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Fri 13th Jul 2012 - Pheonix, TGI Friday’s and Diary

Story of the day:

ALMR sounds warning over regulatory costs: The Association of Licensed Multiple Retailers has sounded a warning over gross margins in the wake of its annual benchmarking survey. The survey has shown gross margins are down by six per cent. Statategic affairs director Kate Nichols said: “There is a strong warning to government in all of this. The industry has pared costs back to the bone over recent years in all but one area – cost resulting from changes to legislation. The survey shows costs in these areas spiking – hefty business rates have fuelled 18 per cent increases in premises costs and licensing reform has seen investment in security measures increase by a staggering 60 per cent – and that is frankly unsustainable in the current environment. Retailers’ strong base for growth could be jeopardised by the imposition of further unsustainable costs arising from legislation.” The survey reveals some inconsistency within the market, however. Whilst food-led operators continue to drive forward – comfortably outperforming the market with like-for-likes of 8.5 per cent - wet-led community outlets, continue to struggle and for the second year in a row, like-for-like growth has flat-lined. Those operating under tied leases in particular struggled - reporting below average capex, margins and growth and a significant increase in rental costs. For the first time, tied rents overtook rents for free of tie and commercial leases. Over the three years the survey has tracked them, tied rents have increased by almost a third, jumping from 9.4 per cent to 12.3 per cent of turnover.

Industry news:

TGI Friday’s joins Jacques Borel VAT campaign: Restaurant operator TGI Friday’s has joined the Jacques Borel VAT Club, the campaign that aims to persuade the government to reduce VAT in the hospitality sector to five per cent. Karen Forrester, chief executive of TGI Friday’s, said: “We have seen from the results of VAT reductions in other countries that there is a direct link to job creation through growth in the eating out industry. At Friday’s we are continually focused on people development and job creation, which in turn drives shareholder value so we see this as a chance to grow our family further.” Jacques Borel said: “I’m delighted to be able to welcome TGI Friday’s to membership of my VAT campaign. A targeted VAT reduction is a great way for the government to generate employment in a cost-effective way.” The Jacques Borel VAT Club now has 35 members from across the pub, restaurant and foodservice market. Membership includes Pizza Hut, Roadchef, Subway, JD Wetherspoon, Charles Wells, Fuller’s, Shepherd Neame and St Austell. TGI Friday’s is set to open between six and eight restaurants in the UK in the remainder of 2012 in what has been described as the company’s biggest single year for openings since it came to the UK 26 years ago.

Free items boost sales: A number of US foodservice operators are giving items away free this week, with social media creating a virtuous circle of customer uptake. 7-Eleven gave out free slurpees yesterday for its 85th birthday between 11am and 7pm with ten million expected to be handed out compared to five million last year thanks to Facebook and Twitter coverage. During last year’s freebie promotion, sandwich sales jumped 40 per cent, baked goods rose 28 per cent, coffee sales jumped 24 per cent and even slurpee sales jumped 22 per cent - even though they were free for most of the day. Starbucks is giving away free Refresher energy drinks today.

Two female beer sommeliers unveiled: The first two accredited female beer sommeliers have been announced by the Beer Academy. Six months after the sommelier qualification was launched, Sophie Atherton and Annabel Smith were accredited as Beer Academy Sommeliers following a viva examination with Beer Academy chief examiner Dr George Philliskirk. He said: “Traditionally the vast majority of UK beer has been drunk by men. But things are changing. Women do enjoy beer but tend to be more discerning that the average male beer drinker. They like to know how it’s brewed, what raw materials are used and how these affect the flavour of the final product and which beers are the best partners for different foods.” 

Urban version of Bicester Village to open in London: An urban version of Bicester Village will open in London in 18 months times. The opening of London Designer outlet is part of a move to make Wembley City a year-round destination. Bicester Village hosts an array of high profile restaurant brands including Carluccio’s, Villandry and Eathai Busaba. James Saunders, director of Quintain, which is developing Wembley City, said: “We want Wembley to be a 365-day-a-year destination. This will be London’s newest, most exciting entertainment district.” Next month, a £70 million hotel will open between Wembley Stadium and Wembley Arena as another milestone in the 20 year regeneration plan for the area. Jane Johnson, interior designer, said: “The theme is Cool Britannia. Everything has been designed by British designers, from furniture, to wall hangings, to carpets.”

Vulcan pub to become a museum piece: One of Cardiff's most historic pubs The Vulcan Hotel, formerly operated by Brain’s, is to be rebuilt at St Fagans National History Museum. Museum experts have started the process to record the building's historic features before removing it from the edge of the city centre. They plan to rebuild it at the museum and want to reopen it as working pub.

Smashburger backer to open new concept: Consumer Capital Partners, which has grown better burger concept Smashburger to 200 sites in the US in five years, is preparing to launch a new full-service concept called Tom’s Urban 24 in September, a “modern diner” that will be open 24 hours and will offer contemporary comfort food. Last October, the group founded Tossa Pizza in Boulder, Colorado, a pizza, pasta, salad and wine concept that is fast casual by day and full service at night. The company is planning to open a second Tossa in Denver later this year.

