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Morning Briefing Strap Line
Wed 17th Oct 2012 - Spirit, Smashburger and Whitbread

Story of the day:

Smashburger boss issues UK appeal through Propel Morning Briefing: David Prokupek, the chief executive of the highly rated US better burger operator Smashburger, which has grown to 200 sites in five years, has issued a “talk-to-us” appeal to UK operators through Propel Morning Briefing. The company has 40 franchisees in the US committed to build 400 sites but is looking for a UK franchisee or franchisees. Prokupek told Morning Briefing. “We are doing well and have had a great year - expansion into Canada and the Middle East has gone great. I have not yet found a partner for the UK market - any leads would be much appreciated.” Prokupek, who added that he was “enjoying the Propel newsletter”, told Propel: “The ideal background is someone with significant experience in fast casual, dining, pubs or certain quick service restaurant operations with a keen sense of brand building, operations, site selection and who is well-capitalised. In the US, we have successful former McDonald's operators, folks from the Yum! system, Dunkn Donuts and many others. In the end, having the owner actively involved and engaged to help grow the brand is critical.” Smashburger’s name is linked to its trademark preparation – it smashes burger patties on the griddle to create more flavour. If any operator would like Prokupek’s e-mail address to get in touch, e-mail Propel managing director Paul Charity on In 2011, Smashburger was recognised with a number of prominent industry awards, including being named “America’s Most Promising Company” by Forbes magazine, ranking number 99 on the annual Inc. 500 list of the nation’s fastest-growing private companies and receiving the 2011 International Council of Shopping Centre’s “Hot Retailer Award”. It grew unit numbers by 55 per cent in 2011.

Free Report: The Association of Licensed Multiple Retailers (ALMR) and CPL Training have teamed up to commission a free report on the key foodservice trends in Europe. The report, written by Propel Info managing director Paul Charity after a visit to the European Foodservice Summit in Zurich, looks at the companies and sectors that are out-performing in Europe and has insight and analysis from some of the world’s top operators. To receive a free copy e-mail Paul Charity on

Industry news:

Horizons – operators will extend openings hours going forward: Restaurant and pub operators will look to extend their opening hours to appeal to consumers at any time of the day from breakfast through to late-night dinner. This was the key prediction made by insight firm Horizons’ managing director Peter Backman at a British Frozen Food Federation (BFFF) marketing seminar held in Reading yesterday. In a presentation entitled ‘Looking into the Crystal Ball’, Backman vision of the future included longer operating hours to meet consumer whatever needs any time of day. Backman said operators would also be forced to utilize their space more efficiently, with larger outlets running several concepts from a single unit such as a takeaway option, quick service food and sit-down restaurant. “The fundamentals of the market are likely to remain similar, with eating out continuing to grow, albeit slowly, and consumers eating out on a regular basis,” he said. “But looking five, ten or more years down the line the cost of rents and overheads will encourage operators to truly maximize the space they have, making each square foot of their premises contribute to boosting turnover in order to improve profitability.” Backman also said that it was likely that some of the larger pub and restaurant operators would sell off their sub-brands, in order to concentrate on a single concept. “It’s going to be ever-more important for operators to concentrate on what they do well, and shed what they don’t do so well. The future is going to be about the offer, the quality of that offer and how profitable the concept is,” he added.

Pizza Hut does election U-turn: Pizza Hut in the US has performed a U-turn over a promise of free pizza for life to anyone who dared ask either election candidate Barack Obama and Mitt Romney whether they preferred sausage or pepperoni. After an outcry, Pizza Hut switched to an online vote on customer preferences.

Starbucks faces backlash over UK tax bill: Starbucks faces a boycott from thousands of customers who are upset over claims the company has paid almost no tax in the UK - £8.6m in 14 years of operating in the UK and generating £3bn of revenue. Customers voiced their outrage on Twitter and threatened to move their business to Costa Coffee. A Starbucks spokesman said: “We will continue to pay our fair share of taxes to the letter of the law as we always have.” Daily Mail columnist Daniel Johnson stated this morning: “So much for the “ethics” and “responsibility” that it boasts of on its website. No one objects to them making a profit as long as the firm pays its taxes like the rest of us. But it doesn’t.”

