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Morning Briefing for pub, restaurant and food wervice operators

Fri 13th Apr 2012 - Punch Taverns, Bravo Inns and Nicola Horlick

Story of the day:

Punch Taverns reports double digit growth in multiple operators: Punch Taverns has reported that it has seen double digit growth in the number of multiple operators within the 5,000 strong estate. The company has been looking to step up the number of co-investments with high quality multi-operators, with investments from Punch of up to £700,000 at individual pubs – it is investing £38m in the estate this year at a total of 400 pubs. Roger Whiteside, Punch chief executive, told Morning Briefing that the company is keen to recruit multi-site operators because of their business skills and ability to create “growing, sustainable businesses”. The past year has seen an influx of multi-site companies, including Pesto, the Italian restaurant business run by La Tasca founder Neil Gatt which is applying the concept to a pub environment, and CM Hospitality, the award-winning gastro-operator run by Ian and Craig Minto. Punch now has more than 100 pubs let on Punch Buying Club leases, which reward licensees who achieve turnover levels above Fair Maintainable Trade with extra discount. The company has also begun to recruit the occasional freehouse owner attracted by the flexibility of its new lease. John Gibson, a former solicitor, ran three freehouse pubs in Northumberland before he took on his first leased pub last year, The Blue Bell in Corbridge. He told Morning Briefing: “We asked Punch for free trade discounts. It’s a gamble on making the pub a success. We were confident that we would and it’s worked. We’ve just kept our drinks reasonably priced and we’ve passed the point where it pays us to have taken the extra discount in return for higher rent. “We would like to open another pub with Punch in the future. They’ve been no problems at all – and I think you’re better off having a relationship with a landlord than a bank in the current climate.”

Industry news:

Government plans next tobacco crackdown: The government is to consult on a plan to strip packets of tobacco of branding. Health Secretary Andrew Lansley told The Times the government would like to “go further, faster” and that, unlike alcohol and fattening food, there was “no harmless level of tobacco smoking”. The proposed move to plain packaging comes in the wake of supermarkets and off-licences being forced to conceal displays of tobacco.  Lansley also told The Times he wanted tobacco companies to have “no business” in the UK. A consultation will be launched next Monday.

US research team finds red wine can control obesity: A study by US researchers has found red wine contains a compound that can help control obesity. The substance, piceatannol, delays the generation of young fat cells and prevents them from growing into mature ones. The researchers think the compound also protects the body from heart and neuro-generative diseases, as well as cancer.

KFC apologises over tsunami advert: Fast food firm KFC has apologised in Thailand for an advert that suggested thousands fleeing a tsunami warning should buy fried chicken first. The advert, placed on Facebook and broadcast through its own radio station on Wednesday, said: “Let’s hurry home and follow the earthquake news. And don’t forget to order your favourite KFC menu.”

Delia Smith sends gammon sales soaring: Television cook Delia Smith is credited with sending gammon sales up 294 per cent this month at Waitrose after she featured a recipe for blackened gammon with salted caramel crackling on a television advert over Easter. In the advert, Delia said: “Modern curing methods have eliminated the need for pre-soaking, which makes it a perfect joint for roasting.”

Irish restaurants in a race to the bottom: The Wall Street Journal has reported that Irish restaurants have been cutting prices to maintain volumes in what amounts to a race to the bottom. The result is sector-specific deflation that has brought big drops in revenue not only for Irish restaurant owners but also for hotel proprietors. Average Irish weekly wages have fallen 4.3 per cent since 2008 to €689.54 in the third quarter of 2011, curtailing disposable income among consumers. Adrian Cummins, chief executive of trade body Restaurants Association of Ireland, estimates that about 500 of Ireland’s 1,500 full-service restaurants have closed in the past two years. Some 80 per cent of restaurants in the country are operating at a loss, Cummins claims. He says menu prices in Ireland have dropped by as much as 20 per cent in the past three years. “It’s a race to the bottom,” Cummins told the Wall Street Journal. “Price is constantly being cut to maintain cash flow and survivability, but in the long term you’re not going to make a profit.”

US restaurant chain Denny’s produces “edgier” web adverts for 18-25 year olds: The mainstream US restaurant chain Denny’s, with 1,680 sites, is producing a set of web commercials with an edgier tone to attract younger customers. Its television commercials depict homely restaurants where waitresses call customers “Hon” and feature the slogan “America’s Diner Is Always Open.” But web averts adopt a more provocative tone. The series, “Always Open” features the comedian Dave Koechner, a “Saturday Night Live” performer who interviews celebrities while they share a booth at a Denny’s. “You climbed Mount Kilimanjaro,” Koechner tells his guest, the actress Jessica Biel, in one video. “Let’s say we’re trapped on the mountain together, both of us, we’re freezing, and we need to share bodily warmth. Do you think it would get romantic?”

