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Tue 27th Nov 2012 - No Saints, Jamie’s Italian and Mitchells & Butlers

Story of the day:

Mitchells & Butlers reports like-for-likes up 2.1 per cent; broadly flat since the year-end: The UK’s largest licensed retailer, Mitchells & Butlers, has reported like-for-like sales rose by 2.1 per cent in the 53 weeks to 29 September but have been broadly flat since. Sales rose 3.3 per cent to £1.889bn with food sales up 4.8 per cent and drink sales up one per cent in the full year. In the most recent eight-week period, food sales have been up 1.5 per cent and drink sales down by 1.9 per cent. Non-executive chairman Bob Ivell said: “This year we have initiated a significant cultural change programme focused on streamlining internal processes and placing the guest at the heart of everything we do. We have restructured the way we support our operations teams, reduced our central costs and increased the accountability of our senior executives for their brands. I am extremely pleased that we have delivered a resilient financial performance, during a period of such cultural and organisational change. Since becoming chairman my foremost priority has been to recruit the right person to lead the business as chief executive. Having appointed Alistair, my focus will now shift to enhancing the balance, skills and compliance of the board through the selection of appropriately qualified independent non-executive directors.” Chief executive Alistair Darby said: “I am delighted to be leading a company with great people and popular branded pubs, bars and restaurants. M&B is well positioned to take maximum advantage of our evolving industry and we have the right strategy in place. I look forward to continuing the business transformation to deliver long term earnings growth and shareholder returns.” The company opened 47 new sites, primarily Harvester, Miller & Carter, Browns and Toby Carvery, creating 1,500 new jobs. It also converted ten sites, largely completing the current conversion programme. A total of 38 of the new openings were leasehold, of which 32 were located on leisure or retail parks. Overall Ebitda returns on expansionary capital invested over the past two years are 17 per cent. Ebitda is £395m compared to £387m the year before.

Industry news:

Rooney Anand – minimum pricing a good idea: Greene King chief executive Rooney Anand has written in favour of minimum pricing in today’s Daily Mail. He wrote: “You only have to walk down many of our high streets on a Friday or Saturday night to see just how far our relationship with alcohol has broken down. For too long, retailers and producers have paid lip service to the promotion of responsible drinking while aggressively promoting, discounting and driving alcohol sales. We openly support the government’s alcohol harm reduction strategy and its minimum unit pricing proposals. We know that these are tough and potentially unpopular decisions to make but we look to the Coalition to show strength and press ahead with its proposed legislation. The question is whether we want to bury our heads during “our time served”, or are we, collectively as an industry, going to take our responsibilities seriously and finally join in the call of ‘last orders’ for cheap booze?”

Marks & Spencer meal deals could be hit by alcohol curbs: The Daily Telegraph has claimed that offers such as Marks & Spencers “Dine in for £10” could be hit by the government’s plans to crackdown on cheap alcohol, due to be unveiled tomorrow. The Home Office consultation is expected to include rules aimed at preventing multi-buy discounts that could include deals like the Marks & Spencer offer. One unnamed source opposed to the plan told The Telegraph: “This is why it is such a bad idea – a policy that’s supposed to stop drunks and out-of-control teenagers ends up preventing respectable middle-class couples having a cheap dinner at home.”

Admiral Taverns chairman – regional brewers have saved village pubs: Jonathan Paveley has argued that regional brewers have saved many village pubs in their localities that might have otherwise have been lost to housing. Writing in the Zolfo Cooper Leisure Wallet, he notes: “I am a proud Devonian, man and boy, and moved back to my home village six years ago after 20 years of exile for various roles. As such I am used to the fact that most West Country villages have lost their pubs, often over 40 years ago: of the five villages in our local benefice only one retains its pub (an Enterprise tenancy). When I moved to Suffolk in the mid-1990s I was surprised to see that almost every village still retained its pub. I was equally surprised to see that almost all villages in the Cotswolds surrounding Hook Norton still retain one or more pubs. And yet ostensibly, Devon villages are no smaller, more isolated or farming dependent than those of East Anglia or the Cotswolds. So why the difference and can anything be learnt from it regarding future rural pub survival? I believe it illustrates some of the underlying causes of pub closure. The first clear difference between the Devonian and Cotswold/East Anglian village pub is the survival of local regional breweries. Devon lost its regional breweries by the 1970s, their village pubs were sold as freehouses and, without a local integrated brewer to sustain them, these small village freehouses made way for homes. Unlike Devon, the Cotswolds and East Anglia still have regional breweries, which have been more reticent to close pubs unless they are utterly hopeless. So it is clear that regional breweries (and frequently pub companies) have been a vital ingredient in sustaining many village pubs, which would otherwise have closed if they were free houses.”

