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Mon 10th Dec 2012 - Pizza Hut, Gatecrasher and Wear Inns

Story of the day:

Yum! Brands to invest £20m in expanding delivery store network by 100 sites: Yum! Brands has unveiled a plan to invest £20m in expanding its network of delivery stores by 100 sites within two years in an attempt to catch-up with market leader Domino’s UK. A key part of the investment is the launch of a new franchise incentive scheme developed to support the opening of new stores. One part of the programme, expected to cost £4.5m, offers up to £65,000 to existing and new franchisees for opening a new store by November 30 2013 subject to terms and conditions. The company said the “aggressive expansion plan” will create significant opportunities for existing and prospective franchisees across England, Wales and Scotland to invest in the pizza delivery brand. Spokesman Mark Fox said: “We are committed to delivering a major investment in growing our UK system, creating significant new opportunities for existing and would-be franchisees. Our investment will increase our marketing spend, drive the outlet numbers and visibility of Pizza Hut Delivery, and create opportunities for franchisees to grow their businesses quickly. The long-term goal is to establish a solid base of over 700 delivery stores across the UK, with an immediate business focus of delivering an additional 100 stores.” Pizza Hut Delivery currently has around 300 company-owned and franchise stores in England, Wales and Scotland, which is less than half the number in the Domino’s network. Yum! Brands retained the delivery arm of the UK Pizza Hut business when it sold the dine-in restaurants to private equity firm Rutland Partners last month.

ALMR National Restaurant Show Study Tour in Chicago open for bookings: The Association of Licensed Multiple Retailers (ALMR) has opened its study tour to the National Restaurant Association Show in Chicago in May 2013 for bookings. Next year’s visit takes place between Thursday 16 May and Monday 20 May. The ALMR launched its first study tour trip to the NRA show this year, with the trip led by Propel Morning Briefing managing director Paul Charity. The NRA draws 58,000-plus industry professionals from all 50 states and 100 countries, all seeking the newest innovations and up-to-the-minute information about trends and issues. The ALMR trip provides: insights from industry experts on the rise in fast-casual dining, social media, new and emerging brands, menu development, staff management and a host of other issues – with 70 free education sessions; involves a tour of Chicago’s hottest concepts and a market overview briefing sessions from US experts. ALMR chief executive Nick Bish said: “Our first trip in May this year was a tremendous success with our attendees reporting they had benefited enormously from the visit to the Show and the chance to study the key trends in the innovative US market.” Paul Charity, managing director of Propel Info, said: “The NRA show is a fantastic opportunity to find fresh inspiration and understand the emerging trends shaping the fast-changing US market.” To book a place, e-mail Jo Charity on or call her on (01444) 810304. Places are limited.

Industry news:

High Court challenge over Westminster City Council burger ban: A High Court challenge is being mounted after environmental health officers from Westminster City Council asked bar and restaurant chain Davy’s to stop serving burgers rare or medium rare. Davy’s has taken the case to the High Court. A Davy’s spokesman told The Daily Telegraph: “(Our) burgers are produced from high quality ingredients and Davy’s contends it has safe measures in place to serve rare or medium-rare burgers.” Westminster food health and safety manager James Armitage said: “This is about making sure customers are eating meat that is not a threat to their health. It is possible to produce burgers that can be eaten undercooked, but strict controls are essential.” Food Standards Agency rules suggest there are no rules preventing the sale of meat by restaurateurs that is rare or raw.

Industry group calls on sector to provide 15,000 two-week work placements: Pub and bar companies across the country aim to create 15,000 work placements for young people in a drive to showcase the career options that are available throughout the industry. The initiative which will run throughout 2013/14 and will equip young people with foundation level qualifications and prepare them for entry into employment via an apprenticeship or as a stepping stone on a structured career path. The industry “Perceptions Group” is calling on employers to register their support for the placement programme and engage in this industry-wide initiative. The programme enables training providers to run pre-employment academies and workshops that will offer potential candidates the opportunity to hone their employability skills prior to their application for a two-week work placement. Over the two-week placement candidates will be immersed in a mixture of on-line and practical training that will cover a range of modules including an introduction to the industry; team working; customer service; sales training; Food Service and Health & Safety Level 2; as well as communication and influencing; making the right first impression and dealing with difficult situations. Hospitality Guide executive director Suzy Jackson said: “The Guild recognises the importance pubs and bars play in both entry level career opportunities as well as continuing professional development. This initiative aims to enable operators, big and small, to engage with thousands of unemployed young people who will have been through a pre-employment programme and will be work ready.” To be part of this career revolution register your support via your trade or member association or email for more information. 

