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Morning Briefing for pub, restaurant and food wervice operators

Fri 19th Oct 2012 - Novus, Restaurant Group and Orchid

Story of the day:

Wetherspoon founder Tim Martin criticises companies for not being vocal on VAT campaign: JD Wetherspoon founder Tim Martin has voiced his most outspoken criticism yet of the senior companies in the sector that are not taking an active approach to the campaign to reduce VAT to five per cent. Martin compared the current situation to the debate over licensing reform a decade ago when a number of large companies failed to oppose the move – while Wetherspoon and family brewers campaigned against it. He has gone further and argued that this “ostrich-like” approach is a failure to understand a major threat to their businesses. Martin, writing in the Propel Friday Opinion section, said: “A decade on (from the licensing reform debate), a debate about VAT is creating a new division in the industry. Wetherspoon and the family brewers are backing Jacques Borel, and argue that pubs can’t possibly compete with supermarkets, having already lost 50 per cent of their beer sales, unless there is tax parity – 20 per cent food VAT for us and nothing for supermarkets is the road to hell. This camp has been joined by a number of restaurant companies, smaller pubcos and, to their credit, Punch. The other camp, which includes M&B, Greene King, Marston’s and Enterprise, might like the idea of VAT equality, but they’re keeping schtum and, while not disputing the logic of the Borel camp, refuse to emerge from the closet and support it overtly. Just like a decade ago the tenants of the ostrich companies are solidly with Jacques: they know what it’s like to trade next to Tesco Metro, but their boards of directors are way out of touch. I think it’s instructive to contrast the earnings per share (profits divided by the number of shares in issue) for those companies which vociferously supported the retention of magistrates’ control a decade ago with those which opposed it. If you look at the results for Wetherspoon, Fuller’s, Young’s and Shepherd Neame, for example, it’s as plain as a pikestaff that we have far outshone our adversaries at the time, especially since the going got tough after the smoking ban. The reason for this is that companies which face the brutal facts take a longer term approach and acknowledge and understand the threats to their businesses. Those companies that refuse to face up to reality and opt for the ostrich-like approach invariably end up with serious problems. The Jacques Borel side understand that pubs face an unfair and life-threatening VAT disparity. Boards of directors that don’t understand this threat and sit on the sidelines are ostriches which can’t see the elephant in the lounge bar.” See separate Friday Opinion e-mail for the full Tim Martin article.

Did you know that Novus has a bigger turnover than Shepherd Neame? 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

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:

Restaurant Group’s Andrew Page hails the resilient eating out market – and predicts further growth: Restaurant Group chief executive Andrew Page has hailed the buoyancy of the eating out market through the recession – and stated his belief that growth will continue. He told The Financial Times: “I’ve never seen a recession like this – what’s been surprising is the resilience of the dining-out market.” The UK’s eating-out market has grown nearly seven per cent since 2007, to be worth an estimated £31.5bn in sales this year, according to Mintel. The FT reports that Restaurant Group will invest up to £9m to build ten Coast to Coasts as part of a 30-strong restaurant expansion plan next year. Deloitte research shows that eating out in the UK has grown over the past 30 years to account for around a third of total spend on food – but this is still a long way behind the US where the figure is 50 per cent. “If you look at our level of eating out compared to the US, there’s still some way to go,” said Page. “I’m very firmly of the view that we’ve got another generation of growth in the dining-out market. (Dining out) has become a small-ticket item. We’re seeing a shift towards less stuff and more experiences: not another carpet or kitchen but people are prepared to go out for a family meal.”

Nigel Ball – rents should be (mostly) falling: Nigel Ball, who works for BNP Paribas Real Estate and negotiates rent reviews for some of the sector’s largest operators, has argued that rents in the pub sector should be falling – in line with the wider market. Writing for Propel Friday Opinion he stated: “All of the economic and industry evidence suggests that rental values should be falling, yet the ALMR Benchmarking Survey (phase 6, July 2012) suggests that rents in the pub sector have increased by almost 11 per cent since 2009. So why are rents still increasing? Well, the answer is that (with a few exceptions) they probably shouldn’t be.” See separate Friday Opinion e-mail for the full Nigel Ball article.

Booker – we expect to pick up as much as £60m turnover from WaverleyTBS collapse: Booker chief executive Charles Wilson has told Morning Briefing that he would be “disappointed” if the company failed to pick up between ten and 20 per cent of WaverleyTBS’s £300m turnover - £30m to £60m - in the wake of its liquidation. “We’ve seen quite a bit of business move towards us,” he said. Meanwhile, Booker said that it expects that the combined Booker and Makro business will grow combined sales from the current £4.6 billion a year to £6 billion. The company has launched a lock-down on the price of core commodities until 4 December.

