Lease on undeveloped unit drags Cornwall-headquartered business into the red despite record sales of £12m
Cornwall-founded and headquartered burger company Hub Box made a loss of £282,000 after being stuck with an empty Devon unit it isn’t going to turn into a restaurant. The company, which has just opened a waterfront eatery at Plymouth’s Royal William Yard, saw sales hit a record £12.3 million in 2021 but was pitched into a loss due to a likely difficulty in offloading a site in Barnstaple.
Hub Box had leased the premises but decided not to turn it into a diner, and because it couldn't find anyone to take on the space it had to write off the full £364,000 cost of the lease. It meant the burger-seller ended up with a loss for 2021 of £281,618, despite what was otherwise a “very strong” year for the business, despite Covid restrictions affecting trade until May last year.
Turnover had increased from £7,229,961 in 2020, and last year’s loss was an improvement on the deficit of £573,880 a year earlier. In the company’s newly published annual report, director Christian Hugo said: “These figures represent Hub Box’s best ever financial year and continue the growth and improving performance over the last few years.”
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He also explained: “We have made the decision to provide against the full cost of lease the business holds for a property in Barnstaple but is unlikely to be developed into a trading site. We are making efforts to sublet the building, but in the current market it is prudent for us to take the view it might remain our cost over the full term of the lease. This has given rise to the £364,000 exceptional item shown in our profit loss, and results in the business making a net loss of £282,000.”
Hub Box started in a shipping container on Truro's Lemon Quay as an offshoot of the Hub restaurant in St Ives. Its first actual restaurant opened when it moved from the container to a former church in the city. It opened two sites in 2021, Falmouth and Cheltenham, and has recently entered into an agreement for a lease in Dorchester, and aims to develop “three to four” new sites in 2022. These include the new 3,400sq ft restaurant on the ground floor of the Grade1 listed Melville block in Plymouth’s Royal William Yard.
Mr Hugo said: “We closed our old Plymouth restaurant outside Drake Circus in December and in May 2022 reopened in the city, but in a much larger site on the waterfront at Royal William Yard. The new restaurant will be another step up for the business, and we expect to replicate the success we had when we moved sites in Exeter in 2019, away from a small location into a much larger and well designed space that was more fitting with the brand as it is nowadays.”
Mr Hugo said 2022 would present challenges for the growing company, but it is expecting to be able to mitigate them. He said: “We are well positioned to continue to grow and prosper despite the more challenging conditions that 2022 are likely to bring. We are currently exploring different funding streams and talking to potential investors who would allow us to unlock the next level of growth for Hub Box.
“2022 presents the business with different challenges from the pandemic years. A return to full VAT rate, reduced business rates reliefs, increasing pressure on margins and utility price increases are all going to impact us. But we have worked hard on mitigating those risks. "
Truro-headquartered Hub Box - which counts Loungers’ co-founders Alex Reilley, who chairs the business, and Jake Bishop amongst its backers - also has restaurants in Cornwall at Truro, Pentewan and St Ives's Hub, plus Bristol, Cardiff and Portsmouth.
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