YO! Sushi, the Robin Rowland-led, Mayfair Equity Partners-backed group, has reported consistent like-for-like sales growth of more than 6.5% since the end of its financial year to 27 November 2016.
The group, which is nearing the 100-site mark, described the year – its first under the ownership of Mayfair, as “transformational”. Turnover for the 12 months to 27 November 2016 increased 6% to £88.4m, whilst like-for-like sales climbed more than 5.5% for the last four quarters.
EBITDA for the year was relatively flat £10.8m reflecting the company’s reinvestment in the brand, the completion of the Mayfair deal and the conclusion of two leases at Paddington station and Glasgow House of Fraser.
YO! Sushi said growth in the short to medium term would come from the core UK business.
Rowland said: “FY2016 was transformational for YO! Following a full strategic review with our new owners we’ve reset the business to best position it for long-term future growth. This has been reflected in 5.5%-plus like-for-like sales growth for the past 12 consecutive months. We have the people and product to take the business forward and 2017 will be about taking advantage of significant opportunities that exist for the brand.”
It added it had extended relationships with international franchise partners, including SSP, to open sites outside the UK that offer “high brand awareness”.
During the year, the company also reviewed its US portfolio, which has been reduced from seven to three sites, and its property strategy to focus on building brand awareness in downtown high-density sites.
This resulted in the decision to exit some of the sites selected by the US franchise partner while under previous ownership.
It opened four sites in the period – in Bournemouth, Harrogate, Newcastle and Chelmsford. In addition, two restaurants at St Pancras station and Edinburgh airport were rebuilt with new leases. The group also disposed of four older sites in the UK to capitalise on lease premiums.
Three franchised restaurants opened in Dubai, while two company-owned sites opened in the US.
The company also reformatted its YO!-to-go offer, both grab-and-go and delivery, which it said had resulted in a “significant increase” in sales.
Since the period end, four further UK restaurants have opened, taking the UK estate to 76 sites in total. Meanwhile, openings in New York and four new international franchised sites in Paris and Sydney Airports have taken the total global estate to 93 sites.
Rowland’s reset
If YO! Sushi’s results for 2016 highlight a company that spent a year resetting itself, the impressive like-for-like performance since suggest that in doing so it has timed its current renaissance to perfection, not that chief executive Robin Rowland is ready to let the business take its foot off the pedal.
Rowland himself calls the year to the end of November 2016 as one that was transformational for the Mayfair Equity Partners-backed YO! Sushi. It was certainly a year of necessary change and one that, if it had happened 12 months later, could arguably found the near 100-strong group battling to rejuvenate itself at all in an increasingly challenging market. Looking back now, the timing of the changes Rowland has overseen has placed YO! in the best position to ride out the current sector storm and in doing so possibly catch sector peer Wagamama in the like-for-like growth stakes.
Since the end of 2015, Rowland has overseen the complete change of his management team, the introduction of a new design, an evolved format, new packaging, a new concept at Boxpark Croydon and significant changes to the group’s menu. An experienced hand has brought a new broom to bear. As the man himself said at the start of 2016: “I believe what we have achieved in the last year, would have taken three years in another company.”
2016 was about going back to basics and putting the foundations in place for further growth. This has included exploring at new concepts and formats. This has included ‘grab & go’ areas being put into the company’s St Pancras, Tottenham Court Rd and St Paul’s sites. It is early days but it is thought that the company is very encouraged with new packaging and offer, YO! Grab & GO currently makes up c10% of group total sales with delivery YO TO GO on top. YO TO GO delivery currently sites near the sector average of c3% of total sales and the company is believed to be fine with that balance at present.
This evolution has seen the group open its first non-conveyor site in Boxpark Croydon. At the same time, new menu items and consumer needs has seen its sales mix move away from its traditional in-store model, with c50% of sales now “call orders” – handheld orders, which include both hot and cold food.
The US remains a long play for the group and one it is determined to take its time over. Rowland and Mayfair are aware that the foundations laid there and any subsequent success will play a crucial role in the long-term development of the company and a significant draw for would-be suitors. The appointment of a US managing director, Scott Steenrod, will hopefully aid its plans there.
For all the changes made, Mayfair have been “very supportive”. “They are brand ambassadors, brand challengers and global citizens, which is what I wanted,” says Rowland. “They are open minded and ambitious for the brand. I am enthused about working with them.” More innovation will follow, with Rowland keen to ramp up the group’s digital marketing play, a strength, which the brand will build on. The group is also set to further highlight is sustainability credentials.
Last week, Rowland predicted a breaking point in the sector as investors became frustrated with ever shrinking profit to debt ratios. Rowland told MCA there was too much supply in the industry and suggested a “survival of the fittest” scenario, with the weaker operators falling be the wayside. He said: “All I know is if you’ve got upward cost pressures – and we’ve had significant ones – there’s going to be some failures.
The major plus point for YO! is that Rowland has steered them through two other periods of marketing softening - ‘dotcom’ and 2008/09. It is also working in a segment of the market set for further growth. Japanese cuisine is set to grow turnover in the UK to £797m in 2017, the latest MCA research has shown. Branded Japanese, and Japanese-inspired operators, are expected to account for 11.2% of sales in the branded restaurant and contemporary fast food market in 2017, up by 0.8 percentage points (pp)year on year.
MCA’s report into the segment estimates that it will see 16% CAGR growth between 2015 and 2017, compared to 8.1% for the branded restaurant and contemporary fats food segment.
Rowland is rightly proud of what his teams and his brand has achieved over the last 18 months. He is not going to allow it to stop there. Although the man himself refuses to look back over his shoulder at what others are doing, sector peer Wagamama might need to take a glance in YO!’s direction soon as it begins to close the sales growth gap.