Restaurants in New York complain of daunting logistics in large soft drink ban: Restaurateurs in New York and soft drinks makers are complaining they face daunting logistical hurdles ahead of the ban on soft drinks sizes of larger than 16 ounces due to be introduced in March 2013. Practical challenges include retooling manufacturing, changing distribution systems and introducing new plastic cups.

Criminologist – binge drinking is falling: Professor Fiona Measham, a criminologist at Durham University who has studied drinking trends for the past 20 years, has argued that the tide on binge drinking has been turned. She said Department of Health figures show a reassuring fall since 2001 in the number of under 16s in England who are drinking - from 26 per cent in 2001 to 12 per cent in 2011. Prof Measham told The Observer: “The trends are clear. From about 2002 onwards, the tide turned. I’ve seen it in my students and I’ve seen it when I do my research in pubs and clubs. Something is changing, a cultural shift, there is no longer the desire to go out and get completely obliterated. Each generation wants to be different from the one before.”

Cost of Christmas lunch soars: The cost of serving Christmas lunch has risen by twice the increase in wages in the past five years, according to a report in The Grocer magazine. A festive meal with all the trimmings has risen in price by 14.3 per cent since 2008, costing £129.47 compared with the 2008 price of £113.26 – the average wage has risen by 6.7 per cent in the same period. 

Heineken argues bans on multi-buys preferable to minimum pricing: The UK’s largest brewer Heineken has argued that banning two-for-one deals and multi-buys in supermarkets is a more realistic option for tackling binge-drinking than minimum pricing. Rene Hooft Graafland told The Sunday Telegraph: “We feel it (multi-buys) is a much more realistic option to work on. You avoid saying: ‘The more you buy, the cheaper you get it’. That is not the idea.” Heineken believe minimum pricing will penalise responsible drinkers.

Tax protesters target 50 Starbucks stores: Tax avoidance activists have held protests at more than 50 Starbucks stores to highlight tax avoidance by multi-nationals. UK Uncut claimed it was the most widespread day of action it had ever held, showing the depth of anger at the scale of tax avoidance by some large companies. The demonstrations went ahead in cities including London, Glasgow, Belfast, Liverpool, Sheffield and Portsmouth even though the US company announced changes to its tax payments in which it will pay around £10m in UK corporation tax for each of the next two years, following the revelation that it paid just £8.6m in 14 years of trading in Britain and nothing in the last three years. UK Uncut said it had “transformed” Starbucks stores into refuges, creches and homeless shelters to highlight the tax issues as well as the effect of government cuts on women. Meanwhile, Starbucks has embarked on a public relations campaign in which it took out full-page adverts in The Times and The Daily Telegraph to produce an open letter from Starbucks chief executive Kris Engskov. He stated: “We hope that over time, through or actions and our contribution, you will give us an opportunity to build on your trust and custom.”

Price of a loaf of bread to rise by 10p: The cost of bread, cakes and pastries is set to rise sharply as the result of the global wheat shortage, with a loaf of bread set to rise by 10p. This year’s wet weather has caused a £50-a-ton increase in the price of flour which will have to be passed on to customers, according to the National Association of Master Bakers.

Scotland Yard in weekend licensing crackdown: Scotland Yard made nearly 300 arrests, shut down 22 venues and seized large amounts of tobacco and alcohol during a 48-hour crackdown on licensed premises across London at the weekend. Nearly 4,000 officers raided clubs, pubs, off-licences and shops in London to target those breaking licensing rules, the Met reported. Met Police commander Mak Chishty said: “Licensing impacts upon everyday community life - in our shops and supermarkets this means people do not sell knives, harmful substances or alcohol to young people; in our pubs and clubs it means that alcohol is sold and consumed in a responsible way, on our roads it means that vehicles, such as taxis are properly licensed and safe.”

