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Mon 3rd Dec 2012 - Marston’s, McMullen’s and Starbucks

Story of the day:

Marston’s lines up pipeline of seven self-operated motels: Midlands-based Marston’s has a pipeline of six or seven own-operated motels, finance director Andrew Andrea has told Morning Briefing. Previously, Marston’s has worked in partnership with firms like Travelodge to building a pub restaurant and co-located 40-bedroom motel. Now Marston’s is also developing smaller 24-bedroom motels alongside its new-builds that it is operating itself. The company has one open in Chepstow, another one on the way in Aberystwyth scheduled for March 2013 and six or seven sites where “planning permissions are in the pipeline”. The twist, though, is that Marston’s is selling the freehold of the motels for about £1m with a lease back to itself to operate the motel – Marston’s sets a rent of about on third of the cash Ebitda of the motel (thought to be about £70,000). Andrea said: “We sell the freehold pretty much on completion (of the build) – Chepstow is already sold.” The advantage of a co-located motel is that it adds between £2,000 and £3,000 per week to the turnover of the pub restaurant. Marston’s sold six of its new-build pub restaurants last year for £20m, with a yield for the buyers of just under six per cent. 

Industry news:

Starbucks seeks compromise on UK tax bill: Starbucks is looking to find a compromise over its low corporation tax bill in the UK – it is expected to promise to increase the amount of tax it pays to avoid a consumer boycott. It is thought likely that Starbucks will agree to reduce the 4.5 per cent royalty on UK income it pays to a Dutch-based sister company in return for the right to use Starbucks name and coffee recipe. A Starbucks spokesman said: “Starbucks is committed to the UK for the long term. (We have) complied with all the tax laws in this country but have regretfully not been as profitable as we would have liked. We have listened to feedback from customers and employees and to maintain and further build public trust we need to do more. As part of this, we are looking at our tax approach in the UK.” 

Seven pub and restaurant companies in the Fast Track 100: Seven pub and restaurant companies have appeared the Sunday Times Fast Track 100 which lists the private companies that have grown sales by the most since 2008. The companies are: Drake and Morgan at Number Five: (grown sales by an annual per cent of 171.5 to £16.4m); Jamie’s Italian at Number Six (grown sales by 168.1 per cent to £72.02m); Brewdog at Number 29: (grown sales by 95.7 per cent to £5.9m); Cote Restaurants at Number 36 (grown sales by 88.3 per cent to £49.3m); RB and AH Pub Group at Number 72 (grown sales by 62.6 per cent to £5.3m); Pho at Number 84 (grown sales by 55.8 per cent to £6.6m); and Amber Taverns at Number 89 (grown sales by 53.5 per cent to £25.4m).

Northern Ireland restaurant forced to expand in Dublin because of VAT rates: Bob McCoubrey, who runs branches of Mourne Seafood Bar in Belfast and Dundrum, will look to open his third site in Dublin because of punitive VAT rates north of the border. The VAT rate in southern Ireland on food is nine per cent and corporation tax is 12.5 per cent – compared to 20 per cent and 24 per cent respectively in Northern Ireland. He said: “I’d love to expand in Northern Ireland. I have seen some fabulous sites, which are real bargains and with my dreamer’s head on, they would be fantastic locations for a new place. But when you sit down and look at the figures, it just doesn’t make sense. With the VAT, especially, 20 per cent here compared to nine per cent in the Republic, it’s just impossible. In France VAT on food is ten per cent, in Italy, it’s nine per cent. Various agencies are trying to market our hospitality, our food and drink, our agri-food businesses to tourists, but when you’re handing over 20 per cent of the sale once you’ve cooked and served the food, it’s not an attractive business proposition for us when we are already paying VAT on some of the raw materials. The taxes are also forcing some restaurants - although not ours - down the road of buying in frozen food rather than showcasing local produce, which is farmed more sustainably and which boosts home-grown businesses.”

US supermarket Walgreens ups game on foodservice: US supermarket giant Walgreens has upped its game on foodservice at its flagship 8000th opening in Los Angeles. The new site offers: fresh hand-rolled sushi and sashimi prepared daily; an upmarket café offering a barista preparing fresh brewed premium coffee, espressos, as well as iced and frozen options; a juice and smoothie bar featuring fresh fruit and vegetables included in the 24 distinct recipes available; eight flavors of self-serve frozen yogurt; hundreds of fresh food items including high-quality, on-the-go meal options such as wraps, sandwiches and salads made fresh daily; a best-in-class wine selection boasting more than 700 fine wines that will pair well with the store’s assortment of artisan and brie cheeses as well as speciality meats and chocolates; and a Coca-Cola Freestyle machine dispensing 130 varieties of Coca Cola fountain drinks.

