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Morning Briefing for pub, restaurant and food wervice operators

Thu 31st May 2012 - Joe Lewis, Luminar and Everards

Story of the day:

Fuller’s reports £75m invested in the past year: Fuller’s has invested £75m in the past year, with 30 new pubs and an investment in its brewery that has added 30,000 barrels of capacity. The company reported revenue up five per cent to £253m and profit before tax up three per cent to £30.3m in the year to 31 March. Chairman Michael Fuller said: “As the summer sun chases away the economic gloom, we now look ahead to what promises to be a historic time for the country. This coming weekend we have the Queen's Diamond Jubilee, followed by the European Football Championships and then the Olympic games. With our pub estate based in London and the South East and London Pride as our flagship beer, we aim to give our customers a wonderful summer to remember.” Managed like-for-likes sales were up 4.2 per cent, tenanted profits rose four per cent and beer company profits rose by two per cent. The company said, though, that excessive duty increases that total 45 per cent over the last five years continue to impact all parts of the business. It added: “The pub industry is a significant contributor to the local communities in which it operates and provides employment for almost one million people. However, we continue to shoulder a disproportionate tax burden as a result of the current detrimental tax regime. The group paid total taxes and other government levies of £114 million for the year, which represents an astonishing 37 per cent of Group revenues including VAT.”

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 (NRA) 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

“The report on the NRA is excellent. I have been going back and forward to the US a lot in the last two years (plus I lived in the US from 1992 to 2000 working in the restaurant business) and your insight is spot on. Thanks for sharing.” 
Alison Vickers,
Business Development Director, YO! Sushi

Industry news:

Visitor number will rise 13 per cent during the Olympics: A report by travel technology companies Forward Keys and Amadeus claims there will be an eight per cent dip in bookings from overseas visitors in the three weeks before the Olympics between 2 July and 22 July. However, numbers are forecast to rise 13 per cent during the Games themselves. The most traffic from a single country to the UK during the games will come from the USA, accounting for 19 per cent of arrivals. However, Europe is the largest source region, bringing in 46 per cent of expected arrivals, while North America is second with a 23 per cent share. 

Morrisons chief hit out at hot chicken “madness”: Morrisons chief executive Dalton Philips has criticised the plan to apply VAT to rotisserie chicken in supermarkets. In an article in The Daily Mirror he wrote: “It’s madness that because a chicken is freshly cooked it will be priced 80p more than a cold chicken and it will become unaffordable for many poorer customers at our supermarkets. Our rotisserie chickens are all from the UK so this will hit British farmers hard too.”

Beer duty escalator petition reaches halfway point: The beer duty escalator petition passed the halfway point to forcing a parliamentary debate yesterday at around 3pm. The petition now has just over 50,000 signatures – 100,000 are needed to force a parliamentary debate on the escalator which increases duty on beer by two per cent over inflation each year.

Company news:

Joe Lewis increases his stake in Mitchells & Butlers: Joe Lewis, the largest single shareholder in Mitchells & Butlers, has bought another 1.4 million shares in the company to take his holding to 26.34 per cent. The shares were bought through his Piedmont investment vehicle. Under Takeover Panel regulations Lewis is now just over 3.5 per cent away from being forced to make a bid for the entire company.

Everards reports 13.5 per cent increase in underlying profits: Leicestershire brewer and retailer Everards has reported a decline of £724,000 – 2.5 per cent – in turnover to £28.24m in the year but a rise of 6.1 per cent in operating profit to £3,937,000 (if an exceptional credit to staff costs of £780,000 in last year’s results is excluded). The company stated: “Company performance has been robust in a very challenging economy and competitive market. Profit before tax (of £2,471,000) was £1,449,000 lower than the previous year due to a reduction of £962,000 in property disposal profits and the one-off credit of £780,000. Excluding these two factors, underlying profit before taxation was up by £293,000 or 13.4 per cent. The figures cover the period up to 24 October last year.

Bravo Inns adds two pubs to reach 30: North-West operator Bravo Inns has added two more freeholds to its estate. The deals were finalised yesterday (30 May). Bravo’s founder and managing director Ken Buckley said both pubs – The Albion in Clayton-le-Moors and The Sun & Stars in Chorley – had ceased trading and were purchased out of administration. Both will undergo major refurbishment works with The Albion scheduled to re-open on 12 July and The Sun & Stars in mid-August. The purchases bring the size of the estate to 30. Bravo, which is funded by Albion Ventures, specialises in wet-led community pubs with sports playing an integral part of the offering. Buckley said the company’s philosophy is to buy pubs at realistic prices and then refurbish them to a high standard.