Pub is the Hub celebrates ten years next month: Pub is the Hub, the scheme that helps threatened rural pubs diversify and of which Prince Charles is patron, celebrates its tenth birthday next month. An event to mark the landmark takes place on Wednesday 5 December with Diageo chief executive Paul Walsh giving an address.

Heineken to end Grand National sponsorship: Heineken is to end its nine-year John Smith’s bitter sponsorship of the Grand National. Next year will be the last Grand National for John Smith’s, which became lead sponsor in 2004.

Southampton Westquay re-opens Food Quarter after £7m revamp: Southampton’s WestQuay has re-opened its food quarter following a £7m refurbishment. New restaurant brands to join the development are Wagamama, Café Rouge Express, Tortilla, Ed’s Easy Diner and PizzaExpress. Existing tenants including Nandos, YO! Sushi, KFC, Harry Ramsden’s, Pizza Hut, McDonald’s and Costa Coffee, which were also refurbished as part of the revamp.

Major brands line up for Telford scheme: Major restaurant brand are lining to open in Telford as part of a £250m plan to transform the area around Telford International Centre into a new convention quarter. The plans will take 18 months to complete and will see several elements added to the site including an 11-screen cinema, restaurants, bars and a new hotel.  Several major restaurant brands have been lined up for the regeneration scheme including Bella Italia, Nando’s, Premier Inn, PizzaExpress and Wagamama. “A convention quarter right outside our front door will give our visitors an incredible range of entertainment and dining options,” Southwater Event Group chief executive Tom Gray said.

McDonald’s test Quarter Pounder and McMuffin variants in the US: McDonald’s, which reported its first sales decline since 2003 last month, has begun testing three new varieties of Quarter Pounders in California, while a McMuffin made with egg white is being tested in Atlanta and Austin, Texas. The Quarter Pounders in test include the Habanero Ranch, with white cheddar, hickory-smoked bacon and a new habanero-ranch sauce; Deluxe, with American cheese, lettuce, tomato, red onion, pickle, mayonnaise and mustard; and Bacon and Cheese, with American cheese, bacon, red onion, pickle, mustard and ketchup. Chief executive Don Thompson told investors last month that slow growth and increased competition in the United States would be a “new normal” for the brand, which meant a greater marketing emphasis on value platforms like the Dollar Menu and increased innovation for premium limited-time offers.

Two London mega casino openings enjoying boom year; Hippodrome success linked to bars and restaurants: Two new mega-casinos that opened in the past year in London have been enjoying double the footfall they anticipated. The 64,000 sq ft Aspers, in the Westfield Stratford City shopping centre, is on course to record about 1.5 million customers in its first year - around 7,000 people visit each Saturday night. Chairman Damian Aspinall told the London Evening Standard: “Before we came along the most any UK casino could claim was a few hundred customers a day. We’ve changed the gaming landscape.” Bars and restaurants are credited with transforming the Hippodrome in Leicester Square by making the experience of visiting attractive to women. Women make up 40 per cent of Aspers’s and 30 per cent of the Hippdrome’s customers. Aspinall said: “I wanted to get rid of the stuffy James Bond image and make it more like just going for a quiet night out. We have an average spend of £30 to £35 so it’s more like going to a night at the movies.” Simon Thomas, who poured more than £40 million of his family’s bingo chain fortune into restoring the Hippodrome, said it was admitting up to 5,000 people a day, around double forecasts.

Company news:

Wetherspoon to open 12 pubs by the end of March 2013; three before Christmas: JD Wetherspoon will open 12 pubs by the end of March 2013 in a £15m investment – and three before Christmas. The three to open before Christmas are located at Halifax, Poynton and Rutherglen. In February, Wetherspoon will be opening pubs at Beccles, Crook, Kirkby-in-Ashfield and Lymington, while, in March, Bingham, Deal, Fakenham, Selby and Whitby will be unveiled. Wetherspoon’s head of property development and acquisitions Jon Randall said: “We are confident that the new pubs will appeal to a cross-section of people.”

