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Morning Briefing for pub, restaurant and food wervice operators

Wed 7th Nov 2012 - Ask, Antic and Brewdog

Story of the day:

Head of Steam steps up “Stuff the Supermarkets” campaign; installs expanded bottled beer range: Head of Steam, the nine-strong north east pub operator led by Tony Brookes, is stepping up its “Stuff the Supermarkets” campaign in the lead-up to Christmas with heavily discounted take-home beer. Brookes said: “The Head Of Steam is making a super-human effort leading up to Christmas to get as much of its customers’ take-home drinks trade for itself, thereby cutting the amount of purchases from supermarkets. (We’re) focusing on elements of the trade that supermarkets can’t compete with and incentivising staff by paying them a bonus for sales made for taking home. One of the big problems pubs increasingly face is the gap in price between equivalent drinks bought in the supermarket and the pub. Pubs need to make their customers offers that close that gap, with quality products, trading on the fact that their customers love them more than they love the supermarket. Pubs need to recognise that off-sale prices have to be on much lower margins than can be enjoyed on drinks bought for consumption in the pub, and this is often a mental stumbling block for pub operators. So our company’s take home offer includes a range of the most popular real ales at heavily discounted prices – but only in bulk, aimed at the party trade – 18, 36 and 72 pint containers, with a small discount for take-out volumes of a gallon. Discounts are also available on draught and packaged ciders, imported and British bottled beers and lagers, and cases of wines. Pubs need to look at what supermarkets can’t do. For example, they can’t sell real ale or cask ciders. They also can’t sell some of our pubs’ most popular bottled beers, like Sam Smith’s of Tadcaster – because Sam Smith’s – like quite a few breweries – refuse to supply supermarkets.” Brookes argues that pubs also need to improve their world beer range to compete with supermarkets. He said: “Many customers are coming to the pub less frequently, but when they do, they are often experimenting with rare and high-value beers. So most of The Head Of Steam pubs have had new big bottle chillers installed to be able to offer literally hundreds of different bottled beers. The Head Of Steam in Newcastle has even converted a back room to become a World Beers Bar. It is noticeable, having studied their drinks stocking policy over recent years, that supermarkets are stocking an increasingly huge range of imported and British bottled beers and lagers – many at very low prices. Even if they can’t compete on price, pub operators should realise they have to at least offer a similar great choice – because that’s what their customers want. If they don’t, their customers can get what they want from the supermarkets.”

Industry news:

Luke Johnson – unions are stifling New York: Risk Capital Partners boss Luke Johnson has argued that unionised labour is stifling enterprise in New York. In his Management Today column, he wrote of a recent visit to the city: “I talked to a local hotelier who explained the nightmare of dealing with unions in the hospitality industry. He has hotels where everyone from waiters to chambermaids to bellhops enjoys collective bargaining rights. Unsurprisingly, the wages bill in his hotel restaurants runs to 40 per cent of revenue - despite the propensity for New Yorkers to dispense generous tips - which the servers keep in full. The comparable labour figure here is nearer 30 per cent. Returns for the owners of such establishments there must be miserable.”

Pete Brown’s new pub book chosen by Radio Four as Book of the Week: Beer writer Pete Brown’s new book, “Shakespear’s Local: Six Centuries of History through one extraordinary pub”, has been chosen by Radio Four to be Book of the Week for the week staring 17 December. He said: “The week before Christmas, there’ll be an abridged 15-minute reading from the book each day of the week. For a book that we all hope will make a nice gift, it couldn’t be better timing. I’m waiting to hear who will be doing the reading!”

NDP Group – young Americans are eating out less because of the recession: Young Americans in the 18-34 age range are eating out less than previous generations because of difficult economic conditions. Research company NDP Group has found that this age group is eating out roughly once a week less than the same age group’s eating out patterns in 2007. “This is a shift of biblical proportions for the restaurant industry,” says Harry Balzer, chief industry analyst at researcher NPD Group, which surveyed 2,400 adults 18 to 34 nationwide. “I’ve done this for 35 years, and we could always count on this age group as the biggest restaurant users. But not in the last five years.” Adults aged 18-34 now eat out 202 times annually this year versus 252 times a year back in 2007, less now than older age groups. Until recently, the 18-34 group was the generation that could always be counted on to eat out more than anyone else. “They don’t spend more, but they have historically eaten out more. The recession has hit them harder than anyone else,” added Balzer.