Company news:

Nightclub company Gatecrasher fails in attempt to re-open site for Christmas; reports increased losses after Leeds site temporary closure: Nightclub operator Gatecrasher Clubs and Bars, which is headed by Simon Raine, has failed in an attempt to re-open its flagship site in Watford for Christmas. Licensing authorities ordered the closure of its troubled Area nightclub for two months and a rebranding for when it re-opens. Gatecrasher lawyers attempted to appeal the length of the closure order last week to allow Area to re-open as Cameo for Christmas. The legal challenge failed and Cameo will only be allowed to open on 6 January 2013, missing the crucial Christmas and New Year trading period. Suspension of the Watford premises licence is the second time in three years that Gatecrasher has had a nightclub licence suspended. This week, the company filed annual accounts that reported turnover dropped by 13 per cent to £9,373,067 in the year to 29 May 2011 after the licence of its Leeds club was suspended. The company reported pre-exceptional profit of £833,711 but pre-tax losses of £985,038 after exceptional items – it lost £181,119 the year before. The drop in turnover was linked to a part-year closure of the Leeds site, lower expenditure on headline DJs at its Birmingham venue “continued competition in certain locations and recessionary economic factors”. Legal fees of £59,231 were incurred in relation to the loss of the licence at the Leeds venue – and a further loss of £159,588 was linked to the period of closure at the club. Gatecrasher appealed against the closure decision and the Leeds venue was successfully re-launched as Bed in December 2011 after a rebranding and refurbishment – it had to install metal detectors and use plastic glasses. The company also reported that Gross Profit margins decreased to 46.2 per cent from 47.4 per cent. It stated: “Despite continued strong control on business costs, in the poor current economic environment it has proved difficult to pass on the full year effect of the increase in both VAT and other costs. This has put pressure on bar prices and entrance fees and the need to have quality events and disc jockeys to maintain attendance levels.” The group re-financed in June 2011 with its long term banking partners Barclays, securing a £3.7m long-tem loan.

ETM Group reports turnover up, pre-tax profit down: ETM Group, the gastro-operator led by Tom and Ed Martin, has reported turnover rose to £12,332,808 in the year to 29 February, up from £10,456,778 the year before. Pre-tax profit dropped to £387,536 from £510,120 the year before. Operating profit was £551,405, down from £692,060 the year before. A statement to Companies House said: “The directors are satisfied with the results given the testing economic conditions. They are constantly looking for opportunities to expand and improve the group and are confident they will be able to do so with adequate funding. During the year, we opened a site is Chiswell Street and a site near Leicester Square and subsequent to the year end a second site in Chiswell Street.” The Net Book Value of the company’s freeholds is put at £3,417,107 – the company has bank loans of £2,954,910.

Tragus to invest north of £20m to modernise Cafe Rouge: Tragus, led by John Derkach, is to invest “well north of £20m” to modernise around 40 its Cage Rouge sites in the coming year, The Sunday Times reports. The company has already refurbished its Hampstead and Hitchin sites and has seen double-digit sales growth. The company will have bespoke design at each refurbished Cafe Rouge site. Derkach told the newspaper: “If you make everywhere look the same, the day that design becomes out of date, the entire estate is out of date. Each has to be sufficiently different so the design is evolving, so you don’t have that problem.”

Wear Inns moves headquarters to brewery: Expanding north east multiple Wear Inns has moved to new headquarters at the Castle Eden brewery in Hartlepool. The company now owns 26 pubs – 17 in the north-east and nine in Yorkshire – with plans to expand to 40 by the end of 2013. Managing director, John Weir said: “It just feels right to be making the move now. I am born and bred in Sunderland and very proud to be developing the business in the region. We needed to put down some roots. Given the history of Castle Eden and the sites we own in the north east and Yorkshire, it is the perfect location.” Wear Inns has bough pubs from TCG and Orchid this year.