No Saints acquires fifteenth nightclub: No Saints, the company led by former Luminar chief executive Stephen Thomas, has acquired its fifteenth nightclub – the 1,500-capacity Provenance in Southampton. The company began trading the site at the weekend. Thomas told Morning Briefing: “We will refurbish it eventually but it is profitable at the moment so we will focus on the soft tissue issues. There was a major nightclub company after it and we’ve acquired it for less than was being offered by the company.” The company re-opened a former Luminar site in Maidstone at the weekend as Wonderland. “We took £55,000 over two days,” Thomas said. The company expects to acquire one more nightclub before Christmas.

Numis increases Whitbread target price from 2350 to 2650p: Numis Securities leisure analyst Wyn Ellis has increased his target price for Whitbread shares from 2350p to 2650p. He said: “We believe that the prospects for further strong growth for Costa in the UK are excellent, particularly in light of the recent bad publicity for Starbucks and Caffè Nero in relation to their UK tax positions. However, in our view, Costa’s expansion into international markets is the development that will move the dial in terms of Whitbread’s valuation and we expect accelerated progress in this area. If Costa can demonstrate that the brand has legs in international markets then the earnings growth potential over the medium term should be transformational, paving the way for a possible spin-off. Although Whitbread continues to be an excellent parent for Costa, we believe Whitbread will eventually consider de-merger. This possibility has been the subject of frequent speculation but we believe that the maximum value for Whitbread shareholders will only be achieved once Costa has clearly demonstrated success in its international expansion. The essential ingredients for success are, we believe, in place. Initial seed-corn investment has been made overseas where we expect more franchising, however, we believe the big opportunity is in equity investment. China is close to an inflexion point; Poland is being revamped; and we expect management to soon drive Costa aggressively into Western Europe, France being an obvious initial target.”

Modern Diner to open first UK site in Exeter: Modern Diner, an American diner chain, is to open its first site in the UK in Exeter, occupying 74 Queen Street, a prominently positioned Grade II Listed property in central Exeter. It formerly traded as a delicatessen and licensed restaurant. Jon Clyne, associate director at Christie + Co’s Exeter Office, said: “With the property’s prominent position and its various potential uses, including A1 and A3, we received a lot of interest. We received several credible proposals and the property was let with Ruby, Modern Diner’s brand, given preferred bidder status. The restaurant will open in early 2013, breathing fresh life into 74 Queen Street.” Erin Allgrove, director of Modern Diner, said: “We are proud to bring the building back to life and give it the care and attention that it deserves. We are excited to bring a fresh approach to fast food in Exeter. The Modern Diner concept combines the heritage of the American Diner with the best produce the region has to offer.”

Chef to open pop-up restaurant in Shrewsbury: A new ‘pop-up’ restaurant is to open in Shropshire for one month only at the site of a relocated cafe bar. The Glutton Club will open for four weeks on Friday at the site of the former Frank Cafe Bar, in Frankwell, Shrewsbury, next to the Theatre Severn. George Cavendish is the ambitious local chef behind the new restaurant after spending five years working in London and has taken out a one-month lease at the empty business unit. He will run the restaurant with friend James Derby and said it was a concept first started by Shrewsbury’s Charles Darwin in his university years. Darwin and his friends would meet every week to sample new, exotic foods and as the food would change so would the venue.

Middletons Steakhouse and Grill to open second site next week: Middletons Steakhouse & Grill will open its second Norfolk site next week (Friday, 7 December). It will become the only dedicated steakhouse in Norwich with a new restaurant located on Timber Hill that will seat 170 over two floors. Stephen Hutton, director of the business said: “Middletons Steakhouse & Grill brings something unique to Norwich with the range of steaks and quality of the ingredients on offer.”

Jamie’s Italian to expand into Russia: Jamie’s Italian, which has 30 sites in the UK, is to open sites in Moscow and St Petersburg, Russia in partnership with Ginza Projects. The move comes after openings in Dubai, Dublin and Sydney - and a second Australian opening planned for Perth.

