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Tue 29th Jan 2013 - City Pub Company, Lavazza and Pubs ‘n’ Bars

Story of the day:

City Pub Company to launch £10m EIS fund-raising in next month: City Pub Company, the Enterprise Investment Scheme-backed company set up by David Bruce and Clive Watson, is to launch its next round of fund-raising, with a target of £10m, which would be split between its two vehicles City Pub Company West and City Pub Company East. The company has so far raised a total of £7.8m, in tranches of £4m and £3.8m. The first two rounds of fund-raising have been over-subscribed. City Pub Company is planning to launch its sixth pub and second brewpub, The Cambridge Brewhouse on King’s Street, on Tuesday 5 March – brewing dry-runs start next week. The pub was formerly known as The Jolly Scholar and is the company's second pub in Cambridge, with both held on university leases. It will have a 6.5 barrel plant and brew three beers a week, supplying its sister pub, The Mill with beer as well. Last November, the company launched its first brewpub, The Henley Brewhouse, which non-executive director John Roberts reports is going ‘exceptionally well’. “We’re planning to have lots of beer-centric evenings at The Cambridge Brewhouse,” Roberts said. City Pub Company has decided not to proceed on a Wellington Pub Company site in Eton after failing to agree terms with the tenanted free-of-tie pub company. Last November, City recruited its own brewer, James Godman, who used to work at Hopback Brewery in Salisbury, to oversee brewing at the two brewpubs. Godman, who has a PhD in biochemistry, divides his time between the two brewpubs.

Bookings for Spring edition of Propel Quarterly: The Spring 2013 edition of Propel Quarterly is now open for advertising bookings. Contact either sharon.dickinson@propelinfo.com or jo.charity@propelinfo.com to book space.

Propel Multi-Club conference: The first Propel Multi-Club conference takes place at One Moorgate Place, London EC2R 6EA on Tuesday 19 March and multi-site companies can book two free places each on a first come, first serve basis. E-mail jo.charity@propelinfo.com to book places.

Industry news:

Starbucks reveals drive-thrus are more profitable and will make up 60% of new openings in the US: Coffee company Starbucks has revealed that 60% of its planned 1,500 new openings in the US will be drive-thrus – because they are more profitable. Founder Howard Shultz said: “Drive-thrus create incremental revenues and profits compared to traditional stores and represent a fast-growing and highly profitable format for Starbucks, comprising just over one-third of our US company-operated stores but contributing nearly 45% of our US retail profit. We are investing in this high-margin store format with innovations that will elevate the customer experience of our brand by enhancing drive-thru efficiency and consistency of service.” Last week, McDonald’s revealed that its new openings in the UK will be focused on a drive-thru format in preference to high street sites.

Horizons – Mexican sector set for long-term growth: Market insights and research firm Horizon has reported that the Mexican restaurant sector is set for long-term growth thanks to the entry of many small and innovative operators. Director Peter Backman said: “Although currently small – worth £205 million in 2012 – the Mexican restaurant (full service and quick service / take away) sector is growing. But this is not the first time there has been a Mexican restaurant assault on the UK market and previous efforts have achieved modest results. However, current expansion, at 10% a year, is driven by the emergence of many new, active, innovation-focused entrants – chains with five or more outlets, account for 46% of food and beverage sales. Pricing of main dishes is in line with other casual dining / fast casual restaurants, but starters and desserts are 30% cheaper than the average. On balance, the future for the next couple of years looks bright. And this time there may be longer-term success too for Mexican Restaurants - and for the sale of Mexican food in non-specialist outlets such as restaurants and pubs as well. But it all depends on how the increasingly sophisticated British customer responds to the Mexican restaurant sector’s offers.”

Health experts call for 7p fat tax on sugary soft drinks: Health experts are calling for a 7p-a-can fat tax to be applied to sugary drinks. A total of 61 organisations, including the Royal Society for Public Health, want the measure to be included in the Budget. The tax, equivalent to a 20p-a-litre levy, would raise £1 billion a year to promote healthier eating.

