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Tue 13th Mar 2012 - Orchid, TGI Friday’s and Spirit

Story of the Day:

February trading hit by cold weather: A survey of small and medium-sized operators by Morning Briefing has found trading in February was badly dented by the cold weather at the start of the month. Accommodation provider Bulldog Hotel Group noted a drop in corporate activity for the month, with food and beverage sales staying strong. Steve Haslam, who runs TLC Inns with Jo Drain, said: “The snow couldn’t have come at a worse time. It started on Saturday, which damaged our evening trade, and continued into Sunday, severely affecting our lunchtime and evening trade.” Ever So Sensible boss Chris Bulaitis reported students particularly careful with their money in February with food sales across the company holding up well. Country destination pubs suffered a testing February, with the snow and cold weather particularly painful. Anglian Country Inns boss James Nye said: “Our two sites in Hertfordshire did exceptionally well. The two in Norfolk, the White Horse and the Jolly Sailor (also in Brancaster), were weaker, mainly because of the snow.” Brian Whiting, founder of Whiting & Hammond, claimed that the south east might have started to feel the chill wind of the tough economic climate. “For the first time ever in my experience, there are a lot of sites up for sale. Previously, the south east has been cushioned. VAT at 20 per cent has hit home in a very hard way and any increase in beer duty will mean things will get tighter.”
(See the end of the Morning Briefing for full report).

Industry news

Peach Coffer Tracker reports sales down in February: Britain’s leading pub and restaurant groups are reporting tough trading conditions at the start of 2012 – with collective like-for-like sales down 3.7% in February, following a 2.1% fall in January. Total sales in February, which include the effect of new openings, were only marginally up on last year at +0.6%. Month-on-month, February sales were up 8.4% on January. The figures come from the Coffer Peach Business Tracker, which collects monthly performance data from 23 operating groups. “These are disappointing figures, as over the past two years the informal eating and drinking-out market has generally kept its head above water despite everything the economy has thrown at it,” said Peter Martin of Peach Factory.

Panera Bread recruits ten million customers to loyalty card in 16 months: Panera Bread, the 1,500-unit US bakery-café chain, has recruited nearly ten million loyalty card holders since launching the scheme in November 2010. More than two-fifths of all transactions are now linked to loyalty cards. Founder Ron Shaich said: “The real value of the loyalty program is, one, it surprises and delights guests, but it’s (also) the information. With between 40 and 45 per cent of all transactions logged on to loyalty cards, “we are able to track individually what people do,” he said. “Since we are able to track that, we’re actually able to market to you in a way that’s unique to you.”

American beer market benefits from craft brews: The American beer market grew by two per cent in 2011 thanks to premium and craft segments attracting consumers. Beer sales totaled $98 billion, with bars, restaurants, nightclubs and stadiums increasing sales by three per cent to £55 billion. The off-trade grew sales by just one per cent to $43 billion.

Panmure analyst warns on minimum pricing: Highly rated Panmure analyst Simon French, who worked as a retail analyst for Whitbread before moving into the City, has warned the industry about the danger of minimum pricing. He told the Sapient Corporate Finance Breakfast Briefing: “I think we are moving into very dangerous territory if the industry becomes a price taker off the government rather than being free to set its own prices. Just because the initial rate would be 40p or 50p a unit there’s no guarantee it would stay there. “It could reduce potential investment into the industry and also reduce the scope for promotions such as 99p pints in Wetherspoon’s January sale, for example.”

McDonald’s to import chicken for the Olympics: McDonald’s will serve chicken products sourced from factory farms in Thailand and Brazil at this year’s London Olympics despite a promise to source meat from the UK whenever it can. A McDonald’s spokesperson said 40 per cent of chicken used by the company is from Thailand and Brazil while the rest is from Europe. The company spends £300m a year with UK farmers, the spokesperson added.

Most adults miss their five a day: A survey of 10,000 UK consumers by the Department of Health has found six in ten adults are failing to eat the recommended five portions a day of fruit and vegetables, with some people thinking tomato ketchup and strawberry ice cream count. Over a third (37 per cent) reported that they thought their diets had got worse since the start of the economic downturn thanks to small pay increases and large rises in the cost of everyday foods.

Company news:

Mitchells & Butlers unveils free Wi-fi: Managed operator Mitchells & Butlers (M&B) is to introduce free Wi-fi across its 1,600 sites after signing a three-year deal today with O2. Robin Young, operations director at M&B, said: “Everyday, in each of our businesses, my teams provide great guest experiences and the availability of free Wi-fi will give us a further opportunity to enhance this. “We know from talking to (customers) that free and easy-to-use Wi-fi is something they want in the restaurant and pub environment.”