Technomic - Innovation and coupons drive US pizza sales hard: More than four in 10 (41 per cent) of consumers polled say they’re now eating pizza once a week, compared to 26 percent just two years ago. Pizza consumption in the US has increased over the past two years as leading players revamp menus to include more innovative speciality pizzas, gourmet ingredients and items beyond pizza that help operators drive traffic. As increased consumer confidence leads some to trade up within the pizza category, others still feeling the pinch are attracted to the special offers and coupons that chains are rolling out as well as generally less expensive, yet high quality, take-and-bake and frozen pizza offerings. “Consumers increasingly view pizza as the ‘go-to’ food when they don’t feel like cooking,” said Technomic executive vice president Darren Tristano.

Sky launches free Cloud Wi-Fi app for use in 10,000 pubs and restaurants: Sky has launched a free Sky Cloud Wi-Fi app yesterday that means customers using Sky broadband can access free Wi-Fi in an estimated 10,000 pubs and restaurants. Sky broadband customers will be able to access unlimited broadband in all Stonegate Pub Company and Wetherspoon sites, the Spirit managed estate, Wagamama, Caffe Nero, Pret A Manger and Pizza Express venues as well as host of independent pubs and restaurants. Sky customers can register up to six devices per household to enable family members to access Wi-Fi when they are out and about. 

Company news:

Osbourne Leisure grabs third site: Osbourne Leisure, the north-east company headed by Mark Arrol that was short-listed last year in the “Best Newcomer” category of the Publican’s Morning Advertiser MA250 awards, has secured a third site in Darlington. Currently a non-licensed retail site, planning has been passed to convert the site into a third Osbournes. The venue should be open by early July, after a two month fit-out. Arrol told Morning Briefing: “March trading was strong with sales up 11 per cent. The Easter week was also very good, with Osbournes Durham recording a record trading week.

Merseyside restaurateur bemoans skills shortage: Halewood Inns Group boss Bill Gillbanks has complained that his business is constrained by a “lack of high quality candidates at all levels”. Gillbanks, who operates bar and restaurant venues under the brand of The Crying Tree in Gateacre and Aughton, is currently considering investment in further sites in Liverpool city centre following the success of his two ventures which were launched in 2011. He told the local newspaper: “In spite of perceptions, there seems to be a genuine lack of quality candidates looking to work in what is an important sector as part of the regional economy’s service offer. “Having worked in the industry for more than ten years I also mix with many of the region’s leading restaurateurs and hoteliers, and the issue still seems to be region-wide throughout Merseyside.”

Stonegate Pub Company launches Einstein training scheme: Managed pub company Stonegate, which operates 560 pubs, has launched a comprehensive new training programme for employees entitled ‘Albert’s Theory of Progression’. Based around the historical figure Albert Einstein, the programme covers all aspects of career progression for team members through to high performing managers. The largely online-based training is separated out into sections depending on the level of the employee within the business, starting with ‘Albert’s Holy Little Book’, the all-encompassing bible for team members, and working its way through ‘Albert’s Award’, ‘Albert’s Accolades’ and ‘Albert’s Welcome’ for team leaders, deputy managers and managers-in-training to ‘Albert’s Masterclass’ and ‘Albert’s Aspirations’ for managers and senior operational staff.

Restaurateur Kit Chapman plans Taunton opening: Kit Chapman will open a new restaurant at the Castle at Taunton, nearly a year to the day after it closed its main dining room in order to focus efforts on its brasserie operation, Brazz. The new venue will be called Castle Bow Bar & Grill and will have its own entrance to increase accessibility. Chapman said last year that his former Michelin-starred restaurant has been closed in the context of “austerity” gripping Britain. 

Smith Inns plans £170,000 revamp at Punch pub: Smith Inns is to undertake a £170,000 co-investment at The Sheffield Arms at Burton-Upon-Stather. The refurbishment will see the creation of a more open-plan, 45-cover dining room. At the same time, the pub’s six bedrooms, which are let out for between £27.50 and £37.50 a night, will be revamped.

Burslem pubs boosted by £8m scheme: Pubs, restaurant and hotels in Burslem has been boosted by a £8 million regeneration scheme. Money to regenerate the town has been provided by the Burslem Townscape Heritage Initiative (BTHI). More than 50 properties have had improvements over the last seven years. A listed heritage hotel, an Indian takeaway, and a historic pub will be the last to benefit - the Leopard Hotel, the Old Crown pub and Raja’s takeaway are all due to have external work done. Contractors have already moved on to the site of the Old Crown, on Westport Road and the pub is currently closed during the week while work is being carried out. Owner of the Old Crown Steve Ainsworth, who has four venues in the town, said: “The funding scheme is great because it has helped us to get work going. Burslem has improved a lot recently. “The improvements have helped to bring more people into the town and it is becoming the new Hanley for nights out.”

