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Thu 14th Mar 2013 - Best Place Inns, Loungers and Nicholson’s

Story of the day:

Best Place Inns strengthens management team and re-brands as it prepares for private equity investment: Best Place Inns, the five-strong London pub and hostel provider headed by Ben Stackhouse, has hired Greg Mangham as its operations director as it prepares for private equity funded expansion. The company has received three approaches from private equity investors and Stackhouse has spent 18 months considering his strategic options. Stackhouse told Propel that hiring Mangham, who has been working at Punch Taverns as a consultant, comes after the decision to accept investment - with negotiations now to begin in earnest to find the right private equity investor. At Punch, Mangham worked for chief executive Roger Whiteside on projects specifically targeted at operational change. He was also project leader responsible for designing, implementing and rolling out the Punch’s franchise concept – he left Punch at the end of last month after 18 months with the company. Mangham also spent more than two years, until October 2011, with Pub Co-operative looking to acquire as many as 2,000 sites for a new tenanted pub company pub to be run as a cooperative. Meanwhile, Best Place Inns has rebranded its estate with the tagline Fresh! and a new website. Stackhouse told Propel: “I spent 18 months not convinced that private equity investment was the way I wanted to go. But hiring Greg is the first step in this direction and I would like to think it will now happen this year. Also by re-branding sites Fresh!, we’ve created a brand that will simplify thing by providing customers with better directional signage.” Best Place Inns combines very traditional London pub environments with backpacker accommodation upstairs – it has a total of 300 beds across the estate. Best Place Inns re-opened the Great Eastern in Greenwich in 2011, which featured in the Long Good Friday, in a co-investment with Punch Taverns. The company’s hostels consistently rank in the top ten for web reviews of hostel providers.

Industry news:

Luke Johnson – Tesco deal to buy Giraffe is a game-changer: Giraffe chairman and investor Luke Johnson has described the £48.6m Tesco deal to buy Giraffe as a “game-changer”. He told The Telegraph that the acquisition will “prove to be the most strategically important deal for the restaurant industry this year. Britain’s biggest retailer has parked its tanks on the lawns of the restaurant industry. It’s a game-changer.” The Financial Times reports that Johnson’s Risk Capital Partners has made about £8m from the deal with Tesco, which is about eight times its original investment in 2004 when the company had seven sites. Johnson and Risk Capital Partners fellow founder Ben Redmond have been heavily involved in many of the key strategic decisions for the business, including site selection, negotiating the debt-funding package for site rollout and leading the transformational acquisition of a number of sites from Tootsies in a pre pack acquisition for Giraffe in 2009. Russel Joffe, managing director of Giraffe, said: “In 2004 Risk Capital Partners gave us the confidence to believe that Giraffe could become a much larger business. Since their investment, Giraffe has been transformed both operationally and financially. I have greatly valued their input and guidance.” (See bottom of e-mail for Tesco comments on the strategy behind buying Giraffe.)

Property rents in Soho soar as operators search for sites: Property rents in Soho are rocketing as top chefs and restaurant chains battle for prime spots, the London Evening Standard has reported. Kurt Zdesar, the man behind successful dim sum restaurant Ping Pong, has recently paid more than £1 million to open an outlet in Frith Street and other sites are subject to bidding wars. Morris Greenberg, of property lease specialist Cedar Dean Gilmarc, said: “Units that had been on the market for some time are achieving three to five offers from businesses keen to get in on the act. The area is buzzing and is now the place where entrepreneurs try out new concepts. If they can make it in Soho they can replicate that success around the country and in other capital cities.” A Denman Street outlet that had been on the market for 18 months suddenly attracted four competitors and reached a premium of £340,000. A unit in Dean Street that had not been on the market received an offer of more than £300,000 from one restaurant desperate to get a site. Market figures suggest that it would cost more than £500,000 to open in Old Compton Street and Berwick Street.

