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Morning Briefing Strap Line
Mon 4th Feb 2013 - Marston’s, Pizza Hut, Red Hot World Buffet

Story of the day:

Jens Hofma – we have a once in a lifetime opportunity to get Pizza Hut on the front foot: Pizza Hut UK boss Jens Hofma has argued that the company has a “once in a lifetime opportunity” to get on the front foot after private equity group Rutland Partners took a stake in the business last November. Rutland is thought to have paid £1 to take control of Pizza Hut as owner Yum! Brands’ franchisee – with a commitment to inject £20m into the company and spend a further £40m from cashflow to fund refurbishments and training. Chief executive Jens Hofma told The Daily Telegraph: “For the next three to four years we have got about £60m to invest. There is no third party debt in the business and I think we are one of the only ones in this market (in that position). A lot of the other concepts are very highly leveraged and are under pressure to open new outlets and grow sales very quickly. We have eliminated a lot of the negatives of the past.” Hofma argued that Pizza Hut’s problems have arisen because the UK has gone from “being one of the least competitive restaurant markets to one of the most competitive in the world”. Pizza Hut UK, which still serves three million customers a month in the UK, reported pre-tax losses widened to £24,178,000 in the period to 4 December 2011 (2010: £20,588,000) on turnover down by 0.7% to £437,685,000. The company said trading on the high street has “continued to be tough compounded by intense levels of discounting from a number of competitors”. At its last results, Pizza Hut reported it was delivering like-for-like sales growth now after changes implemented in May 2011 - improved products and value offers, including free salad and the extension of kids eat free. A total of 16 sites were opened and 30 were closed in the year, which created an exceptional item of £10,031,000. A total of £35m of new share capital was issued in July 2011 to strengthen the balance sheet.

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 to book places.

Industry news:

Branded food sites increase number by 670 in a year: Food market insights and consultancy CGA Strategy has reported that its CGA Outlet Index shows contrasting fortunes for branded food concepts and their free trade unbranded equivalents. Scott Elliott, of the insights firm, said: “There are 670 more branded food pubs and restaurants than there was just a year ago, yet over the same period the free trade restaurant market has shrunk by 370 outlets. In short, local restaurants face much greater competition than ever before with nearly 40% of all free trade restaurants now having a branded food outlet within one mile of their front door - an increase of 26% in just the last five years.” 

ALMR welcomes move to run tube network later at weekends: The Association of Licensed Multiple Retailers has welcomed a proposal from Transport for London’s chief executive Mike Brown to run the tube later on Friday and Saturday evenings. Kate Nicholls, strategic affairs director, said: “(We) welcome TfL’s proposals to run London Underground services later on Friday and Saturday nights, from 2015. This proposed change would provide a welcome boost for the night time economy in London, providing safe and affordable transport home for our customers and staff later into the night. The GLA estimates that the night time economy in London generates a net benefit of £1.3-£1.7 billion per annum, and running the Tube later would increase these economic benefits to London’s licensed premises and the economy as a whole.” 

Pubs and bars in Epping Forest District benefit from Towie effect: Reality TV show The Only Way is Essex (Towie) has attracted hundreds of people to the Epping Forest District in recent months, a tour guide company has revealed. Brit Movie Tours brings coach loads of Towie tourists from all over the world to the shops and bars featured in the BAFTA award winning show each month. Company director Lewis Swan, said that the £22 per person tickets are so popular that they must be booked several months in advance. “We bring people from all over the UK and as far as Australia. They love it.” Among the pub and bars featured in Towie are The Sugar Hut in Brentwood and TLC Inns’ White Horse at Ramsden Heath and Grand Central in Basildon.

Supermarkets beefburgers contained horse and pork: Beefburgers supplied by Silvercrest sold at four major UK supermarkets contained horse meat and pork. Tests by Aldi, Co-op, Asda and Tesco have now confirmed that products supplied by the Silvercrest processing plant in Ireland contained traces of both horse and pig DNA.

The Mail on Sunday – rare beef getting rarer in pubs: The Mail on Sunday has reported that major UK pub chains are “overcooking” beef because of health and safety fears. Spirit Pub Company, Mitchells & Butlers and Whitbread are asking chefs to cook beef joints medium to well done, according to the newspaper. Chef Raymond Blanc warned that pubs risk losing customers if they are ‘overcautious’. “They don’t seem aware that beef doesn’t need to be completely overdone like this,” he said. “All the bacteria is on the surface and is killed off during cooking, so the beef in the middle is safe.” 