Bravo Inns eyes expansion: Bravo Inns, the north-west operator of wet-led community pubs is in the running to add five more freeholds to its existing 27-strong estate. Managing director Ken Buckley told Morning Briefing: “Two pubs are in legals and we hope to complete in four to five weeks.” One of the sites is in Chorley and the other is near Accrington, both in Lancashire. The former is a pubco disposal that hasn’t been trading for a long time, while the second unit, also closed, is being acquired from the administrator. Buckley said both would be subjected to an extensive refurbishment before re-opening and hoped they would be trading by the end of July. Bravo Inns has also put in offers for three other sites. One is a Punch Taverns’ disposal and the other two are Admiral Taverns’ outlets. 

Nicola Horlick plans a dozen restaurants: City fund manager Nicola Horlick has invested £300,000 in a new restaurant called Georgina’s, which opens in Barnes next month. Ingredients will be almost all British but not organic. “The organic thing is a bit of a fad and it’s too expensive. It’s not worth it,” she said. “It’s much more important that a farmer treats a cow well and feeds it grass than whether it comes with some kind of organic certificate. People are more interested in value than organic.” Horlick is planning to open a dozen or so Georgina’s across west London. “We already have a second site lined up in Hammersmith,” she says. Richmond, Putney, Kew and Brook Green are on the target list to follow.

Outside caterer set for Scrummylicious opening: Catering specialist Sarah Cousins is re-open the former Polly Tea Rooms premises in the centre of Devizes as Srummylicious on 30 April. She said: “I will be offering home-made traditional English food, which I will cook myself. I don’t agree with the ready-made meals that some national chains serve up. I believe people want freshly cooked food.”

Friday opinion:

Subjects: American new wave operators, alcohol policy and Pinterest

Authors: Paul Charity, Paul Chase and Darren Tristano

The new wave of US operators by Paul Charity: A coming trend this year is the arrival of a second wave of American food concepts in the UK. A few years have passed since the UK saw the first generation of fast-casual operators sweep across the UK dining landscape. Now the pick of the current crop of the US’s best operators are eyeing the UK. Chipotle, the Mexican fast-casual concept has led the way. The chain is America’s 25th largest chain operation, with $1.8bn of sales and 1,084 units. Even in a stagnant US food service market it added 13.5 per cent to sales in 2011 – the best performance among the country’s top 50 food-service companies. Signs are that its early UK openings are performing well despite industry surprise at its choice of locations. Now two more of the fastest-growing chains in the US are looking hard at the UK market, sensing a sizeable opportunity. Five Guys Burgers and Fries was the fastest-growing chain by unit numbers in 2011. It added 190 new stores in a single year to grow to 737, a remarkable 43 per cent growth in outlets. System sales stood at $716m. The company has, no doubt, noticed the growth of “Better Burger” concepts in the UK – like Byron’s and Gourmet Burger Kitchen - and believes its own take on high-quality burger with price points not vastly different to McDonald’s will find a ready market in the UK. Smashburger, which occupies a similar market position to Five Guys, also has UK ambitions. It ranks Number Seven in the list of fastest-growing chains in the US with an extra 50 units added in 2011 to grow to 106 outlets and sales of $69m. It has grown by the dynamic franchising route in the US – and wants to follow the same route in the UK. Licensed retailers in this country have been sent an e-mail by Smashburger reporting that 450 restaurant licences have been awarded in the US to 35 franchise groups. The e-mail adds: “If you have the vision, experience and the resources to build a franchise network of Smashburger restaurants in the UK, we invite you to contact us.” Other US concepts coming our way include Cheesecake Factory, which this week denied it was taking a site in Fulham but insisted a UK opening is planned. And there’s the improbably named Bubba Gump Shrimp Co that has already landed a high profile site off Leicester Square. The evolution of the eating market in the UK is still in its relative infancy. Twenty years ago the Beers Orders dumped large amounts of pub property into the marketplace. The two decades that have followed have been, in some ways, a kind of semi-false start. True, the eating and drinking market has become much more sophisticated and competitive, with much of this back-loaded to the past ten years. But the next ten years will see competition ratchet up in intensity as customers are offered ever more variety and subtle forms of differentiation – and value becomes an ever more fierce battleground. The cross-fertilisation in eating out culture between the US and UK will speed up. Out top offers can do well in the US market, but equally US operators will populate a number of obvious market niches.
Paul Charity is managing director of Propel Info