British Land – restaurant schemes fully pre-let: Developer British Land has reported that three proposed cinema and restaurant developments are fully let or under offer. The company stated this morning: “We continue to expand the leisure offer at our existing schemes. We have three cinema and restaurant developments underway, one at Glasgow Fort where we are on-site and progressing well, and a further two, subject to planning, at Chester Broughton Retail Park and Edinburgh Fort Kinnaird which are now both fully pre-let/under offer.”

Company news:

Lavazza plans to open 400 UK coffee shops: Italian coffee company Lavazza is planning to open nearly 400 shops over the next decade across the UK. London will be a key target for Lavazza Espression, the coffee maker’s new store format, with 50 shops planned for Greater London over the next three years. It will open its first shop on Villiers Street by Charing Cross station in April and another on Cannon Street in June, while others are set for Derby, Leeds and Newbury over the coming months. Lavazza Espression, which currently has just one standalone shop in Manchester’s Trafford Centre, has appointed property consultant Cushman & Wakefield to advise on its UK roll-out. Matt Illingworth, a partner at Cushman & Wakefield, said: “Lavazza Espression is a new and exciting concept which will give UK customers a real taste and experience of Italy on their doorstep.” In addition to Lavazza coffee, the shop sells Italian food and a selection of more than 40 non-alcoholic and alcoholic beverages. Meanwhile, Harris and Hoole, the coffee chain backed by Tesco, will open its latest new store in North Finchley in mid-February - it will occupy the shop vacated by Game, the computer games retailer.

20 Pubs ‘n’ Bars sites on the market through Christie + Co three years after administration: Twenty sites from the former 87-strong Pubs ‘n’ Bars estate are being brought to market by agent Christie + Co - three years after they fell in administration with Grant Thornton. The pubs, comprising a mixture of freeholds with vacant possession, long leaseholds, tenanted investment opportunities and managed houses, are predominantly situated in the south east of England — including four sites in London. They have been traded for three years awaiting an improvement in market conditions – so far main lender Allied Irish Bank has received just £2,778,339, from the sale of seven pubs, of the £25m it is owed by the company. The 20 pubs have a combined asking price of around £6.25 million, and are available as a portfolio, in clusters or as individual asset purchases. Simon Chaplin, Director of Christie + Co, said: “The pubs are in good locations with the potential for excellent trading. Over the last year or so, we’ve seen a number of experienced operators return to the pub sector with acquisitions, as well as the rise of local and regional entrepreneurs. These 20 pubs are certain to arouse the interest of both experienced investors and those seeking to gain a foothold in the sector.” Pubs ‘n’ Bars went into administration in December 2009 and David Thurgood, Trevor O’Sullivan and Nick Wood of Grant Thornton were appointed to manage the portfolio. The full list of sites is: Angel Hotel, Coleford, Gloucestershire; Hand & Squirrel, Talbot Green, Rhondda; Harry’s Bar, Yeovil, Somerset; The Cambridge, London SE19; Carramore, London NW10; Innisfree, Wembley, London; Royal Standard, London SE1; Eddystone, Plymouth, Devon; Blue Boar, Southend-on-Sea, Essex; Clouseaus, Westcliff-on-Sea, Essex; Lamb & Lion (aka Sherlock Holmes), Westcliff-on-Sea, Essex; Royal Albion, Walton-on-the-Naze, Essex; The Ship, Tiptree, Essex; Three Stars (aka Black Bean), Chelmsford, Essex; Fox on the Downs (aka Winner), Brighton, East Sussex; Hobgoblin, Loughborough, Leicestershire; Foresters Arms, Bagshot, Surrey; Royal Oak, West Molesey, Surrey; Imperial Arms, Farnborough, Hampshire; Gamekeeper (aka Inn for All Seasons), Charminster, Dorset. Of the 87 former Pubs n Bars units, 34 sites have been handed back to landlords. 

Whitby’s to open second site in Doncaster; plans nationwide chain: Fish and chip brand Whitby’s is to open its second site early next month at the former Doncaster fire service headquarters – the venue will have 170 covers. The restaurant, opposite Doncaster Racecourse, will also have a takeaway counter, and will open seven days a week. There is already a branch in Catcliffe, Rotherham and now there are plans to open a chain of Whitby’s restaurants, with DFS founder and Cantley millionaire Lord Kirkham providing finance. 

