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Morning Briefing for pub, restaurant and food wervice operators

Thu 16th Aug 2012 - City Pub Company, Domino’s and Bravo

Story of the day:

TLC Inns – Olympics prove weather has become massively influential: TLC Inns, the award-wining six-strong operator led by Steve Haslam, has reported that trading over the two weeks of the Olympics has shown how influential weather has become in producing massive trading swings. The company has reported that the week before the Olympics saw good weather produce its record sales week this year - £170,000 of takings. The second week of the Olympics, with broadly good weather, produced the second best week of trading this year - £151,000 of takings. However, the middle week, which saw the start of the Olympics and poor weather, saw takings drop to £120,000 across the six sites. Haslam said: “Weather has become increasingly, massively influential, accentuated by the peculiar weather we’ve had this year. The Olympics didn’t affect trade at all – the poor week of trading mirrored an earlier week of poor trading when the weather was the same. Our gold has become decent weather – people have become more led by weather conditions. That the Olympics were being shown when the weather was bad provided an extra reason not to go out. We now see that trading was simply in line with a normal bad weather week. When the weather returned, customers were drawn back to pubs. I always thought that the Olympics itself would be broadly neutral.” Simon Emeny, Fuller’s group managing director, has previously commented that weather has become increasingly important in shaping trading since the introduction of the smoking ban, with habitual smokers being replaced by occasion-driver consumers. Geof Collyer, leisure analyst at Deutsche Bank, said: “Generally, the trading patterns have been more volatile than usual this year and this is set to continue with the weather.”

Industry news:

Good trading in second week of Olympics: A survey by leading trade body the Association of Licensed Multiple Retailers (ALMR) has revealed that 60 per cent of pubs saw an upturn in business during the second week of the Olympic Games - in stark contrast to the difficulties operators experienced the week before. The survey of ALMR members shows that an astonishing 20 per cent of operators experienced like-for-like sales increases of 11 per cent or more on last year, underpinned by a further 30 per cent reporting like-for-like gains of 6-10 per cent. The survey further confirms the non-appearance of the feared logistical disruptions, with just ten per cent of operators reporting logistical difficulties as a result of the Games and that included midnight beer replenishment in regatta-bound Weymouth. ALMR chief executive Nick Bish said: “The public perception was that London wouldn’t be able to handle the Games influx, so people stayed away. But these fears were unjustified and then it became clear that pubs and bars were after all the best place to celebrate the success of Team GB. It’s heartening to see such a turnaround after a difficult first week of trading and to report that pubs and bars are an essential part. This is a testament to the warmth, vibrancy and vitality of the modern British pub. The significant improvement in week two indicates both the massive outpouring of support for the London Olympics and the wonderful work done by entrepreneurial operators to ensure that everyone who came out to experience the Games was able to enjoy the very best of British hospitality.”

Johnson – the pub is being reinvented: Luke Johnson, chairman of Risk Capital Partners, has claimed that the pub is being reinvented. In his Financial Times column he wrote: “Across the licensed trade there are thousands of small businesses who are leading a reinvention of an ancient facility, making it relevant and attractive to today’s customers. They are investing their own equity to bring novel ideas to the business of providing refreshment – and in many cases succeeding. This reversal is bringing greater choice and innovation to the hospitality sector. Faceless public companies frequently lack the engagement and commitment that an individual landlord brings to the task of serving patrons. Moreover, such personally owned outlets tend to offer a greater variety of beers and other drinks, helping to foster diversity in the brewing trade. Institutional investors and banks have tended to desert the pub and beer trade because both are seen as mature. But as with any field, innovation can generate opportunities, and talent will still make good “boozers” work, despite the challenges of competition, politicians, inflation and changing consumer behaviour. Pubs represent a vital element of the fabric of British life: thanks to the energy and imagination of thousands of independent publicans, a strong future remains for these unique British meeting places.”

British cuisine doesn’t get international vote: The UK has failed to make the top ten in an international poll to uncover foodies' favoured holiday destinations, and was voted the worst for cuisine by people from the US, Australia and Norway. The pizzas and pasta dishes of Italy were revealed to be the most popular foreign food, appealing to 32 per cent of the 27,000 people questioned, followed by French cuisine, which took 24 per cent of the vote. Sushi is rising in popularity though, with Japanese food a healthy choice favoured by 18 per cent of travellers.

McDonald’s introduces its own smoothies in the UK: McDonald’s has replaced Innocent smoothies in favour of its own range of fruit smoothies. The company has been trialing the two fruit smoothies at a number of restaurants in Wales for several months and offered them at its Olympic Park restaurants. A nationwide rollout is expected later this year. The fruit smoothies are currently sold in McDonald’s McCafe restaurants in the US, Australia and Canada and contributed to improved sales when they were introduced. McDonald’s also recently introduced Fruitizz, a fizzy fruit juice aimed at children that includes one of the recommended five fruit and vegetables a day as part of its efforts to offer healthier choices in Happy Meals. A McDonald’s spokesman said: “From speaking to our customers we knew that while parents appreciated the nutritional benefit of fruit smoothies for kids, they were widely considered a standalone snack or treat rather than a meal accompaniment. Fruitizz offers kids a light and refreshing fruit juice alternative while still delivering one of their 5-a-day, no added sugars and no artificial colours or flavours.”