Greggs boss to leave to become head of Brakes: Greggs chief executive Ken McMeikan has told the company’s board that he is leaving to become chief executive of Brakes Group. The recruitment of a new chief executive will now begin - McMeikan has agreed with the board that he will stay in his role and a member of the board whilst a successor is appointed. Derek Netherton, chairman of Greggs, said: “We are very grateful to Ken for the valuable contribution he has made to Greggs. He has led the company through the major changes that have put us in a strong position for the future with a clear strategy for growth in a difficult environment. We wish Ken well in his new role.”

Jamie Rollo increases Enterprise Inns share price target: Morgan Stanley leisure analyst Jamie Rollo has increased his share price target for Enterprise Inns from 75p to 140p. He said: “We upgrade Enterprise Inns to Overweight as we see the shares getting rerated further upwards as like-for-like income stabilises and the debt level becomes more manageable. We think the risk of a credit event has materially receded, and we increase our price target from 75p to 140p. While the tenanted pubco model and Enterprise’s high debt levels mean a premium multiple is unlikely, the company is becoming more investable, and even small like-for-like inflections can have a big impact on its equity value. Using the low-end of Enterprise’s historical valuation multiples as a guide suggests circa 50 per cent potential upside. Our 200p bull case uses the 300p Net Asset Value as a guide.”

JD Wetherspoon hopes to crack Stamford nut – and lines up site in nearby Oakham: JD Wetherspoon hopes it has found a site in Stamford, Lincolnshire – its third major attempt to open in the town. The managed operator lost out to Ask and Loungers on securing sites in the historic town in the past decade or so. Now Wetherspoon has signed a contract to convert the Stamford Mercury’s offices in Sheep Market, Stamford to a pub in a £1m scheme. Chief executive John Hutson told the local newspaper: “Stamford is a town that we have been interested in for a long time and we are delighted that we have identified a site.” However, an online petition opposing a Wetherspoon opening in Stamford passed 100 supporters in 24 hours. Meanwhile, it is planning to turn the former Royal British Legion building in High Street, Oakham into a pub in another scheme worth £1m. Spokesman Eddie Gershon said: “We are keen to open new pubs in both Stamford and Oakham. There is still a lot to do in terms of getting to the stage of opening. However, we are certainly moving in the right direction.”

Wadworth sets out to challenge Guinness with sampling campaign: Wadworth is setting out to challenge Guinness drinkers by offering sampling of its Corvus Stout. The move comes after six months’ of positive feed-back from trade and consumers on the flavour, format and cost benefits of Corvus Stout. The sampling campaign is taking place at 35 Wadworth pubs until 16 December. Christine Evers, Wadworth product marketing manager, said: “The timing is right for this. People are interested in experimenting on taste and are more educated about not being manipulated by big advertising and marketing campaigns. The resurgence of the cask ale market has had an interesting affect on stout – whereas once it was a market dominated by big brands, customers are now showing more willing to try something new. In sampling our stout, we are giving them the confidence to do just that.”

Las Iguanas receives 30 franchise approaches at the Olympics: The Latin-American chain Las Iguanas is exploring franchising internationally after receiving 30 enquiries from international visitors to its Westfield Stratford site during the Olympics, The Times has reported. Founder Eren Ali has tasked chairman Ian Neill, former chief executive of Wagamama, with researching potential markets, including India, China, Australia and the Middle East. Las Iguanas operates 28 sites in the UK and is backed by private equity firm Bowmark Capital, which acquired a 52 per cent stake in 2007. Ali told The Times: “It’s all about getting the right franchise partners. To make it worth our while, they’d have to be able to roll out at least ten to 20 units in a territory.” In the year to 31 March, underlying profits rose by 12 per cent to £3.3m on sales up 13 per cent to £33.8m. Like-for-like sales grew by 1.8 per cent year on year. A further three new sites have opened in the current year in Cambridge (April); Kingston (June) and Aberdeen (November) with additional new restaurants due to open in Plymouth and Wembley early in 2013. The group extended its banking facility with Royal Bank of Scotland to £15.7 million in March 2012 providing the funding required to grow the Group to 36 sites. Ali said: “I am delighted to report another year of progress which demonstrates good sales and profit growth, as well a further consolidation of Las Iguanas’ market leadership in authentic Latin American casual dining. This is an excellent trading performance against the backdrop of an ongoing challenging economic climate and we remain encouraged by the ongoing appeal of our brand offering in a variety of trading formats and geographic locations.”

