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Morning Briefing Strap Line
Wed 10th Oct 2012 - M&B, Yummy and Carluccio's

Story of the day:

Propel Blue Book survey reveals profit conversion results: Research for the Propel Blue Book Hospitality Sector Turnover and Profits Blue Book has revealed 42 of the top 200 UK companies convert ten per cent or more of their turnover to pre-tax profit. The top 20 UK companies are converting 13 per cent or more of turnover to pre-tax profit. A select group of 15 companies are currently converting 15 per cent or more of their turnover to pre-tax profit. The Top Ten in the Blue Book profit conversion table includes Wolseley and Brasserie Zedel operator Rex Restaurants and Hard Rock Café, boosted by high margin merchandise sales. The highest placed quoted company is Domino’s Pizza, whose conversion percentage is aided by its franchise model, with Whitbread coming just one place behind.  Other companies to score well are high-end restaurant operator Caprice Holdings, high margin cocktail bar operator Be At One and nightclub company Tokyo Industries.   Propel managing director Paul Charity said: “Our table of profit conversion shows a number of interesting results. Franchise operators deliver high profit conversion percentages as might be expected.   Equally, a number of tenanted operators and family brewers score well. But the Blue Book table shows that well-executed wet-led businesses deliver high profit conversion, with, for example, Amber Taverns, Be At One and some late-night operators performing well. Special mention goes to little-known but high quality Leeds-based Arc Inspirations, set up in 2002 by former Whitbread concept development manager Martin Woolstencroft, which is delivering pre-tax profit conversion more or less in line with Hard Rock Café but without the help of merchandise.  The most recent Arc Inspirations results lamented a £200,000 decline in pre-tax profit but, as our table shows, is still delivering remarkable results – it’s delivering £319,000 of pre-tax profit post central overheads from each site. A clutch of restaurant companies that have been founded relatively recently or are in roll-out after investment – Cote, Jamie’s Italian, Hawksmoor operator Underdog Restaurants and Patisserie Valerie – are already showing very good profit conversion.” 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 jo.charity@propelinfo.com or Sharon.dickinson@propelinfo.com

Industry news:

Yummy Pub Company launches work placement programme for youth centre neighbour: Yummy Pub Company, the multi-site operator with four sites led by Tim Foster and Anthony Pender, has teamed up with The New Horizon Youth Centre, located next door to it The Somerstown Coffeehouse Pub in Kings Cross, to launch a two week work placement that allows disadvantaged individuals to gain an insight into working in all areas of the “Great British public house”. The placement also offers training thanks to Yummy’s partnership with CPL Training. Each individual gets to complete nationally recognised courses including Level 2 awards in food safety, health & safety, fire awareness, customer service and manual handling. Yummy has nominated senior staff member Jessica Shields to look after trainees through the two weeks and she liaises with the centre to help the individuals get to work. Pender said: “At the outset individuals receive experience in job hunting and interviews by applying for it as if it is a normal job and if they lack suitable clothes and footwear Yummy Pubs provide the candidate with vouchers to get them so they can come to work all ‘suited and booted’. After completing the placement the individuals are provided with a letter of reference, a feedback session and certificates. The aim is also to help the individuals find a job in the industry by working with other businesses to interview candidates after the placement is successfully completed and help the preparation for the interview.” Placements run in three week cycles and so far three people have successfully completed the two weeks – one person has started work with hostel provider Beds & Bars and a second with Yummy Pubs. Pender added: “Beds & Bars, CPL Training, Fuller’s and Cirrus Inns have all made efforts to help create opportunities for motivated young adults from the centre. If you would like to be involved in creating opportunities in the trade please email me on anthony@yummypubs.co.uk.”

Architect students seek UNESCO recognition for the London pub: Students from Kingston School of Architecture, Landscape and Interior Design has launched an ambitious bid to secure UNESCO World Heritage status for the London pub. Their task is made more difficult by their brief, which requires the bid to champion not one particular pub, but to make the case in the application to the Department for Culture, Media and Sport for the London pub as a type. 

Alcohol report based on 12 year-old study: A report published yesterday “Over the Limit, the Truth about Families and Alcohol” by the charity 4Children that warns of a “silent epidemic” of alcohol misuse by British families is based on figures from 2000. The report finds that 22 per cent of children live with a parent who drinks hazardously, six per cent of children live with a problem drinker (700,000 children across the country), 62 per cent of children who were subject to care proceedings were from families with parental alcohol misuse and more than a third of all domestic violence cases involve alcohol. One industry source said: “It’s scandalous - the figures of 22 per cent of children living with a hazardous drinker and six per cent living with a dependent drinker are 12 years old.” 