Company news:

City Pub Company looks to recruit brewer as its eyes second brew-pub; second round fund-raising ahead of schedule: City Pub Company, the Enterprise Investment Scheme (EIS) company headed by David Bruce and Clive Watson, is looking to recruit a brewer as it lines up its second brew-pub. The company plans to open a brew-pub in the former police station Henley in late September and has exchanged contracts on a second unnamed site in Cambridge which would become the other brew-pub and is the company’s seventh site. Non-executive director John Roberts, former head of Fuller’s brewing division, told Morning Briefing: “The Cambridge site is not a pub we’d keep in its current format. We’re looking for a brewer who can oversee more than one site.” Meanwhile, City Pub Company, which raised £4m earlier this year, is looking to raise a further £3.8m in a second round of fund-raising – and has raised more than £1m in the first week. There is an Early Bird Special with investors able to buy shares for £1 before the price rises to £1.10 in mid-October. Roberts added: “We’re well ahead of schedule on fund-raising.” City Pub Company will be looking to raise a further £10m in April 2013. Beer writer Pete Brown is helping City Pub Company in the recruitment of a brewer. 

Domino’s in the US adopts elements of UK store approach: Domino’s Pizza in the US has unveiled a new store design that adopts elements of new generation UK store design. The new US sites aim to put pizza front and centre with a “Pizza Theatre” format that will have “pizza-making artists” hand tossing dough and creating custom-made pizzas in front of customers. Some Pizza Theatre sites may have a “comfortable lobby,” as well as an open view of the food preparation process, including a step platform for kids to watch their pizza being made. Guests may be able to order from a kiosk and track their orders electronically. A Domino’s UK source told Morning Briefing: “Each market does something different – so they’ve borrowed some ideas from us (more open kitchen, step for kids, kiosks to order inside), but the rest is bespoke to the US.” US sites may also feature a chalkboard to allow guests to express creativity or give feedback. Units may also have a case with grab-and-go offerings, such as salads, cookies and milk, or mini-dessert parfaits.

St Vibes set out to raise equity with a direct “crowdfunding” approach: A new company St Vibes, headed by chef Isaac McHale, and restaurateurs Daniel Wills and Johnny Smith, is raising investment for a new restaurant and bar in Shoreditch Town Hall, by “crowdfunding” on the internet. Crowdcube sets out the investment proposal with 25 per cent of the equity available to investors. So far, nine investors have offered £46,000, which is 18 per cent of the target. The pitch expires in 16 days time.

French – buy recommendation on six sector companies: Simon French, leisure analyst with Panmure Gordon, has maintained a “Buy” recommendation on six companies in the sector. He said: “The gross margin outlook has been more encouraging with input costs falling to 2.1 per cent and menu inflation remaining at 3.4 per cent but we think the period of benign food inflation will prove to be short lived given the underlying commodity price increases. According to the Food and Agriculture Organisation, food prices jumped six per cent in July from June due to untimely rains in Brazil, drought in the US and production difficulties in Russia. The consumer remains under pressure, as per Tuesday’s ‘surprise’ rise in inflation and with oil prices up 27 per cent in the last two months and a 6.2 per cent increase in rail fares to come in January along with the 3.02p (ex VAT) increase in fuel duty we think the consumer outlook remains uncertain. We note that whilst petrol prices are 5.6 per cent lower than the April peak, they are now only 1.2 per cent lower year-on-year and 2.1 per cent higher month-on-month. Against this backdrop many stocks have performed strongly over the past three months but we continue to be neutral on the pub, restaurant and recreation sector with selective “Buy” recommendations on Enterprise Inns, Marston’s, Restaurant Group, Spirit Pub Company, JD Wetherspoon and Young & Co.” Referring to yesterday’s Coffer Peach tracker results showing like-for-like sales down by 0.2 per cent in July, Deutachhe Bank analyst Geof Collyer said: “This is the fourth month this year where like-for-likes have been negative, so the strength of like-for-likes reported by pub groups like Greene King (Buy) and Spirit Pub Company (Hold), both of which have strong exposure to the capital and in Greene King’s case, the south east as well (55 per cent of pubs) is all the more remarkable.”

Costa Coffee wins “Battle of Southwold”: Costa Coffee has won a battle to open a site in genteel Southwold in Suffolk. The district council approved the plan by seven votes to six having rejected the application in June. Then, Waveney District Council said the cafe would be detrimental to the “viability and vitality” of the town centre. But agent Savills resubmitted the application, saying the council's decision was “not reasonably related to planning”, and it has been approved.

Carluccio’s plans Bath opening next month: Italian restaurant chain Carluccio's is to open a site in Bath on 10 September. Paschalis Loucaides, head of marketing at Carluccio's, said: “We are really pleased to have found a location in the heart of Bath, at the bustling and cosmopolitan Milsom Place.” Carluccio's opened its first restaurant in London in 1991.

