Itsu, the Julian Metcalfe-founded, Asian-inspired brand, saw EBITDA for the 12 months to the end of 2015 increase 7.2% to £7.33m, with total revenues climbing 21.8% to £82.6m, driven by 10 new openings and like-for-like sales growth of 2.3%.
The 69-strong company told MCA that trading for the year to date had continued to be strong, especially across new menu items including at breakfast and in the evening, and that it was “working hard to break through the £100m mark”.
The group also revealed to MCA that it believed there was scope to eventually operate 200 sites in the UK and that it was looking at a couple of options to enter both the US and France at the moment.
MCA understands that the group is in the middle of a pilot with Deliveroo across three of sites in London and that it hopes to have 20 locations operating with the delivery operator by the early autumn.
A spokesperson told MCA: “We have seen some promising signs in our early Deliveroo stores. Most encouragingly, we have just had our first £2m week just four short years after celebrating our £1m milestone.”
Profits for the financial year to the end of 2015 fell to £434.k (2014 - £1.6m), which the company said was a result of investment in new shops, international expansion, new channel development and IT in shops.
Site expansion during the year included two new flagship shops in Westfield, White City and Bicester Village plus the brand’s first travel hubs at Stansted Airport and Euston Station.
Metcalfe said: “2015 was another very strong year for Itsu and that’s down to the incredible hard work of everyone in our expanding family. We can be proud in every area of the business. Our shops have the highest hygiene ratings against our peers and that’s due to meticulous recruitment and training. Our customer service and food quality is second to none and we’re seeing more customers than ever before, both in London and the regions. We were also awarded “Best Concept” at the Retailers’ Retailer Awards in March. All fantastic achievements.”
The company said it was confident of a strong 2016 with more London and regional openings planned plus a return to Heathrow Terminal 5 in late summer.
On breaking the £100 revenue mark, a spokesperson for the company told MCA: “We are working hard to break through the £100 million mark. One can be easily seduced by an aggressive short-growth strategy but we are in for the long haul. Too often businesses become stretched and the customers and team members suffer. We take our time to make sure every new location is set up for success whilst protecting the experiences of our current shops.”
The company said it was “very happy” with the performance of its regional locations. The spokesperson said: “Not only have we opened in new parts of the UK, we have also opened new formats including airports and shopping malls.
“What’s interesting, but not unsurprising, is that our top sellers vary in the regions. Our friends in Manchester love your hot breakfast pots with rice and eggs and our vegetable smoothies. In Leeds, garden shed on a bed is a favourite and, like Manchester, all our hot soups and potsus are popular. In Brighton, Oxford and Cambridge our baby maki are big winners.”
In terms of growing from 69 sites to 200, the group believes there are a number of neighbourhoods in London, like north and south London that provide room for growth. The spokesperson told MCA: “We also believe that there are a number of cities across the UK like Birmingham and Manchester that could support a couple of locations.”
Questioned on whether the group had received any approaches regarding new investment? The spokesperson said: “We were very excited last year to announce the HSBC £40m funding to help drive our growth both in the UK and abroad.”
On international expansion and much mooted debuts in France and the US. The group told MCA: “We are looking at a couple of options to enter both geographies at the moment. We think that there is great potential in both markets. We are just finalizing what our approach will be and hope to have more news shortly.”
The company said that the performance of its own delivery format Itsu [to you], which it launched earlier this year, “confirmed the customer appetite for our “eat beautiful” menu”. The spokesperson said: “We wanted to accelerate our efforts and reach as many people as possible, so we have decided to simplify the customer proposition and operate as one Itsu delivery business working with our existing aggregators.”
The company said that lunch and sushi would always be at the core it business but that it had been “very excited by the gains we have made across breakfast, evenings and weekends”. It told MCA: “Some of this has been product led like our breakfast rice pots or the long awaited return of Udon after 5pm. But we have also made some significant investment to our customer service proposition where we have invested in Service Managers and Hosts so that we can easily transition from a speedy lunchtime to a more relaxed evening service.”
The company said it had also significantly increased the amount of innovation it was undertaking and would continue to add more breadth to its product offering.
When asked how Brexit had impacted the business? The spokesperson told MCA: “From a business point of view, I think we are all in the same boat as other businesses. How will it affect contracts buying and upcoming property deals is unclear but these are all about the day to day of our business.
“Of greater concern is how it affects our team members. We have a very diverse workforce with team members and leaders for every part of the EU. The weeks running up and the after the result were very stressful for our teams. There was a lot of misinformation and genuine fears about their personal status and sadness about how this could disrupt the lives that they have successfully built here.
“Our priority has been their welfare and we continue to regular check in, allay fears and counsel team members. Our leadership team and Julian, himself, have made themselves available to anyone who wants to talk things through or needs immediate help.”
In terms of any impact from the introduction of the National Living Wage, the company said that the good news was it was prepared.
The spokesperson told MCA: “We have always invested in the pay-rate of our team members so had already identified a number of initiatives that would help us to offset the cost without negatively affecting our team members. Maintaining their benefits was extremely important to us. There was never a question that we would cut meal allowances, team members discounts, training or social events. Having a team that is well rewarded and taken care of is our number one priority. We take care of them so that they can take care of our customers.”