Planning inspector blocks redevelopment of Cambridge pub: A planning inspector has blocked a plan to a convert a Cambridge pub, The Carpenters Arms, into seven homes. The inspector Ian Radcliffe ruled that converting the Carpenters Arms would deprive residents of an important facility and that there is no evidence the pub was marketed for “a reasonable amount of time, with an agent specialised in the licensed trade”.

Tourism income hits all-time high: Spending by visitors to the UK rose six per cent to £18.2bn in the 12 months to May. A record 12.3m visitors took holidays in Britain in the period. VisitBritain said the previous record was in April 2012 and that visitor number had risen steadily in each month this year in the run-up to the Olympics.

Company news:

Pheonix Pub Group gives notice on 17 pubs in estate of 70: The Phoenix Pub Group, the south-east multiple which was founded in 1997, has given notice on 17 sites that it is now looking to replace with quality sites. The company has around 45 sites with Enterprise, 12 with Punch and Spirit and the rest are free-of-tie, with around 70 per cent on substantive agreements. A spokesman said: “We have just completed a churning process of our estate and have given notice on 17 sites which we would like to replace quickly with quality sites. Our criteria is that they are capable of 300 barrels per annum.”

Mitchells & Butlers seeks wine procurement manager: Managed operator Mitchells & Butlers (M&B) is looking to recruit a wine procurement manager. The jobs involves “developing and procuring wine product solutions” to enable M&B brands “to deliver maximum performance in the wine category”. Candidates need to have a WSET advanced qualification as a minimum. M&B executive chairman Bob Ivell recently told city analysts that the company’s All Bar One brand was a “wine-driven business” but there had been no wine training for two years. 

Punch Taverns applies for planning consent for £850,000 scheme: Punch Taverns has applied for planning consent for a £850,000 scheme to create 14 letting bedrooms at the back of the Grade II-listed Rose and Crown in York, which is run by licensees Geoff and Paula McGarry. The 14 bedrooms will help alleviate some of the shortages in letting accommodation within the city during peak times of the year. The layout of the new building will create a courtyard that can be used for alfresco eating and drinking. City of York Council planners are expected to make a decision in August. Punch Taverns’ senior business relationship manager David Rowland said: “As a company, this is one of the largest investments that we have undertaken and underlines our commitment to revitalising Britain’s rich pub heritage. Geoff and Paula are experienced operators and I’m sure The Rose & Crown will be a huge success once the work is completed.”

Brain’s opens latest coffee shop in Warminister: SA Brain’s has opened its latest Coffee#1 venue in Warminister, on the site of a former Curry’s electrics shop. In May, the company revealed plans to open 30 coffee shops in south Wales and the south west of England in the next three years. In autumn 2011, Brains bought Coffee #1, which comprised 15 high street shops in south Wales and the south west of England, and since then, it has opened three more.

McDonald’s adds two time-limited menu items for the Olympics: McDonald’s has added two menu items for the Olympics, The first is the Cheddar Deluxe, a 655-calorie burger with British toppings - bacon, grilled onions, tomato chutney, mayo and mature Cheddar cheese. In addition, McDonald’s has added Cheese & Onion Bites as a side. A five-piece portion of the crispy, 300-calorie snack is served with a spicy tomato dip.

Hotel Du Vin founder lines up third Pig site: Robin Hutson, who founded Hotel Du Vin, has lined up the third site for his Pig hotel concept. He will open the 23-bedroom Pig on the Beach in a National Trust property above Studland Bat in Dorset in June next year. Hutson already operates The Pig Hotel in the New Forest and has unveiled plans to open The Pig in the Wall in Southampton docks this autumn.

Climbing centre owner takes on first pub: Climbing centre owner Paul Ball, who operates Peak Pursuits, has taken on his first pub, The Boughey Arms pub in Audley, a Thwaites pub, which has reopened after a four month refurbishment. There is also a new food offering using locally sourced, high-quality produce. Andrew Buchanan, director of pub operations at Daniel Thwaites, said: “The Boughey Arms is the latest pub in the estate to be refurbished as part of our £2.4 million investment programme. It will be the perfect location for visitors to relax after being challenged at the activity centre next door or simply for a quiet pint or bite to eat with friends.”

Burger King under fire for Freestyle additives: The Food Standards Agency has removed Burger King from its list of restaurants serving drinks that do not contain chemicals linked to hyperactivity. The move comes after Burger King installed Coca-Cola’s revolutionary Freestyle machine at a around 16 outlets in the UK. The Freestyle machine offers customer more than 100 flavour variants, but Coca-Cola was unable to remove all of the additives associated with hyperactivity.

