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Tue 19th Mar 2013 - D&D Restaurants, Domino’s and Spirit

Story of the day:

Spirit redoubling efforts to improve retail offers as like-for-like sales turn negative in most recent eight weeks: Spirit Pub Company is redoubling efforts to improve its retail efforts after the company saw like-for-like sales decline 1.1% in the eight weeks to 2 March. The company recorded 1.4% sales growth in the 28 weeks to 2 March. Both food (-0.3%) and wet sales (-3.4%) declined in the most recent eight weeks. The company stated: “Trading conditions were very challenging during the period as a result of the snowfall in January and prolonged cold weather in the second half of February which compared to an unusually dry and mild winter in the prior year. Despite the recent sales decline we continue to outperform the market. We have now invested in 50 pubs in the year to date, mainly in our John Barras and Fayre & Square brands. Following a review of our brand portfolio, our community and high street pubs have been combined in a new Local Pubs division. These pubs share a similar guest base and will be predominantly branded as John Barras, with the Original Pub company brand no longer used.” The leased estate saw like-for-like net income decline by 4.2% in the eight weeks to 2 March compared to 2.9% in the 28 weeks to 2 March. The company stated: “Our leased estate was similarly impacted by the challenging weather comparatives. We continue to focus on our innovation trials and enabling our licensees to improve performance through sharing our retail expertise and investing in our estate with 38 investments completed in the year to date. We are also making good progress disposing of pubs that have limited future potential with a further 12 pubs sold in the period taking the number sold to 20 in the year to date and to 72 in the last twelve months.” Chief executive Mike Tye said: “Recent trading has been impacted by adverse weather conditions and, with the consumer environment remaining challenging, we are redoubling our efforts to improve the retail offer in all areas of our business to give our guests more compelling reasons to visit our pubs. We remain confident of delivering full year expectations.” Numis Securities analyst Douglas Jack said: “We are holding our forecasts: rebranding returns remain strong; leased estate like-for-like net income is expected to be flat in H2; and weather-related comparatives become easier from April.”

Industry news:

NPD Group forecasts one to two per cent market growth: The NPD Group has reported that the UK’s eating out sector is set to enjoy a ‘low and slow’ recovery over the next three years with growth of 1-2% per annum. The research and insights company said that one key behaviour change has been the rise of deals and promotions - last year, just over 25% of all meals and snacks eaten out of the home were on a promotion. However, as operators and manufacturers take price increases arising from food inflation, the focus will clearly need to shift away from price to value. NPD Group said consumers have become more controlled spenders, but not afraid to lay out when they find good value, quality, and trust the product, and its provider. Winners will focus on “menu value” not “value menu”. Eating breakfast out-of-home was a key trend last year, growing 8% in 2012 and biting into lunchtime sales. Guy Fielding, director of business development for The NPD Group, said: “The away-from-home morning meal is seen as more acceptable, and a necessity, and with our increasingly busy lives, starting the day with a takeaway porridge or toasted Panini is more desirable - and affordable - than buying lunch out.” According to The NPD Group, with an existing 6% market share, premium quick service (Fast Casual) in the UK is bigger than the US market where it sits at 4%. Fielding added: “If there is one thing the recession has taught operators in the foodservice sector, it is that you need to adapt constantly to survive – the old ways are gone for good. The British consumer eats out more than any other in Europe – 142 times per person in 2012 - but their eating out habits have changed forever. From the breakfast, to family dining, to the rise of the fast casual sector, the message is know your customer, monitor your competitors and build on your strengths. In 2013 value and differentiation will be vital to enjoy any of the low and slow recovery we’re predicting.”

Tom Ryan – Smashburger is magic: Tom Ryan, who founded Smashburger after leaving McDonald’s as its ‘worldwide chief concept officer’, has explained why the concept has grown so quickly. He told The Denver Post: “Smashburger is magic. We have struck a chord with consumers because of our great burgers, our menu variety, our service and our ambience. We reinvigorated people’s interest in something they took for granted for a long time. At Smash, we realised the biggest burger purveyors in the world were not satisfying the aesthetic or occasion requirements of the market.” Smashburger’s chief executive Dave Propukek is presenting at today’s Propel Multi Club Conference.

Disposable family incomes still twice the level of the 1970s: Disposable family incomes are twice what they were in the late 1970s. The disposable income after taxes and benefits of middle-earning and working age households is £29,000, according to Office of National Statistics figures. But this is a fall from a peak of £31,100 in 2007. In 1977, adjusted for inflation, the disposable income figure was £15,500.

Pubs more popular that coffee shop for Wi-Fi: Britain’s boozers have become our “second office”, with 1.6 million more hours spent on Wi-Fi for work reasons in pubs than in coffee shops, according to a report by The Cloud, the biggest high street WiFi provider in the UK. Steve Jebson, group commercial director at Greene King, said: “Since the launch of Wi-Fi in our pubs last year, we have seen an increase in customers signing up to the service on a weekly basis.”

Company News:

Keith McNally responds to scathing Balthazar review by Giles Coren: Balthazar owner Keith McNally has responded to a scathing review of Balthazar written by Giles Coren in The Times. Coren found every dish he ordered at the Covent Garden venue to be lukewarm and attacked the quality of restaurant food in New York. McNally said: “For Giles Coren to write “you can’t get a mouthful of good food” in New York was absurd. But because it was written so clearly for controversy’s sake it discredited every word he wrote afterwards. When discussing New York restaurants there’s a strong sense of inferiority amongst many, but not all of, the press here. No one more so than Giles Coren. I was warned before he stepped into Balthazar that he might use the review to make an exaggerated dig at New York and, unfortunately, that’s what he did. On a less serious note, I found Coren’s depiction of New York strangely cliched and outdated. His account of downtown was about as accurate - and as quaint - as Dick Van Dyke’s cockney accent in Mary Poppins. Meanwhile Balthazar is packed day and night and turning down 300 reservation requests a day.”