LDC emerges as favourite to buy D&D Restaurants: LDC, the private equity arm of Lloyds Bank, has emerged as favourite to buy Quaglino’s operator D&D Restaurants, according to The Sunday Times. Sir Terence Conran is selling his 51 per cent stake in the business in a deal estimated to be worth £60m with management retaining its 31 per cent share. Although LDC is favourite to secure the deal, other parties involved in the sale could yet outbid it.

Chilango plans two openings before Christmas – aims for four in 2013: Mexican fast casual restaurant chain Chilango will open two more sites in London before Christmas - at 64 London Wall and 32 Brushfield Street. It has three existing sites at Fleet Street, Upper Street and Chancery Lane. Four more sites are scheduled for 2013.

Yorkshire landlord takes on second site: Businessman Alan Ingle has taken on his second pub – he has re-opened the former Dusty Miller pub in Mirfield, near Huddersfield, as the Yorkshire Puddin’. The move comes two years after he opened The Pear Tree, which has a beer focus and a 28-seat restaurant. The Yorkshire Puddin’ is much larger with 110 covers. There will be three types of eating experience at the Yorkshire Puddin’ - tapas, bistro and fine dining. The new restaurant will be fully launched at the end of January when the pub will be re-named the Dusty Bar and Restaurant.

Tea Monkey plans franchise expansion plan: Education entrepreneur Tracey Bovingdon is planning to franchise her Tea Monkey concept to up to 12 cities in the coming year, according to The Times. Bovingdon, who runs Tea Monkey sites in Milton Keynes and Bath, said she planned to “bridge a gap in the market for a high street chain that provides a high quality and extensive range of teas served in a modern environment”.

Brewdog to open Birmingham site this Wednesday: Scottish brewer and retailer Brewdog is to open its tenth craft bar in Birmingham this Wednesday (12 November). The location is on John Bright Street and is only a few minutes walk from New Street Station. Brewdog’s eleventh site will open in Leeds in early 2013.

Yellowhammer Bars sells three sites after 18 per cent drop in like-for-like sales across its 20 venues: Yellowhammer Bars, the operator of Groove and Bliss nightclubs and three style bars branded as Chilli White, has undertaken a strategic review that has seen it dispose of sites in Banbury, Barnstaple and Swindon. The move came after the company saw like-for-like sales drop by 18 per cent across its 20 sites in the year to 29 February 2012. The company will now focus on five freehold and 12 leasehold units. Turnover dropped 18 per cent to £20,537,857 in the most recent year, which followed a year that had seen turnover drop by 13 per cent. The company made a pre-tax profit of £1,978,477 in the most recent year compared to £4,080,866 the year before. A statement to Companies House said: “Reduced consumer spending has continued to hit the sector quite hard and we report a 18 per cent decline in year on year same outlet sales. Since the year-end, a strategic review has been undertaken to ensure that all units to remain in the group are profitable or of strategic importance to the long term viability of the group. The group, going forwards, will rationalise to five freehold and 12 leasehold units. Since the year-end, three units at Banbury, Barnstaple and Swindon have been disposed of. The resultant aim of the restructure of the group is to achieve a return to underlying operating profitability.” Yellowhammer is owned by private equity firm Agilo, which is a specialist in buying distressed assets, and is run by Volante Management, which was awarded the contract to run the business in March 2011. The company is made up of three Agilo acquisitions – Candu Entertainment, Future 3000 and the four-strong Sports Café business. Its chairman is industry veteran Derek Parfitt, who has previously held directorships with Morrells, Greene King and the Magic Pub Company.

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