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Thu 31st Jan 2013 - Admiral Taverns, Enterprise and M&B

Story of the day:

Mitchells & Butlers reports 4% up in December but hit by weather in January: Managed operator Mitchells & Butlers (M&B) has reported strong December trading but that bad weather in January has caused a small drop in like-for-likes in the 17 weeks to 26 January. Christmas sales, covering the six weeks to 5 January, were strong with record levels of advance bookings, particularly on key trading days. Across the period as a whole, like-for-like sales increased by 4%. In the 14 weeks to 5 January, like-for-like sales were 1.0% ahead of last year. Since then, M&B reported trading conditions have been ‘challenging’ following the holiday period and the UK has been affected by cold weather and snow. As a result, like-for-like sales in the 17 weeks to 26 January were 0.3% lower than last year. Total sales growth in the first 17 weeks was 2.1% and operating margins were in line with last year. Chief executive Alistair Darby said: “I am pleased with our performance over Christmas and the New Year. Our planning for Christmas was excellent and we provided our guests with great experiences, as shown by the fact that a third of our pubs, bars and restaurants broke their weekly sales records. Since the New Year, trading has slowed as consumers tighten their belts. Although we do not expect economic conditions to become any less challenging over the next twelve months, we remain confident in our ability to perform well in the year ahead as a result of our continued focus on service and amenity coupled with the high quality of our assets, brands and formats.” 

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:

First Barbie-themed restaurant opens in Taiwan: The first Barbie-themed restaurant, featuring hot pink sofas, high heels-shaped tables and chairs decorated with tutus, has opened in Taiwan, catering to fans of the iconic doll. US toymaker Mattel has licensed Taiwan’s restaurant group Sinlaku to operate the Barbie Cafe and hopes that the new establishment in a shopping district in the capital Taipei will help promote Barbie as a fashion brand. “We picked Taiwan because theme restaurants are very popular and successful here. We are very confident that the Barbie Cafe can promote our brand image,” said Iggy Yip, a senior manager in Mattel’s consumer products division in Greater China.

Tesco – horse burger meat came from outside the UK: Meat in Tesco burgers that was found to contain horse DNA did not come from a list of approved suppliers, the supermarket said yesterday. The meat also came from outside the UK or Ireland, which was contrary to company policy. Tesco has dropped its frozen burger supplier, Silvercrest, following what it termed a “breach of trust”. It has promised to introduce a DNA testing system on meat products to “ensure the quality” of the food on its shelves in the wake of the scandal. It said: “We now understand - with as much certainty as possible - what happened. The evidence tells us that our frozen burger supplier, Silvercrest, used meat in our products that did not come from the list of approved suppliers we gave them. Nor was the meat from the UK or Ireland, despite our instruction that only beef from the UK and Ireland should be used in our frozen beefburgers.”

Gourmet Society reports 58% increase in restaurant members in two years: Dining club the Gourmet Society has reported that its number of partner restaurants has increased by more than 2,000 in the last two years. The Gourmet Society now has 6,316 restaurants, an increase of 58% when compared to the number of partner restaurants at the beginning of 2011, which was just less than 4,000. The news comes less than six months after the Gourmet Society launched its first app for Apple and Android mobile devices, increasing its partner restaurant’s exposure to the club’s members, which now total over 500,000. 

Panera Bread opens fifth free Panera Cares site: Panera Bread, the best-performing US restaurant brand of the past decade, ha opened its fifth pay-what-you-want Panera Care site – this time in Boston, Massachusetts. The restaurants list suggested prices for the items, customers can pay more, less, or nothing – or can also volunteer time instead. “People want to contribute something” even if they can’t pay money, said Kate Antonacci, project manager for Panera Cares.

