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Morning Briefing for pub, restaurant and food wervice operators

Tue 1st May 2012 - Orchid, Enterprise and Food and Fuel

Story of the day:

Wet weather dampens April trading: Operators report wet weather has poured cold water over trading. The rainfall figures up to 29 April showed an average of 121.8 mm had fallen (4.8 inches), almost double the long term average for April of 69.6mm (2.7 inches) and beating the previous record of 120.3mm (4.7 inches) set in 2000. Orchid Pub Company chief executive Rufus Hall, writing in his Orchid blog, said: “Overall it’s bad news full stop. By and large, we’re a fair weather business. Nine out of ten of our pubs and bars have great outside areas which make the tills ring when the sun shines. St. George’s Day was washed out by the rain. Nevertheless sales were only marginally down on last year, despite the weather and the fact that there was no football on Monday night. Do we have any winners when it rains? Probably just one – our 52 Fuzzy Ed’s Fun Houses – because when it rains it’s too wet to take the kids out and too cold to go swimming. Admissions to Fuzzy Ed’s were 12 per cent up last week.” Other operators reported mixed trading. Lincolnshire-based Kurnia Group suffered more than most. Owner Michael Kheng said like-for-like sales were down 44 per cent compared to last April. “The last week was a killer because of the weather.” He said the weather particularly affected income from tourists. Northumberland-based Head of Steam’s Tony Brookes said trade “hadn’t been too bad and not as bad as I thought it would be”. Alex Salussolia, managing director of Glendola Leisure, said: “You could say April was a mixed bag, but we are there or thereabouts - ahead of last year even with all the bad weather.” Other operators reporting sales down on last year were Anglian Country Inns and Thorley Taverns. However, both reported that revenue from the letting accommodation side of their businesses stood up well. Anglian’s James Nye said: “Accommodation held up remarkably well, more so than ambient trade.” Philip Thorley, operations director of Thorley Taverns, said: “The hotel side bucked the trend, although not quite up to last April’s figures.” This morning, Numis Securities analyst Douglas Jack argued that The Restaurant Group should  have benefited from inclement weather conditions in April due to circa 90 per cent of its sites being located in airports and leisure/retail parks.

Industry news:

Peach - Voucher culture here to stay: More than two in five consumers rate vouchers as very or extremely important when deciding where to go out to eat - and the number is still rising. Those are among the key findings from new research into voucher use in restaurants and pubs from Peach BrandTrack. The 42 per cent of consumers who place such high importance on vouchers equates to some 15 million adults among the UK’s eating-out population - and the survey uncovered a hard-core of voucher addicts: six per cent of the population who use them every time they eat out. Peach BrandTrack’s survey, which was carried out among 2,000 British adults in February this year, reveals a variety of insights into voucher use, including:
• Women use vouchers most. Nearly half (46 per cent) say vouchers are very or extremely important—compared to just over a third (38 per cent) of men.

• Young people are most hooked. More than half (55 per cent) of 25 to 34 year-olds give vouchers high importance—compared to just 26 per cent of those aged 65 or over.

• London is a voucher hotbed. Half (51 per cent) of Londoners rate vouchers as very or extremely important. Scotland (33 per cent) ranks lowest by region.

• Voucher websites are here to stay. Over half (56 per cent) use them, with Voucher Codes, Discount Vouchers and GroupOn the most popular.

• Voucher users love pizza brands. The three brands whose customers are most likely to say vouchers are very or extremely important to their eating-out decisions are Zizzi, ASK and Prezzo. The survey also reveals that one in seven people has increased their use of vouchers over the last six months, compared to just one in 14 who has cut it. But those increasing their use have tended to eat out more, indicating that vouchers are helping to shore up pubs and restaurants’ footfall in the face of competition from supermarkets—if not necessarily their profit margins.