Black Country Traditional Inns buys two pubs: Brewer and retailer Black Country Traditional Inns (BCTI) has two pubs in the pipeline that will bring the size of its estate to 29. The company’s founder Angus McMeeking expects all the formalities to be successfully completed with the next three months. The pubs are located within BCTI’s heartland – one is a town centre pub in Wolverhampton and the other is a community pub near Dudley. Both will operate under BCTI’s business model, which centres on creating community pubs that serve a range of real ales including those from sister company Black Country Ales. Around half of the production of Black Country Ales’ brewery in Dudley goes into BCTI’s pubs. BCTI was founded by McMeeking in 2001 and now only buys freeholds or operates free-of-tie leaseholds.

D&D Restaurants plans Fishmarket opening for late summer: D&D Restaurants, the company that operates Pont De La Tour and Quaglino’s, is planning to open a new venue called Fishmarket in late summer. The venue will be housed in the Old Bengal Warehouse in London’s New Street. The venue will serve “great classic fish dishes” such as “grilled scallops and skate wing with cockles and shrimps”. All fish and seafood will be sourced sustainably.

London Clubs Management to open Carlsberg sports bar: London Clubs Management, which runs some of London's most high profile gaming and entertainment venues, is opening a Carlsberg sports bar within its flagship venue, The Casino at the Empire, in London’s West End. The Casino at The Empire offers 55,000 square feet of casino space built across two floors – the company also operates The Playboy Club in London. 

Rex Restaurants starts Brasserie Zedel recruitment: Rex Restaurants, which runs The Delauney and The Wolseley, has begun recruiting for the opening of its much-anticipated Brasserie Zedel in the West End of London. The new venue is described as a “large bustling Parisian brasserie transported to the heart of London”. It will offer “remarkably low prices” and feature Art Deco interiors and host a “Bar Americain”, a live music venue, and “The Crazy Coqs”, a live music and cabaret venue. The venue, due to open in the summer, occupies the site of the former Atlantic Bar & Grill.

JD Wetherspoon eyes Aldershot: Managed company JD Wetherspoon is in negotiations to open a venue in Aldershot. The company is understood to be keen to open in the Arcade shopping centre. The talks come as shop owners in the Arcade claim they have been given notice by the site’s owners.

Luminar starts to invest; buys site: Nightclub company Luminar is starting to invest in a number of key sites. One such venue is the Gallery venue in York, one of the city’s largest nightclubs. The site closed on Monday and will re-open in the summer. Luminar wants to the relocate bars, remove and replace fixed seating, remove and relocate the DJ’s booth, creating separate bar and nightclub operations. The company is also preparing plans to open the Liquid Envy venue in Crawley, which closed last November when Luminar went into administration. A Luminar source told Morning Briefing: “We are planning a number of these over the coming months, both major and minor. The age of the estate is something that we were always going to address as it is a key part of our strategy to grow the group. Admissions are up on the previous year this month, the first time for several years, so our strategy is working.” The company has also acquired Café Mambo in Guildford, part of the building that is already operated as Casino by Steve Thomas. Luminar was bought out of administration last December, in a deal worth £45m, by Peter Marks, Alex Geffert and Joe Heanen.

Bespoke Inns reports bumper trading: Derbyshire-based Bespoke Inns has reported that last week’s warm weather provided a large boost to trading with a like-for-like sales increases of 50 per cent. Alan Shepherd, Bespoke director, said: "It's been an absolutely brilliant weekend and it's been so busy I'm relieved that we got through it. "Across all of the pubs, we had to make sure we had enough staff to cope and it was a tough job constantly keeping up with demand throughout the week. "I'd say that we were at least 50 per cent up on an average week," he said.

Collyer – we’ll know in a year who has the best tenanted and leased strategy: The sector will be able to judge which company has the best tenanted and leased strategy in about a year’s time, Deutsche Bank analyst Geof Collyer has argued. He said: “The tenanted and leased sector has been the hardest hit in the last four years and has taken the longest time to stabilise and then turn around of any of the pub sector’s businesses. Both Marston’s and Greene King are just about there, in terms of like-for-like profits stability, with Enterprise Inns getting closer. Both Spirit and Greene King are deliberately reducing the scale of their tenanted and leased estates, whilst Marston’s is looking to broadly retain its shape. It is a bigger issue for Marston’s as well, given that the tenanted and leased estate is the biggest of its three profit centres and therefore needs to be sorted and turned around. Spirit has a greater exposure to tenanted and leased profits on a relative basis than Greene King but this could equalise over time. If the UK economy has another prolonged downturn, then the tenanted part of the sector is likely to suffer more than the retail or brewing businesses where the ability to control costs and more actively promote offers more downside protection. We will not know which group has the best strategy for its tenanted and leased estate for a year or so, though we would favour the one which improves the returns relative to book value and delivers an improving like-for-like profits trend. All three have taken the view that greater control of the customer-facing offer is important for a material section of their tenanted and leased estate. It is more a question of how much resource to devote to the problem and where the greater risks lie. For example, by our reckoning, Marston’s should have invested around £90m of development capital expenditure by end 2014, yet total EBITA will only have moved by £7m. Because operating lease rent payable is around 34 per cent of total EBITDAR at Spirit compared to four or five at Greene King and Marston’s, Spirit is more operationally geared as a group, and also has significantly lower fixed charge cover (1.5x) than either Greene King (2.7x) or Marston’s (2.1x). Therefore we see its business model as being more vulnerable to a downturn than any other pub stock we follow apart from Punch Taverns.”

