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Tue 15th May 2012 - Realpubs, Stonegate and Brakspear

Story of the day:

Hickman - Greene King conversions to Realpubs “sets the pace” for British pub evolution: Paul Hickman, City analyst at Peel Hunt, has praised the conversion of the first two Greene King pubs to the Realpubs trading style. Hickman reports that The Maynard Arms in Crouch End has seen turnover climb from £14,200 a week to £22,600 a week after a £408,000 investment. Meanwhile, The Black Lion in West Hampstead, the most recent investment, has seen turnover per week almost double from £12,500 to £24,200 after a £322,000 investment. Hickman said: “In one sense the phenomenon of Realpubs represents a simple act of confidence – the confidence to put a truly premium offer into a market that responds to it. The interest is that the concept has roll-out potential throughout the premium estate, transforming returns. There are potential sites in large numbers of London locations where the offer is not properly matched to the locality. There are additional targets out of London in metropolitan cities. In addition, aspects of the thinking – such as the dynamic development of outside areas and their recruitment into the pub’s food business – have implications much more widely throughout Greene King’s estate, including its destination pubs. We also believe that this demonstrates that Greene King, as an organisation, has the flexibility to absorb radical new thinking. For example, we doubt this move could happen at Mitchells & Butlers, which is now moving forward with six drive brand templates. It is now five years since the smoking ban, and simple strategies to switch to food are well out of date. By focusing on premiumisation, Greene King may well be setting the pace for the next move in the evolution of the British pub, which is likely to play a leading role in the consumer recovery.” Greene King bought Realpubs 14 London sites in 2011 for £53.1m. Realpubs, founded by Nick Pring and Malcolm Heap, pay their chefs as much as house managers – both earn circa £35,000 per annum.

Free Report: Paul Charity has written a report on menu trends, the drivers of US dining occasions, the franchise business model and other key areas of the US foodservice market and their significance to the UK market. The report, based on a visit to the National Restaurant Association show in Chicago, is produced in conjunction with the Association of Licensed Multiple Retailers and sponsored by CPL Training. It is free and is available by e-mailing Paul Charity on

Industry news:

ALMR says minimum pricing in Scotland needs to be part of wider framework: The Association of Licensed Multiple Retailers has argued that a minimum unit price of 50p for alcohol in Scotland needs to be part of a broader framework. Chief executive Nick Bish said: “We welcome this move, but it can only be effective as part of a wider framework of action to tackle unregulated supermarket sales. What we need is not only measures to make it more expensive to drink at home, but also action to remove the horrendous regulatory and tax burdens that are crippling the pub and literally pricing many out of the market. Encouraging people to drink in pubs means that they consume measured quantities served by supervised and trained staff and promotes responsible consumption.”

Technomic – restaurants must make an emotional connection with younger diners: A survey by Tehnomic, the world’s leading foodservice research house, has found that millennials, consumers aged 18 to 34 years old, respond to messages from dining establishments in the US that are about more than just food. Technomic’s survey found loyalty to foodservice brands stems from not only their love of the menu, but also from their perceptions of a restaurant’s social responsibility and community involvement. “Millennials visit restaurants more frequently than any other generation,” said Darren Tristano, executive vice president of Technomic. “Restaurant operators are making consistent efforts to track the purchasing habits of Millennials and appeal to their unique need states. Success with today’s Millennial consumer will depend on making an emotional connection and setting expectations.”

Groupon beats market expectations: Groupon has reported an 89 per cent increase in sales for its first quarter to $559.3m (£347.3m). Its net loss reduced to $11.7m, compared with $146.5m in the same period the year before. It ended the period with 36.9m active customers compared to 15.4m at the end of March last year. Chief executive Andrew Mason said the company was “unlocking the opportunity in local commerce for merchants and customers worldwide”.

Company news:

Enterprise Inns reports further improving trends: Tenanted operator Enterprise Inns has reported like-for-like income per pub in the substantive estate (which represents 94 per cent of total pub income) was 1.5 per cent ahead of the same period last year, with the entire estate reporting like-for-like income down by 1.6 per cent. Overall levels of borrowing have reduced to £2.9 billion, with net bank debt reduced to £397 million. To minimise the risk of a potential cash trap in the Unique securitisation, Enterprise has purchased and cancelled £41 million of securitised bonds ahead of schedule. Chief executive Ted Tuppen said: “We have been subjected to extremely challenging conditions during the past four years, with cost pressures, consumer weakness, political interference, pressure on asset valuations and the volatility of capital markets combining to make life difficult. Throughout this period, we have remained committed to our strategy, consistently improved the quality of our pub estate and effectively managed our financial commitments whilst working hard to ensure that we attract, support and retain the best possible publicans to meet the challenges of the marketplace.” Profit before tax and exceptional items was £64m for the six months ended 31 March 2012. The sale of top-end pubs at 12 to 14 times earnings has seen 36 “exceptional properties” sold for proceeds of £49 million, at an average multiple of 14 times income and at a profit of £9 million over book value.

