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Morning Briefing Strap Line
Thu 12th Jul 2012 - Geronimo, Café Rouge and Batemans

Story of the day:

London businesses are stocking up ahead of the Games: Fifty nine per cent of London’s businesses aim to reduce deliveries during the Olympic Games. According to a survey of 1,000 businesses, by Transport for London (TfL), more than a third (37 per cent) are considering stocking up on non-perishable goods in advance of the Games. Around one in five are thinking about postponing non-essential deliveries (22 per cent) or setting up temporary stock rooms (20 per cent). A small number (eight per cent) are even working with neighbouring businesses to ensure they are prepared for the Games. Motorists are being advised to avoid central London, areas around the Olympic Route Network, and Games venues from mid-July. For that reason, freight operators and their customers are being urged to plan ahead and reduce, re-route, re-time or switch deliveries to an alternative mode of transport wherever possible. Ben Plowden, director of planning at TfL Surface Transport, said: “During the Games, London will become a massive sporting and cultural venue, which means public transport and roads in central London and around venues will be exceptionally busy. Freight accounts for 25 per cent of traffic in central London, so it’s encouraging to see that so many businesses are considering steps to reduce deliveries. Some companies are even sharing resources with neighbouring companies, which might be something that businesses would continue to benefit from after the Games have finished.” Soho-based vegetarian restaurant Tibits is sharing deliveries with a number of neighbouring businesses including Ice Bar. The two companies are also sharing space, ordering and storing non-perishable goods in their cellars and stock rooms ahead of the Games.

Industry news:

Pub protection bill passes first hurdle: A new law to protect pubs and independent shops, which was proposed by Cambridge MP Julian Huppert, has cleared its first hurdle. His Private Member’s Bill to tighten up planning rules won unanimous support at its first reading on Tuesday night, and will get a second reading on 26 October. The legislation would require planning permission to be granted before a pub or independent shop could be demolished. 

Daily deals company KGB at risk of OFT investigation: Marketing Week has claimed that daily deals company KGB could follow Groupon in becoming the subject of an investigation by the Office of Fair Trading. The marketing bible has reported that The Advertising Standards Authority has received 74 complaints about the service in the year to date. More than half of these – 45 in total - were received in the last three months, up from 28 in the first quarter of the year. The ad watchdog has banned several KGB ads in the last two months for exaggerated and misleading claims.

New restaurant complex for Victoria gets planning go-ahead: Westminster City Council has approved a plan, submitted by Buckingham Properties, to create a new restaurant complex on Buckingham Palace Road close to Victoria coach station. The current retail provision is thought to be too heavily focused towards tourists passing through Victoria Coach Station and failed to cater for the needs of local residents.

ALMR extends paper entry for awards until 31 August: A wide spectrum of companies have entered the ALMR Operations Managers Awards this year, with the trade body now extending the deadline for entry paper deadline to 31 August. Nick Bish, ALMR chief executive, said: “We have been absolutely delighted with the number of companies that have nominated members of their operations team. Everyone is fantastically busy driving business and so we have decided to give more time for the entry papers to be completed, and moving the deadline back provides time for busy ops managers to do just that.”

Technomic – millennials more willing to try new beverages: Foodservice and beverage research firm Technomic has found that millennials – those born between 1980 and 2000 - evince a bigger interest in trying out new drinks. This is producing a bigger appetite among restaurant brands in the US to expand craft beer ranges, create signature cocktails with boutique spirits and source more wine with sweeter taste profiles. Technomic vice president David Henkes said: “Millennials are absolutely driving some of the biggest trends in adult beverage and will continue to do so for the next few years.”

KFC to introduce self-service kiosks in New Zealand after success in France: KFC will introduce “self-service” kiosks in its New Zealand sites after the technology has proven successful in France. In France, KFC customers pick their meals up from a dedicated counter after they have placed their order on the touch-screen terminals. The company said restaurants with kiosks often became busier, meaning the technology would not result in stores being run with fewer staff.

Spain introduces three per cent VAT rise, lower rise for hotels: Spain unveiled a three per cent rise in VAT from 18 per cent to 21 per cent yesterday. However, there was a smaller rise in VAT, from eight per cent to ten per cent, for public transport, hotels and processed foods. VAT on bread, medicine and books has been kept at four per cent. 

Drinkaware Trust to undergo audit: An independent review of the Drinkaware Trust is to be undertaken by a panel chaired by former Permanent Secretary at the Department of Health. The panel will examine Drinkaware’s effectiveness in meeting its original objectives, which were to increase awareness of alcohol harm, improve attitudes and change behaviour. The panel will be overseen by Sir Hugh Taylor, chairman of the Guy’s and St Thomas’ NHS Foundation Trust and former Permanent Secretary at the Department of Health. Drinkaware was set up in 2007.