Cornish chef withdraws from new project: Celebrated Cornish chef Kevin Viner has pulled out of a plan to launch a fine-dining restaurant at a country house hotel in Mithian. Viner was due to launch Viner at The Rose at The Rose in Vale Country Manor. He is reported to have withdrawn from the plan after a heated exchange with the owner, James Evans, who took over the hotel in 2006. Viner left his last business after a long-running row with his former landlord, Eric Randle, who owns Summercourt where Viner ran Viners Bar and Restaurant. Evans said he was “furious and bitterly disappointed” at his decision to leave without giving any notice. The restaurant would now be rebranded as Rose in the Valley dropping any connection to Mr Viner. “Mr Viner came in with a list of demands. I wanted a master chef not someone to tell me how to run my hotel and restaurant,” Evan added.

McDonald’s and McCain’s looks overseas for potato supply: Companies are having to source potatoes abroad after last year’s wet weather reduced last year’s potato yields by a quarter. McDonald’s and McCain Foods are among the companies said to be shopping abroad for potatoes to turn into chips, while Britain’s 12,000 or so chip shops have been left with poorer quality potatoes. McCain Foods (GB) said it was a “proud supporter of British farming and our strategy is to source British potatoes”, The Financial Times reported. It added: “Due to widely reported issues with the recent harvest, we have had to source some potatoes from Europe in order to meet consumer demand.” A spokesman for McDonald’s, which worked its way through nearly 225,000 tonnes of potatoes in 2011, said: “Unfortunately our crop has been affected by the poor harvest too. However, we still expect the majority of the potatoes we serve to remain British.”

Thwaites appoints operations director to Inns of Character division as it eyes 25 sites: North west brewer and retailer Thwaites has appointed Sorcha Drakeford as operations director of its Thwaites Inns of Character division, which it plans to grow from six sites to 25 by 2018. Drakeford has experience in developing new concepts in her previous roles with the Spirit Pub Company, Mitchells & Butlers, Whitbread, Ask Restaurants and PizzaExpress.

Brewdog targets six new openings in 2013: Scottish brewer and retailer Brewdog is targeting six new bar openings in 2013. Founder James Watt told Morning Briefing that the company’s had confirmed openings in Leeds, Liverpool and London and the company was particularly keen to find sites in Brighton, Sheffield and south London. The company raised £3m in crowd funding last year from 7,000 investors to fund a new £7.5m brewery in Ellon. Production increased to 25,000 barrels a year and Brewdog is targeting 50,000 barrels this year – the total capacity of the new brewery 250,000 hectolitres.

Intertain opens £1m refurbishment to Birmingham Walkabout with innovative “inside outside” area: Intertain has opened its most ambitious Walkabout refurbishment so far - £1m scheme that created three bars and an innovative “inside, outside” area at the front of the listed building that creates an outdoor seating and smoking area. The venue opened in 1996 and has a 1,200 capacity with a licence until 3am. Chief executive John Leslie told Morning Briefing: “On our opening night last Thursday we had 1,000 customers and on Saturday, which was Australia Day, we were trading at capacity from late evening onwards.”

Damson restaurant group plans two openings: The Damson Restaurant Group is to create 60 jobs at a £1.4m venue at Media City UK, Salford Quays - the 140-seater restaurant will open on Friday. Damson, which was established in Heaton Moor, Stockport, in 2009 by Steve Pilling and Simon Stanley, will become the first independent food brand at MediaCity UK. Pilling said: “This is one of the most exciting projects I’ve been involved in yet. The opportunity to be at the forefront of a new dining community in the region’s most exciting location and to invest in the region’s hospitality industry at the same time is a fantastic thing.” The Damson team is also behind Mr Pilling’s Roast Restaurant and Oyster Bar, a £2m restaurant which will open in the third quarter of this year at The Courthouse, Deansgate, The chain is weighing up sites in central Manchester for another branch of Damson. The Damson team also runs The Red Lion gastropub in Stockport.