Organic food sales decrease in the recession: Sales of organic food have reduced by 20.5% in the UK since the start of the recession in 2008, according to analysis by The Times. Consumers have moved away from buying organic red meat, poultry and fish in favour of organic dairy products, with nearly half of baby food sold in the UK now organic. However, globally, organic food sales increased 8.8% in 2011. 

Jeffrey Young – coffee shop numbers may equal pub numbers one day: Jeffrey Young, director of coffee market experts Allegra Strategies, has warned that coffee shop numbers may one day equal pub numbers on high streets. He told The Mail on Sunday: “People said the market was saturated when we did our first report on coffee shops 15 years ago, but it’s grown since. While there is still a gap between the number of pubs and coffee shops, it is genuinely possible that there could one day be the same number of each. And high streets and shopping centres can contain many coffee shops, whereas they are likely to have just one pub, if that.” 

Interest rate swaps over £10m excluded: The review into the mis-selling of interest rate swaps has excluded swaps of £10m or above, The Independent has revealed. The Financial Services Authority ordered banks last Thursday to review all sales, after a survey found that more than 90% included in the review breached at least one of its rules. But it has emerged that swaps of £10m and above will be excluded, exempting the banks from compensating companies that took them out. While the £10m figure looks substantial, experts said it was conceivable that some relatively small enterprises, and many medium-sized firms, could be excluded from the process as a result. Rich Eldridge, head of finance at the law firm Manches, described the “cap” on the review as “startling”. Eldridge, who contacted The Independent after spotting the get-out clause, told the newspaper: “The FSA report just contains an oblique reference to customers who meet a balance-sheet and employee test being included in the review where their swap does not exceed £10m. In fact, all swaps over £10m have been unexpectedly excluded, irrespective of balance-sheet or turnover figures.”

Perfect home has a pub within walking distance: The perfect home is two minutes from a supermarket, ten miles from the coast and within walking distance of a pub where the landlord knows your name, according a survey of 2,000 people by Banner Homes. In addition, those surveyed mentioned having good neighbours on either side of their home, being five miles from the countryside, with scenic walks nearby for when the sun shines and two 37 inch televisions for when it doesn’t as important factors in creating the perfect home.

Heineken – we withdrew super-strong Strongbow Black after visit to hostel: Heineken UK boss Stefan Orlowski has revealed that the company withdrew Strongbow Black cider from the market after he and some of the senior management team visited two hostels for rough sleepers as part of the Business in the Community Seeing is Believing initiative – and spoke with men whose lives had been seriously affected by alcohol misuse. He told The Telegraph: “As a business you have to take a long-term view and lead on corporate social responsibility and sustainability. This is alive throughout the business, not just in me or the management team. This is not about creating corporate commercial kudos with the consumer. I don’t see it as PR. We want profitable and sustainable brands and we won’t have a sustainable business if we don’t do sustainable things in it.”

Company news:

Gordon Ramsay to open Union Street Café in September: Chef Gordon Ramsay has told The Sunday Times that his company plans to open a new site, Union Street Café in September, near London’s Borough market, with investment from David Beckham. The company amended its business model, opening sites overseas under a licensing deal whereby Ramsay collects a percentage of turnover – overseas restaurant turned over £33m last year. “It’s a model that’s transformed our overseas expansion,” Ramsay told the newspaper. Previously, the company has spent £1m opening in Prague and £2.3m opening in Melbourne. “I don’t know how these contracts were ever signed or what my team were thinking about exposing the group financially like that,” Ramsay added.

Marston’s set to expand Norfolk penetration: Midlands-based Marston’s is set to expand its penetration of Norfolk with a new-build pub restaurant site in Dereham. The company has schemes underway to built in a number of Norfolk towns, including Kings Lynn and  Hunstanton. Dereham businessman Andrew Scales has submitted an application to redevelop the eight-acre former Cemex concrete products factory site on Yaxham Road. He revealed that McDonald’s and Marston’s have already signed up to be part of the scheme. Two national chains are also in negotiations to occupy the 50-60 bedroom hotel and are waiting for planning permission to be granted.