ALMR – pub chains are the UK’s number one coffee seller: New figures released by the Association of Licensed Multiple Retailers have revealed that Britain’s national pub chains have now become the country’s number one coffee seller, with over 3.6 million cups sold each week. Commenting on the figures, collated from within the Association’s membership, strategic affairs director Kate Nicholls, said: “These figures demonstrate why Britain’s pubs and bars are at the healthy heart of local communities. They are not only a great place to socialise with friends or share a meal with family, they are also Britain’s favourite place to grab a coffee.” The Association has also calculated that whilst Starbucks has reported an effective tax rate of 31.1 per cent, paying no corporation tax on annual UK sales of £1.2 billion, pubs and bars have an effective tax rate of 68.1 per cent, with corporation tax accounting for a quarter of that. Kate Nicholls said: “We may have imported the American model of coffee shops onto our high streets, but you can’t beat the British pub - and our customers can enjoy their coffee knowing that we pay every penny we should in tax.”

Movie house with restaurant segment in the US grows: A market segment in the US that offers cinema screens and good quality restaurants to time-starved consumers at the same location is showing rapid expansion. Studio Movie Grill unveiled its tenth and largest location so far this week - the 12-screen, 1,500-seat Studio Movie Grill in Dallas. Other growing brands include Alamo Drafthouse Cinema of Austin, Texas, Cobb Theatres/CineBistro of Birmingham, Alabama, iPic Theaters of Los Angeles and the 16-unit Movie Tavern, also of Dallas. Time savings are one of the major reasons for the segment’s growth. One industry expert said: “As our schedules get busier, having a great night out that combines everything in one place saves time and reduces stress.”

Technomic to hold UK and US foodservice trends briefing in November: Research and market insights company Technomic to hold a half-day conference on Friday 7 November to provide an overview of key UK and US foodservice trends. Technomic states that the event will help attendees “assess existing and emerging competition” and help operators “position or reposition” their brand. The event takes place at The Cumberland, Great Cumberland Place between 7.30am and 12.30pm and costs £95 to attend. The link to book a place is 

Winners of the British Beer and Pub Association awards unveiled: The winners of the British Beer & Pub Association industry awards have been announced at the BBPA’s annual dinner – including a special Chairman’s Award for someone who inspired a nationwide petition to stop the beer duty escalator. The winners are: Heart of the Community award: Joseph Holt; Beer Champion: Liberation Group; Pub Champion: Daniel Thwaites; and the Chairman’s Award: Chris Keating of Wychwood Brewery.

US consumers name favorite pizza chain: A survey of 7,600 people by Market Force Information has found 550-strong CiCi’s Pizza is America’s favorite pizza chain, finishing just ahead of Papa John’s and Papa Murphy’s Take ‘N’ Bake Pizza. The survey asked customers to identify their favorite restaurant chains and to rate those favorites’ performance among key attributes like taste, service, cleanliness, atmosphere and overall value. The total number of votes each chain received was divided by that brand’s number of US locations in order to create a level playing field among national players and regional pizza chains.

New restaurant quarter planned for Milton Keynes: A £15 million planning application to extend Midsummer Place Shopping Centre in Milton Keynes and create a new restaurant quarter has been submitted. The improvements, which could add 57,000 sq ft of new retail space to the centre, aims to bring more fashion, restaurants and jobs to the area. Milton Keynes Council received the application from developers Legal & General Property (LGP).

University bar closes down: The University bar in Aberystwyth has closed because of a lack of custom from students. Student president Ben Makin said: “More students are drinking coffee during the day while studying – and fewer are going out late into the night.”

Company news:

Novus achieves plus four like-for-likes in August, down from 12 per cent run rate: London pub, bar and restaurant operator Novus saw four per cent like-for-like sales growth in August. The company, which has been seeing 12 per cent sales growth, out-performed the market but chief executive Steve Richards told Morning Briefing that he was “disappointed the company had not done better”. Novus had £7m of sales from pre-booked parties during the month, including 17 parties booked by Olympics sponsor McDonald’s, and this helped mitigate a significant drop in footfall. Richards said: “We did well on pre-booked sales but walk-in business was poor. The West End was particularly hit during August as it’s the major centre for tourists - people stayed away or were diverted.” Novus’s August sales figures compare well with London visitor attraction numbers, which saw double digit declines in the month – London theatres have reported a 26 per cent decline compared to the year before. Novus will be publishing its annual figures for the year to 29 July in a few weeks and it is understood record profits were again achieved. In March, Richards told a Numis Securities conference that the company was forecasting a £18m pre-tax profit.

