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Morning Briefing Strap Line
Mon 15th Oct 2012 - Gatecrasher, Stonegate and Miller Brands UK

Story of the day:

Rick Stein reports reduced profit figures after investment but turnover up: Rick Stein's Cornish restaurant, hotel and pub business, which he owns with his ex-wife Jill, has reported turnover increased to £15,239,000 in 2011, up from £11,551,000 the year before, Pre-tax profit dropped to £626,000 from £1,640,000 the year before as a result of a £700,000 investment in refurbishing its café, hotel bedrooms and a production unit. Operating profit of £733,000 was slightly above budget but down by 55 per cent on the 2010 figure because of higher wages and overheads after it opened a new central warehouse, a full year charge for its two new outlets in Falmouth and a “strengthening of management and administration functions”. During the year, a final dividend was paid amounting to £450,000. Rick and Jill Stein's business includes four restaurants in Padstow: The Seafood Restaurant; St Petroc's Bistro; Rick Stein's Café; and Stein's Fish and Chips as well as The Cornish Arms pub in St Merryn and Rick Stein's Fish restaurant in Falmouth. The business also includes four shops in Padstow comprising of a deli, patisserie, gift shop and fishmongers; a cookery school and a total of 40 guest bedrooms across its various sites. The company took out a new loan of £3.6m in December 2011. In February this year, the company bought a leasehold property next to its Stein’s Fish and Chips and Stein’s Deli businesses that now trades as Stein’s Fisheries. Rick and Jill Stein were paid a combined £398,000 by the business.

Did you know that ten of the top 20 profit convertors in the sector are pub operators? 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:

Architecture students submit Unesco bid for London pubs: A group of 435 students on landscape, architecture and interior design courses at The University of Kingston have submitted a 350-page document to the Department for Culture, Media and Sport that makes the case for Unesco status for the London pub as a unique testament to cultural tradition. The students have surveyed 87 typical or distinctive London pubs. Tutor David Knight said: “Our research captures extraordinary examples but it also aims to try and describe the typical, or generic qualities of ‘London pubness’ which might influence policy.” There are many other precedents of listing ‘types’, or what Unesco calls ‘serial sites’. Already listed are belfries in France and Belgium, Berlin’s modernist housing estates, Viennese coffee houses, prehistoric dwellings around the alps and Flemish béguinages.

Soft drink makers and NRA file lawsuit against New York soft drinks ban: Soft drink makers and a restaurant trade body has filed a lawsuit that attempts to block the ban on large sugary drinks in New York. The lawsuit argues that Mayor Michael Bloomberg’s board of health overstepped its authority when it passed the regulation. The plaintiffs include the American Beverage Association and the National Restaurant Association as well as a number of unions and pro-business groups. The ban, the first of its kind in the US, outlaws the sale of sugary drinks larger than 16 ounces everywhere in New York City except grocery and convenience stores.

Britons plagued by “wine fear”: New research has found that the huge majority of Britons are filled with fear when it comes to ordering wine in a restaurant. The French Wines with Style Report claims that just 12.4 per cent of customers are confident of selecting the right wine when eating out. Regardless of the apparent lack of wine confidence, only 20.8 per cent of Brits would ask the advice of the waiter.

University research cracks the mystery of ale choice: Anglia Ruskin University (ARU) senior lecturer Tim Froggatt has come up with a definitive list of how drinkers choose when there’s a large array of ales on sale in some pubs. Froggett has found they use a combination of pump clip image, peer and expert testimonial and the location of the beer on the bar – with those on the left proving most popular. He said 15 per cent of “cask ale virgins” would choose the pump on the top left – because we are trained to read from top to bottom and left to right. The real ale fan added that pump clip images often use yellow, which “kick-starts” the body’s vision system, and red, which is stimulating and therefore attention grabbing.

Operators begin to withdraw vouchers and discounts: Horizons’ Voucher Tracker, which monitors the volume and type of on-line money-off deals issued by restaurants, has noted the first signs of operators withdrawing customers’ reliance on discount offers by limiting their availability and changing the nature of the deals. Kids Eat Free vouchers, which in 2010 were offered by high street restaurants throughout the year, have this year been issued during the school holidays only, dropping off sharply when the schools went back in September. Since the economic downturn many of the UK’s high street restaurant operators have used vouchers and money-off deals to boost customer footfall, particularly in traditionally quieter periods. Many of the vouchers are downloaded via the internet from sites such as However, while discount deals may fill seats they risk eroding the value of a restaurant’s brand image, and in some cases have a negative impact on operating margins. The proliferation of discount deals over the past two years has meant that the pricing points of many restaurants has effectively been reduced as customers get used to paying far less for their meals because of the vouchers. Returning to standard pricing by withdrawing vouchers, without losing price-sensitive customers to the competition, is one of the biggest challenges currently faced by high street restaurant operators. Peter Backman, managing director of Horizons, said: “In September our Voucher Tracker research noted a shift away from discounting, particularly family-orientated discounts. Two-for-one deals and money-off vouchers are now being replaced by offers such as ‘free dessert/starter with every main course’ or discounts available at restricted times.”