Costa Coffee in Hampstead could provide front desk services for police: Hampstead police station’s front desk could be replaced with a pop-up four-hours-a-week service run from a Costa Coffee shop, a Labour politician briefed by police has reported. London Assembly member Andrew Dismore delivered the warning during Mayor’s Question Time at City Hall. Dismore said: “The replacement for Hampstead police station is going to be a four-hour-a-week desk in Costa Coffee, which will no doubt come as news to Costa Coffee in Highgate because they haven’t been asked if they’d be prepared to host it. Frankly, when the police were laying this out to us last (Friday) they were embarrassed about what they had to say. They got a really hard time from the community who said this was not going to work.”

Brewdog embarks on eight city tour to meet shareholders: Scottish brewer and retailer Brewdog’s founder James Watt is to embark on a tour of eight cities to meet investors in the company. The so-called Equity for Punks Tour – the name of the company’s fund-raising scheme - will visit eight Brewdog bar in eight different cities. The company stated: “The Equity for Punks tour gives you a chance to learn first-hand about your company’s performance in 2012 and our plans for 2013. It will be your first chance to taste beer from our brand new brewery as we unveil the first ever batches of Punk IPA brewed there. In addition, we will also taste and talk about our latest prototype beers on draft: Cocoa Psycho, Jackhammer and Nuns with Guns. There will be a Question and Answer session with James after the presentation, and a chance for you to share your thoughts and ideas on how we can make BrewDog even better in 2013.”

Stonegate launches “most interactive” intranet in the sector in partnership with CPL Training: Stonegate Pub Company has launched the “most interactive” intranet in the sector in conjunction with CPL Training. Its bespoke online intranet system houses a wealth of training and company information along with all employees’ development information. The system is called Elsa, named after Albert Einstein’s second wife, and compliments the suite of training and development programmes named after the theoretical physicist already used by the company. Elsa mirrors the business functions within a bar with eight key pub ‘rooms’ each holding a wealth of vital information. The ‘rooms’ include: The ‘Cellar’ which stores product information, a guide to equipment and maintenance programmes; The ‘Kitchen’ has everything you need to know regarding menu implementation, audit reports as well as emergency contacts; ‘The Team Room’ offers information for staff on NVQs and apprenticeships, as well as compliance training and the Albert’s induction for all new staff; while the ‘Entertainment Zone’ provides staff and managers with information on local DJs, sports fixtures and quizzes. The company’s new on-line appraisal system is also held on Elsa. Managers are notified when an appraisal is due and the system has built-in reminders to ensure no key dates are missed making the process more streamlined and efficient. The on-line documents can be manipulated into a variety of bespoke reports. Lee Woolley, head of learning and development at Stonegate, said: “Elsa will quite simply change the way we communicate in Stonegate. It enables us to communicate directly with every single employee or with whichever selected audience we wish; segment, brand, division, or role. It enables suppliers to show their products and run targeted incentives. It helps our employees with their personal development and helps our general managers with sales and labour forecasting. But best of all is the forums where retail teams can communicate directly with the board through suggestions and questions. It also aids general managers in sharing equipment, ideas and even team members. I think it is without doubt the most aesthetically pleasing, most interactive and most fun company intranet I have ever seen - and we’ve only just started.”

Pleisure reports 25 per cent sales rise at site with range of bottled craft beers: Award-winning Pleisure, the Brighton-based multiple headed by Nick Griffin, has reported a 25 per cent rise in turnover at a site that now stocks a broad range of bottled craft beers. Griffin said interest in craft beers, from this country but also from around the world, has arisen on the back of the rising popularity of cask ales and the quest by consumers to try different brews. He says a head brewer “who loves what we do” has approached him with the view to brewing for Pleisure. Griffin has negotiated a “release fee” with Enterprise Inns at The Speaker in Westminster that allows Pleisure to stock 16 craft and bottled beers. Griffin added: “Since then, takings have been up 25 per cent week-on-week and even though we suffered from people not coming into central London during the Olympics, everything has worked fantastically well. Barrelage has increased, margins have increased, Enterprise is happy, and we are giving customers what they want.”