Costa to launch advertising campaign for Costa Express vending machines: Costa Coffee is to launch a major advertising campaign for its Costa Express vending machines as it brings all brand activity under the aegis of one creative agency. Kevin Hydes, Costa marketing director, told Marketing Week that the aim is to have consistent approach to branding across its portfolio. He told the magazine: “We can’t take customers for granted, there’s no room for complacency in our business. Our focus is on every single customer and every single interaction they have with the brand - whether that’s in stores, machines, online or at home - it’s critical. A third of all adults go into Costa every month so from a retail perspective Costa is a really mature brand but Express is still young and less people have experienced it. It’s in its relative infancy and we have to be sensitive to that and really get across its quality Costa message to deliver consistency and great experience across the whole brand.”

Milton Brewery to open second Cambridge pub: Milton Brewery is to open its second Cambridge pub later this year – it has bought The Haymakers in High Street, Chesterton, which shut its doors in July 2011, and plans to reopen it as a real ale pub in April. Milton Brewery managing director Richard Naisby said he hoped to replicate the success of his first Cambridge pub, The Devonshire Arms in Petersfield, which is the Campaign for Real Ale’s reigning city pub of the year. He said: “There is a strong market for pubs in Cambridge, but they have to be the right pubs, and they have got to appeal to a broad spectrum of the population. It’s about doing what is an age-old job, but doing it properly.”

Claude Bosi opens new gastro-pub in partnership with Brakspear: Chef Claude Bosi opened his new gastro-pub, The Malt House in Fulham yesterday, a freehold owned by Henley-based Brakspear, after a £750,000 refurbishment. His company Jolly Fine Restaurants Ltd also operates twice Michelin-starred Hibiscus restaurant and The Fox & Grapes gastropub in Wimbledon. The Malt House, just off Fulham Road, is a large corner site, dating back to 1729. The £750,000 refurbishment has been funded jointly by Brakspear and Jolly Fine Restaurants. Tom Davies, Brakspear chief executive, said at the time of the acquisition: “The Malt House is a landmark west London site with enormous potential. By partnering with one of the most talented and well-known restaurateurs in the business, we are confident of turning it into an outstanding food pub with letting bedrooms.”

Krispy Kreme unveils date for first opening in Scotland: Krispy Kreme will open its first store in Edinburgh on 13 February, as part of plans to open up to 14 more stores in the UK this year.

Thwaites pubs re-opens with Thai restaurant: A Thwaites pub, The Dale Inn in Denby Dale, Huddersfield, has been re-opened with a Thai restaurant after a £128,000 investment with local businessmen. G&T Accountancy Services partner Steve Glover and client Paul Radley, managing director of PSR Industrial Flooring, have teamed up to re-open the former Dalesman, which has been closed for three years. Run-down living quarters upstairs were converted in to the new 50-seat Thai restaurant. “We were keen to reopen The Dale Inn as we wanted to invest in the local community and create jobs,” said Steve Glover. “We knew that with the right offer and people we could return the pub to its rightful place, at the heart of the community.”

Living Ventures looks to raise £750,000 from investors through EIS scheme: Restaurant and bar group Living Ventures is looking to attract individual investors to buy a stake in a £2.5m fine dining venue. Managing director Tim Bacon said the group is looking to raise £750,000 and is offering a 30% shareholding in its Manchester House Restaurant and Lounge Bar, which is due to open in Spinningfields in June. The company is offering 30 investors or “member partners” from the Manchester area to take a 1% stake for £25,000 as part of an Enterprise Investment Scheme. In return, shareholders will receive a yearly yield on their investment and a dividend. They will get access to priority bookings as well as a monthly expense account. Living Venture has partnered with Aiden Byrne, the youngest chef to win a Michelin Star in the UK, for the new venture. The new venue will be based at Tower 12, Avenue North, Spinningfields. It will feature a second-floor restaurant and a 12th floor Sky Lounge. Bacon said: “This is a different kind of fundraising exercise and an alternative to approaching the banks. We want to bring in a mix of investors whom we want to be part of the business. A lot of people want to own a restaurant or be part of the restaurant trade, and this gives them the opportunity to do just that. We want Manchester people on board, who will come in, use the facilities, host parties and enjoy being part of it. We’ve had a lot of interest in it already but I really want to mix it up and am keen to get female shareholders on board.” Living Ventures is set to turnover £45m for its current financial year, which ends on March 31, and is targeting revenues of £50m for 2013. Christmas sales rose 14% on the previous year, aided by new opening that included a second Alchemist on New York Street, Manchester, and The Botanist, in Alderley Edge. Living Ventures also wants to open Artisan, a pizza restaurant, which will also be in Manchester House, and the group is expanding The Australasia bar to create The Grand Pacific Bar and Garden. It is investing a total of £6m during 2013.