Leading sector training provider CPL Training wins record market share: Wirral-based sector training provider CPL Training has won a record market share in the third quarter of 2012 for the personal licence qualification - the APLH - with 26.7 per cent of the market. In June to August of this year, 3,620 APLH certificates were issued to candidates sitting the APLH with CPL Training - its highest-ever number of APLH candidates in one quarter. Paul Chase, CPL Training’s Head of UK Compliance, said: “We are delighted with these figures. Our market share has risen in a largely static market, and this is a tribute to the hard work of all our staff and a vote of confidence from our expanding list of customers, large and small.”

Move to create Brighton’s first community pub: Residents in Brighton are hoping to create the city’s first community pub by selling shares. The Bevendean Hotel in Moulsecoomb was closed down in May 2010 and residents now want to raise £200,000 to reopen it. The co-operative is selling shares at £10 each. Co-operative organiser Warren Carter said: “We’re going to be a beacon for something that can happen in other areas that have lost their community pubs.”

Company news:

Geof Collyer’s raises Enterprise Inns share price target to 135p: Deutsche Bank analyst Geof Collyer has issued a buy recommendation on Enterprise Inns’ shares with a target price of 135p a share. He said: “During the 2012 financial year, the group’s corporate and securitised bond holders saw the market value of their investment rise by around £340m while the equity investors have managed less than half of that. Even after this year’s run, the share price remains 35 per cent below the levels of April 2010, when the group was in poorer shape. We see 2013 as the year when the equity holders reap most of the upside in the market value of the EV. There is around 55 per cent upside to our revised price target of 135p (was 105p), which reflects the forecast debt paydown (and is still a 55 per cent discount to Net Asset Value). Earlier in 2012, we published a note assessing the group’s progress from so called ‘zombie’ stock to one which was getting closer and closer to complete rehabilitation as an equity growth story. Our suggestion was not that this was an equity story based on strong trading growth – the tenanted and leased model has never claimed that – but that it was a strong equity growth story in the making based on the achievement of stable trading after five years of underlying declines and that, as the market understood this, the benefits of the significant debt repayment would transfer to the equity. Over the next three years, between £300m and £465m of debt should be repaid – equivalent to 70 per cent to 110 per cent of the current market capitalisation. Our new 135p price target is based on a 55 per cent discount to NAV (versus 70 per cent now). We see the key catalyst for this discount narrowing from the current level being the market becoming progressively more comfortable with the long term cash flow benefits that stable profits will bring.”

Arden gets backing to expand Chicago Rib Shack: Christian Arden has won backing from Nicola Horlick’s Rockpool Investments vehicle to expand the Chicago Rib Shack concept, according to The Times. A new fast casual version of Chicago Rib Shack, which was established 30 years ago by My Kinda Town founder Bob Payton, debuted in September 2011 at Westfield Stratford City and is reported to have been profitable from day one with sales of more than £20,000-per-week. Rockpool will launch a £1.7m Enterprise Investment Scheme with plans to open nine sites in shopping centres in the next three years. Arden is reported to be working with nightclub entrepreneur Stephen Thomas, a Rockpool Investments member, who will be a “seed investor” and is expected to become chairman.

McMullens buys green field Milton Keynes site for seventh ‘Chicken & Grill’ pub: Hertfordshire-based McMullen’s have bought a green field site at Tattenhoe in Milton Keynes to develop its seventh ‘Chicken & Grill’ pub. Planning permission has been obtained to create a pub with over 140 covers although the possibility of newts on the site means that the work can’t start for six months- so the pub will not open much before Christmas 2013. The total project will cost circa £2.5m. “We are delighted to have acquired our third pub in the affluent and growing town of Milton Keynes,” said managing director Peter Furness-Smith. “This new site will trade as another of our successful ‘Chicken & Grill’ pubs.” Added retail operations director Heydon Mizon: “The Chicken & Grill concept was developed three years ago and has exceeded our expectations in all six sites where it has been operated. We are particularly pleased with the last two openings, The Jolly Farmers in Enfield and the Britannia in Marlow, where initial sales have far exceeded our expectations”.

Stonegate Pub Company invests £200,000 on Goose refurbishment: Stonegate Pub Company has invested £200,000 refurbishing the Goose pub in Walthamstow, one of the package of 333 wet-led pubs it acquired from Mitchells & Butlers in 2010. Manager Natashia Dingwall said: “The Goose is the first thing people see when they get off the train at Walthamstow Central, so for many it’s their first impression of the area. Before there was a feeling that it was a bit tatty and unloved, but what we’ve been trying to do with this refurbishment is to make it a pub Walthamstow can be proud of.”

