D&D London To Close All Its Restaurants, Situation of Other Restaurant Operators in the UK

The owner of some of the biggest and most luxurious restaurants and eateries of United Kingdom, such as Le Pont de La Tour, Quaglino’s and Coq d’Argent, D&D London, has decided to close down all its 38 restaurants operating in the different locations of the United Kingdom with immediate effect. This decision was taken by the company, primarily due to the government’s advisory regarding the travel ban and against dining out, due to the coronavirus outbreak.

The fear of the outbreak, in the previous few days, had already taken the country by storm, as people have stopped getting out of their houses and are avoiding contact, so as to protect themselves against the virus. This had significant implications for the business and economy, and especially for the food and beverages industry all over the world. The fine dines restaurants and bars all across the world have suffered deeply, with people not going to dine out to avoid any kind of contact.

The move by D&D London came as the Carluccio’s restaurant giant made a statement that it was on the brink of closure if this situation persisted, which it is now going through. The company previously too had to close down its stores in some of the major locations of the world such as Paris and New York due to similar reasons.

Other factors causing the Restaurant chain’s downfall

Apart from the Coronavirus outbreak, the company has also faced other challenges, starting in the year 2018. The company in May 2018 made a statement that it would need immediate and urgent action to keep all the restaurants and the bars that it operated, running.

This was followed by the rescue plan of the company, being approved by approximately 90 per cent of the company's creditors, which allowed the company to pay off all its liabilities, over an agreed and extended period of time, without having to ascertain any other borrowing costs or charges on its books.

Another issue that has been reported about the company is the fact that due to high operating costs, the restaurant chain’s revenue and profits have been significantly declining since the last three years. It was reported that in the year 2016 company’s profit before tax displayed an unprecedented decline of around 81 per cent.

How have the other companies faired in this period of chaos?

After Boris Johnson’s announcement on Saturday, 16^th March 2020, asking the citizens of the United Kingdom to avoid any kind of non-essential travel as well as asking them to stay away from Pubs and Restaurants, the food and beverages business in the United Kingdom have taken a significant hit. Even prior to the announcement, when the neighbouring countries such as the likes of Italy, France and Spain were in a lockdown, the citizens of the UK were fearful and not going out, and hence this period of mess for restaurants and bars in the UK has been extended, so much so that, one of the largest catering groups in the country, Compass issued an alert regarding its profits primarily owing to the outbreak, which will force to close half of its business in the country.

Similarly, other major brands have also been reeling under the economic stress caused by the Covid-19 outbreak.

The following is a brief overview of share price performances of four such companies, who are among the biggest players of the restaurants and bar business in the United Kingdom trading on the London Stock Exchange.

CPG Share Price Performance

As on 20^th March 2020, at 13:46 P.M (Greenwich Mean Time), by the time of writing this report, the Compass Group Plc share was trading at a price of GBX 1,140.00 on the London Stock Exchange market, an increase in the value of 8.06 per cent or GBX 85.00, in comparison with the price of the share on the previous trading day, which had been reported to be at GBX 1,055.00. As of the time of reporting, the market capitalisation of Compass Group Plc has been reported to be at a value of GBP 16.75 billion, with respect to the current trading price of the company’s share.

The beta of the share of the company was reported to be at 1.22 when this report was being written.

MAB Share Price Performance

As on 20^th March 2020, at 13:45 P.M (Greenwich Mean Time), by the time of writing this report, the Mitchells and Butlers Plc share was trading at a price of GBX 124.60 on the London Stock Exchange market, an increase in the value of 23.61 per cent or GBX 23.80, in comparison with the price of the share on the previous trading day, which had been reported to be at GBX 100.80. As of the time of reporting, the market capitalisation of Mitchells and Butlers Plc has been reported to be at a value of GBP 432.63 million, with respect to the current trading price of the company’s share.

The beta of the share of the company was reported to be at 1.86 when this report was being written.

FSTA Share Price Performance

As on 20^th March 2020, at 13:02 P.M (Greenwich Mean Time), by the time of writing this report, the Fuller Smith & Turner Plc share was trading at a price of GBX 660.00 on the London Stock Exchange market, an increase in the value of 1.54 per cent or GBX 10.00, in comparison with the price of the share on the previous trading day, which had been reported to be at GBX 650.00. As of the time of reporting, the market capitalisation of Fuller Smith & Turner Plc has been reported to be at a value of GBP 210.21 million, with respect to the current trading price of the company’s share.

The beta of the share of the company was reported to be at 0.75 when this report was being written.

YNGN Share Price Performance

As on 20^th March 2020, at 13:36 P.M (Greenwich Mean Time), by the time of writing this report, the Young and Company’s Brewery Plc share was trading at a price of GBX 643.25 on the London Stock Exchange market, an increase in the value of 13.35 per cent or GBX 75.75, in comparison with the price of the share on the previous trading day, which had been reported to be at GBX 567.50. As of the time of reporting, the market capitalisation of Young and Company’s Brewery Plc has been reported to be at a value of GBP 383.32 million, with respect to the current trading price of the company’s share.

The beta of the share of the company was reported to be at 1.12 when this report was being written.

Comparative share price chart of CPG, MAB, FSTA and YNGN

(Source: Thomson Reuters) Daily Chart as on 20-March-20, before the closing of the LSE Market