Lucky Voice joins the ALMR: Lucky Voice has joined the Association of Licensed Multiple Retailers (ALMR). Founded by’s Martha Lane Fox and Nick Thistleton, the Lucky Voice business started with a premium private room karaoke venue in Soho, London, and has expanded to three owner-operated venues and five franchised operations across the UK. Each Lucky Voice venue consists of private pods, which hold four to 15 people, and up-to-date song lists on bespoke touch-screen technology. Nick Thistleton, managing director of Lucky Voice, said: “We are delighted to be joining the ALMR, a prominent and skilled organisation whose campaigning and tireless work on behalf of its many members is renowned throughout the industry. The hospitality sector is an ever-evolving landscape, and a strong partnership is paramount when facing the various challenges that arise within our industry.” ALMR chief executive Nick Bish said: “Karaoke bars are a new and exciting expansion of ALMR’s membership and it’s really fantastic to have Lucky Voice, the industry leader and pioneer now involved with the Association.”

New York Mayor confident he will overturn legal block on sugary drinks ban: New York Mayor Michael Bloomberg has stated his confidence that the legal block on his oversize sugary drink ban will be overturned on appeal. He said: “When we began this process, we knew we would face lawsuits. Anytime you adopt a groundbreaking policy, special interests will sue. That’s America. The Board of Health’s limit on the serving size of sugary drinks does not limit anyone’s consumption. It just requires them to think about whether they really want more than 16 ounces.”

Beer festival drops pints: The 30 year-old Leeds Beer Festival, held at Pudsey Civic Hall for the past 20 years, has taken the historic decision to not serve beer in pints in favour of using one-third and two-third measures. David Dixon, of festival organiser Leeds CAMRA, said: “Nowhere, as far as we know, has dropped halves and pints, even on a temporary basis – that’s anywhere in the country, not just Leeds. We say the reason for this is we are the first to be brave enough to give it a try.”

Beer chiefs write to The Times to call for change of policy on beer tax hikes: A total of 39 beer and pub industry chief executives have written to The Times to warn of beer tax hikes leaving a £150 million ‘black hole’ in the Budget. “Last year’s tax increase was expected to yield an additional £100 million. However, the Treasury’s own figures show it has seen declining revenues, estimated to be down £50 million by the end of the year,” the letter stated. “This unpopular policy will therefore have left a £150 million black hole in the Treasury’s accounts and cost 5,000 jobs, whilst making a pint in the pub an unaffordable luxury for many more people.” Those who have signed, led by Jonathan Neame, chairman of the British Beer & Pub Association and chief executive of Kent brewer Shepherd Neame, say that a freeze is essential to kick start growth in the thousands of enterprises throughout the brewing and pub supply chain. “It is time to call time on the damaging beer duty escalator,” the letter concludes.

Competition Commission clears Booker acquisition of Makro: The Competition Commission (CC) has provisionally cleared the acquisition by Booker of Makro. The CC has concluded that the merged company would continue to face sufficient competition from other wholesalers. The CC believes that the existing and potential alternatives offered by other suppliers will ensure that the merger does not lead to a substantial lessening of competition. Simon Polito, chairman of the inquiry, said: “The wholesaling market is complex, diverse and dynamic. Our evidence points to the fact that customers can and do switch between different types of wholesalers, so we looked closely at all the areas where Booker and Makro stores currently overlap to see what other sources of supply would remain. In all the areas we looked at, Booker would continue to face competition from national, regional or local wholesalers so we don’t believe customers will face higher prices, lower-quality service or other issues as a result of the merger.”