Chipotle named US’s favorite Mexican brand: Chipotle Mexican Grill has been voted as US consumers’ favorite Mexican restaurant chain in the United States, according to consumer research firm Market Force Information. Chipotle received 24 per cent of the total votes for respondents’ favorite Mexican restaurant chain, actually coming in behind Taco Bell, which amassed 38 per cent of the vote. However, when total votes were divided by the number of units for each chain - more than 6,000 for Taco Bell and more than 1,300 for Chipotle - to index results, Chipotle earned the number one ranking.

Subway franchisee loses VAT case: A Subway franchisee has lost a test case over whether VAT should be applied to Subway’s “toasted” sandwich.  A leading tax judge in the High Court has ruled that the toasted sandwich, and the meatball marinara, are heated for the customer's enjoyment, not for health reasons, and so are subject to VAT at the full rate of 20 per cent. Franchisee Sub One Ltd, which brought the test case on behalf of 1,200 Subway franchisees, had claimed that they were heated in order to comply with food safety legislation, and as a result should not be subject to VAT. Losing the test case would have been a major blow to the Treasury's attempts to close VAT loopholes on food in the wake of the reversal of Government policy on sausage rolls.

Chairman of VisitBritain calls for tourism spend increase: Christopher Rodrigues, chairman of VisitBritain, has called for an increase in tourism spend to capitalise on the legacy of the Olympic and Paralympic Games. He told The Times: “Now is the moment to turn the feelgood factor into visits in the coming months and years.”

Company news:

YO! Sushi in talks with more US franchisees: Conveyor belt sushi firm YO! Sushi is in talks with more potential US franchisees after the opening of the first franchised site in Washington DC. Business development director Alison Vickers told fastcasual.com: “We are in a number of conversations with multi-unit franchisees for territories such as Chicago, Boston, New Jersey and Florida. We are highly selective in our partner selection as we want to acquire the right partners for a long term successful relationship.” Vickers also reported that its US menus have been adapted for US tastes. She said: “After a lot of research and tasting panels, we have modified some of the menu items to meet American tastes, especially around some of the sushi rolls. The menu is around 80 percent the same as the UK with the look, feel and design of the menu the same as the UK.”

US McDonald’s becomes the first provide iPads for customer use: A new McDonald's restaurant in the Virginia Beach, Virginia, has become the first US McDonald’s to provide iPads mounted on tables inside the dining room for customer use. The Apple tablets are mounted on four tables at the restaurant. Hugh Fard, the restaurant's operator, said the idea to include iPads was a way to connect to a "new generation" of customers who like to multitask.

Agent appointed to advise of food and beverage at Greenwich Market: Property agent Davis Coffer Lyons (DCL) has been appointed by Greenwich Hospital to advise on the food and beverage element of its Greenwich town centre holdings, including the island site that is home to Greenwich Market. DCL will provide strategic advice with a view to broadening and enhancing the eating and drinking offer within the town centre, catering not only to the thriving visitor trade but also the local audience, and sourcing interesting independent operators for new opportunities to complement the specialist retail offer. Regeneration of the Market is planned, which aims to revitalise business in the market and the town centre and which will include a 100-bed hotel operated by Bespoke Hotels. Greenwich Hospital owns Greenwich Town Centre and the heritage buildings occupied by the Royal Maritime Museum.

Four County Inns buys Weston pub: Four County inns, which specialises in restoring underinvested back to their former glory, has bought the closed New Inn, situated in Meadow Street, Weston, Somerset. The firm, which owns a number of pubs in the South West, is promising to turn it back into a popular traditional inn and is looking for a new tenant. Edward Toomer, director of Four County Inns, said “The New Inn will become a local community pub for residents and tourists alike with an emphasis on real ales and ciders. We hope it will become a popular venue for real ale enthusiasts.” Agent was Christie & Co and the pub was biult off an asking price of £350,000.