Family brewer tax contribution hits £500m: The Independent Family Brewers of Britain has revealed that its contribution to HM Revenue & Customs in the last tax year totals almost half a billion pounds. Following research with 20 members, it is estimated that Family Brewers’ members and employees contributed £496.5m to the UK economy last year. Of this total, over £200m is comprised of excise duty and £169.5m is VAT, equal to 5.8% and 0.2% of the UK’s total tax revenue respectively. In addition, the Family Brewers have collectively paid over £34m in corporation tax, dwarfing the £6m reportedly paid by technology giant Google, the £1.8m reportedly paid by internet retail giant Amazon and the zero contribution made by coffee chain Starbucks. The news comes after the Family Brewers announced a turnover of almost £1.6 billion across its members, with 17,000 full-time employees and 21,000 employed with the Family Brewers on a part-time basis. James Staughton, chairman of the Independent Family Brewers of Britain, said: “These figures speak for themselves. To help our licensees’ long-term future and profitability, we encourage the government to scrap the beer duty escalator and consider a reduction in VAT charged in pubs on drink, food and accommodation, in order to offset unfair supermarket competition and stimulate economic growth and employment in our industry.”

Islington – no point in charging late-night levy unless we get the money: Plans to charge pubs and clubs a levy to open late at night could be scrapped unless the Mayor of London can guarantee the bulk of the funds raised are returned to Islington’s coffers. Islington’s Labour crime chief Councillor Paul Convery said that the plan – designed to bring the borough’s burgeoning pub, club and bar scene under control – would be useless if 70% of the levy which goes to Mayor Boris Johnson stays with him.

Company news:

Exceptional trading conditions hit Enterprise Inns; signs deal with Carlsberg: Exceptional trading conditions have been blamed by Enterprise Inns for a 4.4% drop in like-for-like income, worth £5m, in the first 17 weeks of its financial year to 26 January. The company stated: “A number of factors have made the first four months of the (financial) year unusually challenging. The poor weather during much of the period has not been helpful, particularly when compared to the Indian summer of October 2011, which was very good for trade. Trading in the weeks around Christmas and the New Year was strong and produced welcome respite. However, the extreme weather conditions of the last two weeks, with snow across much of the country, have led to reduced footfall and a consequential loss of beer volume, which we estimate to have reduced our net income by £1.5 million. The cessation of trading on 1 October 2012 of WaverleyTBS, our wines and spirits distributor, adversely impacted the business because we were unable to supply wines and spirits to our publicans and resulted in a direct loss of some £1 million of trading income. However, we have now signed a new two-year distribution agreement with Carlsberg, which will become operational in the next few weeks such that income from wines and spirits should return to normalised levels by the end of March.” Enterprise expects to generate £150m of proceeds through disposals this year. It stated: “In the first 17 weeks of the current financial year we have completed or exchanged on 88 pubs for proceeds of £32 million and we have 34 additional pubs in the hands of solicitors expected to generate a further £17 million. The company added: “We expect trading conditions to remain difficult in 2013 as consumers face economic uncertainty and publicans have to manage rising cost pressures. Our focus on enhancing the quality of our estate, attracting and retaining the right publicans and providing exceptional support will leave us well placed in the year ahead. Despite a challenging start our target is to return the business to like-for-like net income growth in the second half of this year.”

Molson Coors offers Admiral tenants a 30% discount on Sky: Molson Coors has partnered Admiral Taverns to offer a 30% discount on subscriptions to Sky TV for Admiral licensees. The move echoes a collaboration between Molson Coors and Sky unveiled last year, which has seen over 1,000 independent pubs get better value on live sport. To qualify for the discount, licensees must stock Carling, which is already poured at three quarters of Admiral pubs, and two other draught brands from the Molson Coors’ portfolio. As part of the twelve month agreement, landlords can opt for Coors Light, Cobra, Sharp’s Doom Bar or Worthington’s. In return, tenants will receive a 30% reduction on their Sky Ultimate subscription. Kevin Georgel, managing director at Admiral, said: “We are continually looking for ways to support our licensees in developing the best community pubs in the country, and this initiative to offer Sky Sports is a great example of how we can utilise partnerships with key strategic suppliers, such as Molson Coors, to deliver enormous benefits to our licensees.” Tony Gibbons, multiple on premise director at Molson Coors, said: “With millions of us watching live sport outside of the home every week nothing brings people into pubs like an afternoon of Sky Sports matched with a well-poured pint. That is why we have worked hard with Admiral to get a deal for publicans that represents great value for great sport, throughout the year.”