ALMR issues Machine Games Duty reminder: The Association of Licensed Multiple Retailers (ALMR) has issued a reminder that new Machine Games Duty takes effect from 1 February 2013 and that a new legal requirement to be registered with HMRC if you operate gaming machines will take effect. Strategic affairs director Kate Nicholls said: “Companies can register once for all machines in their outlets. Online registration is open from 1 November and operators who will be making machines available for play on 1 February 2013 must register before 1 January 2013. The penalty for failing to register is significant and registration can take two weeks to be processed.”

Carlsberg sets sites on female drinkers: Carlsberg wants to kick-start a revival in beer by attracting more female drinkers. Chief executive Jorgen Buhl Rasmussen has asked the company’s 130 scientists to dream up new “innovations and concepts” to attract women - including offering sweeter-tasting beer. He said: “We need to be better at creating new products with more appeal to women. Females don’t like the very bitter taste you have in beer and you get quite bloated. It’s a big opportunity for us to get more female consumers into our portfolio of products.”

The Mail on Sunday reports Panorama blunder: The Mail on Sunday has reported Panorama’s U-turn over claims that a minimum unit price of 50p on alcohol could save the lives of 50,000 pensioners a year, which Propel Morning Briefing reported ten days ago. The figure was based on research by The University of Sheffield which has since stated that “human error” caused an overstatement of figures – the actual number is 11,500 lives a year. The Mail on Sunday called it a “humiliating U-turn” by Panorama.

Company news:

Barclays Bank unlikely to retrieve £3.25m in full owed by Churchill Inns and Clemetines: Barclays Bank is unlikely to receive in full the £3.25m (excluding interest and charges) it is owed by the two Northamptonshire companies headed by Fred Ward, Churchill Inns, which operated six leasehold pubs, and Clementines, operator of five freehold pubs, that went into administration in August – and there will no payments to unsecured creditors. Administrator Zolfo Cooper has reported the companies had revenue levels below budget with cashflow difficulties and building creditor arrears. Problems were worsened by a collapsed ceiling at The Sun Inn site, Kislingbury, in December 2011 causing a short period of closure and flooding on two occasions at The Bold Dragoon. Sites were placed on the market through Fleurets but trading deteriorated further and the companies were placed in administration. Two leasehold sites, The White Lion, Pailton, and The Carpenters Arms, Irchester, were closed after administration as Fleurets advised no premium was likely on account of their making losses. The administrator reports that it’s not been possible to estimate preferential claims due to “lack of payroll records” and that unsecured claims have been estimated from previous management accounts rather than any other more detailed information due to a “lack of books and records in this regard”. Zolfo Cooper also reported it had taken steps to “recover equipment removed from head office prior to appointment”. Zolfo Cooper’s costs are around £91,000 so far.

Miller Brands UK double pre-tax profit: The Peroni Nastro Azzurro and Pilsner Urquell brewer Miller Brands UK doubled pre-tax profits in the year to the end of March this year to £13,344,000 from £6,882,000 the year before. Turnover rose by ten per cent to £224,498,00 from £203,643,00 the year before. In Companies House documents, Miller Brands UK stated: “Throughout the year, (we) challenged and provided innovation on how beer is marketed and promoted both within the digital space and also in more traditional forms of communication.” The company launched St Stefanus, an imported Abbey beer from Belgium, in the year following on from Kozel the year before, which has “seen strong momentum both in terms of distribution and rate of sale”.

Marston’s and Greene King get Scottish pubs go-ahead: Super-regional brewers and retailers Marston’s and Greene King have both won the licensing go-ahead for new-build pubs in Renfrewshire on the same day. Greene King won a provisional licence for a Cloverleaf development at Linwood Road, Paisley and Marston's got the green light for its fourth Scottish new-build development - this time at Braehead, Renfrew. The two pubs represent a £6m combined investment. Yorkshire-based solicitors John Gaunt and Partners represented both companies in their licensing applications.