Local authority incurs £12,662 bill over reversed Wetherspoon decision: A protracted attempt to open a JD Wetherspoon pub in Stirling has cost taxpayers an additional £12,662. The money was spent on legal fees between the pub giant’s Spittal Street application being knocked back in February, and it being approved last month after the case was referred back to the regional licensing board by a sheriff. Councillor Steven Paterson said: “This is an appalling waste of public money that could and should be better spent. I have asked the chief executive to investigate. In particular, I am worried at the extent to which non-licensing issues are raised by objectors and board members alike. If non-licensing matters continue to be casually aired like this, I fear the council will be exposed to legal costs on this scale and worse in future.”   Meanwhile, Wetherspoon is seeking to expand its Scottish presence yet further with a pub in “Gateway to the Isles” Oban, which has a resident population of just 8,500 that expands to 25,000 during the holiday season. The company is seeking planning permission for a bar on the Railway Pier in the building currently occupied by outdoor clothing shop Wilderness. Meanwhile, Propel Morning Briefing understands that Wetherspoon is in negotiations to open a site in Holmfirth, West Yorkshire.

Marston’s and KFC set for Camarthen: Fast food company KFC will open a new site on a new retail development, at Myrtle Hill, Pensarn, Camarthen on Monday – it has one other site, in Aberystwyth, in this part of west Wales. A Marston’s new-build pub restaurant and a Farm Foods supermarket will also be built on the site.

St Austell releases viral You Tube advert for Tribute: St Austell Brewery has released a viral You Tube advert for its award-winning Tribute Ale. The advert features a lone and confused surfer, carrying his board around London, asking: “Do you know where I can find a little piece of Cornwall?" The surfer is eventually served a pint of Tribute and remarks: “A taste of Cornwall – that’s better.” 

Starbucks poaches Vodaphone marketing executive: Starbucks has hired Vodafone’s UK director of brand marketing Danielle Crook and appointed her to the new role of vice president of marketing and category for Europe. At Starbucks, Crook will lead marketing strategy across Europe and will report into Michelle Gass, president for the region. Crook joined Vodafone UK as marketing director from Fallon in 2009. Meanwhile, more details have emerged of “hot bakery goods” Starbucks is trialling in nine San Francisco stores, with plans to eventually expand distribution nationally. Among the items being tested are: a whole wheat spinach croissant, a ham and cheese croissant, and a tomato, cheese and herb croissant. There’s also a blueberry yogurt muffin, raspberry passion fruit loaf cake and lemon vanilla loaf cake, which replaces the current lemon loaf cake. Many of the items are served warmed, unlike its current lineup of baked goods.

Mitchells & Butlers opens training academy: Mitchells & Butlers has opened a state of the art in-house training academy at its Retail Support Centre in Birmingham. The Academy will be used by Mitchells & Butlers’ 38,000 central support and retail employees for inductions, learning and development programmes, and can accommodate road shows, workshops and forums for up to 250 people.   The facility includes a training bar, uses the latest IT technology, as well as utilising some of the energy saving practices found in Mitchells & Butlers’ businesses such as LED lighting. Kadisha Lewis, director of talent development at Mitchells & Butlers, said: “Developing our people is absolutely critical to our success and the launch of the Training Academy underpins our commitment to be one of the best companies to work for where our employees feel that they are continually learning.” The opening of a dedicated Training Academy reinforces Mitchells & Butlers’ number one priority to focus on their people and their guests; creating an organisation that engages and empowers people to deliver outstanding service across its 1,600 restaurants and pubs." Saudagar Singh, group HR Director, added: “Our new training Academy is an exciting development providing additional facilities to further up-skill and develop our people.   Ultimately, it will play a central role in ensuring that our guests have a fantastic experience in our businesses.”

Inventive Leisure decides against Revolution opening in Carlisle opening: Revolution vodka bar operator Inventive Leisure, has decided against opening a site in the redeveloped ground floor of the former Castle Post Office in Carlisle. Building owner Simon Harrison said:  “We got the heads of terms agreed with Revolution but we’re now looking at other options. The long and short of it is that Carlisle has dropped down in their priorities. It’s disappointing but we feel to a degree that it’s the right thing for the building. Their layout would have required quite a lot of demolition work at the back."

Villagers consider buying Charles Wells pub: Villagers in Baston are looking at raising the £293,550 needed to buy a Charles Wells pub, The Spinning Wheel in Church Street, Baston. The pub is due to close its doors on 9 January, leaving just one other pub, The Baskervilles, in the village. Villagers Ben and Kelly Field have proposed a community buyout and have set up a Facebook group called Save the Spinning Wheel. The couple suggest that if 250 of the 539 households in the village put in £1,174 each – they could raise enough to buy the pub, which has an asking price of £293,550. Everyone who put cash in would get a vote in a management committee that would run the pub.