Vintage Inns marks Diamond Jubilee with tea and cakes: Vintage Inns, Mitchells & Butlers largest brand with 223 sites, is marking the Queen’s Diamond Jubilee with a new Vintage Inns afternoon tea menu. Customers are offered a selection of classic sandwiches, cream scones and cakes, all washed down with a refreshing pot of tea for £9.95. The current Vintage menu also features the Vintage Summer cake, a triple-decker sponge cake with raspberries, blackcurrants, blueberries, summer fruit syrup and cream. Unveiled by Paul Hollywood of BBC2's The Great British Bake-Off, the cake was created by Vintage Inns' chefs to mark the Queen's Diamond Jubilee. For every piece sold, the company donates 15p to Marie Curie Cancer Care.

Red Mist Leisure invests in estate: Four-strong Red Mist Leisure has hired Catering Design Group to consult on a front-of-house refurbishment on The Exchequer pub in Crookham, Hampshire. The latest project follows the refurbishment of The Stag on The River, Eashing near Godalming and The Queen’s Head in East Clandon in Guildford. The company, founded by Mark Robson and Mark Williams, bought three pubs they already tenanted from Punch Taverns in August 2009.

Evans & Peel Detective Agency concept to open on Earls Court Road: A new concept, Evans & Peel Detective Agency, opens its first site on London Earl’s Court Road on 6 June. The venue offers small plate food with 1920s Prohibition-era theming – and 77 rentable drawers where customers can store a bottle of spirit decanted into a Evans & Peel bottle. Customers receive a key for the drawer and it’s theirs for a whole year. 

Wharfebank Brewery takes over its second pub: Wharfebank Brewery has taken on its second pub – The Half Moon in Pool-in-Wharfedale. The brewery opened its first pub, Punch’s Fleece in Otley, last year. Wharfebank was founded by former Caledonian Brewery sales director Martin Kellaway. The pub, an Enterprise Inns site, re-opens today after a refurbishment. 

Domino’s Pizza reports rise in deliveries to pubs: Pizza chain Domino's has reported an increase in the number of deliveries to UK pubs as pubs diversify. A spokesman for Domino’s told The Sun: “Many smaller locals are struggling and it's hard to compete with some of the bigger food-led pubs so we're happy to work with them.” The Half and Half Lounge Bar in Croydon, south London, allows customers to order pizzas or bring their own lunch. Manager Tom Neza said: “We don't do food and we wanted to attract people during the day.”

Ooberstock launches on-line wholesale platform: Leading UK drinks brands and thousands of retailers have embraced the launch of Ooberstock, a new intelligent wholesale business for the licensed hospitality sector. The revolutionary online platform which promises to deliver greater transparency, lower prices, improved customer choice and more flexibility on delivery times, went live earlier this month to an enthusiastic response from the trade. Early adopters who have signed up to be listed on Ooberstock include a number of major drinks brand owners such as Heineken UK, Coca-Cola Enterprises, Britvic Soft Drinks, Budweiser Budvar, Red Bull, SHS Sales & Marketing, Highland Spring and Wells & Youngs, while more than 4,000 pubs, bars, clubs and hotels have registered for the service.

Stonegate’s new-style local pub chosen for Carlsberg honour: The Red Lion in Wednesfield, near Wolverhampton, which was opened a month ago by Stonegate Pub Company after a £200,000 refurbishment as an updated version of the local pub, has been chosen by Carlsberg as the only pub in the UK to host its “Show Your England Colours” road show. The road show, which is designed to get everyone behind the England team, has visited a number of venues including Anfield and the Emirates Stadium to engage and excite fans, prior to the Euro 2012 competition. The tour will also visit Wembley for the forthcoming England friendly matches. The interactive road show has five stations where customers can test their skill, try their luck, show their knowledge and broadcast their dedication to the England team. The road show visits the pub between midday and 6pm this coming Sunday.

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