Company news:

Loungers reports February like-for-likes up 9.6% and total sales up 58.5%: Loungers, the cafe bar concept headed by Alex Reilley, has reported that like-for-like sales for February were up 9.6% with total sales for the month up 58.5% on the same period last year. Reilley said: “We’re very pleased with February’s sales figures particularly as this was on the back of a 7.7% increase in like-for-like sales in January. This time of year is traditionally a very strong period for us. So to post such robust sales is a great indicator that the business is really pushing on and that we’re very much in the groove at the moment.” Meanwhile, the company has provided more detail on its latest and 31st opening, Impero Lounge, which opened last week in a former Budgens unit in the North Somerset town of Portishead following a £525,000 conversion. The site, which is almost 10,000 square foot, has been sub-divided to create a 4000 square foot space comprising of 120 covers internally and a further 30 covers externally to the front of the property. As part of their redevelopment of the property, a separate retail unit has been created, which Loungers will look to sub-let. Impero is Loungers’ second of an anticipated 12 opening in 2013 with the next two openings scheduled for mid-April (Cosy Club Exeter) & early May (Bosco Lounge, Woodley). Of the latest opening, Reilley said: “Portishead is a very strong town and as one of Europe’s fastest growing towns is only set to get stronger in the next few years. Portishead has an extremely vibrant, traditional high street and we are very pleased to have secured such a prominent site in the heart of the town”. 

Stonegate – we’re still investing in Goose: Managed operator Stonegate has moved to stress that it is still investing in its Goose brand – it has 16 sites. The company has reported that a move to re-brand a site in Leigh by reverting to its original name is a one-off. Spokeswoman Maureen Heffernan said: “There are no plans to abandon the Goose brand. Stonegate continues to invest in Goose pubs and recently refurbished both Walthamstow and Fulham sites investing around £500,000. Further refurbishments are planned throughout the year.” Goose was acquired as part of the 333 wet-led pubs the company bought from Mitchells & Butlers in 2010.

Geof Collyer – JD Wetherspoon focused on driving like-for-like sales growth: Deutsche Bank analyst Geof Collyer has highlighted JD Wetherspoon’s current focus on driving headline sales. He said: “Since spring 2012, the group has been driving more aggressive like-for-like growth as a way of offsetting the variety of pressures that have hit the business (and the peer group). Tough comps are lying ahead and we do not expect the current trend to continue into H2. Margins are now the lowest they have been since IPO, and JDW has been having more difficulties in offsetting input cost inflation than the peer group. We see some mitigation: (i) its utilities negotiating cycle is a year ahead of the peer group; (ii) it is getting hit harder from machine duty changes as its income from this area is higher on average than other pub estates; (iii) it has given the impression of absorbing price increases to protect market share, though we suspect it has been losing volume as well. This year’s rollout is going to be back-end loaded with only five of the expected 25 new pubs opening in H1.”

Devon operator goes multi-site: Devon operator Paul Parnell is to expand to a second site after acquiring the lease to run the Five Bells Inn at Clyst Hydon in Cullompton. Parnell, owner of the Jack in the Green pub and restaurant at Rockbeare, has acquired the lease through an arrangement with Exeter-based Grenadier Estates. The pub has been sold by GVA Hotels and Leisure, on behalf of the LPA Receivers. The purchase price has not been disclosed. Parnell said: “We have just celebrated 20 years at the Jack in the Green and I’m looking forward to expanding our success across Devon with this exciting new venture. The Five Bells Inn will focus on delivering exceptional hospitality, serving local beers and cider with traditional good value pub grub served in a warm and welcoming atmosphere.”

Family plans world-class hotel for Newcastle: The Malhotra family has unveiled plans for a world class hotel in Newcastle – it’s dubbed “The Dorchester of the North”. The 50-bed Newcastle hotel will offer top-quality accommodation, restaurants and leisure space, developers promise. It will also see the historic Balmbras pub re-open as a bar and function room, while the Attic nightspot will be revamped as a club with a “VIP suite”. The Malhotra family has spent £5m buying up properties on Grey Street, the Cloth Market and Mosley Street. Meenu Malhotra said: “The standards will be second to none. It will be on a par with hotels like the Dorchester or the Grosvenor. This will be a world class hotel. Newcastle is a big tourist attraction and it needs a splendid hotel like this.