Moral panic and public policy by Paul Chase: Following the publication of the Government’s Alcohol Strategy, it is instructive to note what information is made available to Members of Parliament. The House of Commons Library is the first pit-stop available to your local MP, anxious to fill-up his jerry-can with information so as to appear knowledgeable on contemporary problems. No panic buying of fuel here – just fuel for moral panic! Government Standard Note SN/SG/3311 “Statistics on alcohol”, lodged in the HOC Library, an eight page summary last updated on the 29 March, is a case in point. It begins with the following words: “Alcohol misuse is a significant and increasing problem in contemporary society. It is prevalent among young people and seems to be a characteristic of British drinking culture.” What makes this opening sally more than a little comical, is that most of the statistics which the Note then goes on to cite flatly contradict this assertion. Take binge drinking amongst 16 to 24 year-olds as an example: ‘Binge drinking’ is defined as drinking in excess of eight units of alcohol in one session. The number of 16 to 24 year-old men doing this on at least one occasion per week has fallen from 39 per cent in 1998, to 24 per cent in 2010. In women of this age group it has fallen over the same period from 24 per cent to an all-time low of 17 per cent. Far from the Licensing Act 2003 leading to the “binge drinking epidemic” beloved of the Daily Mail, this is a reducing trend. The Note goes on to say: “Young people drink less frequently than older people” and “In 2010, 13 per cent of children aged 11-13 in England drank alcohol in the last week; the lowest level recorded since a peak of 27 per cent in 1996”. Most encouraging of all are the statistics quoted in relation to drink driving: between 1997 and 2010 fatalities arising out of drink-driving declined from 550 in 1997 to 250 in 2010 – a fall of 55 per cent. Serious injuries also declined by 58 per cent. Even deaths from alcohol-related illnesses have reduced by 3 per cent in 2009 as compared with 2010. And for nearly 10 years these have hovered between five and a half and six and a half thousand a year, suggesting a small, hard-core of chronic drinkers whose behaviour is likely to be impervious to minimum pricing. The panic buying of petrol has subsided as the threat of a tanker drivers strike has receded. Not so the moral panic over alcohol. As the “alcohol problem” declines, the moral panic over it increases in an inverse relationship that is becoming more and more bizarre. Any chance of an evidence driven policy on alcohol? Not on this evidence.
Paul Chase is director and head of UK compliance at CPL Training

The rise and rise of Pinterest by Darren Tristano: Pinterest, a photo-bookmarking social network, has grown by 900 per cent in unique visitors since its inception in 2009, with 17.8 million new monthly views in February alone. The website has drawn endless attention from a wide variety of people for its image-focused layout. As opposed to Facebook or Twitter, Pinterest places little emphasis on text and allows users to create digital boards to “pin” their favorite pictures to. Due to its photo-heavy format, Pinterest is an ideal opportunity for restaurant operators to communicate their menus and brand viewpoints while keeping up with the latest technology trends. This column will discuss a few things that operators can do to successfully use Pinterest as a way to market their brand. In general, people enjoy seeing the food a restaurant offers rather than reading menu descriptions. Restaurants can use Pinterest to share images of their menu items by posting their own photos or re-pinning photos from users. It is important that operators post non-promotional pictures of food on their Pinterest boards so that users don’t feel like the postings are an obvious marketing tactic or advertisement. Instagram is a free photo-sharing app that is also extremely trendy right now. By pinning photos of menu items that have been taken by this photo-sharing community, operators can engage an entirely new group of consumers while appearing hip to technology trends. In addition, operators should post and re-pin photos other than their food and products to avoid being categorised as blatantly using the social-media website to sell their brand. Consumers want to feel that a brand is relating to them rather than marketing to them. It is important to post and re-pin images that are related to the brand’s overall message and goal. For example, a brand that promotes healthy living might post or re-pin images that relate to other elements of health such as working out, mental health or nature. Daphne’s California Greek features Pinterest boards dedicated to nutritious eating, active-lifestyle accessories and featured musicians of the month. Interaction is also key to successfully using Pinterest. A concept must engage with the website’s community by commenting on other users’ boards, liking items and following interesting users. Pinterest is not a one-way marketing and advertising platform. As a social website, it is important for operators maintain an ongoing conversation with their consumers to prove they aren’t just using it as a way to advertise their concept for free. By engaging in Pinterest, operators can take a new look into consumers’ interests, as well as gain inspiration from other restaurants and popular postings. Mama Fu’s Asian House has become an active Pinterest user by following 123 users, posting numerous comments and liking 79 posts as of the end of March. Pinterest is quickly catching fire as a marketing strategy for restaurants. Operators should be jumping at the opportunity to be among the brands using this trendy website to connect with customers. To successfully utilise the marketing possibilities of Pinterest, operators must be sure they can dedicate time to developing a presence on this website. The more active a brand is on social networks, the more likely consumers will take notice.
Darren Tristano is executive vice-president of Technomic

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