Founder of Costa Coffee prefers Nestle; laments the rise of the big coffee shop chains: The founder of the Costa Coffee chain, Bruno Costa, who set up the business with his brother Sergio and sold it to Whitbread in 1995, has stated that he prefers to drink Nestle’s Nespresso, made from individual coffee capsules although he added that he’s “impressed” by Costa’s coffee offer. Bruno Costa lives in Purley where Costa Coffee is set to open its sixth site. He said: “As far as the coffee business is concerned, like here in Purley, I know it is monopolised by these three or four companies that don’t give much chance to the smaller ones. It reflects what the supermarkets have done to smaller shops in the high streets.”

Henderson Global Investors to redevelop Smithfield Quarter for restaurant use: Plans by Henderson Global Investors to redevelop the Smithfield Quarter in London will go on show to the public this Friday (19 October) at Goldsmiths Centre. The ground floor of the Annex Building will comprise of restaurant and retail units within the retained and restored Fish Market.

New York restaurant trade body shies away from fight over soft drink ban: The New York State Restaurant Association has decided against taking part in a lawsuit filed by the National Restaurant Association and other trade groups to overturn New York City’s restrictions on the sale of 16oz soft drinks. The trade body, which has 5,000 members, said the “issue only impacts a very small per cent of our New York City members, and we feel that we need to pick our battles”. A spokesman added: “We’re also very concerned that there may be blowback from the city (that could affect) our association and members.”

Company news:

Spirit reveals progress on digital and social media (and apprentices): Spirit Pub Company has revealed the progress it is making on harnessing the power of social and digital media. The company said it now had 830,000 customers on its database, a rise of 30 per cent in the past year. The company’s various brand websites have received 7.2 million unique visits and 220,000 bookings at sites have come through online bookings. Spirit also receives 250,000 pieces of customer feedback each year and guest advocacy levels are now 72 per cent and rising. The company is also now receiving 900 job applications per week and has 500 apprentices working for the company with an 80 per cent retention rate. Chief executive Mike Tye singled out one particular apprentice, Charlotte Bonsor, who began working at the company’s Polite Vicar pub in Newcastle, Staffordshire in October 2011, for the progress she has made with the company. “She’s now deputy general manager and we hope to appoint her as general manager within a year – she’s 19-years-old.”

BII Licensee of the Year to introduce wood-fired pizza offer: New Pub Company is to introduce a wood-fired pizza offer at its Camden Eye pub, which is run by BII Licensee of the Year Mahdis Neghabian. The company will start to serve pizza on Thursday 1 November. The offer is inspired by visits to Pizza East and the Bull’s Head, Repton, Derbyshire where former BII Licensees of the Year Richard and Loren Pope have a wood-fire pizza oven installed close to the bar which is producing very high volumes of business. New Pub Company chief executive Peter Linacre told Morning Briefing: “We went to the Bull’s Head and it was heaving at 5pm in the afternoon – it’s fantastic theatre.” The Camden Eye already has a “very, very successful” food offer but the conversion of a first floor function room has created more capacity.

Thomas withdraws Guildford Wonderland application – but will re-submit: Former chief executive of Luminar Leisure Stephen Thomas, who now runs No Saints, has withdrawn an application to open a £1m Wonderland venue in the former Old Orleans venue in Guildford – but will re-submit it. The company, which currently runs The Casino Nightclub in Guildford, wanted to open until 4am but withdrew it shortly before the licensing committee made a decision. In a bid to get the new venue licensed, opening hours will be reduced. Thomas said: “There’s nothing for people over the age of 25 (in Guildford) so what I wanted to do was have a fusion restaurant, an elegant bar and ancillary dancing. It would (be) an investment of just short of £1 million.”

Patisserie Valerie introduces winter menu, price deal and kids’ menu: Patisserie Valerie, headed by Paul May, has introduced a new winter menu at its 64 UK sites that offer two courses for £9.99. New additions to the menu include premium white and dark hot chocolate, made from real chocolate pieces and speciality drinks such as gingerbread and spiced chai lattes and seasonal Suki teas, all of which are available to drink in or to take away. The £9.99 offer has a choice of three main meals and four desserts – and there’s kid’s menu offer of meals for £3.50. Patisserie Valerie’s UK operations director Jon Hassall said: “We’ve worked very hard to offer our customers a haven from the harsh winter weather and increasing shopping crowds in the run up to Christmas. This is the time of year where people like to indulge a little more. We’ve also introduced some special winter offers such as an early riser to take the edge off a frosty morning and great prices on regular hot drinks and pastry deals before 11am.”