Orchid starts latest Pizza Kitchen Bar conversion: Managed operator Orchid is converting its Old Ball in Horsforth, Yorkshire to its Pizza Kitchen Bar format. The pub is set to re-open towards the end of February. The pub’s Facebook page states: “The Old Ball is soon to be famed for an original combination of 100% fresh dough pizza, served in the friendly and familiar setting of the traditional local that you know and love, with live music and sport (we are not becoming a restaurant).” Last week, Orchid revealed it was launching Do Drop Inns following the success of its Pizza Kitchen Bars division. The company said: “These pizza pubs have been hugely successful and demonstrate that customers love individuality and independence but also want the reassurance of a group pub. When Dew Drop Inns launches there will be 30 pubs under the umbrella, and as the new incarnation of the Modern British division it could become one of the most profitable sectors for the pub company.”

Bramwell Pub Company site keeps licence – despite police file stretching to 1,300 pages: Bramwell Pub Company has fought off a licence revocation at its Charter pub in Ilkeston despite police lodging a 1,300 page document with licensing officials that charted 161 incidents since January 2011. But at a meeting of the Erewash Licensing and Public Protection Panel, the pub was allowed to stay open, with a number of extra conditions in place. These include the capacity being dropped from 580 to 480 and plastic glasses and bottles to be used after 10pm on Fridays and Saturdays. There also has to be an upgrade to the CCTV system by 28 February and no alcohol served after 1am.

Gregg Wallace puts Putney restaurant on the market: Gregg Wallace has placed his 3,000 square foot Putney restaurant, Wallace & Co, on the market with an asking price of £150,000, according to The Mail on Sunday. The restaurant opened in 2010 to mixed reviews – it has an annual rent of £80,000 a year. A spokesman said: “The business is on the market and if the right offer is made, Gregg and his partners will consider selling. However, Gregg is passionate about the business and would want to stay a part of Gregg & Co if it was sold.”

Greene King to convert Oxford pub to Hungry Horse brand: Suffolk-based Greene King is to convert The Bullnose Morris pub, on Oxford’s Blackbird Leys estate, to its Hungry Horse estate. The Hungry Horse brand is set to pass the 200-site mark in the second half of this financial year. In December, Greene King reported Hungry Horse was trading from 188 sites with eight more under development. On Friday, Hungry Horse e-mailed its database offering customers £5 off in February when £15 or more is spent on food.

Shepherd Neame re-opens The Royal Hotel in Deal: Faversham-based brewer and retailer Shepherd Neame has re-opened the 18-bedroom Royal Hotel in Deal after a refurbishment that has seen the introduction of a new restaurant. Public areas and bedrooms have been entirely renovated and the exterior of the hotel boasts Kentish weatherboarding and traditional sign-writing. The new Quarterdeck Restaurant boasts a menu containing local and seasonal ingredients, including a wide variety of fish and seafood dishes.

Stars support Ministry of Sound campaign: A host of celebrities have joined a campaign to save a famous central London nightclub. The Ministry of Sound in Elephant and Castle is trying to stop the building of a block of flats nearby because club bosses fear noise complaints could force the venue’s closure. Judge Jules, Pete Tong, Fatboy Slim, Calvin Harris and Example are supporting the club. London’s mayor is due to decide on 26 February whether to approve the scheme. Boris Johnson stepped in to adjudicate on the planning application after Southwark Council refused planning permission.

Red Hot Buffet praises Barclays for funding support: Red Hot Buffet has praised the support received from Barclays Bank to open its new 27,500 square foot outlet in Nottingham. The bank has provided extra loan funding through its Cashback for Business Scheme and now also provides its banking services. The new restaurant, which opened last week, replaces its first and existing site in the city. Red Hot World Buffet director Helen Dhaliwal said: “Without the confidence from Barclays’ financial team in these testing times it would be difficult to continue to expand at the current rate of three to four new sites per year. We have identified this period as a perfect opportunity to continue with our growth plans and create more jobs for the local economy.” The deal was led by Matt Ryan, business development director at Barclays Corporate Banking in Manchester. He added: “This is a great business model, the scale of the sites and quality and price of the food, provides a truly unique experience, which is why people queue out of the door most days. With a strong management team, they are now well placed in the sector to continue to achieve significant growth.” Red Hot World Buffet operates in Manchester, Leeds, Cardiff, Liverpool, Milton Keynes and Northampton.

