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Morning Briefing Strap Line
Mon 22nd Oct 2012 - M&B, McDonald’s and Cote

Story of the day:

Mitchells & Butlers moves to introduce “small plates” across Crown Carveries: Mitchells & Butlers (M&B) has moved to introduce small plates across its entire 110-strong budget carvery chain Crown Carveries. The expansion of small plates, priced at £3.69, follows a successful trial at 20 sites. The move is counter-intuitive – looking to charge customers less than the normal price for a smaller plate - but could be the route to higher margins at the high-volume business. The Crown Carveries business, which charges £4.19 for a full-sized carvery Monday to Saturday and £7.29 on a Sunday, has grown from inauspicious beginnings when M&B was fearful it might cannibalise sales at its higher-priced Toby Carvery brand. It was applied as a “sticking plaster” brand at a few sites when other brands and offers had failed to past muster – and was quickly found to drive enormous volumes. The brand was named by former chairman John Lovering as one of M&B’s six key drive brands. However, the value part of the market became more competitive and M&B has not progressed expansion of the brand. The challenges for Crown Carveries seemed to be exacerbated as the company began to discount what was already a value band. The introduction of “small plates” looks to be a way forward for the brand because it drives more volume – not everybody wants a large-portion carvery – and provides better margins on account of having around 50 per cent less meat, the expensive component of the larger serving. One industry observer noted: “Crown Carveries is the kind of brand that M&B does best – high-volume, high-quality carvery. However, it’s been a little caught by the crossfire in the value-driven part of the market where the discounting has been fairly ferocious. Small plates looks like a clever route to better margins and incremental volume – you’re attracting customers who love carvery but don’t want the full-size serving every time.” Adverts for “smaller carvery” appeared in national newspapers at the weekend. Crown Carveries is thought to serve an astonishing 20 million meals per annum, which works out at around 3,500 covers per pub per week.
Propel Opinion by Paul Charity: Mitchells & Butlers’ Crown Carveries brand, overseen by Jeremy Skingley who also looks after Toby Carvery, is not one of the company’s better-known brands. It deserves more recognition because it generates extraordinary numbers of covers, the largest of any brand at M&B. To put its volumes in context, 20 million meals per year at 110 pubs compares to a total of 26 million meals served per annum across Marston’s 550 managed pubs (2011 annual report figures for Marston’s.) In Mitchells & Butlers terms, it serves just less than one in six of the 125 million meals sold to customers each year at circa 1,600 pubs. However, competition at the value-food end of the market has been ferocious and, at times in recent years, Crown Carveries’ sites have been forced to discount down to £2.99. The small plates initiative looks like a way out of the low margins trap, with the company hoping to generate even more volume at better margins. It will be interesting to see how this plays out.
Did you know that Charles Wells has a bigger turnover than Young’s? 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:

Licensee highlights unfair business rates: A Midlands licensee, Nigel Wooliscroft has written to The Financial Times, to highlight the unfair levels of business rates levied on his pubs. He wrote: “I own and run two leased public houses in a small market town in the Midlands. The single most unrealistic cost I face in trying to keep my businesses going is the shockingly high level of taxation dressed up as business rates. My pub on our high street has a rateable value of £61,500, while a large, more prominently sited NatWest branch less than 100m away is valued at £63,000, and a nearby restaurant at £19,500. There can be no comparison between my very small business and the NatWest branch, and I’m sure the turnover and profitability of the restaurant exceeds my own. My other pub in a side street on the edge of town is rated at £48,750, while the Chinese restaurant next door to it is rated at only £7,100. The government needs to look at the business rates valuation system very carefully, then come back to me and tell me why NatWest pays the same amount as my little pub.” Propel Info asks: Do you have any examples of clearly unfair business rates at your sites? E-mail Paul Charity on

Jamie Oliver to launch lunches at Boots: Celebrity chef Jamie Oliver is to lend his name to a new sandwich and snack range at Boots. The new “Jamie does lunch” range is described as the first “deli-inspired” lunch range in the UK. Prices will start at £1.95 for its new range of sandwiches, wraps, salads and dips, including an Italian inspired sandwich called the “Muffuletta”. Boots is hoping the new range will equal the success of its Shapers meal deal which provides a meal for under 500 calories. 