Simon French - Wetherspoon should be able to maintain margins in the next year: Simon French, leisure analyst at Panmure Gordon, has raised his earning per share forecast for JD Wetherspoon and also raised his Target Price for its shares to 515p. He said: “With two per cent like-for-like sales growth and the benefit of new openings, management should be able to broadly maintain margins over the next 12 months. We expect the group to trade well over the next two months reflecting the Olympics period as the group benefits from its Summer of Sport marketing campaign. We think there is underlying top-line momentum in the business and margins should stabilise as the 176 pubs opened over the last four years mature and the drag from new pubs diminishes as the number of openings is reduced.”

Propel Diary:

Five Posh food going down a storm: JD Wetherspoon has been at pains in its in-house magazine to explain to customers that new menu item eggs Benedict should not be judged by its posh reputation – it’s just darn tasty has been the message. The try-it-you’ll-like-it message seemed to have worked. Since the introduction earlier this year, sales of eggs Benedict have taken off like the proverbial rocket and are currently, founder Tim Martin tells Diary, hitting the 25,000-a-week mark. “We are now the number one seller of Pimm’s and eggs Benedict in the world,” Martin chirrups.

Paying him like they should: The Young’s annual report, published last month, shows the company sensibly rewarding Geronimo boss Rupert Clevely for the storming like-for-likes since the estate was acquired. Clevely, who sits on the board, picked up a £200,000 bonus on top of his £240,000 of basic salary and benefits. It placed him on top of the bonus pile alongside chief executive Stephen Goodyear who also earned a £200,000 bonus.

Analyst chips in with useful advice: Peel Hunt leisure analyst Paul Hickman was mightily impressed by a tour of a number of Fuller’s pubs a fortnight ago. Among the sites he liked was the new Parcel Yard venue in Kings Cross. And, for once, there was a useful tip on how the pub, already on track to sell a mighty 1,000 brewers’ barrels of cask ale this year, might sell even more. Hickman noted: “It has been restored for £1.7m, using glass and design features true to the original use. Although it already sells more cask beer than any other Fuller’s pub, it will sell even more once the company has provided more effective signage around the station to let travellers know that it is there.”

Beeb, beeb - beeb beeb, yeh: The reasonably-new-in-post boss of Starbucks UK is Kris Engskov, who hails from the US having once worked as an aide to Bill Clinton. It’s good to see he’s getting a taste for life in the UK. He tweeted recently: “Great documentary on London’s Portland Road last night on BBC2 - fantastic history. Love the Beeb.” And we love you, fella.

Payne shares his pain: Stonegate Pub Company chairman Ian Payne wrote an excellent article for the Propel Morning Briefing a few weeks back warning of the dangers of minimum pricing. Payne is an occasional Tweeter as well, although his Tweets are mostly golf-related. Just recently, the usual alcohol propaganda on television drove him to vent some Twitter spleen: “Medical terrorist Number One Deborah Arnott spewing usual garbage on Sky News right now.”

Innovation comes thick and fast: Retail innovation in all shapes and sizes is appearing in the sector. Two weeks ago, Greene King was telling City analysts about payment kiosks at Hungry Horse and the advent of cake takeaway at its Cloverleaf brand. Up in Manchester, Brunning & Price, the gastro-brand operated by The Restraurant Group has come up with something more traditional at its largest site so far, The Wharf in Castlefield with 300 covers – there’s a boules pit outside the pub.

Luke Johnson’s ability to cheer us up: The terrific Luke Johnson, who writes a brilliant weekly column in The Financial Times, pens a few words on why enthusiasts and optimists tend to be right – and stand a better chance of winning in business. He notes: “All human existence has been a struggle between those who believe in a bright future, and those who can see only decline. At present the pessimists might appear in the ascendancy. But history demonstrates irrefutably that in the longer run they are always wrong about the really big issues that matter most. Of course there are cycles but the relentless accumulation of knowledge means that progress is unstoppable.” Don’t you feel better already?

Olympic thinking from Batemans: You might have read in the Propel Morning Briefing how Olympics organisers have taken a, er, muscular approach to anyone daring to mention the Olympics in their marketing literature. Stuart Bateman, mischievous managing director of Lincolnshire brewer and retailer Batemans, sends Propel a note: “Our Olympic Games 100 Metre 2012 London Games Bitter is selling really well!” And over at Geronimo, they’ve gone their own way on the Olympic torch. Starting next Tuesday (17 July), a Geronimo Olympic torch – their own version of the torch of course - will be passed between key Geronimo Inns. Each time it moves on, it will be announced on Facebook and Twitter. Followers will be able to hunt out the torch, take a photo of it and upload it to Facebook or Twitter - the first to do so will win a bottle of Moët & Chandon Champagne.

Public relations doyenne comes up with action plan: Doyenne of hospitality sector public relations Maureen Heffernan read Tim Martin’s impassioned plea for more chief executives to argue the case for a lower tax plan reported in the Propel Morning Briefing - and immediately came up with an action plan that’s a sure-fire publicity-grabber. “Lady Godiva rode naked through Coventry to force the Earl of Mercia to lower taxes – maybe try this,” she tweeted.

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