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Morning Briefing Strap Line
Tue 9th Oct 2012 - Orchid, Starbucks and Whitbread

Story of the day:

Orchid Pub Company reports sales per site up in 2011; outperforming Peach Tracker in 2012: Orchid Pub Company, the 256-strong operator headed by Rufus Hall, has reported, in newly filed Companies House documents, that average weekly sales per pub climbed by £200 each in 2011, compared to the year before, to hit £13,900.   The company stated: “The increase in turnover has been driven by a combination of our continued investment in people, providing customers with high quality food, drink and service, and the acquisition of a further ten pubs in 2011. Trading for the first three quarters of the year ending December 2012 has performed ahead of expectation which has been most encouraging given the adverse impact of the wettest British summer for 100 years and the slowdown in sales experienced during the Olympic period.   Across these months our like-for-like sales growth has out-performed the market as measured by the Peach Tracker and Ebitda conversion has also been ahead of expectation.” The company also reported that its Parkmill Pub Management Company produced an income for the company of £1,060,000 in the year.  A total of £20m will be invested in Orchid in the next three years. The company stated: “The focus of this investment will be in the core estate, which has largely been uninvested since 2007 and repositioning some units to more food-led offers. In addition, it has been agreed that some non-core pubs will be disposed of. By the end of the 2012 financial year we are on course to have reinvested around £3.5m on 19 houses. With Deutsche Bank’s support, a clear plan, a number of great customer offers and a strong team, the directors of Orchid are confident that (the company) is well-positioned to deliver sustainable growth over the next few years.” Group Ebitda in the period – after rents paid on leasehold properties within the pub estate – was £32.2m at house level, which suggests pub Ebitda of around £125,000 per site. Ten days ago, Orchid reported, in a Press Release: “In the three years between 1 January 2009 to 31 December 2011, Orchid operated in a capital constrained environment with an average core capex spend of just £7,500 per pub.   Nevertheless, like-for-like sales declined by less than one per cent in the same period, and this strong performance reflects our continued investment in people, the resilience of our offers and the quality of our teams."

Did you know that eight of the top 20 companies in the sector operate pubs? The Propel Info Hospitality Sector Turnover and Profits Blue Book ranks the 200 leading pub, restaurant and foodservice companies in the UK by turnover and profit, provides a five-year overview of performance and lists directors’ salaries. To buy a copy e-mail Jo Charity or Sharon Dickinson on or

Industry news:

WaverleyTBS put into liquidation: WaverleyTBS has been placed into liquidation by administrator Deloitte with 685 job losses after no bidder came forward in a quick-fire auction process. Propel Morning Briefing reported yesterday that bidders had been given just three days to complete the sale process as the company’s commercial credibility drained away – a number of customers were left without supplies. One would-be bidder told Morning Briefing it was unwilling to “catch the falling knife”. A second company told Propel that Waverley was unsaveable. “It was just too messy,” said the source. Rival suppliers such as Matthew Clarke, Booker, Ooberstock and Enotria will now vie to grab parts of Waverley’s £309m turnover.

Young’s takes fourth spot in Top 99 growth table: London retailer Young’s has taken fourth place in a table of sales growth among Europe’s top 99 foodservice companies. The company, which is 81st in the table, saw sales growth of 29.1 per cent in 2011. The company was beaten by Great Bertrand (65th), which saw sales up 68.8 per cent, Amrest (37th), with sales up 44.5 per cent and Vapiano (75th), which saw sales increase by 34.2 per cent. 

Cask Marque reports 19 bars abroad are now accredited; starts US trial: Cask Marque, the body that accredits cask ale quality in pubs, has reported that there are currently 19 venues overseas that are Cask Marque accredited. There are seven bars in Spain with accreditation, plus two in Denmark, three in Finland, two in Sweden. Cask Marque has also started a trial in the Philadelphia area of the US, involving four bars. Chief executive Paul Nunny said: “Cask, like in the UK, is in growth in America but from a small base. Therefore now is the time to reinforce and educate both America brewers and retailers about the providence of cask so that the market is true to its origins. We will all learn from America brewers interpretation of the category as we have done with craft beers.”