Starbucks UK boss campaigned against tax avoidance as Clinton aide: Starbucks UK boss Kris Engskov was a key aide to Bill Clinton when he campaigned against tax avoidance in the US by large foreign-based corporations, The Observer has reported. On the campaign trail Clinton argued that he could collect an additional £45bn in tax from foreign multinationals in just four years. A total of almost £26m in “royalties and licence fees” was paid by Starbucks UK in 2011 to other parts of the group. Engskov has defended this by pointing out that royalties are levied at the same percentage of revenues everywhere Starbucks operates in the world.

Staying in costs more than going out: A survey by insurer Sheila’s Wheels has found that staying in on a Saturday night can cost more than going out. Its research has shown four out of five Brits will forgo a Saturday night-out in the run-up to Christmas to save a few pounds and four out of ten say they expect to stay in every Saturday night before the festive season arrives. The firm found that a group of five friends staying in works out at an average costs of £174 or around £22 each; the same as the average spend per head on a meal out, while an evening at a local pub is the cheapest option with friends, costing an average £17.

Tony Brookes – the health lobby is an ally of pubs: Tony Brookes, the supermarket alcohol price campaigner and boss of seven-strong north east company Head of Steam, has argued that minimum pricing could be set higher without any affect on pubs and that the health lobby is an ally of the trade. He said: “MUP could be set considerably higher than the levels currently envisaged - 40 to 50p - without it having any impact on pubs at all except the ones offering irresponsible ‘three shots for a quid’ type promotions, which are supposed to be outlawed anyway. The health lobby is not the enemy of the pub trade – it is the ally of pubs, if approached correctly. By having a high MUP (and other processes designed to reduce the attractiveness of supermarkets’ irresponsible drinks promotions), there would be less alcohol drunk in total (health lobby – yes) and a higher proportion would be sold in pubs where consumption is controlled (health lobby – yes) and there would be fewer, if any, ridiculously cheap alcohol deals such that drunks can get smashed for coppers (health lobby – yes). There would, therefore, be less binge drinking – which takes place primarily in homes and in alleyways - and admittance to hospitals with alcohol-related problems and fewer operations (health lobby – yes) and the police would need less resource to tackle public disorder. A further point is that I believe, on average, alcohol sold in pubs is weaker than that sold in supermarkets. Much of it is ordinary bitters or best bitters in the area of 3.6 to 4.3 per cent ABV. Supermarket shelves are stacked with bottles of beers and lagers at around five per cent ABV. There can be no arguing that reducing the sales of super-cheap super-strength alcohol in supermarkets would be a good thing to impact on the real problem drinkers.”
Allsop October auction best in six years: Allsop’s October commercial auction was the largest sale in six years and raised £75.5 million. A total of 213 Lots were offered over two days with 159 properties sold, achieving a success rate of 75 per cent. A spokesman for Allsop said: “This is the best end-of-day result in terms of success rate and overall value in the market since December 2009. Prices were sustained for well-let property in good locations, as seen in a slight firming of the average yield on A grade retail from 6.6 per cent in July to 6.2 per cent (net). Our recent buyers’ survey results highlight that 21 per cent of buyers at our auction are local to the area in which they invest. The remainder are regular national buyers and ten per cent were from overseas. This was a significant increase in international bidders in the room, particularly from a South African consortium who bought nine lots across the UK.”
Double dip recession expected to be declared over this week: The Office of National Statistics is expected to declare at end to the double-dip recession this week by reporting the economy grew by 0.7 per cent in the three month to September.
Staycation trend drives Center Parcs to 97.1 per cent occupancy: latest to be hit by interest rate swap: The “staycation” trend saw occupancy levels at Center Parcs’ four UK holiday villages hit 97.1 per cent in the year to 26 April 2012, up from 96.3 per cent the year before. Average daily rent per villa hit £140.73 compared to £136.49 the year before. Meanwhile, Center Parcs has become the latest company to be hit by an interest rate swap. The company spent £66m unwinding a swap, prompting it to report a £47.8m pre-tax loss in the year to April 2012 despite making a pre-exceptional profit of £32m on sales of £297.1m. Mitchells & Butlers and Thwaites are among the larger pub and restaurant companies to have been hit by costs associated with interest rate swaps.
Government to ban discounting of multiple bottles of wine; presses ahead with minimum pricing: The government is to ban the sale of discounted multiple bottles of wine a part of its alcohol strategy expected this week, according to The Telegraph. Discounted multi-deals give shoppers an incentive to buy more alcohol than they intended, minister believe. The Home Office will seek views on a range of options for a minimum unit price on alcohol. 

