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Wed 12th Sep 2012 - Joe Lewis, Wellington and Domino’s

Story of the day:

Coffer Peach tracker – sales up by five per cent in London in August; less strong elsewhere: Pub and restaurant groups benefitted from an August sales boost – but almost exclusively in London. Latest data from the Coffer Peach Business Tracker, the industry’s sales barometer, reveals contrasting fortunes for operators inside and outside the M25 last month. While combined like-for-like sales for August increased five per cent inside the M25, they were ahead a more modest one per cent outside of London compared with the same month last year. Those regional figures translated to a 2.1 per cent like-for-like sales increase across the country as a whole. “There were a number of factors at play – the bounce back from last year’s August riots, brighter weather for much of the month and, of course, the Olympics,” said Peter Martin of Peach Factory. “Across the country as a whole, the second week of the month, which coincided with the anniversary of the riots that severely hit areas of London and other major cities, saw the biggest increase against last year’s trading, suggesting a real riot-related bounce-back,” said Martin. “But what about the Olympics? While some operators saw their usual trade in London disrupted, as regular customers stayed at home, others have reported buoyant trading. It all seems to depend on where their sites were, particularly their proximity to the Games action. London pubs seemed to benefit most from the August uplift, with like-for-like growth approaching seven per cent. While casual dining chains in London may have been up only 2.8 per cent against last August, it at least reversed a recent trend of falling like-for-likes inside the M25, where restaurant groups have been generally struggling against increasingly intense and diverse competition,” observed Martin. “Gauging whether there was an overall Olympic bonus in the Capital, or how big it was, is clouded by the riots effect. However, it is fair to say that the rest of the country did not receive a Games dividend, with overall sales only marginally up on last year, despite the better weather. Nonetheless, the major pub and restaurant chains will not be too disappointed. An overall 2.1 per cent like-for-like sales increase may not be scintillating, but it gets the market back in-line with the underlying growth rate, and is an improvement of the 0.2 per cent market decline in July and the more modest 1.3 per cent increase in June. The year-on-year like-for-like rate is currently running at around two per cent,” added Martin.

Industry news:

Luke Johnson calls for end to comparable evidence in rent reviews: Serial leisure sector entrepreneur and private equity investor Luke Johnson has called for an end to the “fraudulent” system of comparable evidence to determine rent reviews. Speaking at the BCSC conference, Johnson argued that the system led only to “distorted uplifts and unsustainable rents”. He also called for percentage rents with no minimums, lower and much more straightforward service charges and meaningful negotiations with tenants. Johnson argued that retail rents had risen to unsustainable levels and that there is something “seriously wrong” when a landlord was making twice as much profit as a retailer.

CAMRA – Cameron’s constituency unique in retaining all its pubs: The Campaign for Real Ale has reported that David Cameron’s Witney constituency is unique in having the same number of pubs – 24- it had 30 years ago, a new report shows. Camra said no other market town in the country has kept a similar number of licensed premises over that time.

Alcohol consumption 12 per cent lower than in 2004: The tax gap endured by British beer drinkers when compared to EU neighbours has reached new heights. According to the British Beer & Pub Association’s Statistical Handbook 2012, British beer drinkers now pay nine times more beer tax than the French, and an astonishing 13 times more than the Germans. In the EU, only Finland slaps a higher tax on beer than the UK Treasury. UK alcohol consumption per capita fell once again in 2011, from 8.4 to 8.3 litres per head, and is now 12 per cent lower than in 2004. The decline in numbers of young people (11-15 year olds) drinking alcohol over the last decade has been significant, falling by 29 per cent since 2008. The average price of a pint of beer in tenanted/leased pubs was £2.85, £2.87 in independent pubs and £2.91 in managed pubs. BBPA chief executive Brigid Simmonds said: “Behind these numbers lie the key issues facing our industry. With almost one million jobs depending on the beer and pub sector, action is needed to bring the tax on beer more into line with neighbouring states.”