Shortlist for BBPA awards unveiled: The British Beer and Pub Association has unveiled the shortlist for new awards set to handed out at its annual dinner on Wednesday 17 October. Shortlisted for “Beer Champion 2012” are: Carlsberg UK, Charles Wells, Daniel Thwaites, Heineken UK, Liberation Group; finalists for Pub Champion 2012 are: Daniel Thwaites, Heineken UK, Liberation Group; the shortlist for “Heart of the Community Award 2012” are: Daniel Thwaites, Enterprise Inns, Heineken UK, Joseph Holt and JW Lees. The event will also see a chairman’s award, which will be given to an individual and awarded by the BBPA Board, who will be looking for someone who has made a telling contribution to the industry – and deserves to be recognised. BBPA chief executive Brigid Simmonds said: “We have had some brilliant entries, and the judges were hugely impressed with the work that has been put in. We are really looking forward to finding out the winners.”

PricewaterhouseCoopers – insolvencies on the increase: The pressures of the recession have taken their toll during the 12 months to the end of September with insolvencies increasing, according to the latest PricewaterhouseCoopers (PwC) research. In total, there were 1,464 insolvencies in the hospitality and leisure (H&L) sector in the past 12 months compared to 1,304 in the same period the year before. David Chubb, PwC business recovery partner and hospitality and leisure specialist, said: “Pubs and restaurants have had a good quarter in the fight against the recession. They continue to combat drops in discretionary spend by enticing consumers with promotions like set menu vouchers, happy hours, and multi buy deals. However, there are signs that consumers are now expecting this and are farming the offers without spending on additional courses or drinks that the promotion was priced to entice. Consequently, operators are now having to consider the economics of the special offer strategy."

Zagat recalls San Francisco guide after spelling mistake: Zagat has recalled its guide to restaurants in San Francisco after mis-spelling the name of the city on the Spine. The guide to best eateries in “San Francsico (sic)” has already become a collector’s item.

Company news:

Starbucks reveals next set of innovations and new product expansion: Starbucks has unveiled its next set of innovations and evolutions. The company will roll-out its Square mobile payment system, announced in August, in the US in November. The system will enable digital tipping through both Square Wallet and Starbucks’ mobile payment app in the summer of 2013. Square will also process Starbucks’ credit and debit card transactions, which will reduce payment processing costs for Starbucks. The new mobile payment system is also integrated with Apple’s Passbook. Using the Starbucks app, iPhone and iPod touch users can tap “add to Passbook” once, and swipe their Starbucks’ pass to pay. Passbook is time and location enabled so the Starbucks card will appear on the device’s lock screen as soon as the customer walks in a site. The partnership will expand the use of mobile payment at Starbucks, which already boasts more than 70 million mobile transactions since the chain launched its first app in January 2011.Elsewhere, Starbucks will open its first Evolution Fresh Juice concept outside of Seattle – where it has two and a third planned – in San Francisco in the middle of this month. La Boulange bakery products, acquired in June, will appear in US sites in late spring 2013 and its Clover Brewing System, a patented system acquired in 2008, will be rolled out to 200 more US sites – it’s in 347 locations at the moment. Clover produces a more premium cup of coffee – but takes a little longer. 

Speculation that McDonald’s is to launch as a retail coffee brand: There is speculation in the US that McDonald’s is to launch its coffee as a retail brand.   The speculation comes after McDonald’s filed for US trademark registration to protect the brand’s name on ground and whole-bean coffee, prompting speculation that the chain may launch a branded coffee for retail sale. Coffee accounted for at least $2.1 billion of the chain’s sales in the US last year. A 2011 study showed stronger loyalty to the brand’s brew than Starbucks or Dunkin’ Donuts, both of which sell their beans and ground coffee by the pound.

Former Hungry Horse employee posts 32 pictures of “unclean and messy” kitchen on Facebook: An unnamed employee of The Rosewood Hungry Horse in Burnham-on-Sea, owned by Greene King, has posted 32 pictures of the seemingly “unclean and messy” kitchen on Facebook. The move prompted Greene King to issue a statement defending hygiene standards at the pub, which has a five star hygiene rating. A spokesman said: “This is a busy working kitchen and we appreciate it can look a bit messy at the end of a busy working day but we are confident that at no time is hygiene ever compromised.” The photographs were taken by a member of staff who worked at the pub for eight weeks over the summer and claims to have been shocked by the pub’s poor hygiene standards. Sedgemoor District Council’s environmental health team said it is investigating.