New Greek restaurant opens in Rye: Businessman George Angeles has opened a new Greek restaurant in Rye, My Greek Kitchen, which adjoins the highly acclaimed Kettle O’Fish takeaway. Raymond Blanc filmed at the Kettle O’Fish as part of his BBC series and the Times newspaper supplement awarded it second best eatery in England. George said: “My Greek Cypriot background and family recipes handed down through many generations, have created a deep passion for good quality food.”

Papa John’s wins “Pizza Delivery Chain of the Year” award: Papa John’s, which has recently opened its 200th site in the UK, has won “Pizza Delivery Chain of the Year award” at The Pizza, Pasta and Italian Food Association awards. Dave Galvin, UK franchise sales manager, said: “The aim of the awards is to encourage standards and so we are delighted that the hard work and dedication of our franchisees from across the UK have been recognised in this way.”

Inventive Leisure invests £800,000 on Bournemouth opening: Inventive Leisure will £800,000 re-opening Sherbets Lounge as its latest Revolution Vodka Bar in Bournemouth, which will combine its Revolucion de Cuba offer on the same site. The venue has a 800 capacity and opens on 21 December. General Manager Will Daw said: “We’re very excited to be launching a site that combines both the vodka and rum bars within one venue. We’re entirely transforming the site right down to the details, with elements of authentic Cuban-style interior, so that customers walking through the door are instantly transported to our glorious world of vodka and rum.”

Dublin’s biggest hotel sells for 20 per cent of 2007 price: Dublin’s biggest hotel has been sold to the world’s largest hotel company for €67m, which is one-fifth of the price paid five years ago. The 500 bedroom Burlington Hotel has been sold to US venture capital fund Blackstone after Bank of Scotland (Ireland) took control of the hotel from failed developer Bernard McNamara, who paid €288m for the building in 2007. The Burlington is one of the biggest four star hotels in Europe. 

New cabaret bar with cinema opens in Cardiff: A new bar featuring cabaret, comedy, music, theatre and cinema has opened in Cardiff city centre. Porter’s is being opened by duo David Wilson, who is director of the Chapter Arts Centre-based Actors workshop, and recently retired actor Daniel Porter, in Harlech Court on Bute Terrace. The pair say they have used their knowledge of the arts to create an unusual city centre venue, with a stage for live performances, a cinema room which doubles as a function room, private party area, rehearsal room or teaching space, and instruments that customers will be welcome to play. Porter said: “(We want it to be) an unpretentious, welcoming and familiar home not only for actors, industry professionals, drama students and theatre lovers but for anyone looking for good old-fashioned fun.”

Private equity fund eyes nightclub market: A private equity fund is planning to focus on the nightclub market, buying distressed assets around the UK. Cayman Island-registered property fund EMCO Capital Advisers, is to buy regional sites that it will either refurbish and re-open or turn into flats, shops or offices. The launch of the fund underlines the rising propensity of private equity companies to invest in parts of the leisure market where they see high returns on investment, no least because of general under investment and reduced property values. Emyr Hughes, who has co-founded the fund with Danny Brown, told The Financial Times: “Clubbing is about escapism and people are being a lot savvier these days about how they spend their money to escape from normal life. If you want custom you need to provide something people are prepared to pay for, like getting one of The X Factor contestants to come and do a live act.” The fund is regionally focused and will avoid London because of high property vales and a tougher planning regime. The fund will target venues that may have lost their operating licence, need refurbishment or are currently running at a loss. They envisage capital growth will be driven by relicensing of the premises where the licence has been lost, income derived from the granting of leases to Emco Leisure, which will operate the venues, or ‘change of use’ permissions, enabling some venues to be converted into residential property. After a two-year investment period, the properties will then be sold on. Hughes added: “The portfolio of venues, each to be held over a two-year cycle (and we hope and expect to start with at least six) will, operationally, benefit from efficiencies of scale due to a centralised management system being developed by the venue operator. We expect the fund’s investors to enjoy considerable opportunities for returns on the back of risk reduced by portfolio diversification and, moreover, by the presence of planning permission on each property. We see this as, potentially, a useful opportunity to achieve strong returns in a low interest rate environment.” The fund has a minimum investment level of £250,000, a two per cent annual management charge and a 20 per cent performance fee if a return of five per cent a year has been achieved.

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