Three-stared Michelin chef introduces stand-up service: Tokyo chef Hiroshi Shimada, who previously worked at three Michelin starred Tokyo restaurant Azabu Yukimura, has opened a restaurant, Shimada, where diners have to stand to sample his top-end menu items – but at a third or less of the cost. Shimada says the concept creates turnover at the new restaurant, which has space for only 14 people.

Tim Martin – dodgy stories about food abound: JD Wetherspoon founder Tim Martin has argued that the public needs to dig beneath the headlines when it comes to stories about food products. He said: “The media abounds with stories of dietary health scares, but also with those of miraculous superfoods. For example, not long ago, we were routinely advised to glug two litres of water a day and every press photo showed a celebrity clutching a bottle of Evian, until it was pointed out that two litres a day included coffee, tea, soft drinks and the water content of everyday food – the humble potato is 90 per cent water. Similarly, we were advised until very recently to eat two eggs a week and that implicitly, you’d be lucky to survive the night, if you had an omelette and chips for lunch. Whereas few people have said, “Sorry, we got that wrong”, recent advice is that eggs are good for you – a superfood even. No apologies to farmers in the meantime.”

Westfield submits £1billion Croydon shopping scheme plan: Shopping centre developer Westfield has submitted its £1billion plan to create 1.5m sq ft of retail space, a cinema complex, bowling alley and restaurants in Croydon. The new centre will include a retail training centre to help provide young people with the skills not just to get the chance for a job but to set them on the road to a long-term career. Westfield development director John Burton said: “During our consultation exercise in the town centre so many people came up to say they wouldn't take their families into the town centre on a Friday or Saturday night. We must change that perception.”

Nottingham pubs and restaurants join forces with shops: Nottingham’s Leisure Business Improvement District (BID) is to join forces with its retail counterpart, the Nottingham Retail BID, creating one of the largest single BIDs in the country. The two organisations will merge into a single entity from January 2013. Nottingham BID will represent around 770 levy paying businesses in the city centre, producing a combined levy income of over £850,000. Approximately 200 of those businesses will be licensed premises. Spokesman Jeff Allen said: “We firmly believe that combining the two BIDs into a single entity – Nottingham BID - is right for the city and, more importantly, right for the businesses in the city centre. People come to the city centre for the whole experience - to shop and to spend their leisure time and a single BID with joined up activities recognises this. It also creates a highly influential organisation in the city with a powerful voice that can effect real change.” 

Government scraps health and safety inspections at pubs, restaurants and hotels: The government plans to scrap health and safety inspections at pubs, restaurants and hotels in a move to ease the red tape burden on small businesses. Only businesses considered high risk, such as construction, will face inspections after April 2013.

Company News:

Wellington Pub Company reports average rent uplift of 8.8 per cent on review: Wellington Pub Company, the securitised free-of-tie pub estate owned by the Reuben Brothers and operated by Criterion Asset Management, has reported that the estate produced an annualised annual rental income of £27.4m in year to the end of its most recent quarter – a 2.1 per cent drop on the year before. The company ended the first quarter of its new financial year, which runs from 1 April 2012, with 806 pubs, four fewer than in the quarter before. The company stated: “The disposal strategy remains to sell bottom end and/or problem properties and those that have a higher alternative use value. 683 pubs (85 per cent of the estate) are let on a long lease. Five properties were re-let on a long lease during the quarter and there were 15 lease forfeitures. The average level of rental uplift achieved at review in the year was 8.8 per cent.” The company retains circa £11 million of cash on deposit. Annualised EBITDA for the 12 months to end of June 2012 was £20m. Average pub rent is circa £34,100 per annum.

McDonald’s wins ASA approval to say kid’s drink is one of your five-a-day: McDonald’s has won the backing of the Advertising Standards Agency (ASA) to state that its Fruitizz fizzy drink for kids can be viewed as one of the recommended five-a-day portions of fruit and vegetables. The drink contains the equivalent of six teaspoons of sugar contained within the fruit juice concentrate, including grape, raspberry and lemon, plus fizzy water, natural flavourings and the preservative potassium sorbate. After complaints, the ASA has ruled that the addition of natural flavourings and preservatives “did not negate the five-a-day benefits of 150ml of fruit juice within the 250ml serving”.