Iconic Hoste Arms receives £2m investment: A £2m investment in the iconic Hoste Arms in Burnham Market is close to completion. The work being carried includes the building of a new garden room, a New Zealand-style lodge dining area, a new open pass kitchen, four new bedrooms, refurbishment of seven existing bedrooms, the spa being doubled in size, a new entrance area being created and the existing reception being transformed into a retail area which sells books about the local area. The work is being done for Brendan and Bee Hopkins, who bought The Hoste in April last year. It is due to be completed by 6 May. The couple are friends of the The Hoste’s previous owner, the late Paul Whittome and his wife Jeanne, who significantly expanded the business after buying it in 1989. Brendan Hopkins was the chief executive of Australia’s second largest media organisation, APN Media. He said: “One of the main reasons we bought The Hoste was to ensure that this iconic hotel remained an independently-owned business with its own unique character and wasn’t just sold to a big national company. Business has been going very well since we took over and we are looking forward to the completion of this work to take the business to the next level.”

Jamie Oliver creates Italian beer for his restaurant chain: Jamie Oliver has worked with Freedom Brewery to create an artisan Italian lager for his restaurants. Freedom Brewery worked with multi-award-winning brewer Agostino Arioli from Birrificio Italiano, to create Libertà. Libertà, which translates as freedom in Italian, is brewed at the craft brewer’s Staffordshire headquarters, which employs an off-grid sustainable source of water requiring no treatment or purification prior to brewing, where it is left to authentically mature for four weeks to ensure that it has a really full flavour. Edward Mayman, managing director of Freedom Brewery, said: “We are delighted to be a part of this unique, exciting project. The Freedom range is already available in many of Jamie’s restaurants but being asked to partake in creating a bespoke brew was a real honour and we are looking forward to drinking Libertà in Jamie’s Italian.”

KFC customers in Devon and Glasgow find kidneys in their meals: KFC has hit the headlines in both Barnstaple and Glasgow after customers found chicken kidneys in their meals – the kidney looks like brain matter. In a letter to the Barnstaple customer, a spokesman for KFC said: “The photo has been viewed by our technical department and they confirmed the foreign body has been identified as a kidney. Although totally natural and not in any way harmful we fully appreciate that it is unsightly and unappetising for many people.”

Quince Tree to open second site: Quince Tree, the hybrid pub, restaurant, café and deli in Stonor near Henley that opened last year, is to expand with café site at Clifton Garden Nurseries near Warwick Avenue tube station in London. Quince Tree owner Bobby Yerburgh bought the original Quince Tree site in a derelict state in 2008. An opening was planned for October 2011 but Yerburgh decided to hold off until he was happy that the site was completely ready – if finally opened in April 2012. “Whilst it was difficult – financially and emotionally – to say no to Christmas bookings we just weren’t ready,” he said. The café opening date has not been set.

Woking brewer wins Nicholson’s homebrew challenge: Woking home brewer Tom Wright has won a homebrew challenge set by Mitchells & Butlers brand Nicholson’s in partnership with Thornbridge Brewery – it will go on sale at Nicholson’s 75 pubs. Jim Harrison, Thornbridge managing director, said: “A considerable number of home brewers develop great quality beers that can never be appreciated by a wider drinking public. The Home Brew Challenge provides home brewers with an opportunity to match their beers against those of other enthusiasts, and have them tasted by a panel of expert beer judges.” Judges included top beer writer Pete Brown, Master Brewer Alex Barlow, last year’s winner Paul Carruthers and Ben Lockwood, brand manager, Nicholson’s pubs. Wright produced a 4.3% ABV called ‘Roc Fall’. He said: “It’s always rewarding when people like your beer but to get that recognition from professionals is fantastic. I’m really looking forward to seeing my beer in pubs. Not only that, but having the opportunity to brew it with the guys from such a well respected brewery as Thornbridge is an experience that will be extremely hard to beat.” Lockwood said: “The very high standard of the beer entered into the competition is a testament to the quality being produced by home brewers. We are delighted to be able to offer Tom the chance for his beer to be available in our pubs as the pub remains, of course, the best place to experience great British beer.”