Carlsberg UK brewer named top Master Brewer in the world: Jon Elks, of Carlsberg UK has been named as the world’s top Master Brewer in the Institute of Brewing Distilling’s prestigious Master Brewer examinations. He was awarded the JS Hough award for the candidate achieving the highest overall marks in the five modules of the Master Brewer examination. Jon, 32, of Northampton, has worked at Carlsberg UK for 11 years. He started work in the laboratory at the Northampton brewer before being appointed technical brewer in order to allow him to pursue his ambition of taking his IBD brewing qualifications. Elks said: “It was tough but really enjoyable! I had four written exams and had to write a dissertation on the work I was doing at Carlsberg UK. I’m incredibly proud to receive this award and I’m thankful to the company for giving me the opportunities to develop my skills.” Carlsberg employs nine master brewers in the UK.

Wine wholesaler Costco adds high-end wines and spirits to offer: Wine retailer Costco has expanded its offer in the UK market, with a UK website selling high-end wines and spirits. Open to both Costco members and non-members, the site, which went live last week, features 131 different wines and spirits in its range, including Cristal, Krug and Dom Pérignon Champagne, and classed growth Bordeaux from the acclaimed 2009 vintage.

Company news:

Douglas Jack tips Enterprise, Spirit, M&B and Marston’s; predicts 2.5 per cent sales growth needed to maintain margins: The average share price for quoted pub and restaurant companies has risen 31 per cent over the last year reflecting resilient trading and previous undervaluation but the re-rating process should now be largely complete, Numis Securities leisure analyst Douglas Jack has claimed. He points to Enterprise Inns, Mitchells & Butlers, Marston’s, and Spirit Pub Company as the companies that offer the greatest share price upside from growing EBITDA and reducing debt. He notes that pub supply reduction has settled at one per cent per annum (versus 4.5 per cent in 2009) with restaurant supply growing at 0.5 per cent per annum. Jack said: “Benefiting from numerous competitive advantages and limited competing capex in the private sector, the quoted managed pubs and restaurant operators are stepping up expansion. The closure rate has slowed for independent restaurants and stabilised (at 18 pubs per week) for wet-let pubs. Quoted managed pub/restaurant like-for-likes sales are currently growing at an average of 3.8 per cent, albeit with margins flat due to many operators not fully passing their higher costs on to customers. Spirit Pub Company and Domino’s Pizza (both positioned towards value food) are generating the strongest like-for-like profit growth, followed by Marston’s and Greene King. Cost inflation is slowing gradually for the quoted operators. Short-term food cost spikes are a risk, but as low-inflation items typically account for two-thirds of the cost base, we estimate that 2.5 per cent like-for-like sales growth (higher if discounting steps up) will again be needed on average, before cost mitigation, to maintain EBIT margins. Quoted tenanted/leased pub estates are all in average profit growth, boosted by investment, tail-end disposals and the adoption of managed pub disciplines, but only Marston’s and Fuller Smith & Turner are in like-for-like profit growth.” Jack said Greene King, Enterprise Inns and Spirit Pub Company could move into like-for-like profit growth during the second half of 2013 aided by franchising. He added: “Our key picks for 2013 are Enterprise Inns (Buy), Spirit Pub Company (Buy), Mitchells & Butlers (Add) and Marston’s (Add), which should all re-rate further in our opinion, in addition to providing upside from growing EBITDA/reducing debt. We believe Domino’s Pizza (Add) offers the best long-term growth in the sector, which stronger expansion and margin growth as well as good early trading in Germany. We would take profits in The Restaurant Group (Reduce), which faces increasing competition as well as much tougher like-for-like and margin prospects in 2013. We would use what should be a strong quarter four trading update in January to take some profits.” 

Antic applies to open pub in former Leyton Town Hall: Fast-expanding London pub operator Antic has submitted plans to convert part of the former Leyton Town Hall site into a pub. The company used several front rooms of the building, in the High Road, as a temporary ‘pop-up’ bar during the Olympic and Paralympic Games. Antic now wants to run a pub at the site permanently and wants to make several alterations to the Grade II listed structure. Antic operations director Max Alderman has referred to Waltham Forest as an up-and-coming area. A section of the building is formally licensed as a restaurant rather than a pub, so the chain is also seeking change of use permission.

Man versus Food inspired restaurant opens in Swansea: A new restaurant, Smoke Haus, opens in Swansea’s Wind Street next week (Tuesday, 13 November) inspired by Man versus Food, the US television show that features Adam Richman pitting himself against eating challenges at US restaurants. The new American diner-style restaurant, on the site of a former La Tasca, will offer customers dishes such as pulled pork sandwiches and metre long hot-dogs. Customers who eat six spicy wings in ten minutes get a T-shirt and their picture in pride of place on the wall. Mark Power, from Swansea, and Jane Myall, originally from Newport, had the idea for the new “dining experience” months ago, but have been waiting for the right venue. They secured the La Tasca site less than 24 hours after the company said it was pulling out of Wind Street. “I love Adam Richman’s passion for food and I wanted to bring something similar to Swansea,” said Power. “The food will stand up on its own.”