Cambridgeshire-based Elgood files abbreviated accounts: Elgood, the regional family brewer based in Wisbech, Cambridgeshire, has filed abbreviated accounts for the year to 31 December 2011. The accounts show the company has fixed assets worth £4,777,211, up from £4,561,645 the year before. The value of its net assets stands at £3,355,453, marginally down from £3,450,662 the year before. 

Douglas Jack – M&B recruiting a chief executive would be “good for confidence”: Douglas Jack, City analyst at Numis Securities, has argued that it would be “good for confidence” if the company could recruit a chief executive. The company, which reports this Friday (18 May), has been without a full-time chief executive since the departure of Adam Fowle in March 2011. Jack said: “Recruiting a chief executive would be good for confidence, but M&B has hardly been paralysed without one. In addition to faster expansion and numerous cost-saving initiatives, recent developments include: evolving brand designs at Browns and O’Neill’s; Toby Carvery adding a “grab-and-go” format; Ember Inns starting to allow children in and adding a children’s menu and rolling our free Wi-Fi to all its sites. M&B should be on schedule to open 60 outlets this year, of which 30-40 should be in leisure/retail parks where M&B is achieving 30 per cent plus returns, aided by improved capex efficiency, good deals with landlords and undercutting the Restaurant Group by circa £1.50 per head.” Jack thinks the “Enterprise Value” valuation is below peers at 6.8 times. A critic of the company told Morning Briefing: “ The Enterprise Value is wrong sadly as it does not include the pension deficit, even the low one the company advised everyone of last year at £400 million.”

JD Wetherspoon opens in Prestwick: JD Wetherspoon is to open a £1m pub development in Prestwick today having converted a former Woolworths shop. The venue will be called The Prestwick Pioneer. The opening comes after a long legal fight which saw the pub’s plans challenged in the Scottish courts before Wetherspoon were eventually given the go-ahead to develop.

Stonegate offers Diamond Jubilee ale across 334 sites: Stonegate Pub Company has partnered with Wells & Young to offer a Diamond Jubilee ale, a four per cent ABV beer, which will be available in selected Yates’s, Slug and Lettuce and a number of unbranded pubs within the Stonegate estate. In addition to offering a specially badged beer, the pubs across the estate will also be selling commemorative tankards as souvenirs of the special occasion. Miles Selby, head of purchasing at Stonegate Pub Company, said: “What better way to celebrate the Jubilee than offering our customers across 334 businesses a special Diamond Jubilee ale.”

Bill’s set for Wimbledon: Bill’s Produce & Grocery Store, owned by Richard Caring, has secured a site in Wimbledon – hot on the heels of winning preferred bidder status for the town hall site in Horsham owned by the district council. Jasper Gerard, of the Daily Telegraph, has said of Bill’s “every high street should have a place like this”. In Horsham founder Bill Collison has hit back at claims Bill’s was “expensive”. “When you want lovely local products and you want free range and provenance with your products, there is a cost to that,” he said.

Greene King reveals importance of London to Locals Pubs division: Greene King has briefed City analysts about the importance of London to its Locals Pubs division. The company revealed that 133 of its 472 Locals Pubs, where food sales have climbed to 23 per cent of turnover from 15 per cent in 2007, are within the M25 – they account for 28 per cent of the Local Pubs estate but 38 per cent of the profit. The Local Pubs estate increased by more than 50 per cent last year with the acquisition of Realpubs and Capital Pub Company, boosting numbers from 84 to 133. The company has also drawn up a focused premium London strategy for a group of pubs it is now calling Metropolitan – it includes the Realpubs and Capital Pub Company sites with a potential further 20 to 30 sites within the estate. The company has trademarked a new entity, the Metropolitan Wine Company to supply its Metropolitan premium pubs. 

Luminar nightclub in tragic deaths to become a gym: Work is to begin on turning a former Luminar nightclub in Northampton, where two people were crushed to death last year, into a fitness gym. The Lava & Ignite building, on St Peters Way, was bought by Pure Gym, who said it would turn it into a 24-hour fitness centre creating up to 25 jobs. A planning application was approved by Northampton Borough Council on 2 May.