Bagel Nash opens 15th site – a flagship in Nottingham: Bagel Nash is to open its fifteenth site at the end of this month – in Nottingham. The company sells a variety of bagels and coffee through its 14 stores – located in Leeds, Manchester, York and in Derby Westfield. Bagel Nash produces bagels from scratch at its own bakery, exporting 21million bagels a year all around the world. The new Nottingham store will open on Wheelergate in the city centre, opposite the former Virgin Megastore. It also prides itself on the quality of its fresh coffee and the team at Bagel Nash spent years researching and perfecting the taste of their Rainforest Alliance coffee, which rivals other high street chains. The company also offers a catering service for business lunches, and plans to hire out the upstairs of the flagship Nottingham branch as a meeting and function space. Bagel Nash was founded in Leeds in 1987. The current owners, Andy Mickelthwaite and Sara Hildreth, acquired the business in 2011 and plan to have a total of 45 stores in four years’ time.

McDonald’s makes £1m investment in beef emissions: McDonald’s is helping beef farmers monitor the carbon emissions of their animals, with the launch of a special “carbon tool”. The equipment, which is a computer tablet, is being made available by McDonald’s UK as part of a £1 million investment in helping beef farmers improve their environmental performance and realise greater efficiencies. It will enable farmers to measure the carbon emissions produced per kilo of beef, and benchmark their score against top-performing farms.

Cocomaya plans pop-up at Heathrow: Artisan baker and chocolatier Cocomaya is set to open a pop-up store this Easter at London Heathrow airport’s Terminal 5. The 200 square foot venue will sell a range of food, including its Vienna-style pastries, cakes, sandwiches, chocolate bars and truffles, as well as hot and cold drinks. It will be promoting its mini cakes for eating on the go with a takeaway coffee, and also its products as gifts for those travelling back home.

New Moon Pub Company to open fourth site: New Moon Pub Company, the company headed by Paul Newman and David Mooney, is to open its fourth site in mid-May. It will convert Enterprise Inns’ Stanley Arms, in Eastham Village, Wirral into a gastro-pub called Montgomery Pub and Kitchen. New Moon co-owner Paul Newman said: “At the moment the building is very unsightly and part of the focus of our business is on turning disused pubs into somewhere the community can be proud of.”

Tesco boss explains thinking behind Giraffe acquisition: Tesco commercial director Kevin Grace has blogged on the strategy behind the acquisition of the Giraffe restaurant chain. He wrote: “We’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop. With more general merchandise moving online, we have a great opportunity to rethink how we use the space in some of our larger stores. To put some of that thinking into context, it might be useful to think about the many different shopping malls around the world. In most cases, their food concepts are excellent and it’s one of the main reasons people go there. Let’s look at two examples. Lots of our larger stores in Asia have restaurants regularly used by customers to meet their friends and spend time together; people like being able to take a break and relax after their shopping trip. Similarly, if you’ve ever visited Westfield, you’ll know that people go there to meet, eat and drink as much as they do to shop. They have a fantastic collection of restaurants - around 50 different concepts serving fresh, quality food and a variety of cuisines. The brands are accessible yet aspirational and the comfortable dining space allows customers to relax, socialise, recharge. It’s not an afterthought - it’s central to their offer. There’s no reason that supermarkets can’t offer something similar here. At the beginning of the year, we approached Giraffe Restaurants to see if they’d like to be part of the hospitality offer in some of our larger stores. Why them? Well, they’re a family run business with a strong brand and a fresh, seasonal, quality menu that has something for everyone. Where possible, they’ll sit adjacent to or outside the main Tesco store - we want the dining experience to feel separate from the weekly shop because it’s a place where customers can take a break and relax. They’ll keep their unique look and feel because it’s part of their brand and customers like it.” Luke Johnson, Chairman of Giraffe since 2004, said: “Giraffe is a great business and we have really enjoyed working with Russel and his wider team for the past nine years. When we invested in 2004 we believed that Giraffe could be a national business; the deal with Tesco vindicates this vision. We wish Russel, his management team and his ambitious new owners at Tesco well as they embark on the next exciting phase of Giraffe’s growth.”

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