Company news:

McDonald’s reports five per cent like-for-like sales increase in the UK; breakfast sales and “premium” burgers show double digit growth: McDonald’s has reported like-for-like sales have climbed by five per cent this year in the UK, which means it’s had 26 consecutive quarters of growth. It saw a double digit rise in the sale of breakfasts and more expensive menu items such as its Chicken Legend – and now has 477 restaurants open 24-hours–a-day, a rise of more than 50 in a quarter. The company is also set to provide free iPads for customers to use. Jill McDonald, the head of McDonald’s in the UK, said: “Customers are a lot more discerning about how they spend their money. We can offer a meal out for a family of four for less than £15.” The company has opened another 13 sites this year, creating 800 jobs. The company said it expected to serve around one in ten meals on the Olympic Park for spectators and athletes, but actually served one in five – the equivalent of 2.5m meals. McDonald said: “The summer of 2012 was an exciting one for the country as well as for us at McDonald’s. But it wasn’t just about London 2012. We experienced another strong quarter of growth in sales and customer visits all around the UK, with people choosing us because we continue to provide good food and good service at great value for money.” In the US, the company is looking to take more market share by emphasising the “entry level” Dollar Menu, Daily Double and Bacon McDouble burgers while encouraging trade-up to premium-price items such as its new pair of CBO (Cheddar Onion Bacon) Angus and chicken sandwiches. McDonald’s is testing a number of technological improvements, including kiosks, e-couponing, mobile ordering and mobile phone-based customer loyalty programs. However, none of these is ready for a systemwide introduction just yet.
Chef & Brewer offers 25 per cent discount on new menu: Spirit Pub Company’s Chef & Brewer brand has launched a national newsprint advertising campaign offering 25 per cent off food bills until 3 November. The discount coincides with the launch of a new menu items. New main course items include: venison pie, chorizo chicken, a 10 oz rib eye steak, Scottish venison burger, grilled sea bass risotto, a vegetable terrine and vegetable patch pie.

JD Wetherspoon lines up site in Plympton: JD Wetherspoon has applied for planning consent to convert the Ridgeway’s former Job Centre building in Plympton into a pub. The company has requested to put extensions on two floors – the ground and first – at the site which was most recently used as a temporary building for Plympton’s library – Plympton has a population of 35,000. A spokesperson for Wetherspoon said: “We have a number of pubs that have been very successful in the city for more than ten years and we are always looking to expand.” This is the second time the pub chain has attempted to open its doors in Plympton’s Ridgeway. In 2008, JD Wetherspoon abandoned attempts to move into a Grade II listed building at 111 the Ridgeway, after planners rejected the application.