Nightclub company Gatecrasher forced to accept two month closure of Watford club and name change to retain licence: Nightclub operator Gatecrasher has been forced to accept a two month closure and a name change for its Area nightclub in Watford to save its licence. The move came after police officers produced a report cataloguing problems and violence at the club over the past year. Licensing councillors also refused a request from Gatecrasher to start the two-month closure immediately, meaning Area would be open in time for Christmas. The club will instead close as Area in 21 days. Among the other conditions placed on the club were that alcohol sales end at 2am and it closes at 2.30am except on Sundays when it is to close at 11pm. No glass is to be used in the club except champagne bottles in the VIP area and the smoking area is to be limited to 50 people and become a no drinks area.

Stonegate withdraws NiteOwl product: Managed operator Stonegate has withdrawn a “smoking” cocktail product in the wake of a liquid nitrogen scare. NiteOwl drinks will no longer be sold in Reflex, even though Stonegate accepts they are not dangerous. It follows an incident in Lancaster where a teenager required emergency surgery to remove her stomach after consuming a drink made with liquid nitrogen. A Stonegate spokesperson said: “An external promotions company we use in some of our bars, including Reflex in Croydon, sell NiteOwl which is carbon dioxide dry ice. Despite this being perfectly safe we have chosen to withdraw the sale of this product from all our premises for the foreseeable future to avoid confusion or concerns.”

Jamie Rollo – we expect JD Wetherspoon margins to decline in 2013 but strong like-for-like sales growth “some cause for optimism”: Morgan Stanley leisure analyst Jamie Rollo has argued that further Wetherspoon margin erosion seems likely in the year ahead but strong sales growth could neutralise this. Rollo said: “We expect EBIT margins to continue to decline in the 2013 financial year. EBIT margins have declined in 18 out of the last 20 years and this continued in 2012, when the margin was 9.0 per cent, representing a 58bps decline on the 2011 financial year. We expect this trend to continue in the 2013 financial year, with a further 26bps drop to 8.7 per cent. The company said that it expects to see further cost pressure in 2013 from utilities, labour and food inflation, but that a strong like-for-like performance would be sufficient to offset this and margins could be flat this year. In the second half of the 2012 financial year, EBIT margins were 8.6 per cent, a little below the full year level of nine per cent and its working assumption is that the 2013 margin will be somewhere between these two. We estimate every 50bps to EBIT margins is worth six per cent to Earnings Per Share, we will be looking out for an update on this. Margins have been on a long-term downwards trend, although with strong like-for-like sales growth, there may be some cause for optimism here.” 

Nick House and Piers Adam to open ski chalet-themed Bodo’s Schloss: Entrepreneurs Nick House and Piers Adam are to open Bodo’s Schloss, a 400-capacity ski-chalet themed nightclub in the basement of Royal Garden Hotel in Kensington on 7 November. The venue will serve traditional Austrian dishes and be styled as an Austrian Alpine lodge with 300-year-old tiles and wood imported from the Alps. House and Adams previous ventures have included the Mahiki and Whiskey Mist nightclubs.

G1 Group reports increases in turnover and operating profit: G1 Group, the managed operator led by Stefan King, had reported turnover rise 20 per cent to £59.3 million in the year to 31 March 2012. The company bought The Three Sisters & Tailors Hall, Biddy Mulligans & Grassmarket Hotel, The Bank Hotel, Cabaret Voltaire and the Murrayfield Hotel in the year. It said the new venues accounted for about half of the 46.4 per cent increase in operating profit, which reached £7.5m. The rest of the growth came from existing operations, which benefited from a growing use of social media to communicate directly with customers. Chairman Brian McGhee said: “Customer communication and marketing is increasingly influenced by social media tools and the G1 team have shown flair and creativity in this area.” Pre-tax profits increased by 38.9 per cent to hit £6.5m. G1 said that although difficult economic conditions look likely to continue beyond 2012, it believes it can address the challenges successfully and continue to expand.

La Tasca appoints international executive chef: La Tasca, the UK tapas chain led by Simon Wilkinson, has appointed Josu Zubikarai as its new International executive chef based in Washington DC. The appointment is a major coup for the brand as Josu is viewed as the pioneer of Spanish food on the east coast of the US. Originating from the Basque country, Zubikarai opened the acclaimed Taberna del Albardero in Washington DC in 1989, which quickly established itself as one of the best Spanish restaurants in the country as well as being awarded three stars by the Washingtonian magazine. Zubikarai takes up his post in November and will work closely with UK executive chef Antonio Bennetto in developing the brand's menus within their UK and international markets. Wilkinson said: “We are delighted to welcome Josu to La Tasca - he is very much a pioneer of Spanish food and his appointment to the brand strengthens our credentials as a quality food business.”