Costa Coffee overcomes opposition in Bingham: Costa Coffee has won planning consent to open a site in Bingham , market town nine miles from Nottingham with a population of 9,000, despite more than 1,000 people signing a petition against the plan and opposition from the town council. The coffee shop will open at 2 Eaton Place, which is currently an empty unit. The application was made by Coffee Lovers, which is a Costa franchisee. Sham Ramparia, who will run the store, said it would benefit the town but the town council opposed the planning application for change of use from retail unit to a cafe. Bingham Mayor Tracey Kerry said the town council was disappointed it was losing another retail unit. Kerry said: “I felt it was a shame to lose this retail unit and put another coffee house in the town. It would be nice to see some other businesses on the retail side coming into town.” The owners of another coffee shop, the Picture Cafe, in Market Place, organised a petition, which attracted more than 1,500 signatures opposed to the Costa plan.

Thurlby Group – 2012 was a year of consolidation: Thurlby Group, the highly rated six-strong operator based in Stamford, Lincolnshire and led by Michael Thurlby, has described 2012 as a year of consolidation. The company opened its sixth site, the Lord Nelson in Oakham, at the end of 2011 and has had an “amazing year”. “We could never have expected such a great success,” said Thurlby. The company’s other five pubs all like-for-like sale increases in the year and margins “improved slightly” thanks to increased purchasing power. Refurbishments have been completed on The Jubilee Garage and Smiths of Bourne. Looking ahead, Thurlby added: “A nice summer of sunshine would help the industry no end this year but another 2% increase on the price on beer duty would not. Toward the middle to the end of 2103 I think we may be ready for one more site.”

London nightclub sees £145,000 rent increase: London Transport has seen an £145,000 uplift in the rent it charges London nightclub Fabric, based in Charterhouse Street. Said Anthony Alder, of licensed leisure specialists AG&G, which represented London Transport: “We may not know much about the heavy bass and techno served up by Fabric’s DJs but we know the capital’s nightclub sector inside out and could see that at more than 20,000 square feet and with a 1,700 capacity, the venue could be generating more income for its owners. We were able to put this insight to good use and successfully increased the rent from £355,770 to £500,000 per annum. It shows that late night, quirky clubs in sought-after, mid town locations can be just as appealing to hard-headed investors as to fun-loving punters.”

Hugh Fearnley-Whittingstall launches professional cookery school: Chef Hugh Fearnley-Whittingstall is launching a cookery school aimed at the professional market at his River Cottage. A spokesman said: “This will be the only professional cookery school of its kind due to it applying a holistic approach to professional cookery. Students will learn everything from where their food comes from right through to how to cook it. This new professional cookery school has been born out of ongoing demand from leading restaurant groups and chefs who have all been on the course and have found it to be of fundamental importance to their cookery education and development making it a must for all developing professional chefs-attendees to date include Gordon Ramsay, Mark Sargeant, Jamie Oliver, Renee Redzepi and Angela Hartnett.” The Professional Cookery Level 2 Apprenticeship course will be launched on 1 April.

Tenant’s liquidation leads to licensing woe: Agent AG&G has reminded landlords of the dangers of a lost license in the wake of a liquidation. The operator of Deboucher Lounge and Bar in Kensington Church Street went into liquidation and as a result of a little-publicised quirk in the law, the premises lost its late licence – and the chance to secure a premium rent. Under the Licensing Act 2003 there is a requirement for notice to be served immediately by the property owner to protect the Premises Licence. If this notice is not served the license is rescinded. In this case the freeholder was only advised that the business had gone into receivership a month or so after it had happened. The opportunity to protect the licence was then missed because the licensing authority wasn’t notified within the prescriptive stipulated time. “It was an expensive misfortune because it meant reapplying to the authority for a licence and, unfortunately, there were objections. In the end the licence was granted, but it was only to 12 midnight instead of 2am, which has knocked about 40% off the property’s potential rent,” explains Anthony Alder of AG&G. “This is a salutary reminder of the need to act quickly when there is a change in business or personal circumstances that may affect your alcohol licence. Failure to deal with the situation promptly can have commercial repercussions for a long time to come, so it pays to take expert professional legal advice immediately if you have any concerns about licensing law.”