Starbucks closes Horsham site: Starbucks has closed its site in Horsham two weeks after Pret A Manger opened one of its newer coffee shop format sites in the town. The Starbucks site also faced competition from Caffe Nero, which opened a year ago, and Costa Coffee, as well as a host of independents.
Cote sale story resurfaces: The Sunday Telegraph has repeated a story about the possible sale of French brasserie chain Cote. Propel Morning Briefing reported in August that its owner Richard Caring had appointed Hawkpoint to explore a possible sale. The Sunday Telegraph reported: “Caring could sell a stake to a new investor who would help bankroll expansion or sell outright.” The company saw turnover of £35,583,416 in the year to July 2011 and Ebitda of £6.8m with pre-tax profit of £3,971,680. Cote currently operates 33 restaurants, with seven sites opening in the past year. It opened 12 sites in the previous financial year. The last filed accounts show the company owed Caring £6.79m, which he provided the company as an unsecured, non-interest bearing loan – it has bank debts of £13.29m. Industry experts believe the company is likely to have Ebitda in excess of £10m for the latest financial year, which finished at the end of July, with the company worth between £90m and £110m.

Rotiserie chicken concept to open in Soho: The latest concept to focus on chicken, Clockjack Oven, will open its first site in Soho in December. The restaurant concept will serve rôtisserie chicken and hopes to grow to 15 sites in the capital in the next five years. Clockjack Oven has been founded by Frazer Duncan and Jerry Goldberg and will occupy the former Piccadilly Spice restaurant site on Denman Street in Soho, which will reopen as the first Clockjack Oven restaurant in December. Two more sites are planned for 2013. Michelin-starred restaurateur David Moore, owner of Pied à Terre and L’Autre Pied, is a non-executive director of Clockjack Oven.

Tortilla opening three sites this autumn: Tortilla, the UK’s biggest fast-casual Mexican restaurant group, is opening three new UK sites this autumn. The first new restaurant, which opened at the start of October, is located at Crown Estate’s 460 Strand site in central London, adjacent to Trafalgar Square. The other new sites, which will open in October and November, are located at Bluewater in Kent and in Hammerson’s WestQuay Shopping Centre in Southampton respectively. The new openings follow £2.25m of bank financing from Santander Corporate Banking and a £3.5 million investment from Quilvest Private Equity in December 2011.

Nottingham micro-pub gets planning go-ahead: Nottingham planners has granted planning permission to allow a former pharmacy to be turned into the city’s first micro pub – on the Mansfield Road, Carrington. There are currently just six micro pubs in the country, with four in Kent, one in Hartlepool and one in Newark. The new one will seat 24 people. Committee chairman Councillor Chris Gibson said: “I think this will be an interesting take on a pub. Apparently, there will be waiter service.”

Former Belfry managers to launch boutique hotel collection: Three former members of the management team at the Belfry in Warwickshire, are launching a group of boutique hotels in the east of England called the House Collection. The 21-bedroom Poet’s House in the centre of Ely will be the first site in the group, and will open in spring 2013, with a second property following in Cambridge. Finance has been provided by Cambridgeshire company Eastern Counties Finance. The founders of the House Collection - David Toulson-Burke, Ian Cross and Jonathan Baker - want to create a portfolio of high quality small hotels with a maximum of 45 bedrooms. 

