THE FULHAM SHORE PLC
The Fulham Shore PLC is a UK based publicly listed company that owns and operates several restaurant businesses within the inner and suburban areas of London. The company was incorporated in 2012 and according to their 2016 Annual Report, owns and operates 34 restaurants, comprising 24 Franco Manca, 9 The Real Greek, and 1 Bukowski Grill franchise in Soho:
The company is operated by a team of ‘hands-on’ directors that have over 30 years’ experience in building restaurants in the UK. This management team consists of six members: a Chairman, 3 Directors (Managing, Finance and Corporate Finance) and 2 Non-executive Directors. The directors believe that, given their collective experience in the restaurant and food service sectors, they can take advantage of the opportunities which exist in these sectors and create a profitable and sustainable business (The Fulham Shore PLC, 2016).
The company’s overall strategy is to purchase, operate and expand businesses in the restaurant and food service sectors, initially within the Central London area, and eventually to other towns and cities as identified by the growth of each developing brand. The company is focussed on building a number of small, local brands and has no interest in large national restaurant chains (The Fulham Shore PLC, 2016). In working primarily with equity investors and business partners, the company aims to grow shareholder value by increasing both the profit and the value of each of their businesses. The company plans to enhance this growth through reinvestment by opening new restaurants and developing staff incentive schemes such as profit sharing.
The Fulham Shore describes their businesses as ‘distinct growth’ businesses, each driven by skilled and incentivised restaurant entrepreneurs (2016). The company typically seeks to take controlling interest in businesses through acquisitions. Additionally, they will consider minority investments for strong investment cases which is evidenced by their 2016 franchise agreement with Bukowski Grill restaurants.
In 2016 The Fulham Shore reported its first annual profit since inception in 2012 and has already realised one of its expansion goals in opening 2 new restaurants outside of the London area. Despite saying on their website that they are not interested in large national restaurant chains, the Chairman, in the company’s 2016 Annual Report, has indicated the company’s intention to expand Franco Manca and The Real Greek brands nationally. According to the 2016 Chairman’s Report, the company is set for another year of growth and expansion as they diversify into other restaurant/food service concepts such as street food stalls, online ordering, takeaway delivery and even cookbooks, having launched The Real Greek cookbook in 2016.
The Fulham Shore offers their restaurant partners an attractive group of support options (2016):
- Experienced board of directors and operators
- Expansion capital
- Access to lending
- Strategic and operational aid
- Designing and implementing specific control systems
- Assisting with property requirements
- Arranging full and partial exit routes
- Potential opportunities for tax deferral.
Of the six management team members only 2 are described as having accounting qualifications on their website, the Finance Director and one of the Non-executive Directors. The Chairman has cartography and teaching qualifications, whilst the Managing Director worked his way up from the kitchen of a restaurant formerly owned by a company belonging to the current Chairman. The Director of Corporate Finance is a barrister by profession and the remaining Non-executive Chairman had a 38 year career in the banking sector.
The company has a total of 571,385, 237 ordinary shares of 1p each currently in issue, with 52.8% of the shares not in public hands. The Chairman and Managing Director are the only members of the company’s management team that are listed as significant shareholders, holding a combined 33.92% of the total shares in issue. The Company’s subsidiaries include Kefi Limited, FM6 Limited and Souvlaki & Bar Limited.
In engaging the services of a financial PR company to lead their external communication campaign, the company has shown a commitment to future growth and as a result have an obvious presence in online media with regular Twitter feeds, news articles in investment publications as well as the expected appearances on the London Stock Exchange, Google Finance websites and other stock-related websites.
The company’s Twitter feeds are showing a run of new restaurant acquisitions and openings with recent news articles reporting good revenues and profits for 2017:
- The Fulham Shore PLC Twitter feed
- Recent article on website “This is Money” reporting that the company’s revenue and profits are up for 2017.
- 2016 article on website Investor’s Chronicle highlighting a steep jump in sales and operating profit for the year.
- The Fulham Shore PLC listing on the London Stock Exchange
- The Fulham Shore PLC summary on Google Finance
From initial research there appears to be a variety of factors affecting the industry, most notable being Brexit. As reported by The Guardian in 2016 Brexit has the potential to destabilise food supply markets and food pricing in the UK which in turn will increase the risks faced by businesses involved in the restaurant/food service industries.
Now that the UK has voted to leave the EU, the fallout of Brexit on the food industry is evident in current news articles from this month (The Guardian) and at the end of last year (The Independent) relating to bar and restaurant chains reportedly having to scale back UK expansion as costs rise. This is affecting all levels of the market through to primary producers and manufacturers (i.e. restaurant suppliers) who are also facing new challenges and risks associated with Brexit. KPMG has developed a report showing how the cost of imported foods could potentially rise if a deal was not made before Britain leaves the EU and thus defaults to the World Trade Organisation’s customs rules (Article in The Guardian).
Chairman David Page advises the Group operates in a competitive and fragmented market which regularly sees new concepts come to the market (The Fulham Group PLC, 2016). In this highly competitive industry Page explains in an interview to the Financial Times (“Fulham Shore buys”, 2016) his simple ‘recipe’ for the continuing success and growth of the company as being attributable to keeping the business formula simple, believing that volume and happy customers have more value than “squeezing the last pip out of the lemon”.
In focussing on the freshness and quality of produce used in its restaurants, the Group could be exposed to potential supply chain disruptions and other risks associated with destabilising of the market and UK economy as a result of Brexit.
Interestingly, in the company’s 2016 Annual Report, the Chairman noted the narrow majority for Brexit and assumes that the turbulence that this may cause to parts of the restaurant industry and the UK economy in general will last some time. The Chairman goes on to explain further that they (the Directors) feel that as in previous periods of economic disruption, the restaurant businesses that offer best price/best product will prosper, as customers turn to real value for money (2016).