JD Wetherspoon curtails hours at proposed Cardiff Bay pub; plans record beer festival: Managed operator JD Wetherspoon has agreed to limit hours at its planned new Cardiff Bay pub, on the site occupied until just recently by fish & chip concept Harry Ramsden’s. The company had wanted to serve drinks until 2.30am at the weekends. But it has now applied to open until 1am on Friday and Saturday. Wetherspoon wants to operate the site over two floors and have an outdoor terrace on the first floor. Meanwhile, Wetherspoon will be serving ten overseas beers in its pubs at its international real ale festival, running Wednesday October 24 until Sunday November 11 inclusive - it is the highest number of overseas beers ever available at a Wetherspoon beer festival. In addition, each Wetherspoon pub will be serving up to 40 beers from across the UK, including new, seasonal and speciality beers. The overseas beers on offer have been sourced from brewers in Japan, Lithuania, Holland, Australia, Canada, Italy, USA and Belgium.

Beds and Bars boss makes impassioned jobs plea to deputy Prime Minister: Managing director of Beds and Bars Keith Knowles has written an impassioned jobs plea to deputy Prime Minister Nick Clegg. Knowles asks Clegg to reconsider his proposed wealth tax and to focus on how the hospitality industry can be supported, to create jobs. He told Clegg: “There is no ceiling in our industry, moving from dishwasher to managing director is doable - is just requires a vision and hard work. Come on side with as an industry champion and help us get people into jobs, with real prospects and a future. With a bit of effort, there are thousands of jobs to be created. Work with us. I would be happy to meet you any time.”

No Saints plans Guildford opening: No Saints, the nightclub company headed by former Luminar chief executive Steve Thomas, has applied to open a Wonderland venue in the vacant Old Orleans restaurant site in Guildford. No Saints operates four other Wonderland sites, including ones in Sutton and Basingstoke. Its website describes the brand as having “mind-bending decor and inexhaustible entertainment”, and promises to “show you the world from a different perspective”.

Private equity firms circle Red Hot World Buffet: Private equity firms LDC and Bowmark Capital are among investors eyeing a deal to invest in the seven-strong Red Hot World Buffet concept, according to the Manchester Evening News. Red Hot World Buffet wants to open a further 15 over the next three years. Founder Parmjit Dhaliwal told the newspaper: “We want to take the concept to other locations in the Midlands and the north and are looking at external funding to enable us to roll out sites more quickly. Private equity investment will also bring in additional expertise as we look to execute our business plan.”

Hawksmoor sets opening date for fourth restaurant: Steak house operator Hawksmoor, owned by Underdog Restaurants, will open its fourth London restaurant, Hawksmoor Air Street, on 1 November. The new restaurant will feature a menu that gives as much weight to seafood as it does to steaks – Mitch Tonks is advising on the fish and helping with the menu and suppliers. Hawksmoor agreed a deal with Ignite Group to take an assignment of the lease for its 235-cover Senkai restaurant at 65-84 Regent Street. The 10,000 sq ft first-floor restaurant - formerly Cocoon - was assigned on a 26-year lease from 25 March 2004 for an undisclosed premium.

Domino’s UK teams up with Budweiser Budvar to promote a great night-in: Pizza and beer for a year are the prizes in a promotion “A Great Night In” being run in a partnership between Budweiser Budvar and Domino’s Pizza. Participation involves texting a unique code located on the inside of the sleeve, revealed only after purchase of a Budvar pack, to a dedicated number. This will trigger a text response advising if the prize of free Domino’s Pizza and Budweiser Budvar for a year has been won. There will be 20 winners but everybody who takes part and subsequently any participant who places an order with Domino’s Pizza worth over £30 will be automatically entitled to a 35 per cent discount. Budvar UK’s marketing controller Ian Moss said: “From our industry stand point Domino’s Pizza is already in the on-trade as they are already trialing a link-up with Fullers to help enable drinkers to order pizza at their pubs unable to offer food. This however is their first excursion into the off-trade and they have made a great choice of partner with us at Budvar as we have with them.”