Company news:

Collyer – return of Lewis’s boat a good time to conduct chief executive interviews at M&B: Geof Collyer, leisure analyst at Deutsche Bank, has argued that the impending return of Mitchells & Butlers’ shareholder Joe Lewis’s yacht to London would be a good time to conduct job interviews for the chief executive’s job. He said: “Investors are keen to see a new chief executive appointed. A number of suggestions have been bandied around, but the market would prefer one that will stay around. To that end, Joe Lewis’ yacht is apparently due back on its mooring by Tower Bridge for the Olympics. So if chairman Bob Ivell is as close as some think he is to recruiting, it would be a good opportunity to conduct interviews with the group’s largest shareholder (Piedmont Holding has been increased by 17 per cent since the decision not to bid was taken last November; it now stands at 26.34 per cent).” Collyer points out that The Jubilee and various sporting events have provided a much needed stimulus to trade in recent weeks. Ahead of next Thursday’s (19 July) scheduled third quarter results from M&B, he said: “Greene King (+7.1 per cent, 8 weeks to 17 June) and JD Wetherspoon (+6.1 per cent, 11 weeks to 8 July) have reported strong recent like-for-likes numbers that give some colour beyond the M&B trading period, whilst Young’s has just reported +4 per cent for the 13 weeks to 1 July, which works out as -2 per cent for seven weeks to 21 May and +11 per cent for six weeks to 1 July. Everyone else is reporting good numbers – maybe M&B will join the party by having enjoyed the partying?”

Freehold of The Sugar Hut in Brentwood sells at auction for £1.3m: Enterprise Inns has sold the freehold of The Sugar Hut nightclub in Brentwood, which appears in reality television show “The Only Way is Essex”, for £1.3m, within the guide price range of £1.25m to £1.35m. Current tenant Mick Norcross, who pays rent of £71,794 per annum, has a 20-year lease that started in September 2004. Would-be buyers were expressly warned that goodwill arising from the venue’s appearance in “The Only Way is Essex” should be excluded.

Hickman – wrong to bet against Wetherspoon: Paul Hickman, leisure analyst at Peel Hunt, has issue a “Buy” recommendation on Wetherspoon shares after the company reported an unexpected 6.1 per cent increase in like-for-like sales. He said: “Having depressed expectations in the first half, it is now Wetherspoon’s turn to over-perform on trading. To achieve 16 per cent earnings growth in this market is a notable achievement, proving once again that it is wrong to bet against Wetherspoon. Like-for-like sales for this 11-week period were 6.1 per cent against our expectation of one per cent. This is a strong result after the third quarter’s two per cent increase. Wetherspoon is relatively unexposed to outside trading areas, so should have been a net beneficiary of the weather. It has also traded well over the Jubilee and Euro 2012. Following 8.1 per cent in the third quarter, operating margin is expected to improve to 8.5 per cent for the second half, which is 30bps better than our expectation. The higher than expected sales will have helped this performance. This level of top-line growth looks good and compares well with the good like-for-like trading at Greene King, which managed +7.1 per cent in its current period.

PizzaExpress site sells for £1.39m at auction: The freehold of the PizzaExpress restaurant in Balham, London, has sold for £1.39m at an Allsop auction – its guide price was £1.2m to £1.3m. The lease runs to 2030 without a break and PizzaExpress pays a rent of £75,000 per annum, which provides a gross initial yield of 5.4 per cent.

Batemans reports rise in turnover and operating profit: Lincolnshire-based family regional brewer Batemans, headed by Stuart Bateman, has reported a 15.5 per cent rise in turnover to £14,589,000 in the year ended 31 January 2012. Pre-tax profit dropped to £73,580 from £122,283 the year before when there was a £77,417 profit on a disposal. Operating profit stood at £290,298 around £16,000 higher than the year before. The company stated: “In another challenging year, turnover, gross margin and operating profit improved on the prior year. The difference in the after tax profit position (£36,000 compared to £92,000) was largely due to a reduction in property disposal profits.” Batemans reduced its employment costs as a percentage of turnover to 15.3 per cent compared to 18.2 per cent the year before. The company completed a refinancing in April 2011 taking out a loan of £3m. Pay for its ten-strong board of directors dropped to £693,094 from £755,360 the year before.

Former Greene King and JDW manager to open second Blind Tiger: A former manager for Greene King and Wetherspoon, James Morris, is to open a second Blind Tiger music venue at the start of next month (2 August) – on the site of the former Paul Heathcote restaurant in Bolton town centre. Morris is undertaking a £150,000 refurbishment of the site. He opened his first Blind Tiger in his hometown of Bury seven years ago.