Jamie Rollo increases Spirit price target to 55p per share: Morgan Stanley analyst Jamie Rollo has increased his price target on Spirit shares to 55p. He said: “Spirit’s full-year result results were in-line with our expectations, though a tad below consensus, and showed a good improvement in the second half. Current trading was mixed (strong in managed, weak in leased), and we did not make any significant forecast changes. There were a large number of exceptional items, and Net Asset Value post the asset write-down nearly halved to 76p. The company did not give much of an update on its strategy for leased, which is a little disappointing. Net debt rose in the year, and PLC cash fell quite sharply suggesting little has yet been upstreamed from the securitisation structure. We have increased our price target from 40p to 55p reflecting the significant increase in peer group valuation multiples, in-line with our estimates, a touch below consensus.”
TGI Friday’s makes key appointment as it gears up for 20 openings in the next three years: TGI. Friday’s has appointed David Carroll as director of acquisition and development as the company gears up for 20 new openings in the next three years. Carroll, who started his Friday’s career as a restaurant manager 13 years ago, will be looking to “unlock new opportunities for Friday’s”. Carroll was heavily involved in the development of one of Friday’s recent openings, Manchester Royal Exchange, which boasts one of the world’s biggest bars, unique restaurant design and the first Friday’s Mixology bar. One of David’s current projects is to lead the opening of the first Friday’s restaurant in Jersey, which is due to open in December and will create 80 jobs on the island. Carroll said: “These are really exciting times for Friday’s, we’ve had continued growth in recent years and want to ensure that this continues. I’m looking for lots of new site opportunities across the UK, particularly in shopping centres, retail parks, and central city locations.” Karen Forrester, TGI Friday’s UK chief executive, said: “The new structure at Friday’s reflects the speed at which we want to grow our UK business. As a brand we’re never standing still, and are continually developing our restaurant design, guest experience, and quality offering. David has played an integral role in the leadership team at Friday’s and has been instrumental in the successful opening of our new restaurants including Westfield Stratford, Manchester Royal Exchange and Wembley.”

Thai restaurant chain secures £2.4m of funding: Thai restaurant group Chaophraya, which will open its seventh site in Edinburgh next month, has secured £2.4m of investment from Santander’s Breakthrough programme for small and medium-sized busineses. Chaophraya, which currently has restaurants in Leeds, Liverpool, Manchester, Sheffield and Birmingham, will also use the investment to extend its original Leeds restaurant and open another new site at the start of 2013. The group was founded in 2004 by Martin Stead and Kim Kaewkraikhot, who opened their first restaurant in Leeds. The group has since branched out with its ChaoBaby concept, which is designed for shopping malls and has units in the Trafford Centre in Manchester and Meadowhall centre in Sheffield. “We have been steadily growing our businesses since establishing our first restaurant eight years ago,” said Stead. “Our aim is to take the Chao experience to as many cities as possible but we had reached a stage in our lifecycle where accessing further finance to invest had become problematic.”

Indian restaurateur looks to expand across the south east: Restaurateur Dev Biswal, who runs The Ambrette restaurant in Margate and Rye, is hoping to expand his Indian restaurant business across the south east through franchise. He said: “We’re now looking at good, affluent locations in the South East to set up more Ambrettes – we’re looking at Tunbridge Wells, Sevenoaks, Guildford, Surrey and Canterbury. I think the fact that there is no major chain is due to the way the Indian restaurant sector is structured in the UK, it’s mainly dependent on chefs and nobody has standardised a proven formula which works nationwide. Also, the cooking involves too many parameters, so it can be very difficult to franchise it – we cook with so many different spices and ingredients.”

Cipriani pizzeria agrees to change its name: The newly-opened Cipriani pizzeria in Northern Ireland has agreed to change its name after the ultra-fashionable Hotel Cipriani in Venice took legal action. At Belfast High Court on Friday, the hotel sought an injunction claiming its Europe-wide trademark had been flouted. The owner of the pizzeria has agreed to stop using the name within four days.

Amber Taverns lines up Morecombe’s Ma Murphy’s pub: Amber Taverns, led by James Baer and Bryan Wardman, has put in an offer to buy the former Ma Murphy’s Irish Pub on Lines Street in Morecombe where it plans a £375,000 refurbishment. Gary Roberts, operations director at Amber Taverns, said the deal is subject to licensing approval. Roberts said the building would remain as a community pub but the name would be changed and a major internal refurbishment is planned.

Did you know YO! Sushi made menu changes for its US debut? UK conveyor belt sushi chain YO! Sushi made changes to the UK menu to appeal more to American tastes. Portions were increased more jalapenos and other chili peppers were worked into recipes, and there are more grilled and fried options.

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