Marston’s wins go-ahead in Penwortham: South Ribble Council has given Marston’s the go-ahead to open a pub restaurant on Millbrook Way, Penwortham, Lancashire. Planning agent Peacock & Smith told planning councillors: “It will deliver a well-designed building in a gateway location, attracting passing trade from the A582 to support the local economy.”

TGI Friday’s set for £3m Blackpool site: TGI Friday’s, the resurgent chain headed by Karen Forrester, is set to take the ground floor of a new development in Blackpool that will occupy the landmark site formerly occupied by Yates’s wine lodge on Clifton Street. The former Yates’s had to be pulled down after a devastating fire in February 2009. Contemporary Asian restaurant chain Cosmo is also ear-marked to move into the £3m new-build scheme. Yates’s, owned by Stonegate Pub Company, moved to premises in nearby Market Street after the fire.

Lancashire Taverns hits £1.8m turnover in latest financial year: Lancashire Taverns, the multi-site operator set up by chef Chris Yates in 2008, will hit turnover of £1.8m in the year to 6 March, according to the Manchester Evening News. The company operated four sites in the year and opened the Pack Horse, Burt, last month. Yates started his career working for Rochdale chef Andrew Nutter before being headhunted to work at Paul Heathcote’s Longridge restaurant. He was offered a job as chef de partie at Gordon Ramsay’s three Michelin star restaurant but decided instead to open his first pub with a £35,000 investment. He said: “At a time when pubs are closing, we are doing well because we have a strong food proposition.”

Spirit receives opposition to Sherwood pub plan: Plans by managed company Spirit Group to develop the Grade II listed Five Ways in Sherwood have met opposition from a councillor and a real-ale campaigner. The pub, built in 1936, has a rare multi-roomed layout. Spirit wants to put in a disabled toilet and take down several interior walls. Author Alan Sillitoe, who used the pub, campaigned against earlier proposed changes in the 1990s. A spokesman for Spirit said: “Our proposed changes will improve accessibility, open up the venue and improve the overall guest experience.”

Orchid Pub Company makes its pizza kitchen bar (PKB) concept focus of growth: Managed operator Orchid will focus on expanding its pizza kitchen (PKB) bar concept after the first sites in Harpenden and Stockport saw 50 per cent sales growth. The concept, which has a ‘Fresh Dough Guarantee’, is set to be rolled out to 25 sites. Chief executive Rufus Hall said: “PKB is a real genre buster and a key focus for Orchid in 2012 - we see a very bright future for the division”.

Flavour of Trade: How was February trading?

Anglian Country Inns enjoys February growth: Director James Nye said trade in February wasn’t “too bad at all” with like-for-like sales up between four per cent and eight per cent compared with February 2011 for three of Anglia Country Inns’ sites. “The only exception was on the hotel-side of the business at the White Horse in Brancaster, where eight bedrooms (half the total) were closed for refurbishment.” Nye said the company also benefited from Valentine’s Day falling on a Tuesday. “We had a lot of spill-over trade on the Monday and Wednesday, in addition to around 300 diners on the day itself.” Takings also benefited from The Fox in Hitchin being voted among the top 50 gastropubs in the Publican’s Morning Advertiser survey. “The award certainly helped sales – that together with a new menu.” He added: “February is usually a tough month. The two sites in Hertfordshire did exceptionally well. The two in Norfolk, the White Horse and the Jolly Sailor (also in Brancaster), were weaker, mainly because of the snow.” Also, the brewers’ price rises hardly dented sales. “We introduced pre-emptive price rises. We defended out margins by predicting how much the brewers were going to ask.”

TLC Inns hit by snow but grows sales: Co-founder Steve Haslam said his company took a hit of around £30,000 as a consequence of the snow. “It couldn’t have come at a worse time. It started on Saturday, which damaged our evening trade, and continued into Sunday, severely affecting our lunchtime and evening trade.” In spite of this setback, Haslam said TLC enjoyed “low single figure growth overall in February, with the first two weeks best described as woolly, which then settled down to show signs of strengthening for the last two weeks”. Valentine’s Day takings were encouraging, but “not what they used to be”. Haslam said the rocketing price of petrol and diesel was having an impact on trade, especially as all of TLC’s six venues rely on food sales from destination diners. “The rise in petrol price is probably more damaging than the increase in a pint of beer. “Taxation on beer is the new petrol tax as the Government can’t keep on pushing up the price of petrol.” So far, the company has absorbed the brewers’ price increases. “We made a decision not to increase price until mid March when our menus change. We will look at increasing food prices to compensate. But with the Budget looming, we could be looking at an extra 30p on a pint.”