Black Sheep Brewery backs Yorkshire ale trail: The 30 most popular pubs In Yorkshire, as voted for by the public, will feature in the new Ale Trail being launched by Welcome to Yorkshire and supported by the Black Sheep Brewery. The trail includes a guide map, a range of festivals to see and breweries to visit. Jo Theakston, marketing director of Black Sheep Brewery, said: “Yorkshire can be rightly proud of the huge numbers of fantastic pubs that offer a warm and memorable welcome to visitors. This trail is a great way of giving people some real inspiration for pubs to visit, whether they’re after some award-winning ale or great food.” The White Horse Farm Inn in Rosedale Abby was voted Yorkshire’s Favourite Pub 2012.

Proactive Investors – Greene King remains a compelling story: The Proactive Investors website has tipped Greene King as a “compelling” investment story and argued that its recent stock price rally “looks to have further upside”. It added: “After all, the forecast price to earnings for this year is around 10.3X which falls to 9.6X next year and the dividend yields are 4.6 per cent and five per cent respectively. One interesting feature is that coffee sales were up a fifth on the roll-out of the Illy coffee brand which is a sign - if ever there was one - that pubs are changing.”

Geronimo Inns launches Olympics initiative: Geronimo Inns, the gastro-operator owned by Young’s, has launched an Olympic initiative whereby each pub is supporting a particular British Olympian. Each pub will have a shrine to its particular athlete. If the athlete wins a gold medal, there will be a celebratory drink for all Geronimo customers in the pub supporting the athlete at the time. A silver medal will result in customers receiving 20 per cent off their food bill, and bronze will see the pub concerned provide a range of free bar snacks.

Marston’s set opening date for The Talardy Hotel: Midlands-based Marston’s has set an opening date of 6 August for The Talardy Hotel in St Asaph, Wales, which it took over after it fell into receivership in June 2010. It will offer 11 luxury ensuite bedrooms, as well as a restaurant and bar.

Independent – rumours of a M&B and Greene King merger still doing the rounds: The Independent has reported that speculation that merger between Mitchells & Butlers and Greene King could be a possibility continues to do the rounds. The newspaper added: “M&B – whose largest shareholder is Joe Lewis, the billionaire owner of Tottenham Hotspur – ticked up 1.8p to 252.3p, while Greene King advanced by 12p to 571p after Nomura's Tim Barrett raised his target price to 585p.”

Luminar in negotiations over rent at Swansea Oceania: The Swansea Oceania nightclub that featured in an episode of “Back to the Floor” this week is the subject of negotiations over rent between Luminar and its landlord. The documentary, which featured chief executive Peter Marks, featured a promotion that offered drinks for 80p. A spokesman for the company told the local newspaper: “We have to make sure our nights are competitive so that we can encourage clubbers to come to our venue. The promotion is only on one night a week.” A Welsh government spokesman said: “We believe the UK government proposals to introduce a minimum price of 40p per unit of alcohol does not go far enough and needs to be set at a level that will impact on excessive alcohol consumption.” Luminar has already vacated its Oceania site in Wolverhampton after the landlord refused to reduce the rent.

Café Rouge freehold sells for £1.13m: The freehold of the Café Rouge in Maidstone has sold for £1,130,000 at an Allsop auction – the guide price was £950,000 to £1.05m. Café Rouge, on Earl Street, pays a rent that rises to £65,000 per annum after March 2014. The vendor will top Café Rouge’s rent up to £65,000, which means the buyer earns an initial yield of 5.75 per cent. Café Rouge’s owner Tragus signed a 20-year lease on the property in March this year, with rent starting at £38,821 until March 2013 when it rises to £45,428.56 and finally rises to £65,000 in March 2014.

Former Nobu chef to open second Wabi: Former Nobu head chef Scott Hallsworth will open a new Japanese restaurant, Wabi London, on a 10,000 sq ft site located in Lincoln’s Inn Fields near Holborn. Hallsworth already operates a Wabi restaurant in Horsham. Leisure property advisors Davis Coffer Lyons brokered the deal on behalf of leading hotel and property developer, Masterworks Development Corporation. Australian-born Hallsworth spent six years at Nobu in London before being handpicked by Nobu Matsuhisa to launch Nobu Melbourne in 2007. This new venture will see him join forces with entrepreneur André Cachia. The restaurant, which was secured on a new lease, will launch this autumn and serve a varied and seasonal menu of Japanese cuisine with a contemporary European twist. Wabi will also offer customers the option of dining at a sushi bar overseen by Taiji Maruyama, another Nobu London graduate, highly regarded for his innovative approach. Masterworks Development Corporation already operates hotel and restaurant developments across the UK and the USA, including three in London located at Trafalgar Square, St Pauls, and the City, primarily aimed at business travellers.

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