Bill’s to open twelfth site in Chichester next week: Bill’s Produce and Grocery store, owned by Richard Caring, will open its twelfth site in Chichester’s Butter Market, a Grade II listed building, on Wednesday 14 November. Bill Collison, founder of the Bill’s chain of restaurants, has said previously: “I am Sussex born and bred so opening a store in Chichester was a natural progression for me.” Pattiserie Valerie also occupies the Butter Market. The company’s thirteenth site is due to open in Horsham in late November or early December. A new 20-year lease was granted at a passing rent of £60,000 per annum exclusive. The Old Town Hall building is now undergoing a range of agreed external changes including the removal of the staircase which once provided access to the registrar’s office. On the ground floor there will be a spiral staircase installed, linking the entrance lobby to the first floor dining area where there will be a raised dining area in line with the existing stage. Josh Leon, associate director at Davis Coffer Lyons, who acted on behalf of the local authority in letting the Town Hall, said: “This is a really iconic site, full of character which will make for a really special restaurant venue. Horsham has a growing list of excellent, diverse restaurant operators, and coffee shops, and Bill’s, which already has a well established reputation in the region, will be a tremendously welcome addition to the area and will enliven a historically underused building.” 

Managed operator TCG reports Halloween “grown to become one of the biggest nights”: Managed operator TCG has reported that Halloween has grown in importance to become one of the calendar’s biggest nights, with sales up by more than £60,000 on a typical Wednesday. TCG chief operating officer Nigel Wright said: “Halloween has grown steadily to become one of the biggest nights of the year in our pubs and bars. Big events’ like Halloween are only as good as the execution by the teams and, as ever, they embraced the occasion with creativity and enthusiasm - as well as huge quantities of fake blood and face paint.” While fancy dress and themed drinks were tactics used by many sites, several went the extra mile to create a Halloween atmosphere. The Golden Fleece in Chelmsford recreated 80s horror movie ‘The Fog’, filling the pub with fog and turning the dance floor into a haunted forest. Sales were up by 65 per cent on the previous year. 

Auntie Anne’s pretzels comes to Gloucester: Pretzel chain Auntie Anne’s is to open a site in Gloucester’s Eastgate shopping centre on 1 December. The US-based operator, founded 24 years ago has 1200 location in 23 countries. UK master franchisor is Robert Burton, who owned and operated the Thrifty Car Rental Master Franchise for 12 years.

Robinsons take tenancy training to a new level: Cheshire-based family brewer and retailer Frederic Robinson has partnered with CPL Training to launch an online, e-learning training platform - across their 360 pub estate. Robinsons are committed to looking at innovative ways to support both existing and new tenants in order to help their businesses succeed. Veronica Robinson, Director at Robinsons, said: “We are keen to empower our tenants by supporting both their training, and also the training of their employees. It’s early days in terms of the launch, but feedback from those tenants testing the new training platform has been very positive.” The online e-learning system is easy to use through standard internet access and offers a wide range of compliance and softer skills training courses. All the courses are designed to be interactive with lots of graphics to aid learning, as well as frequent tests and quizzes to remind users of the key points before they take the final exam. There is also a unique learner management and reporting platform which gives easy access to training records and provides an audit trail for any compliance checks. Pubs can either acquire an annual site licence that allows them and their staff unlimited access to all the courses provided or, alternatively, tenants can pay-as-they-go for just £20.00 per course (plus VAT). All courses are fully certificated with tenants and staff receiving their own personalised certificate when they pass the course. A total of 25 e-learning courses on offer.

Balthazar set to open for Covent Garden in February: The long-awaited London opening of New York favourite Balthazar is now scheduled for February. The restaurant, being opened by Richard Caring and New York restaurateur Keith McNally, will occupy the old Theatre Museum in Covent Garden (also known as the Flower Cellars). Balthazar is sharing the space with the London Film Museum, and will operate as an all-day venue serving everything from early breakfast and weekend brunch to afternoon tea and late-night suppers. All the breads, cakes, croissants and pastries will be produced in-house or at the new Balthazar bakery in Waterloo.

Bingham mobilises against Costa Coffee faster than most: Shop-keepers in Bingham may have set a new record in mobilising against a proposed Costa Coffee opening in double-quick time – a petition with 900 names has been submitted opposing the plan on the same day a planning application was submitted to Rushcliffe Borough Council on Wednesday. A Costa spokesman said: “We honestly do not think that anyone should see Costa as a threat to independent businesses. Our offering is very different to local independent coffee shops and we believe that people can and will use both, depending on their needs.”