Whiting & Hammond hit by bad weather: Co-founder Brian Whiting said February’s trade figures were disappointing and down on the previous year. “Oddly, some of our busiest sites were the most affected - by as much as seven per cent to eight per cent,” remarked Whiting. He thought the downturn was caused principally by two factors – two weekends of bad weather and the current economic climate with people not popping in for a drink on their way home. A brighter note was that custom on Valentine’s Day was very good. Another successful trading day was Shrove Tuesday, when pancakes were on the menu as starters, main courses and desserts. Whiting said: “People want a reason to come out and you have to give them something to entice them away from home.” He also thought the recession has hit home in the company’s heartland – the south east. “For the first time ever in my experience, there are a lot of sites up for sale. Previously, the south east has been cushioned. VAT at 20 per cent has hit home in a very hard way and any increase in beer duty will mean things will get tighter.”

Ever So Sensible Group reports patchy trading: Managing director Chris Bulaitis said Midlands operator Ever So Sensible has witnessed “fairly patchy trading” in February. “Food sales are up slightly at our seven food-led sites, but our four high-street drinking businesses have shown a decline.” On the latter, he said the decline was down to “the younger element, especially students, not spending as much, which was definitely due to the economy and pessimism over prospects for employment”. Nor did, the brewers’ price rises help the situation. The food side of the business fared better because it appealed “to the mature market, "28-year-olds and over” with more disposable income. Valentine’s Day provided a much-welcomed boost to trade and takings on the previous weekend (11th and 12th) stood up well. Bulaitis noted that February’s takings were influenced by very poor figures for January, even more subdued than usual in what is traditionally the quietest time of the year.

Southern Counties Taverns reports sales increase: Boss Bert Johnson reported this February’s turnover was “slightly better than last year”. He added: “Overall, most of our houses showed a small increase, perhaps up to five per cent.” Johnson said trade hadn’t been too bad since the New Year and the increases in brewers’ prices hadn’t made a noticeable difference. “We would have expected trade to have fallen, but it didn’t. The brewery increases equated to around 15p per pint, but we’ve keep it down to 10p – people will accept a 5p to 10p increase, but not 15p.” Southern Counties Taverns, which operates 14 community locals with virtually no food offering at most, did not introduce any special promotions or events during February. The snow didn’t affect the company’s performance and Johnson said: “The only difference was the cost of gas for the heating the outlets.”

Black Country Traditional Inns ahead in February: Founder Angus McMeeking said takings were slightly ahead of February 2011 figures. “We had a cracking Christmas and New Year and expected it to slow down, so it was pleasing to see the figures. But, of course, there is always the feeling that we could do better.” The company’s estate consists of 25 “old-fashioned boozers and real ale houses with almost zero food trade”. As such, no extra trade is stimulated by Valentine’s Day. However, to stimulate trade, the company is running its first loyalty scheme, which offers a free pint for every eight pints purchased. “It has been well-received and it is our way of saying thank you to our regular customers.” The estate is supplied with real ales from sister company Black Country Ales, which has a brewery in Dudley. Around 60 per cent of the beers stocked in the managed houses come from the brewery, which makes the company less reliant on major breweries. Black Country increases its prices in line with those of the major brewers. McMeeking is also fearful about any increase in alcohol prices in the forthcoming Budget. “A 10p increase in the price of a pint will take some selling to the public.”

Bulldog Hotel Group up in February: The five strong operator of traditional coaching inns reported like-for-likes were up by 5.8 per cent on the same month the year before. Founder Kevin Charity said, however, that trading was mixed with accommodation down and food and beverage holding up well. “There seems to be a bit of a lull in corporate spending. We were up on budget with invested sites performing particularly well.” Sales growth for the month was achieved despite a really bad first week when cold weather severely dented trade. “Trade didn’t stay depressed for long once the cold weather lifted,” he added.

All Our Bars reports tough February: Paul Wigham, chief executive of 32-strong operator All Our Bars, reports an “appalling” first three weeks of the month followed by a strong bounce-back in the last week. He said: “The last week of the month saw good Premiership and rugby games plus pay day. The post-pay day dips are becoming more apparent. January was actually pretty okay – we promoted like mad in January. Generally, where we have invested we’re getting better and more consistent results – you’ve got to keep on top of your standards.”

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