Clifton with Putney to follow exemplifies VE’s active growth strategy, facilitated by healthy liquidity (net cash at June 2021).

Richard Finch

Written by

Richard Finch

Analyst, Consumer

Various Eateries

Raring to go!

Travel & leisure

QuickView

22 July 2021

Price

93.5p

Market cap

£83m

Share price graph

Share details

Code

VARE

Listing

AIM

Shares in issue

89.0m

Business description

Founded by Hugh Osmond (non-executive director) in 2014, Various Eateries (VE) owns, develops and operates restaurants, clubhouses and hotels. Now at 12 sites in southern England (core brands Coppa Club and Tavolino). VE joined AIM in September 2020, after raising £25m (gross) at 73p per share.

Bull

Entrepreneurial leadership with record of delivery, opening 400 sites: Andy Bassadone (executive chairman), founder of Strada and Côte, and Hugh Osmond, co-founder of Punch and led flotation of Pizza Express.

Scalable brands suited to post-pandemic conditions, notably Coppa Club as all-day clubhouse equipped for remote working.

Strong growth opportunity on COVID-19 fallout, eg reduced competition and greater site availability on favourable terms, for well-funded operator (£21m gross cash at June 2021).

Bear

Macro uncertainty, particularly regarding the economic impact of COVID-19.

Execution risk in terms of planned expansion.

Retention of key personnel.

Analysts

Richard Finch

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

Various Eateries (VE) continues to deliver on its Q320 IPO aspirations with ‘extremely strong’ trading since reopening in April and confirmation of prime site expansion on advantageous terms. In particular, its main brand Coppa Club grew like-for-like sales by 28% on 2019 in its first five weeks of indoor and outdoor dining from 17 May (UK restaurant market like-for-like sales up 8% in June, per Coffer CGA Business Tracker). Similarly, in the half to March 2021, business was encouraging when allowed to trade, ie October saw 10% higher like-for-like sales at Coppa Clubs outside London. A current opening in Clifton with Putney to follow exemplifies VE’s active growth strategy, facilitated by healthy liquidity (net cash at June 2021).

Confidence undimmed

The pandemic has reinforced management’s conviction that its Coppa Club product, an all-day, multi-use venue with a clubhouse feel, increasingly addresses changes in consumer behaviour, accelerated by COVID-19. More flexible, remote working and the growing appeal of neighbourhood hospitality chime with Coppa Club’s wide proposition, ie restaurant, lounge, bar and workspace with outdoor seating, supplemented at two sites by accommodation and events and meeting spaces. The focus is on prime residential areas outside London notwithstanding an established major outlet at Tower Bridge. With over 50 Coppa Clubs (now eight) envisaged nationwide, management confirms a ‘very healthy’ pipeline with an autumn opening and several sites under negotiation. VE also sees scope for 100+ Tavolino, a neighbourhood Italian restaurant at mid-market prices (now just at Tower Bridge), initially with the conversion of two prominent company-owned Strada in London. A run rate of c 10 openings a year across the estate is planned.

H121 resilience

Despite the challenge of COVID-19 (20 weeks of closures and 7 weeks of curbs, hence 70% lower sales), the half to March 2021 saw maintained EBITDA break-even, bolstered by the receipt of a £2.5m business interruption insurance interim payment. £19m gross cash at the period end compared with c £24m at the start.

Valuation: Attractive

With no consensus forecasts and FY21 disrupted by COVID-19, we base valuation on management’s pro forma EBITDA based on 2019 performance, adjusted for later acquisitions. Its £5.3m pre-IFRS 16 EBITDA on June 2021 net cash of £8m suggests EV/EBITDA of 14x. This may prove undemanding if VE’s highly scalable model can capitalise on ’the most favourable market opportunities in a generation’.

Consensus estimates

Year
end

Revenue
(£m)

EBITDA
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

09/19

25.6

2.3

(145.1)

0.0

N/A

N/A

09/20

16.5

(0.8)

(116.4)

0.0

N/A

N/A

09/21e

N/A

N/A

N/A

N/A

N/A

N/A

09/22e

N/A

N/A

N/A

N/A

N/A

N/A

Source: Refinitiv. Note: *Not meaningful, given transformative increase in issued share capital in connection with admission to AIM at very end of FY20.

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