Spirit aims to raise £2.1m by selling three freeholds let to Tesco Express at auction today: Three Spirit Pub Company freeholds let to Tesco convenience stores will be auctioned by CBRE today. The three sites are: Tesco Express in Orton Wistow, Peterborough, with a guide price of £750,000 to £760,000 (rent is £56,000 per annum); a Tesco Express in Burley Road, Leeds, with a guide price of £600,000 to £610,000 (rent is £45,000 per annum); and a Tesco Express in Gracemount Drive, Edinburgh, with a guide price of £720,000 to £730,000 (rent is £50,000 per annum).

Soap star Mick Norcross unveils £4.5m plan for Leigh-on-Sea hotel: Mick Norcross, who operates the Sugar Hut in Brentwood, has unveiled details of his £4.5m plan to refurbish a historic Leigh hotel. Norcross, who appears in the Only Way is Essex, said he wanted to bring the luxury London hotel experience to the county. Renamed the Grand Boutique Hotel, the venue will feature a piano lounge bar, restaurant and spa, while staying true to its Victorian roots. Work is now underway at the site after protracted delays over planning consents.

Pelican buys Prestige Purchasing’s Consortium businesss: Pelican Buying Company, the leading experts in procurement for the hospitality, education and private healthcare sectors, has acquired Prestige Purchasing’s Consortium business. The acquisition will provide Pelican with continued business growth in the hotel sector. Founded 22 years ago, Pelican Buying Company manages the purchasing requirements of its customers, with a strong focus on delivering greater productivity, better efficiency and increased profitability across a number of purchasing categories.

Brighton multi-operator comes up against opposition over Smack nightclub plan: Brighton multi-site operator Rowbell, which runs The Camelford Arms in Camelford Street, Hove, and The Paris House in Western Road, Hove, has met opposition from police and the local authority over a plan to convert the Pasha nightclub to Brighton’s Wes Street to a venue called Smack. However, a spokesman for the club said it would be aimed at a classy clientele. He said: “It absolutely has nothing to do with drugs or violence. It is linked to the feel of the club – a 1980s New York coffee party.”

Details of Bodo’s Schloss rent deal revealed: The Bodo’s Schloss nightclub, to be opened by Piers Adam and Nick House at the former Casino site at the Royal Garden Hotel in London’s Kensington, has been let on a rent of £450,000 per annum, it has been revealed. Jonathan Moradoff, associate director at Davis Coffer Lyons, which acted for Adam and House, said: “This acquisition will be a tremendous addition to the area, thanks to Adam and House excellent track record in the sector and the high demand for this type of property in the vicinity. The property was an incredibly rare off market opportunity and a complicated deal on account of licensing and planning. It makes a superb addition to the duo’s recent leisure property purchases of The Markham Inn and The Rose, which have both been trading exceptionally well in the high-end sector.” Bodo’s Schloss will open for business on Friday 26 October 2012.

Whitbread buys three Premier Inn sites in Wales but receives Rotherham knock-back: Whitbread has bought three hotel sites in Wales to convert to its Premier Inn brand. Its agent DTZ has acquired a 60-bedroom hotel on High Street in Newport, an 80-bedroom hotel with a family pub at the Triangle Site in Barry and a 61-bedroom hotel at the Gatehouse Development in Tenby. DTZ was appointed by Premier Inn in early 2011 to acquire hotel and restaurant sites across Wales. Andrew Gibson, senior Surveyor at DTZ in Cardiff, said: "In addition to these acquisitions we are also in advanced discussions on a number of other sites." Meanwhile, Rotherham Council has rejected plans for a £6m Whitbread 80-bedroom Premier inn and pub restaurant on Sheffield Road, Templeborough. Councillors said there were ‘more preferable sites’ for the development, such as near the New York Stadium and on the former Liquid nightclub site on the edge of the town centre.

On line business Biscuiteers to open first cafe: Online business Biscuiteers is to open it first Biscuit Boutique and Icing Café in Notting Hill Gate, London, at the end of the month. The venue will host masterclasses in icing, as well as private and children’s icing parties. Its biscuit and chocolate collections will also be available to purchase. Customers will be able to pop into its Icing Café, pick from a daily selection of biscuit designs, icing colours and decorations.