Well Fed Pub Group hires former Star Inn chef: Well Fed Pub Group, the company led by Craig Minto that runs two pubs in Addingham owned by Punch Taverns, has hired an executive chef. Mark Owens was previously a senior sous chef at the award-winning Star Inn at Harome, near Helmsley. His previous experience includes a spell as commis chef at the Michelin-starred Le Gavroche Restaurant in London’s Mayfair. Minto, 31, said: “We continue to strengthen our kitchen brigade. Mark and his team are creating what will be our best menus to date, a vital step in our ongoing mission to establish Addingham as a recognised food destination.”

Mitchells & Butlers beats residents attempt to change opening hours: Mitchells & Butlers has beaten an unusual attempt by residents to convince Swindon Council’s licensing committee to change the opening hours of a Sizzling Pub Company site they say is causing late-night noise disturbance. In an unusual move, residents brought about a review of the premises licence of The Village Inn, in Ramleaze, Shaw, which can sell drink and put on entertainment seven days a week between 10am and midnight. Three residents attended yesterday’s licensing panel hearing, led by Vernon Montgomery, of Saddleback Road, who asked councillors to impose a new closing time of 11pm from Sunday to Thursday inclusive, but to allow the pub to open earlier so as not to reduce the overall trading hours. They also asked the panel to make it a condition that the smoking shelter at the front of the premises stops being used at 11pm. However, the committee decided to make no changes, claiming a reduction of hours would be disproportionate, after the firm revealed it planned to reposition the smoking shelter so its open ends pointed away from residents’ homes.

Sarumdale administrator reports “potential claim against Barclays” over interest rate swap mis-selling; FSA to report on interest rate swaps this week: Administrator Begbies Traynor has reported that there is a potential interest rate mis-selling claim against Barclays Bank in respect of multi-site pub company Sarumdale, which owed the bank £6.9m when it was placed in administration last year. Former Sarumdale directors Rodney Hall and Mike Lloyd claim the company was the victim of interest rate swap mis-selling that meant Sarumdale was paying £300,000 a year in interest and £400,000 in capital repayments from 2008 onwards after it applied for a £6.1m consolidation and expansion loan from Barclays. Lloyd told The Mail on Sunday yesterday: “We were told that interest rates only go one way and that taking a ten-year hedging product would protect us. We trusted our bank manager. Yet in reality they played on our fears to sell us a hugely expensive product that they marketed as cost-free. The cost of exiting the swap was never explained.” In a report filed last week at Companies House, Begbies Traynor reported that a claim against Barclays is being actioned through a law firm with “input from the directors forthcoming”. It added: “At this juncture, given the commercial sensitivity of releasing information into the public domain prior to a potential legal process, the administrators are unable to provide any further information.” Begbies Traynor reported that the Sarumdale estate, being traded by Convivial Management Services on a fee of £1,800 per pub per month during the administration, made a profit of £181,159 between June and December last year - £2.13m has been raised from the sale of four pubs so far. Meanwhile, the Financial Services Authority is set to make a statement this week on the mis-selling scandal that could lead to an estimated 40,000 companies launching claims against banks. Banks have so far set aside £720m to cover compensation claims but this is expected to increase dramatically. Barclays, for example, is rumoured to be preparing to make another £1.1bn provision on top of the £450m already set aside.

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