The Burger Joint undertakes premises swap: Highly rated Bristol burger concept The Burger Joint, which has consistently appeared in the top five places of Bristol’s 600 restaurants on TripAdvisor since it launched three years ago, is move to bigger premises in a premises swap with Planet Pizza. The Burger Joint, currently located on Cotham Hill, will move into Planet Pizza’s premises on Whiteladies Road while Planet Pizza moves to Cotham Hill. Dan Bekhradnia, owner of The Burger Joint, said: “We didn’t plan it as a straight swap – they were two independent decisions – but we are delighted to have come to this agreement with Planet Pizza, one of Bristol’s best established and most successful restaurants”. The Burger Joint is offering 400 free meals to customers who register on its website when it re-opens in different premises in early September.

Stewart Brewing targets £5m turnover: Stewart Brewing, based in Edinburgh, has targeted a five-fold increase in turnover to £5m as it moves to a £1.25m brewery where production will increase fivefold to 2.5 million litres. Steven Stewart, who founded the business in 2004, said: “We’ve bought far more land than we need to so that we can expand over time. We’re turning over about £1m a year at present and, once the new brewery is up and running, we’re aiming to grow into a £5m business.” The firm has also secured a £150,000 regional selective assistance grant from the Scottish government and £50,000 from the East of Scotland Investment Fund with help from Midlothian Council.

Spirit sells Ealing pub: Spirit Pub Company has sold The Red Lion pub in Greenford Broadway, a suburb of Ealing in London. A spokesman for Spirit Pub Company said: “We can confirm that we have exchanged contracts for The Red Lion in Greenford and the pub closed on Saturday, August 11. After reviewing our estate, The Red Lion was identified as an unviable business for us and therefore was put onto the open market.” Elsewhere, the company’s Village pub and 40-bedroom motel in Normanton, Wakefield, will be knocked down and replaced by a 45-bedroom residential development.

Yates’s site in Newport latest to see evolution spend: The Yates’s site in Newport is the latest in Stonegate Pub Company brand to see an evolutionary spend - £190,000 will be spent on it before it re-opens on Thursday 23 August. The venue will have new décor, a fresh new back bar design and several new VIP booths installed.

The Wild Pheasant, Llangollen, bought out of administration: The Wild Pheasant Hotel in Llangollen has been bought out of administration by businessman Asif Siddiqui. The venue was part of the seven-strong Global Investment Company, owned by Stephanie and David Both, which went into administration in July 2011. The Bodiris Hotel, near Wrexham, has already been sold for £800,000 while the Chainbridge in Llangollen was acquired for £500,000. The Bryn Hotel is still being run by Convivial Management Service on behalf of administrator KPMG. Two leasehold hotels, The Chester Bridge Hotel and Ye Olde Anchor Inn, were returned to their respective landlords and a third leasehold hotel, The Wynnstay Arms Hotel, was closed at the point of administration. Global’s bank Barclays is owed £5,276,000 and the administrator has stated there will be insufficient funds to pay it in full. Agent for the sale was Colliers International.

Wagamama unveils four new openings: Restaurant chain Wagamama has confirmed it is to open four more sites as part of a push to open between 15 and 20 sites in the next year. They will be located at Ealing Broadway Centre, Telford Southwater, Fulham Broadway Centre and Southampton West Quay. Wagamama property director Sharon Cawthorne said: “We continue to work with Cushman & Wakefield and our owners at Duke Street to roll out the brand across some of the leading locations across the UK.”

Ramsay to add sushi at Maze: Gordon Ramsay’s Maze restaurant is to add a sushi bar to its offer in mid-September. Sushi and sashimi dishes will be available for order at the counter, as an accompaniment to drinks at the bar, or alongside the menu in the main restaurant. The sushi bar will be overseen by chef Goehi Kishi.

Former Domino’s UK marketing boss joins Paddy Power: Former Domino's UK marketing director Robin Auld has joined bookmaker Paddy Power as brand director. Auld has spent the past two years working on a consultancy basis for Domino’s Germany.

Mick Norcross gets planning consent for boutique hotel, spa and restaurant: 'The Only Way is Essex' star Mick Norcoss has obtained planning permission to turn The Grand Hotel in Leigh-on-Sea, closed since 2008, into a boutique hotel, spa and restaurant. He said: “I have long admired this iconic building and dreamed of rejuvenating it to reflect the original architecture. It has been my desire to bring the quality West End hotel experience to Essex and I see this building as the perfect opportunity to achieve my dream. Our vision is for this beautiful building to be used by everyone throughout the community, enjoying quality food and drink and utilising the rooms for varying uses from art exhibitions to fashion shows.” Norcross is also understood to have bought the freehold of his Sugar Hut premises in Brentwood from Enterprise Inns for £1.3m at an Allsop auction.

North-west operator Bravo Inns has opened its thirtieth pub: Bravo Inns, led by Ken Buckley, has re-opened The Albion in Clayton-Le-Moors, near Accrington, Lancashire – its thirtieth pub. The pub had ceased trading and was acquired out of administration. 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.

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