Byron set for Cambridge opening: Better burger concept Byron is to open in a site previously occupied by sister brand Ask on Cambridge’s Bridge Street in mid-March, the third conversion of an Ask site. Byron is also set to open at the Liverpool One scheme in June, with additional openings planned for Fulham Broadway, Finchley and at a PizzaExpress venue in Cowcross Street.

Patisserie Valerie Ebitda near £10m; plans 18 new openings: Café chain Patisserie Valerie, led by Paul May, has reported that Ebitda rose to £9.6m in the year to 30 September 2012, up from £8m the year before. Turnover rose to £49,511,423 from £40,482,648 the year before. Pre-tax profit stood at £5,895,285 compared to £4,595,649 in the prior year. The company stated: “During the year 18 new sites were opened and all are trading positively and are making good contributions to the group. Despite the current economic climate the management remains optimistic about trading and currently the business is ahead of last year for the first three months to date. It is the directors’ intention to continue the group’s opening programme with a plan for the next financial year in line with the number opened in this year. To date four sites have opened since the year end with trade in all being encouraging.” The company, which has 1,500 staff, reported it targets a cash payback and return on capital expenditure with a target in excess of 40% return and two-year payback on average. The balance sheet shows positive shareholders’ funds of £6,173,574 (2011- £1,865,788) after taking account of shareholders loans of £5.6m.

Wadworth’s Corvus beats Guinness in blind taste test: Wiltshire brewer and retailer Wadworth has reported that its stout Corvus has beaten Guinness in a blind taste test with 65% of drinkers choosing Corvus over Guinness. The independent research was carried out by the Oxford School of Hospitality Management. Drinkers were asked to try both stouts, which were unlabelled. Having chosen their favourite, they were then asked to mark this out of ten. A remarkable 65% chose Corvus as their favourite, with the majority of respondents marking it eight, nine or ten out of ten. “This is fantastic news for Corvus and backs up the response we have had from pubs,” said Wadworth sales and marketing director Paul Sullivan.

Des Gunewardena – recession is a great time to invest: D&D London chief executive Des Gunewardena, whose company will open two new sites in Leeds, has argued that a recession is a good time to be investing. The company is currently planning more openings across the UK, with Birmingham and Manchester potential targets. D&D is to create around 100 jobs when it opens Crafthouse and Angelica in Leeds, which is set to open on March 21. Gunewardena said: “The best time to invest is in a recession provided you’re creating something that’s going to last for a long time. We built some of our most famous restaurants like Le Pont de la Tour when they came out of the vicious recession of the 90s. Provided you’ve got cash to do it recessions are good times to open.” Of Leeds, he added: “We feel it’s a pretty cool city. It’s part of a plan of ours of going out to other cities in the UK outside London. We’re really happy to be coming here. What we don’t want to be is some international restaurant company coming to Leeds but we do want to open restaurants that really become part of the Leeds scene.” Crafthouse will showcase the very best British produce and will boast 144-covers with views across the city. Angelica will feature an outside terrace with penthouse restaurant boasting a cocktail bar.

Cambridgeshire site moves from Little Chef to sex shop to coffee shop in a decade: A coffee shop called Coffee Tree is set to open on the site of a former sex shop in Guyhirn, Cambridgeshire. The building was originally a Little Chef restaurant until it closed in 2004. There was great controversy when an application was submitted in 2008 to turn it into a sex shop, dividing local councillors and residents – the shop was granted consent but closed last year.

PizzaExpress ticked off over radio advert: PizzaExpress has been ticked off by the Advertising Standards Agency (ASA) for claiming in a radio advert that it only prepared pizzas after an order had been placed. A voice-over on the advert claimed: “At PizzaExpress, your order is our start gun. Only then do we chop, knead, tear, season, drizzle and bake. Because, whether it’s a classic American with extra anchovies, or added olives, it’s only made fresh from the moment you order. At PizzaExpress, we don’t start without you.” But a listener challenged the ad for being misleading because she understood that some food preparation, such as chopping, was done before orders were placed. The ASA found that the advert breached BCAP Code rule 3.1 (misleading advertising) and 3.12 (exaggeration), and must not be broadcast again in its current form. It also told PizzaExpress not to exaggerate in future about the extent to which its food was prepared to order.