Starbucks increases opening target for this year: Starbucks has increased the number of global locations it expects to open this year to 1,000 from the previous target of 800. Howard Schultz, Starbucks’ chief executive, said U.S. locations that opened within the past year are performing “extraordinarily well”. “So any thought of saturation or inability to find quality real estate and continue to expand in the US, or, for that matter, North America, should be taken off the table,” he said. Efforts in the UK and Europe are focused on a turnaround. He added: “We’ve seen this movie before and I’m proud to say it had a positive ending in the US. But this is not going to happen overnight.”

McDonald’s to focus on children’s “well-being”: McDonald’s will look to leverage the London Olympics to launch a global exercise initiative for children that will continue after the games have concluded. Global chief brand officer Kevin Newell told The Chicago Tribune: “Most people, when they talk about children’s well-being, go immediately to the food – but it’s also about education and activity.” A new television advert will show children engaging in physical activity being rewarded with a McDonald’s product. The company is looking hard at products that work well in one territory being introduced elsewhere. Examples are premium burgers and wraps in Europe, chicken products, spices and innovative sauces. 

One in three households squeezed on travel expenses: The rising cost of petrol and rail fares has forced 8.2 million households into “transport poverty”. More than a third of households are having to cut back on other spending to afford to travel. The figures relates to the 2009/2010 period so are thought to have got “much worse” since.

Nightclub cancels zebra appearance: A nightclub scrapped plans to hire a live zebra after complaints from animal welfare groups. Carbon bar had printed posters promising a zebra at its Zoo club night as a “first” for the Oxford club scene. Manager Jan Zarecky said it had been planned as “a bit of fun”. A RSPCA spokeswoman said it had worries the zebra’s safety would be “unnecessarily compromised for the purpose of entertainment”.

CAMRA – beer duty is closing pubs: CAMRA has reported that the rate of pub closures is now around 12 a week, with crippling beer taxes the main reason. The West Midlands and Lancashire are among the areas hardest hit by community pub closures. CAMRA said 300 independent pubs had called last orders between September last year and March this year.

Company news:

Collyer - Enterprise debt issues are fading: Deutsche Bank analyst Geof Collyer has argued that Enterprise Inns interim results on 15 May could provide the “next leg up in the company’s share price”. He said: “We believe that management could provide enough comfort at the forthcoming interim results to show that its plans for debt reduction should not just put the prospect of cash trap for its securitisation in 2014 out of shareholders minds, but could potentially remove the issue from the agenda for the next decade or so. Furthermore, the current plan for the continued reduction in bank debt (from selling high-end assets) should allow the group to refinance its bank facility early – maybe even Q3/Q4 this year – and extend its maturity out towards the later part of the decade, when it should become an irrelevance or will have been completely repaid.”

Original Pub Company launches innovative spring/summer menu: Original Pub Company, the newest Spirit Pub Company brand with 24 sites and another 56 identified within the estate, has launched an innovative spring/summer menu. The brand, which Spirit believes could grow to more than 150 sites eventually, has introduced tortilla baskets, a build-you-own burger option, mega “topped” burgers featuring chicken Tikka, mixed grill or Mexican, foot-long subs (chicken breast and bacon, Italian meatballs or steak and cheese served with mixed leaves and mayo) and a Yorkshire pudding roll (guests can choose from roast beef, roast chicken or gammon rolled into a giant Yorkshire pudding, with roast potatoes and a jug of gravy on a Sunday). The food mix at Original Pub Company is currently 16 per cent with an average of 300 covers a week with spend-per-head of £6.40 including VAT.

Former Innbrighton operations manager opens second site: Former Innbrighton operations manager Simon Woplin has opened his second pub. The former Jamaica Inn in Hove has re-opened as The Noble House, named after Second World War Hurricane pilot Sergeant Dennis Noble whose plane was downed 100 yards from the pub. Noble House is serving Noble Best, a four per cent abv ale brewed in honour of Sergeant Noble by Horsham-based Weltons Brewery. Woplin also operates Brighton Rocks in Brighton’s Kemptown area.