Bill’s Produce and Grocery store opens in Cardiff next Monday: Bill’s Produce and Grocery Store opens its first site in Wales next Monday, (15 October). The venue, in Cardiff’s Wyndham Arcade, comes as Bill’s, owned by Richard Caring, unveils new additions to its autumn menu. They include a “new section of breads, a ham hock terrine served with handmade piccalilli and toasted sourdough plus pan-fried salmon, served with beetroot tortellini, and a pea, mint and chichory salad and watercress tartare”. 

JD Wetherspoon applies to convert derelict cinema in Alnwick, Northumberland: Managed operator Wetherspoon has applied for planning consent to turn a cinema that has stood derelict in Alnwick, Northumberland for two decades into a £1.3m pub – Alnwick has a population of just over 8,000 with the district’s population standing at 31,029. Architects’ drawings show a 3,500 square foot bar area, in what was once the cinema auditorium, capable of catering for more than 400 customers. There would also be a 1,400 square foot beer garden on the Roxbro Place side of the Grade II-listed building, which was erected in 1862. John Hutson, chief executive of Wetherspoon, said: “We have had great success in the region and we believe one of our pubs would be an asset to the town.”

Jamie Rollo - we remain positive on Whitbread shares: Morgan Stanley analyst Jamie Rollo has issued a note saying that he remains positive on Whitbread shares ahead of first half results on 23 October. He said: “The consumer environment in the UK remains fragile, so we expect Whitbread to give its usual cautious outlook with regards to economic challenges and variable monthly trading conditions. But with both businesses outperforming their peers, we think our second half sales assumptions of plus one per cent and plus two per cent respectively are conservative. We also think full year consensus estimates for circa £25m EBIT growth are too low when we estimate the impact of new space is circa £30m (we forecast £35m EBIT growth this year). While the shares have had a good run, we still like Whitbread for its strong internally-driven growth generation, outperformance relative to its competition, the potential upside for a separation of Costa or some of the real estate (albeit the company has not indicated any plans to do this), and for what remains a reasonable valuation.   We remain positive on the shares: Whitbread’s expansion plan should generate double-digit earnings per share growth for the next four years, it is a market leader in its main segments and outperforming peers, it offers upside from a potential Costa or property separation, and it remains attractively valued.”

Pret A Manger launches free lunch app: Pret A Manger has launched a Facebook app that offers followers the chance to win a free lunch. The company tells customers: “We need your help! Times are tough and people keep telling us, “There’s no such thing as a free lunch”.  That makes us sad. So we’re looking to you, our lovely Facebook fans, to help cheer us up. Tell us the three products you’d like for lunch and we may just give them to you for nothing.”

Antic to launch online petition to save Catford Bridge Tavern: Antic, the fast-expanding London multiple headed by Antony Thomas, is to launch an online petition in an attempt to prevent its Catford Bridge Taverns being turned into a supermarket. The company stated: “It is with much sadness that we have to announce that the Catford Bridge Tavern is under threat of being turned into a retail unit by its current owners. The pub is leased by us from Punch Taverns who in turn lease it from the owner. We have it on a tenancy-at-will, meaning that the owners can ask us to leave at any time. As the pub is already licensed for the sale of alcohol, it is a prime target for a retail unit. The landlord needs only apply for planning permission with no regulations to stop him. We would like to ask you to join us in opposing the application and therefore retaining your beautiful pub.”

Buyers in contract time trial to secure West London pub: Two buyers battled to buy the freehold of the Duke of Edinburgh in Shepherds Bush with two sale contracts issued simultaneously - the successful party exchanging contracts within one hour. “This was quite a dramatic sale all round, with the pub selling for in excess of the guide price of £950,000,” said Panayiotis Themistocli of agent AG&G, which marketed the property. “The buyer is a local developer who already owns a number of properties in the same street and was keen to add to his portfolio. As a handsome building in a prime part of West London, close to rail and bus links and the Westfield shopping centre, the Duke of Edinburgh was just too good an opportunity to miss. The new owner intends to make the most of its excellent location and convert it into a number of self-contained residential units.”