Orchid extends discount offer to staff: Managed pub operator Orchid has extended an offer of 50% of menu items for staff. The 50% offer to staff, who hold the company’s O card, will now continue until 18 February – it was due to end on 8 February. An Orchid spokeswoman told Morning Briefing: “(Our chief executive Rufus Hall) extended it so staff could take advantage of discount over the Valentines weekend.”

Vintage Inns reports success with Strive for Five: Vintage Inns, the 200-strong Mitchells & Butlers brand that was awarded the 2012 Springboard UK Award for Excellence for The Best Food & Beverage Strategy, has reported success with a training programme called Strive for Five. Strive for Five saw staff turnover down by 13%, guest satisfaction is up by 5% and the average customer spend has increased by 50p per guest.

Gordon Ramsay accounts filed at Companies House providing more detail: Kavalake, the name of Gordon Ramsay’s restaurant company, has filed full accounts at Companies House showing pre-tax profit of £2,444,000, compared to a loss of £4,060,000 the year before. The accounts, released in part to the Sunday newspapers, show like-for-like sales rose 3% in the year ended 31 August 2012 – turnover was up 13% in the UK driven by new openings. Its Bread Street Kitchen opening served 120,000 customers in its first year. Exceptional items reduced to £255,000 for the year compared to £4,165,000 the year before when Ramsay parted company with his father-in-law Chris Hutcheson. Overall turnover declined by £2.8m but only because of the closure of the loss-making Australian operation, which had turnover of £7,851,000 in 2011. Ramsay has a personal guarantee of £2,176,800 in place, down from £3.5m the year before. 

New Luminar owner pays £6m final installment early: The new owner of nightclub company Luminar made the payment of a final large installment of £6m to buy the company out of administration early. The payment to Ernst & Young was due on 31 December 2012 – but Morning Briefing understands the payment was made ten days or so early. Luminar was sold for £33.9m in December 2011 with £15.9m paid on completion. It was agreed that £14.2m was to be paid on a deferred basis with £2.2m being paid in monthly installments of circa £240,000 per month ending in September last year – and £6.9m of deferred payment during 2012, adding up to a total of £8.2m. The final £6m was the last large payment due. A further £3.7m of the sale price is contingent on the successful assignment of 46 leasehold premises, of which 15 assignments have been agreed when Ernst & Young reported at the start of last month. Meanwhile, Luminar is to occupy three floors of a planed eight-storey redevelopment of the Casino nightclub in Guildford. Architects’ plans reveal that the rebuilt Casino nightclub at the Quadrant in Onslow Street could contain up to eight floors of bars. The new building has been designed by Tom Wright, the man behind the Burj Al Arab sail-shaped hotel in Dubai. “It will be exciting,” said Harper. “It will be something new happening in Guildford when not a lot has been happening. We’re also looking at maybe getting the building sponsored like they do with football stadiums because it’s very dynamic – a work of art.” The design features five floors above ground that would be used for drinks and entertainment, and three lower floors. There could be up to 12 bars, as well as dance floors, stages and outdoor smoking balconies.

Propel Opinion by Paul Charity: The UK’s largest nightclub business appears to have had a strong year since it was bought out of administration by an industry consortium led by Peter Marks in December 2011. The company, which received 200 expressions of interest when it was in administration, has been investing in sites (some had gone eight years without a refurbishment) with a pragmatic approach, de-branding venues such as its Crawley site where a fresh start is appropriate. The company, now operating 56 sites, is also known to have made real progress at a number of its under-performing sites such as Swansea Oceania. What is also clear now is that the new owners paid a very sensible price to acquire Luminar. The freehold property within the portfolio – 15 sites – was valued at £32m when it launched a sale and leaseback through Colliers International last March. It is not known precisely how many freeholds have been sold and leased back although its flagship Oceania in Kingston was subject to a £7.5m transaction at the start of October last year. Marks, who was formerly chief executive at Brook leisure and Sports Café, has also impressed in his first year as chief executive of Luminar with an open and accessible approach to stakeholders. The nightclub business is not without its challenges, as witnessed by the current licence revocation pending at its Kingston site. Nevertheless, the payment of the last large sum outstanding to the administrator – and the willingness to take on sites like the Guildford mentioned in the story above - is an indication that the company’s new owner is confident about its future.

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