Michelin-starred chef does takeaway: Michelin-starred French chef Bruno Loubet is launching a French takeaway service to try to rival traditional fast food options. He has designed menus for the new takeaway service, set up by French mustard brand Maille and Housebites, which allows diners to pick dishes from specific chefs in their area who prepare the food in their own kitchen before delivering it. Loubet said: “This is good for the image of French food — simple and very tasty. It is really nice and makes a change from curry and pizza.” Loubet has trained 35 chefs working in London and Brighton how to prepare his new menu. These chefs now offer his gourmet French offerings alongside their own menus on the Housebites website.

Ruby Tuesday franchisees to open second site: The UK franchisees of US restaurant chain Ruby Tuesday are to open their second site in a 4,300 square foot venue in Cheltenham. Brothers Gary and Stephen Mayo opened their first site in St David’s Shopping Centre in Cardiff in 2010. The brothers also run Sunway franchises in Wales and the Bryn Meadows Hotel in Caerphilly.

Activist shareholder sells Shepherd Neame stake: The activist shareholder Guinness Peat Group has sold its remaining stake in Kent-based Shepherd Neame. Guinness Peat is winding up its portfolio of interests to return funds to shareholders. It sold 235,235 shares in Shepherd Neame. The stock last traded at 710p, valuing the stake at about £1,670,000.

New restaurant opens on Southend seafront: A new £2m restaurant opened at the weekend on Southend seafront. The new restaurant, was opened on Saturday by James “Arg” Argent from ITV2’s the Only Way is Essex. The new development, opened by the owners of Adventure Island, is made up of a family pizzeria, game zone and retro milkshake bar and replaces the Pizzas of Eight restaurant. The upper floor houses a pizza and pasta restaurant, plus a stage for live entertainment performed by visiting acts and the staff. Feelgoods is also environmentally friendly. It has a natural sedum “living roof” made up from hundreds of mini cacti that change colour through the seasons and are completely self sufficient, absorbing water from the environment. Marc Miller, managing director of Stockvale which runs Adventure Island, said: “We worked really hard to design a building that responds to the sensitive setting of Southend’s internationally important pier and reflect the heritage and nostalgia for the Great British seaside.”

British man opens Cuba’s first Indian restaurant: British man Cedric Fernando and his Cuban wife have opened Cuba’s first curry house in Havana. Around 25 per cent of customers are Cubans while the remainder are holiday-makers and ex-patriates. Like all privately-owned restaurants on the island, it is run inside the family home. The family has taken advantage of the opportunities created as the Communist government slowly opens up the state-controlled economy. The Cuban government now believes an increasing amount of limited private enterprise is crucial in helping sustain Cuba's socialist system, and there are now 1,618 private restaurants - or paladars - across the country.

Rossopomodoro secures fifth UK site: Rossopomodoro, the Italian restaurant chain backed by Change Capital, has secured its fifth UK site on Rufus Street, near London’s Hoxton Square. Davis Coffer Lyons advised the private landlord and Richard Susskind advised Rossopomodoro on the deal. The group, which operates circa 110 sites in Italy, has taken a circa 1500 square foot site at the former Hoxton Furnace Pizzeria as part of its plans to ramp up expansion plans in the UK, where it intends to open up to 30 new sites by the end of 2014. A rent of £80,000 per annum is being paid for the ground floor and basement unit close to Old Street, London N1, on a new 20-year lease.

Capital Pub Company to run Hire Space pilot: Capital Pub Company is to run a pilot scheme with bookings website Hire Space. Hire Space allows pubs to list their function rooms and spaces for free, and then lets the public book and pay for them online. This can either be a minimum spend or hire fee, and the website takes a commission on bookings made. It also lets people book and pay for drinks and meals through the site. The venture is backed by Karen Hanton, founder of Europe’s largest online restaurant booker Top Table, and is currently signing up pubs in London ahead of its full launch in September 2012.

Brakspear to hire retail and digital marketing manager: Henley-based Brakspear is looking to recruit a retail and digital sales manager, with a salary between £35,000 and £40,000, to help grow sales across its 140 pubs through developing marketing initiatives. The recruitment of a digital manager follows the appointment of a design specialist to provide input for licensees on refurbishments.

Ramsay to run a hotel: Celebrity chef Gordon Ramsay and retail queen Mary Portas have signed up to run a hotel in a new Channel 4 show. Viewers will be able to stay the night at Hotel Britannia, where the pair will train unemployed people who want to work in the service industry. Channel 4 names, such as fashion stylist turned cook Gok Wan, property experts Sarah Beeny and Phil Spencer and Countdown host Nick Hewer, could also take up positions at the pop-up establishment in London.

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