De Vere places flagship Cambridge hotel on the market for £20m: Hotel company De Vere has placed its four star 119-bedroom University Arms hotel in Cambridge on the market for £20m. The company sold The Royal Bath, Bournemouth and The Daresbury Park Hotel earlier this year. Jeremy Jones, director of agent Christie + Co, said: “With the trading performance of The University Arms materially ahead of the same period last year and Cambridge widely viewed as an international destination, we anticipate interest in this freehold hotel to be high. With the potential to re-position the hotel, renowned for generations as Cambridge’s best known hotel, we anticipate a huge amount of interest.”

Costa opening in Totnes opposed by Whitbread award-winning author: The plan by Costa Coffee to open a site in the genteel town of Totnes has come up against opposition from Joan Brady, who won the Book of the Year Award sponsored by Costa parent Whitbread. She said: “Totnes is a David battling a Goliath. How can citizens believe in our democracy when their elected representatives overturn their wishes and favour corporate profits? It's an example of a very modern dilemma all over the UK.”

Britannia Pub Co acquires pub from Trust Inns: Britannia Pub Co has bought Half Moon public house in Dulwich in London from Trust Inns. The company is owned by industry veteran Cymon Ecke, who ran the DJ orientated bar Riki – Tik in Soho and live music venues including The Coronet and XOYO. Britannia intends to refurbish and relaunch the unit next year. Ross Kirton, director at agent Colliers International, said: “Cymon has had notable success in the licensed sector. Having recently sold XOYO he now plans to develop The Britannia Pub Company a new venture that focuses purely on creating premium neighbourhood pubs. The Half Moon has enormous potential and we are sure Cymon will maximise this.”

Firework display probable cause of Greene King hotel fire: A firework display on top of Greene King’s Ryde Castle Hotel was the cause of a blaze that caused its partial collapse in the building, an investigation has found. Four claims have been submitted to Greene King in relation to the fire, including a couple who were getting married on the day and are claiming £7,000. Greene King said it is “working with independent assessors to reach an amicable solution as quickly as possible”. The 18-bedroom hotel, which overlooks Ryde Esplanade and Harbour, is currently closed for refurbishment.

Scott and Quaff re-open The Fleet today: Award-winning multi-site pub operator Scott and Quaff, headed by Brian Hulme, will re-open the The Fleet at Twyning on Wednesday, an Enterprise Inns pub that closed in June after a fire. Nick Mossop, a partner at Scoff & Quaff said: “We are delighted to be reopening The Fleet after the electrical fire which disrupted our summer trading period.”

Joe Lewis’s Freebirds World Burrito fastest growing brand with sales over $50m: Mitchells & Butlers shareholder Joe Lewis owns the US’s fastest-growing chain with sales over $50m, according to Technomic research. In unit terms, the brand grew by 62 per cent in 2011, adding 24 sites to its 38 existing. The company told Morning Briefing earlier this year that it expects to add 30 new sites this year. Technomic stated: “The top 150 fast-casual chains saw their net number of units increase 5.2 percent to 17,447. In comparison, the limited-service restaurant industry as a whole saw a net decline of -0.3 percent in total units.” Smashburger was placed second on Technomic’s list with 53.8 per cent growth. Technomic added: “Five Guys Burgers and Fries had the largest net unit increase of all fast-casual chains with the addition of 182 units in 2011 bringing its US system to 918 units. Chipotle Mexican Grill and Panera Bread had the second and third largest net unit increases, with Chipotle up 141 units or 13 per cent, and Panera up by 100 units or 7.2 per cent.”

Hugh Fearnley-Whittingstall restaurant earnings highest sustainability rating: TV cook Hugh Fearnley-Whittingstall newest restaurant, River Cottage Canteen Plymouth, has earned the highest ever rating awarded by the Sustainable Restaurant Association – a score of 89 per cent. The score beats the 87 per cent awarded for River Cottage HQ at Park Farm and the 84 per cent at River Cottage Canteen, Axminster, in 2011. SRA assessors were impressed with River Cottage Canteen Plymouth’s commitment to sourcing from local, independent suppliers and using meat, poultry and dairy from animals kept to high standards of welfare.

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