Douglas Jack – Spirit shares are undervalued: Numis Securities leisure analyst Douglas Jack has argued that Spirit shares, for which he has a price target of 80p and a “buy” recommendation, are undervalued – final results are on Tuesday 16 October.  He said: “ Our consensus-in-line forecast expects profit before tax to rise 16 per cent over the full year and by 23 per cent in second half, with no increase in debt. We expect to hold our forecasts, which anticipate self-financed double-digit growth continuing in 2013. Given the progress being made, we believe the shares are undervalued. Although, we expect managed like-for-like sales to have slowed in early 2013 due to cooler weather and tough comparatives of 6.2 per cent, results should highlight strong growth, falling net debt and the potential for further growth in 2013-14. The 6.9x 2013E EV/EBITDA rating (7.6x excluding the onerous lease provision) is not strenuous (versus an 8.5x peer group average) given Spirit’s above-average growth and cash tax credits.”

Landmark Ludlow pub re-opened: The 19th Century Talbot Inn, at Newnham Bridge, Ludlow, has re-opened after a three year closure period.   Developer Ian Dowling has converted The Talbot Inn into a modern 90-seat gastro pub with seven ensuite bedrooms, private dining and meeting facilities. Dowling is planning to use locally sourced fresh produce, ales and ciders as part of a new seasonally changing menu. He said “It has been a long and detailed project but our aim was to get every feature as perfect as possible. This has been achieved with a contemporary interior while also managing to retain the building’s rustic and historic charm. Most of all, I think we’ve created somewhere stylish for people to relax and enjoy quality home-made food.”

Carluccio’s switches online reservations to liveRES: Italian restaurant group Carluccio’s has turned to the online reservation solution from liveRES to manage its online bookings. LiveRES has taken over responsibility for online bookings across all 68 Carluccio’s restaurants. The online booking system also enables Carluccio’s to target promotions at 400,000-plus customers registered to receive email updates and event information. Sarah Murray, operations director for Carluccio’s, said: “Our registered customers are part of the Carluccio’s family, and are the most enthusiastic ambassadors for the brand. Like many growing families, as the business expands both geographically and in terms of outlet numbers, email and online communications with our customers has become an important way of staying in touch. As we expand, with up to 10 more outlets scheduled to open over the next year, it’s also important that we keep our bookings strategy consistent across the business, and the head office controls which liveRES delivers enables us to do that effectively.”

Thai restaurant chain Chaophraya to open seventh site: Chaophraya, the Thai restaurant chain with sites in Birmingham, Liverpool, Leeds, Manchester and Sheffield and Glasgow, is to open a second Scottish restaurant. The chain will be opening in the former Oloroso restaurant site on George Street – the opening comes four months after it opened a £2m site on Glasgow’s Buchanan Street.

Hall & Woodhouse sells derelict pub to care home specialist: Brewer and retailer Hall & Woodhouse has sold a pub that’s lain derelict for four years to Dorset care home specialist Waypoints Care.   Initial plans in 2008 to build a care home above ground floor shops were rejected, but Purbeck District Council eventually granted permission for a care home in 2011. A care home company was working with Hall & Woodhouse to take over the site last December, but pulled out because of economic conditions. In February this year, Hall and Woodhouse said that it would apply for the home to be demolished and that future options for Greenridge were unlikely to include a care home. But now a deal has been secured which Waypoints Care that could see it become a care home for up to 80 people with dementia.

Zizzi teams up with young chef: Pizza chain Zizzi has teamed up with food writer and chef Gizzi Erskine to work with a promising young chef in creating a special menu to be sold nationwide, raising money for the Prince’s Trust. The charity helped Zizzi and Erskine find a promising talent in the food world and following a final cook-off, London chef Joe Gray, 29, was selected. Gray has worked closely with Erskine in developing a three-course menu that is now available in more than 120 Zizzi restaurants nationwide. For every dish sold from their menu, Zizzi will make a donation to the Prince’s Trust. Helen Jones, marketing director at Zizzi, said: “We’re a big supporter of the Trust’s brilliant work with unemployed young people and we believe that providing them with a platform to showcase their talents is really important.”

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