Hugh Osmond company buys Reading hotel: Leisure entrepreneur Hugh Osmond, who was an investor in Punch Taverns and PizzaExpress, has formed a new company to buy The Swan hotel at Streatley, near Reading, off a guide price of £6m. The 45-bedroom hotel was sold by former owner Nike Group Hotels to Rare Bird Hotels, a new hotel group set up by Osmond. Jonathan Wren, a director within the hotels department of Colliers International, said: “The marketing and sale of the Swan proved once again that despite all the talk of doom and gloom in the provincial hotel market, there are always buyers for quality businesses.”

Titanic Brewery opens its first village pub: Titanic Brewery, headed by Keith and David Bott, has opened its first village pub to take the estate size to seven. The Hollybush, in Seighford has been opened by Titanic after residents clubbed together to raise £199,000 to buy the Grade II-listed building. More than 400 people, including shareholders and local residents, turned out for the pub’s opening night. The Hollybush was bought for £199,000 at auction in March by a company formed by villagers. Peter Longstaff, secretary of the Seighford Pub Company, said: “When we bought it, it was at the height of when pubs were closing and buying a pub was probably seen as madness. But the village had lost its shop and a post office and we knew that developers had shown interest in the pub. We didn’t want it to be demolished and turned into housing.” The company has 71 shareholders.

Royal Couple choose Greene King pub in Cambridge for lunch: A Royal visit to Cambridge saw the Duke and Duchess of Cambridge choose a Greene King pub for lunch in preference to two Michelin starred Midsummer House next door. Fort St George manager Gail Pritchard said the couple liked the food so much they went up for seconds. “It’s a very pretty pub and they had a river view. I think Prince William just wanted a nice pub lunch with his wife away from all the cameras. They said they enjoyed the food and even went back for seconds.” The Duke and Duchess ate smoked salmon, tuna and beef sandwiches, mini burgers, fish goujons, chips and fresh fruit as part of a group of 12.

Whitbread’s Premier Inn trials “ssshh-o-meters” to guarantee sleep: Premier Inn is introducing noise sensors into communal halls that evaluate how much noise is being made by late night guests to ensure people get undisturbed sleep. The new monitors, which will be positioned in corridors near guests’ rooms, will light up when noise levels reach a certain decibel level, gently reminding people to keep the noise down for the other patrons staying at the hotel. Premier Inn’s chief executive Andy Harrison said: “We asked our teams to come up with ideas about how we could reduce noise from other customers and they came up with some really novel innovations. We’ve introduced what we’re calling ‘ssshhh-o-meters’. Although it seems like a bit of fun, it’s actually addressing a very real business challenge. Because we offer a money-back guarantee it sharpens our focus on making sure we do everything we can to offer our guests a good night’s sleep.” The scheme is being trialed as part of its unique Good Night Guarantee. If a guest doesn’t have a good night’s sleep, Premier Inn promises to refund them the cost of their stay.

Couple to re-open historic Cockermouth hotel after Wetherspoon withdrawal: Cockermouth’s historic grade-two listed Globe Hotel, closed since the floods of 2009, is on course to be reopened by February or March 2013. Owners Peter and Helen Brown plan to reopen around a dozen of the hotel’s rooms and bar area. It had been thought that the hotel, which was built in the 1700s, may be turned into a Wetherspoon pub after the chain started talks with the owners last year - the hotel was on the market for £595,000. Peter Brown, who has owned the hotel for around 20 years, said: “We were led down the garden path by Wetherspoon, who reassured us that everything was going to go ahead and then pulled out at the last minute.”

Liverpool entrepreneur opens Gecko: Liverpool entrepreneur Chris Hamblin has opened a new cafe bar, deli and restaurant concept called Gecko. Based in Queen Square Gecko is in the same casual vein as Hamblin’s other venues Buffalo and Coffee Crew. He said: “Gecko is our first multi-dimensional concept in that you can stay in various areas to dine, or recline, drink, chat or pop in to our deli for a ‘take home’ or ‘take to the office’ experience. Ultimately, Gecko is about simple yet fabulous-tasting Mediterranean cuisine.”

German budget chain Motel One to open six sites in the UK: Motel One, the German budget design hotel brand that already operates 39 hotels in Germany and Austria, plans to open six UK hotels in the next two years with sites in Edinburgh, London, Manchester and Newcastle. The first hotel to open its doors is the 208-room Motel One Edinburgh-Royal – on Market Street, close to Waverly Station. The building, opening this month, is a conversion of the original 16th and 18th century properties that once stood in its place and as much as the historic walls as possible has been conserved. Rooms are as little as £69 a night - Motel One aims to offer rooms at reasonable prices in good, central locations for business as well as leisure travellers.