Freehold of Food and Fuel pub goes to auction: The freehold of a pub occupied by Food & Fuel, the ten-strong London operator headed by Karen Jones, is set to go to an Allsops auction on 21 May. The Prince of Wales, on Upper Richmond Road, Putney, is to be auctioned with a guide price of £1.4 to £1.5m. The current rent is £105,000, with the pub’s top lease held by Punch Taverns until 2029. The lease is also, unusually, guaranteed until 2019 by Scottish & Newcastle. Food & Fuel acquired the lease from previous tenant Etive in January this year - Etive, founded by Freddie Fleming and Ollie Pudney, runs The Bull and Last in Highgate. 

Former Michelin-starred pub changes name in break with the past: The new licensees of the former Michelin-starred Goose at Britwell Salome have changed its name to make a break with the past. Andrew Hill and Eilidh Ferguson say they are focused on creating a traditional pub - and have re-named the venue The Red Lion. Former Goose chef Ryan Simpson now runs Orwells in Shiplake. The Red Lion is owned by John and Julia Mearns, who run the farm opposite and decided to buy the pub. Hill and Ferguson won the Oxfordshire Dining Award in the Good Pub Guide 2010, while at The Half Moon, Cuxham, their previous pub.

Prezzo appoints head of training: Restaurant group Prezzo has appointed Janene Pretorius as its head of training. Ms Pretorius was previously head of staff training and development at Gaucho, overseeing training for staff at its 14 UK restaurants as well as those in the Middle East. She also had responsibility for overseeing all training at Gaucho’s other concepts; CAU, Galante and Freggo. Ms Pretorius will be responsible for Prezzo’s 2,500 staff at its 184 Prezzo, Chimichanga and Caffe Uno restaurants across the UK.

Mitchells & Butlers’ Nicholson’s chain to launch it own pale ale: Nicholson’s, the 80-strong city pub group operated by Mitchells & Butlers, is to launch its own-branded pale ale, which has been produced by St Austell Brewery. The brew will be launched on Thursday 10 May by food and drink critic Nigel Barden at the company’s White Swan pub in Covent Garden.

Freehold of The 02 Academy in Birmingham up-for-sale: The freehold of The 02 Academy in Birmingham is up-for-sale with a guide price of £2m at an Allsops auction on 21 May. The 02 Academy is let to Hospital Holdings, a subsidiary of Compass, with a sub-let to Academy Music Group on a rent of £165,500 per annum.

JD Wetherspoon targets Lowestoft: JD Wetherspoon has submitted plans to convert a large part of the former Tuttles department store on Station Square in Lowestoft to a pub in a £1m investment. A spokesman for Wetherspoon said: “We are still in negotiations on a site in Station Square and, although things are progressing, planning and licensing are still required.” Meanwhile, Wetherspoon has won a licence to convert the former Woolworths in Blairgowrie to a new pub in a £1.2m investment.

Antic Pub Company freehold to go to auction: The freehold of Antic Pun Company’s most recent opening, Pratt & Payne on Streatham High Road, is to go an Allsops auction on 21 May with a guide price of between £1.2m and £1.3m. The pub has a dance studio on the second floor and total current rents are £103,100 per annum. The pub is let to Mitchells & Butlers on a lease expiring in 2032. The auction is the first time the pub has been on the market since 1980. 

Marston’s applies to convert maltings building to flats: Wolverhampton-based brewer and retailer Marston’s has applied for planning consent to convert an unused maltings building at the Jennings brewery in Cockermouth to 16 flats. The building was formerly used for brewery production, storage and offices but has stood empty since before the 2009 floods. The company said that the site has to be used for something before it deteriorates. Marston’s has applied for permission to create 10 two-bedroom apartments and six three-bedroom apartments.

Heston Blumenthal’s company reports sales growth: The company that oversees chef Heston Blumenthal’s restaurant and other interests has reported strong turnover growth. SL6, which operates his Fat Duck restaurant and two pubs in Bray as well as collecting revenue from his endorsements, reported a 22 per cent increase in revenue to £10.1m for the year ended June 2011. Pre-tax profit was £768,566 – Blumenthal collected a dividend of £750,000.

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