Westons makes Australian acquisition: Westons Cider has bought drinks distributor World Brands Australia (WBA) as part of the UK cider maker’s plan to further expand its international business. Westons, based in Hereford, established a trading relationship with WBA several years ago when it launched into the Australian market, where cider is currently seeing surging sales. Recent figures show the Australian cider market grew by 42.8 per cent volume and 58 per cent value from a small base on an annual basis.

Freehold of Brighton restaurant led to Nando’s smashes guide price: The freehold of a restaurant let to Nando’s in Brighton’s Duke Street for a rent of £115,000 per annum has smashed its guide price of between £1.4m and £1.6m at an Allsop suction, selling for £1,775,000, which produces a yield for the buyer of 6.48 per cent. Nando’s has a lease until 2024 and the site has upper floors with development potential. Meanwhile, a freehold site let to Zizzi operator Ask Restaurants in Bishops Stortford’s Market Square has sold for £1,250,000, above the £1,200,000 upper end of its guide price – Ask pays £77,500 in rent per annum on a lease expiring in 2029 so the buyer is earning a 6.29 per cent yield on their money.

Shepherd Neame sells Brighton pub to local multiple operator: An unnamed Brighton multiple operator has bought the city’s Northern Tavern on Ditchling Road from Shepherd Neame for £275,000. “Shepherd Neame first put the Northern on the market a while ago after a full refurbishment but then changed its mind. The company recently offered it for sale again and accepted an offer of £275,000,” says Anthony Alder of agent AG&G, who handled the sale. “The new owner is a local multiple operator, who has plans to convert the ground-floor trade area into a café/restaurant with offices or possibly residential accommodation above.”

Spirit Pub Company unveils strategy for leased estate: Managed operator Spirit Pub Company has unveiled the details of a radical new strategy to drive performance in its leased estate by applying franchise and semi-franchise agreements. Chief executive Mike Tye told City analysts that the leased division has great properties that had suffered years of lack of investment and retail expertise. “This will be the first year of putting that right,” he said. Tye added that he wanted to move away from the perpetual tenanted arena “arguments on how to divide the profit cake by growing the profit cake” and that the traditional fixed rent plus beer margin model is “imperfect”. Spirit will apply three new models to its leased division with lower fixed rent and high variable rent as a new approach that incentivises the company and lessees to drive turnover and profit. The first model is a straight-forward franchise of its John Barras brand as a starting point – other brands may follow. The first site, opening this weekend, will be The Heartsease pub in Plumstead Road, Norwich, which has had a £200,000 investment and will be run by franchisees Michael Bream and Rebecca Barker. The second new model will be a semi-franchise model where lessees will be given the full benefit of managed division expertise and wherewithal with a percentage of sales passing to Spirit to encourage both sides “to strive for sales growth”. The third model applied by Spirit will involve the company taking product and price control on the pub’s drink and food offer. Tye also said there was premium end to its leased division where very high quality multi-site operators and licensees would continue to work more independently. He added that the three-pronged interventionist strategy is a “natural evolution of good licensee retailing”. Spirit will also initiate retail training for entire leased pub teams and introduce a mystery customer scheme. Analysts were told by Tye that he thinks between 100 and 200 of Spirit’s leased pubs will convert to either the full franchise or semi-franchise model over time. “All of the people we’ve spoken to see the upside,” Tye said. He further told analysts that it would have been wrong to sell the leased division when there is “no market” to sell it. “That would have been destroying value rather than accreting it – and we’re now of the view that there is considerable upside.” The company would take a robust view where it thinks lessees and Spirit could be earning, say, £200,000 per annum each at a pub – and income is far lower. “We’re going to shake the tree - 490 of our 550 leased pubs were managed pubs and we’re hanging in there because there are some fantastic assets.” Spirit has also installed I-draught systems in its leased estate and removed around £1.7m of support costs. Asked whether he thought creating franchised pubs would make Spirit leased harder to sell eventually, Tye said: “I don’t think that’s the case – we just agree a franchise agreement with the new owner.” Spirit still plans to sell around 50 leased pubs in the coming year. The company has converted 11 leased pubs to its managed division so far at a cost of around £400,000 each.

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