Whitbread’s Premier Inn opens largest site; hits 50,000 bedrooms: Premier Inn, owned by Whitbread, opened its largest UK hotel last Friday – a 630 bedroom hotel located at Gatwick’s North Terminal. The new build property is located directly opposite the terminal, next to the Sofitel hotel. Patrick Dempsey, managing director at Whitbread Hotels and Restaurants, said: “Reaching 50,000 rooms across the portfolio is a great achievement that we are very pleased with. Our growth across Greater London is particularly exciting as it means we can offer even more people a great night’s sleep in the best locations.”

Campaigners beat Tesco conversion plan: Campaigners have beaten beat plans to turn a Weston-super-Mare pub, owned by Enterprise Inns, into a Tesco Express. People living in the locality launched the Save the Bristol House Inn campaign after learning the supermarket giant was looking to extend the pub and convert it into a supermarket. Now the plan has been withdrawn and the pub has re-opened with new licenses - Dave Willey and Brian Lines.

Coastal Leisure re-opens £1m Sunderland site: Coastal Leisure, headed by Anthony Robson, has re-opened the former Paddy Whacks in Sunderland, which went into administration last year despite a £1m investment. The venue is now called Voodoo Lounge. The bar will have two floors catering for different ages and musical tastes. Robson said: “A lot of people from Sunderland go out in Newcastle now. I’m not trying to compete with Newcastle but people from Sunderland should be able to come out here too and go somewhere that caters for a sophisticated crowd. I don’t think Sunderland should be left out. We had the crowds once, we can do it again.”

Handmade Burger Co opens first site in the south east this month: Handmade Burger Co will open its first site in the south east this month – it is opening in Reading’s Orcale centre. The company opened its first restaurant in Birmingham in 2006 and now has 14 branches in the UK. The Oracle’s spokeswoman Sam French said: “We feel the new restaurant will be a great addition to the mix of cuisine available to our customers.”

Live music provides a 100 per cent sales uplift at seven TCG sites: A Battle of the Bands contest at seven TCG sites boosted sales by up to 100 per cent at participating pubs and bars. Seven venues across TCG’s south-west region took part in the contest, branded ‘Live and Unleashed’. Heats at each site started in September, featuring three or four popular local bands. Winners from each heat progressed to their regional semi-final and then a Grand Final in mid-November, held at The Sailors Arms in Newquay, where acts performed alongside ‘The Voice’ finalist Adam Isaac. TCG chief operating office Nigel Wright said: “Live music is already a vital part of the sales mix in many of our pubs and bars. The idea behind Live and Unleashed was to give existing music venues something different to their usual offer and to trial live music in new sites.” 

Business Growth Fund takes minority stake in Peyton & Byrne: The Business Growth Fund has taken a minority stake in Peyton & Byrne with a view to expanding its fledgling bakery and cafe concept, which currently operates at two sites in London, according to The Sunday Times. Peyton & Byrne, which has a £20m turnover and is run by Great British Menu star Oliver Peyton and his sister Siobhan Peyton, runs restaurants at London venues such as Kew Gardens and the Wallace Collection. The Business Growth Fund already has a stake in the Wear Inns pub company and restaurant chain Barburrito. 

Last restaurant/bar unit in Llanelli scheme up for grabs: The last remaining restaurant /bar unit at Eastgate Leisure Quarter, Llanelli’s town centre retail and leisure scheme in South Wales, is up for grabs. The 3,000 square foot unit with external seating area, sits opposite the newly-opened six-screen Odeon Cinema, between new signings Nando’s and Greene King, and across from the new regional theatre. Further signings at the scheme include Costa, Jenkins, Saloon Grill, a 53-bed Travelodge, and Scarletts Rugby Club Sports Bar and shop. Eastgate Leisure Quarter is located adjacent to the St Eli shopping centre, with 7.1 million visitors per annum, and the newly created bus interchange which itself is generating up to one million users per annum. Tracey Mills, director at agent Davis Coffer Lyons, said: “The Eastgate scheme itself , together with the combined anticipated admissions to the cinema and theatre, makes for a very healthy captive audience. The investment in this scheme has completely changed the dynamics of the town, now serving as the leisure destination of choice for Park Troste, only five minutes by car from the 450,000 sq ft retail park, one of the most popular in Wales.” 

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