Ask Italian ups game on customer feedback: Ask Italian has launched a ‘My Ask Italian’ programme with customer experience management (CEM) experts Empathica to improve feedback. Replacing a long-standing mystery shopping programme, the scheme has provided the business with feedback from nearly 2,000 customers. Steve Holmes, managing director of Ask Italian, said: The ‘My Ask Italian’ programme enables us to listen more closely to our customers, to understand better how they feel about our brand and, most importantly, to tailor our offer going forward to enhance their experience and build customer satisfaction and loyalty. The audit style approach provided by our previous measurement tool simply didn’t fit with our vision as we work to better understand our customers’ needs and deliver a natural and genuinely friendly experience. Casual dining is an ever-changing, highly competitive marketplace and it’s essential for us to have our finger on the pulse of what our customers think and feel so we can maintain our edge and key points of difference.”

Sherry bar opens in London: Owners of Spanish restaurant Lola Rojo, Antonio Belles and Cristina Garcia, opened a new sherry bar, Rosita, yesterday (6 November). Lola Rojo saw a big a profile boost in 2010 when it appeared on Gordon Ramsay’s TV show The F Word when the chef was searching for the UK’s best local restaurant. The new business is just a few hundred metres along Battersea’s Northcote Road from their original restaurant.

Brewdog to sell 28 per cent abv beer in 6cl bottles in pub estate: Scottish brewer and retailer Brewdog is to start to selling its 28 per cent ABV ‘Ghost Deer’ beer in 6cl bottle its nine bars – for £5.99 each. Ghost Deer was first brewed to see how far traditional fermentation methods could take beer depth, flavour and strength. James Watt said: “We have been criticised before for being reckless in brewing high ABV beers, but the opposite is closer to the truth. Britain’s binge drink culture is fuelled by stack-them-high, sell-them-cheap beers peddled by giant mass production breweries, not artisanal, craft beers like this one that teach drinkers that beer could be so much more.”

Cheesecake Factory opens in Kuwait: Cheesecake Factory, the US operator looking for a site in the UK, has opened in Kuwait. The opening of The Cheesecake Factory in Kuwait follows on the brand’s successful Middle East launch in Dubai in August and continues its planned expansion across the Middle East with Alshaya, the international retail franchise operator in the region.

Stonegate Pub Company completes the roll-out of new menus across five brand segments to reflect market trends; introduces ultimate British beef sandwich at Yates’s: Managed operator Stonegate has evolved menus at five of its seven brand segments to reflect current trends in the eating out market. Key changes across the menus include the addition of nostalgic and luxurious dishes, a re-focus on using ingredients that have heritage and provenance and a move to cater for the all-day grazing trend, offering Mexican style street food and deli-style dishes. The menus have also seen the beefing up of their best-selling burger range and the enhancement of a number of popular dishes. Perry Huntley, head of food development at Stonegate Pub Company said: “Developing the menus for the Autumn/Winter offer change has seen us select, nostalgic, comforting dishes as the weather turns colder. We’ve also followed some of the current market trends as well as enhancing and improving our best-selling items. We’ve increased the number of accompanying sauces and toppings across the menus. For example, on the Great Traditional menu when customers order crispy chicken fillets they can choose a range of sauces from blue cheese & spring onion sauce, BBQ sauce to lemon & pepper butter so that they can create the dish of their choice. The key driver in the offer change is the opportunity to give our pubs and bars dishes that really stand out and set them apart from their competitors. It’s about giving our customers compelling reasons to visit through choice and value for money.” Key menu changes are: Scream: a new ‘small bowls’ section, similar to tapas-style dishes designed to appeal to those who are looking to share with friends, but pay for items individually; new all-day grazing dishes include the sausage sliders which are crispy beer-battered mini sausage served with a BBQ sauce; offers such as two-for-one desserts; a burger and a drink all day, every day; two-for-one pizzas in selected sites and a free hot drink with any breakfast meal; Local Pubs: an award-winning Boozy Beef Pie which was created by one of Stonegate’s pub chefs, Kieron Wright from the Percy Lambert in Weybridge; Mexican-style street food style including sizzling steak and chicken fajitas, a southern fried chicken baguette, chilli con carne and a new chilli burger; ‘King Size’ options where customers can choose a larger portion or, for just 99p, customers can add an extra chicken breast or burger to the standard sized burger. Classic Inns: a Butternut squash & celeriac bake; mushroom rarebit with sautéed Portobello and oyster mushrooms; a beef burger topped with chorizo and manchego cheese sauce served in a multi seed bun with trimmings; a Fisherman’s platter has been added to the sharer section which includes a combination of king prawns, crispy calamari, devilled whitebait, lemon-pepper breaded scallops and British wholetail scampi served with tartare and a spicy marie rose sauce: Yates’s: Lunchtimes sees the introduction of soft corn tortillas with either tender pulled spiced BBQ beef or southern fried chicken; and inspired by a recent visit to Chicago delis, the delicious ultimate British beef sandwich has also been introduced and harks back to the Bosley beef sandwich which was listed on the Yates’s menu in the early 1900s.

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