Brakspear completes first sale and leaseback: Brakspear has bought its first pub on a sale and lease back basis, purchasing The Running Horses in Mickleham, Surrey. Owners Steve and Josie Slayford become the lessees at the award-winning pub. The Slayfords have been at The Running Horses for 17 years, initially as lessees before buying the freehold in 2009, and have turned it into a successful food-led pub with five letting rooms. It was recently named ‘Surrey Dining Pub of the Year’ in the Good Pub Guide for 2013, cementing its reputation for top quality food and service, combined with a thriving traditional bar. Sited close to Box Hill, the pub does a brisk trade with walkers and others visiting the popular landmark. “Selling to Brakspear gives us the best of both worlds,” said Steve. “We continue to run the pub, which is what we love doing, but now we can invest in the business again. Brakspear’s designer has already started to work on a refurbishment, which will refresh the dining areas and give them a more informal feel. We had a few expressions of interest in the pub, and we chose to sell to Brakspear because we like the way they do business: it feels like a partnership where we’re given a lot of autonomy in how we run the pub and they give us the support we need to do it well.” Brakspear chief executive Tom Davies added: “We’re delighted to be adding The Running Horses to our estate: it’s a great pub with a fine reputation, thanks to the sterling work by Steve and Josie over many years. With the forthcoming refurbishment, and other support we can offer them, we’re confident they will make the pub even more popular and successful.” Brakspear and the Slayfords are jointly funding the pub refurbishment of around £50,000.

Orchid Pub Company reports Christmas booking up ten per cent after pro-active approach: Orchid Pub Company has reported Christmas bookings are ten per cent up on last year after adopting a proactive approach. The company reports that business-wide advanced planning began in May with menu ‘cook offs’, training and tasting for staff, and a massive operational focus with all managers attending a roadshow to share festive best practice. The company also provided examples of manager-led initiatives: At The Legh Arms in Macclesfield, general manager Celia Heaton gives her staff a rather different work challenge to get the bookings in. “We’ve been sending two of the girls out into the town dressed up in Santa outfits to start spreading the word,” she said; The Church Tavern in Birmingham is another advocate of fancy dress as a way to get people committing to their Christmas parties. General manager Rachel Onysko dressed up as an elf last year and this year it is the turn of one of the male members of staff. “It works really well as it shows people that we’re happy to go the extra mile to make their Christmas with us really special,” Rachel said. The Bramingham in Luton, has brought the party season forward a week to avoid businesses having to postpone celebrations until January. The Bramingham is also using vouchers with Christmas bookings to get people back into the pub in January – offering them a free bottle of wine with their first meal of 2013. The Henry Boddington in Salford takes Christmas to potential customers. Staff there head out to local businesses and retirement homes, helping them get in the festive spirit early with Christmas party bags to show them just what the seasonal experience at an Orchid pub entails. Simon Dodd, commercial director at Orchid, said: “All these ideas stem directly from our pub teams, and they never fail to amaze us with new ways to promote Christmas each year.”

Marston’s acquires Orchid pub in south Gloucestershire: Midlands-based Marston’s has acquired The Bradley Stoke pub in Brook Way from Orchid Pub Company. The pub is expected to re-open in 2013 after planning permission has been obtained for refurbishment. A Marston’s spokesperson said: “We are looking to obtain planning permission to renovate The Bradley Stoke. The planned refurbishments would see the pub re-opening again in 2013 with a focus on food.”

Hakkasan to launch late-night lounge concept: Restaurant group Hakkasan is to launch the Ling Ling late-night lounge concept at its Hanway Place site on 1 November. The concept will see the restaurant turn into a late night lounge on Thursday, Friday and Saturday after 11pm. The Hakkasan menu will be available until 1.30am. A smaller dim sum menu will be available until later.

Milton Brewery lines up to run new Cambridge pub: Milton Brewery, which runs The Devonshire Arms in Cambridge, is in talks to run a new-build pub planned by developer Danescroft. The developer bought The Queen Edith in Wulfstan Way, shut in December 2011, from Punch Taverns and wants to redevelop the site to build flats – but also a new, smaller pub. A spokesman for Danescroft said: “The proposal is to redevelop the site to incorporate a new, smaller, more traditional public house building with a separate block of apartments to the rear.”

JD Wetherspoon finds Dumbarton site (at third attempt): JD Wetherspoon has applied for planning consent to open a new pub in the former Woolworth’s store in Dumbarton, which has a population of 20,527. The company has been looking for a site in Dumbarton since 2003 when it looked at launching a bar within the former Blair and Bryden solicitor’s office on the High Street. It has also intimated an interest in the former Co-op building and the town’s Artizan Centre in the past.

