Loungers sales surge after Eat Out to Help Out boost

Sales have surged at cafe bar chain Loungers after it reopened sites from the Covid-19 lockdown and was buoyed by the Eat Out to Help Out scheme.

The group, which runs 137 individually titled Lounge sites and 30 Cosy Club venues, saw shares jump on Wednesday morning after it said like-for-like sales soared by 29.9% in the 10 weeks from July 4.

The state-backed Eat Out to Help Out discount scheme and cuts to VAT on food and soft drinks helped to drive revenues higher, it said.

Like-for-like sales would have fallen by 1.1% during the period without the subsidy schemes, the company told investors.

It reported that sales growth was “significantly” ahead of its expectations for the period as it revealed a positive outlook for the rest of the year.

Nick Collins, chief executive officer of Loungers, said: “Clearly we don’t know what is around the corner.

“We anticipate further interruption to trade on either a local or regional basis in the short-term and have the balance sheet and liquidity to withstand significant further Covid impacts.

“Covid has, however, strengthened our belief in the potential scale of both brands in the longer-term and the behavioural shifts being witnessed further underline this.”

However, Mr Collins also told the PA news agency that he feels there could be a “shift in customer sentiment” following the introduction of the “rule of six”, which limited the size of groups from Monday.

“It’s very early so we are still guessing but my first instinct is that it will impact sentiment,” he said.

“It does feel like the Government has scared people a bit with the announcement but we are not sure yet if we will see sales affected.

“We’ve not seen any drop off in sales in September after Eat Out ended so we have every reason to stay optimistic.”

Loungers has opened new sites in Hull and Birmingham and “cautiously” plans to open a further four in the current financial year.

Chairman Alex Reilley hailed its expansion plans and said its long-term target of 400 Lounge sites “feels increasingly conservative” on the back of its strong growth.

The group shut all of its sites on March 20 as a result of the Government-mandated lockdown but said all of its sites had reopened by August 7.

The update came as it revealed that losses widened for the year to April due to the pandemic, posting a pre-tax loss of £14.7 million.

It posted sales for the full year of £166.5 million, as they increased by 8.8% for the year despite the closure of sites at the end of the period.

Shares moved 12.2% higher to 171.7p in early trading.