Nando’s and Zizzi line up for Manchester development: Nando’s and Zizzi are lined up for a former Woolworths shop in Manchester that will be redeveloped into a hotel, restaurant and retail complex. The building is situated in the heart of Piccadilly Gardens and was the scene of the Woolworths fire in 1979 which claimed the lives of around 500 people.
Enterprise Inns in talks on Wi-Fi: Tenanted operator Enterprise Inns is reported to be in talks to extend a Wi-Fi network across its 6,000 pub estate. Enterprise is also in discussions with BT and BSkyB to reduce digital TV bills. Neil Smith, chief financial officer, said: “This is about reducing costs.”
Gourmet Burger Kitchen withdraws from Wilmslow: A Gourmet Burger Kitchen site has closed in Wilmslow after five years of trading. The venue, located in the Rex Buildings on Alderley Road, ceased trading on Wednesday, 30th January. The company, which operates 57 restaurants, placed a notice on the door saying: “(We) would like to take this opportunity to thank everyone of you who has walked through our doors and had the experience of GBK.”

Restaurant Group – we avoid deep discounting: Restaurant Group chief executive Andrew Page has insisted the company has avoided “deep discounting”. He told The Financial Times: “Once you’re knocking 40% off your prices, you’re in deep discounting territory. Deep discounting has been prevalent for most of the last five years and a lot of chains are trying to wean themselves off it, particularly the buy-one-get-one-free operators. We’ve never done that, but we do run promotions which range from ‘kids eat free’ or ‘20% off’ meal vouchers from time to time.”

Whitbread lodges £5m Premier Inn plan for Perth: Whitbread has lodged plans for the creation of a new £5m hotel and restaurant in Perth city centre. The proposals involve the conversion of the old Pullar’s building on Mill Street, expected to create around 40 jobs. Developer Deanway Muir Ltd has agreed to purchase the property and plans to convert the block into an 83-bedroom Premier Inn hotel and restaurant.

Corney & Barrow Bars plunges into the red as like-for-likes sales drop 11%: London operator Corney & Barrow Bars has reported a pre-tax loss of £1,057,483 in the year to 30 April 2012 compared to a pre-tax profit of £445,564 the year before – like-for-like sales dropped by 11% (although they are budgeted to recover this year). Turnover rose to £16,923,311 from £16,722,815 the year before. The turnover rise of 1% was due to the introduction of service charges and the net effect of new bar openings. Gross profit margin improved from 72.7% to 73.9% thanks to a “combination of effect supplier negotiations, stock control and pricing policies”. The company said: “The company continued to experience very challenging trading conditions. Whilst there was some positive signs of recovery during the second half of the year, the company was unable to make up the lost ground suffered during a very disappointing first quarter. Overall gross profit margin was marginally higher than in the previous year. The company has remained rigorous in the management of its controllable costs but was again required to absorb additional costs arising from increases in national minimum wage, rates, service charges, utilities, licensing and various external compliance costs. All banking covenants were satisfied. The impact of depressed consumer spending, a wet summer and deepening economic uncertainty has continued to adversely affect performance since the year-end.” 

Second Balthazar bakery planned in Waterloo: A second Balthazar bakery is planned for Waterloo after the first one opens on 6 February next to the Balthazar restaurant in Covent Garden due to open on 12 February. The Balthazar opening, the London outpost of the New York site run by Keith McNally and opening in partnership with Richard Caring, is one of this year’s most eagerly awaited restaurants. The main boulangerie, next to the restaurant in Covent Garden, will sell bread, pastries and Viennoiseries - prepared by head pastry chef Regis Beauregard who was formerly pastry chef at The Ritz - as well as sandwiches, salads, chocolate and cookies on a take-away basis only. A Balthazar wholesale bakery is also planned in Waterloo. This has been set up to supply Balthazar and other restaurants - but there are plans to open it to the public. The site will eventually be selling bread and Viennoiseries, with trestle tables and bench style seating in the arches for customers.

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