Historic “Mitchells & Butlers” pub available for £50,000: A landmark pub in Smethwick, West Midlands, The Waterloo, which carries Mitchells & Butlers branding from its historic brewing days, has been placed on a list of the UK’s top ten endangered but historic buildings by the Victorian Society. The pub was built in 1908 and goes under the hammer at an auction at Villa Park on 31 October with a guide price of £50,000 – the pub closed in 2010. Chris Costelloe, director of the Victorian Society, said: “It needs a plan that retains its use as one of the most stunning pubs in the West Midlands.”

Chivas plans new distillery: Chivas Brothers, which is owned by Pernod Ricard, is planning to build a new distillery in Speyside as part of a £40m expansion plan. The company, which owns brands such as Chivas Regal and The Glenlivet, wants to build the distillery on a site that houses the disused Imperial Distillery close to the village of Carron.

M&B’s Nicholson’s to hold first autumn cask festival: Mitchells & Butlers’ Nicholson’s brand is to host its first Autumn Ale Festival next week. The Autumn Ale Festival runs from 22 October to 18 November and will offer to a selection of 60 cask ales on rotation across all 80 Nicholson’s pubs. Many pubs will be extending their regular range of 12 casks to over 20 autumnal ales during the Festival. The ales have been specially selected from some of the country’s top microbreweries, including Halloween Ales and beers exclusively to Nicholson’s. Assistant brand manager Ben Lockwood said: “Our Autumn Ale Festival gives Nicholson’s a great opportunity to showcase our extended range of ale and our passion for a pouring a quality pint. With cask ale experiencing a surge in popularity, and the boundaries of innovation and flavour being pushed by microbreweries, Nicholson’s has the credentials to offer guests one of the best real ale pub experiences.”

Greene King gets planners backing for Bristol Hungry Horse: Planning officers have backed a plan to build a Hungry Horse pub on a former school site in Bristol. The plans are set to be discussed at a meeting on Wednesday (24 October 2012).

Pret A Manger earns award in France: Soup and sandwich chain Pret A Manger, which opened it first site in Paris nine months ago, has been awarded the Enseigne d’Or for the efficiency of its operations at a ceremony attended by thousands of French retailers. There are three Pret A Manger branches in Paris, all with higher average sales than in London with a fourth due to open. Clive Schlee, the chain’s chief executive, said: “We were initially worried about how we might be received, but this award is the realisation of what our Parisian customers have already been telling us. They love the quality of our food and the speed of service.”

Itsu leads the way in Southwark: Sushi chain Itsu has become the first operator to take space at the Harlequin Building at 65 Southwark Street. Itsu, which has 30 sites across London, has leased the entire ground floor retail area, comprising just under 3,000 square foot of space. It has signed a 15-year lease at an initial rent of £130,000 per annum.

Burger and Lobster to open fourth site: Burger & Lobster will open its fourth site on Bread Street in the City of London on 5 January. News of the next site comes as the company opens its third venue opens today in Farringdon. The company also has sites in Mayfair and Soho.

Spirit’s leased division to offer “entrepreneurial training”: Spirit’s leased division is offering its licensees access to entrepreneurial training at no cost. The two day course - Growth Through Retail Development (GTRD) & Growth Through Effective Marketing (GTEM) - is available from this month at various locations across the country. Developed jointly by Spirit and training expert Clinton Horn of Exemplar Training & Development, the course focuses on developing licensees, who already run large turnover businesses found in the Spirit estate, to enhance profit through guest facing improvements & industry leading retailing techniques. Managing director for Spirit Leased, Chris Welham said: “We absolutely must offer guests visiting our pubs the very best in service and standards and to do this we need our licensees to be great retailers. We have some exceptional licensees in our estate running large and unique pubs and these courses will build on their expertise and take their pub offers to the next level”.

Coffee and book shop concept secures second site: A new concept that combines coffee and books, which launched in London last month, has acquired a second site. Paper & Cup, which opened its first site in Shoreditch, east London, will be opening its next outlet on St Paul’s Way in the Mile End region of the capital on 1 December. Brent Clark, founder of Paper & Cup, told British Baker: “We have just confirmed we are expanding to a second store. I was always looking to grow the business, but I certainly didn’t expect to do it within a month of opening our first site. We are being supported by Lexington Catering with the management and start-up side of things, along with a couple of members of staff to help get us off the ground.”

Everards to submit £20m planning application next week: Everards, the innovative Midlands brewer and retailer led by Stephen Gould, will submit its application next week for outline planning consent to build an ambitious new £20m food and drink cluster – The Soar Food and Drink Park - on the outskirts of Leicester next week. Everards wants to build a new craft brewery, “brew-pub” and visitor centre on a 13-acre site next to its existing Castle Acres brewery, with access to a further 73 acres of recreational land that is part of the River Soar flood plain.

Whitbread provides start date for new finance director: Whitbread has this morning reported that its new finance director Nicholas Cadbury will start work and join the board on 14 November. 

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