Cocktail bar company Be At One launches new app: London-based cocktail specialist Be At One, which saw an investment from Piper Private Equity last year, has launched an app for iPhones and Andriod smartphones to help undecided customers pick a cocktail. The free download encourages people to look at the Be At One menu, which features more than 160 cocktails. The app produces a bottle that is given a spin to provide customers with a random selection. The app also uses augmented reality to help customers find the nearest Be At One and allow them to make reservations. The launch of the app – available on iTunes and at Google Play - also coincides with the cocktail chain re-inventing its look.

YO! Sushi to open in York this week: Conveyor belt sushi chain YO! Sushi will open its ninth restaurant this year, with an opening in Exeter planed for November. It opens this Thursday (18 October) in Church Street, one of the busiest pedestrian areas in the city. The restaurant has 65 covers with 3,000 square foot of space. The York interior features “a fusion of texture and colour combinations”. A departure from YO! Sushi’s traditional white and orange colour theme, the central seating booths are upholstered in ‘wasabi green’ faux leather, with black, white and grey tiling to create a clean and contemporary feel, whilst slatted birch ceiling rafts add warmth and texture. 

Nightclub in Brighton’s West Street offered for sale: The Hed Kandi nightclub in Brighton’s West Street, recently refurbished to a very high standard, is on the market through agent Davis Coffer Lyons. A premium is sought for a sub-lease which expires in June 2026 – rent is eight per cent of turnover with a minimum rent of £75,000 per annum. 

Owner of Oxford’s only lapdancing club vows to fight licence rejection: The owner of Oxford’s only lapdancing club, The Lodge, has vowed to go to the High Court after the city council refused to renew its licence. Owner Al Thompson warned a judicial review could cost taxpayers more than £100,000 in fees and damages. The renewal bid received 23 letters of support and 20 objections. Opponents raised concerns over the impact the club was having on the area. One objector said: “They (lapdancing clubs) cast a pall of shame over the whole area.”

Collyer – we prefer the companies with momentum and geographic advantage: Deutsch Bank analyst Geof Collyer has stated a strong preference for the shares of companies that have sales momentum and south east geographic advantage. He said: “Momentum is key in delivering sustained or enhanced returns, and following track records for collections of assets can be as important as following track records of management teams. There is still a lot of work in progress, but given the vagaries of the UK economy and the strength of the south east, we would still prefer those groups with that geographic advantage coupled with strong sales and profits momentum.” 

Pub in Dorset sells after TV appearance: A pub in Dorset has been sold after it appeared on the BBC's Escape to the Country. The Gaggle of Geese, in the village of Buckland Newton near Dorchester, has been sold to new owner Jinny Lambert. The pub was featured on Escape to the Country and Colliers International, which sold the pub, said there was a surge of interest after the appearance. Escape to the Country is hosted by former Colliers surveyor Jonnie Irwin. The pub has also been featured in Hugh Fearnley-Whittingstall's River Cottage series. Peter Brunt from Colliers said: “There was plenty of interest in The Gaggle anyway and I think Jonnie showing the couple around the place really concentrated people’s attention on just what a fantastic opportunity it represented.”

Hand Picked Hotel boss looking to buy two more sites: Hand Picked Hotels, the 18-strong hotel operator headed by Julia Hands, wife of private equity firm Terra Firma boss Guy Hands would like to buy two more hotel sites. She told The Sunday Telegraph: “I’d like to buy two more, a second one in Scotland, perhaps on the west coast, and maybe something along the M4 and M40 corridors or the Midlands. I’ve always said 20 would be the optimum number because with that number the head office can still cope with the management.” Hands reported that it’s been a “difficult four years” as revenues have been flat but utilities and business rates have gone up, with carbon tax on the way. Profit on turnover of £60m has dropped to £11m a year before head office costs from £13m four years ago.

Did you know? Domino’s US chief information officer Kevin Vasconi tips digital wallets and payments as a key trend to follow. He said: “As digital payment technologies mature and begin to show up in the Quick Service Restaurant space, we need to make sure that they are secure and scalable to a high-volume business like Domino’s. I think these technologies have a lot of promise to deliver tangible value for the consumer.”

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