Loungers team head to France for study tour: A senior team from Loungers, the café bar concept headed by Alex Reilley and backed by Piper Private Equity, has headed to Montpelier in France to undertake its annual research tour for ideas that might be applied in the UK business. The team will spend two days touring venues in the area.

Byron opens latest site in Spitalfields: Byron, the better burger concept owned by Pizza Express operator Gondola Holdings that may be sold, opened its latest site on Steward Street, Spitalfields yesterday – its 26th site. Explaining the founding of Byron, Tom Byng said: “During a four-year stint in America, I ate enough hamburgers to sink the Titanic. My favourite diner was the Silver Top in downtown Providence, Rhode Island. I would end up here, late at night, frequently a little worse for wear, with two or three friends. We always ordered hamburgers. They were simple, tasty things – a bit messy, but made with good quality meat and only the classic adornments; some lettuce, tomato, red onion, and maybe a slice of cheese or bacon. The ultimate comfort food - and so satisfying in their simplicity; hamburgers the way they should be. In London in 2007, it struck me there weren’t any restaurants offering hamburgers like those at the Silver Top. So the idea for Byron was born.”

Businessman to re-open Barton venue as   “food and bed pub”: Businessman Andrew Parker is to re-open the White Swan Hotel in Barton, acquired from Enterprise Inns, as a “food and bed pub”. Refurbishment work has begun to restore the Barton pub and hotel, with plans to reopen it for business next year – it’s been closed for about a year. Describing his plans for the hostelry, he said: “It will be a food and bed pub, with a British menu."

Hawkins takes on Stow-on-the-Wold pub: Experienced pub sector entrepreneur Sue Hawkins has acquired the Bell Inn in Stow-on-the-Wold.   Hawkins, who will operate the venue with her niece Rachel, has been revamping West Country pubs in locations including Stratford-on-Avon and Shipston-on-Sour for a number of years. She will start work on the refurbishment at the start of October and hopesto be finished by the end of January 2013. “Our ethos is to put the customer first at all times – locals first with tourists the icing on the cake,” she said.

Barrio Bars to launch third venture: Barrio Bars, the London bar operator led by Ferdie Ahmed, is to launch its third venue in the city with a new site set for Shoreditch next month. Taking inspiration from Latin culture, the venue, which has 300 covers, will be split into Barrio Downtown and Barrio Uptown at the back, with street food, cocktails and late night music.

Scottish distiller breaks £1bn sales barrier: Family-owned distiller William Grant & Sons has broken through the £1bn sales barrier with a nine per cent jump in sales to £1.05bn. Operating profit in 2011 fell 4.6 per cent to £126.3m.   It reported that investment in six key brands - Glenfiddich, The Balvenie, Grant’s Scotch whiskies, Sailor Jerry Rum, Hendrick’s Gin and Tallamore Dew Irish whiskey – has “helped deliver value growth ahead of volume”.   

Two Michelin-starred chef Rogan to open pub this Friday: Simon Rogan, who holds two Michelin star at his restaurant L’Eclume in Cartmel, is to open his first pub, Robinson’s Pig & Whistle this Friday (12 October). Rogan said: “We know the locals and have socialised with them at length during our time here in Cartmel. They want a presence and a personality in their pubs and this is exactly what we will give them at the Pig and Whistle. The first thing our guests ask us when they check into our accommodation at L’Eclume is, ‘Where can we go for a good drink?’ In the past we have always recommended other people’s pubs, now we can recommend our own.” The Pig and Whistle will serve a selection of cask ales and has the capacity to cater for 50. “It’s one of four pubs in the village,” said Rogan. “It has lots of charm, it’s small and quaint and when it came up for grabs we felt we had to have it. And best of all, it’s just a stone’s throw away from our own front door. We’re giving the ground floor a new lick of paint, new carpets, new curtains and furniture and a new bar area. Once we have a firm handle on things we will then look at how we can make improvements to the layout and flow – starting with a brand new conservatory overlooking its beautiful gardens next spring.”

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