D&D Restaurants to introduce seaside doughnut machine at Leeds opening: Quaglino’s operator D&D Restaurants is to introduce a seaside mini-doughnut machine at its Crafthouse restaurant, due to open alongside its Angelica restaurant at the Leeds Trinity development on 26 March. Chef Lee Bennett said: “I think diners are crying out for good, honest, Yorkshire food. I’ve travelled all over the county, at least 500 miles in total, to meet farmers and check the quality of their produce. I’m very happy that we’re able to source most of our food from within a 50-mile radius. A signature dish will be the rib of beef for two. We’re bringing the Josper Grill to Leeds – it’s brilliant and gives the meat a real smoky-charred flavour. We’ll carve it in the kitchen and serve it on a beautiful copper pan – customers can choose their own sides, all for one price. Bridlington Bay Lobster Bisque will be another classic dish. I come from Bridlington so this says home to me. I use a homemade, double concentrated, meat stock to give it body, and add a touch of brandy, double cream, seasonal vegetables and sprig of fennel. Once reduced, it’s a deliciously smooth and glossy soup. I’m getting nostalgic and bringing the trifle back. You don’t see this on menus any more. A main feature of Angelica is the raw bar. A whole side of the kitchen will be a seafood display over crushed ice. I’m bringing the basic techniques I learned in Asia for the sashimi and sushi maki rolls, as well as offering ceviche and fish tartars. It’ll be a fairly small selection executed really well, perfect for the health conscious. I’m excited about introducing our miniature doughnut machine there. Again, this is inspired by growing up in Bridlington where they are a big feature on the seafront. They’ll be freshly cooked to order, with a choice of sugar toppings – vanilla, cinnamon, herb, or chocolate – and dips of berry compote, crushed apples or chocolate sauce. They are all served with fresh whipped cream.” Crafthouse and its sister restaurant Angelica will occupy the fifth and sixth floors of the Trinity development – they are the first openings outside of London by D&D Restaurants.

House of Wolf’s food offer receives recognition: The House of Wolf in London, a Star Pubs & Bars’ leased pub run by operators, Jennifer Anderson-Mann, Damian Frizzell and Matthew Fleming, featured in this week’s Food & Drink programme on BBC2 where it was heralded as one of a new breed of culinary innovators. Ear plugs, blindfolds and syringes are all serving suggestions on the ‘listen, smell, touch’ menu at the House of Wolf in Islington, London. Diners are encouraged to wear ear plugs when they bite into crusty rolls hanging from the ceiling to accentuate the crunch. Blindfolds are worn to focus senses on the taste of a dish while syringes are preloaded with alcohol and sauces. Jennifer Anderson-Mann, one of three founders at House of Wolf, said: ‘The House of Wolf has become one of London’s most celebrated places for dining, drinking, art and entertainment.”

Shepherd Neame nears completion of £1.6m refurbishment: Shepherd Neame will re-open its Marine Hotel in Tankerton at Easter after a £1.6m refurbishment. The refurbishment is the firm’s biggest so far and will see all 31 bedrooms updated, as well as the bar area, ballroom and dining room. The conservatory is being spruced up to become an orangery and a new coffee bar is being added.

Christie + Co - vast majority of R&L disposal estate sold or under offer: Agent Christie + Co has reported that the vast majority of the R&L disposal estate, formerly owned by Robbie Tchenguiz, is sold or under offer. The disposal campaign began in March 2001 and involved more than 200 pubs. The two most recent sales are The Town and Coyles Bar in Dundee. The Town was bought by Park Leisure and has already been rebranded as Nicols. Coyles Bar was bought by a property developer who has already undertaken a refurbishment of the site. The disposal campaign has been carried out on behalf of Barclays Capital and Deloitte.

Subway opens first forecourt store: Sandwich chain Subway has opened its first store as part of a new partnership with Irish independent forecourt retailer Applegreen. The outlet, in the Republic of Ireland, is located in a service station in Gorey, County Wexford, and opened last Friday (15 March). Another site it due to open in Uckfield, East Sussex, in April as part of the Applegreen deal. Subway operates1,483 sites in the UK.

Starbucks first UK franchisee takes second site: Starbucks first UK franchisee 23.5 Degrees has taken a second site – this time in Bournemouth Triangle development. The business has taken unit 5 at The Triangle which was previously occupied by Bon Marche but was vacated when the business entered administration last year. The franchisee opened its first site in a former Little Chef at Liphook, Hampshire.

Novus appoints Emma Howe as head of corporate: Novus has appointed Emma Howe as its head of corporate. Howe was previously the corporate national account manager for the company, joining from Red Letter Days in 2008. In this newly-created role, Howe will lead the sales and corporate team to deliver a designated marketing plan alongside engaging with existing clients and agents and ensuring service standards remain consistently high. Howe will implement a corporate development strategy and growth plan to focus on generating pre-bookings of 75% across the 52-strong venue portfolio.

Domino’s Pizza UK drops pizza name from logo: Domino’s Pizza is undergoing a UK rebrand that involves dropping the pizza name from the logo. It will instead stick with the iconic red and blue colour scheme and the domino tile. Marketing Week reported that the change has been prompted by an increasing awareness of the brand among consumers, negating the need for the word pizza in the logo. “The brand is now one of the most easily recognisable symbols in the country. The name Domino’s is synonymous when referring to pizza delivery and this is a reflection of how far the Domino’s brand has come,” Simon Wallis, sales and marketing director at Domino’s UK told the publication.

Vintage Inns launches James Martin range of pies: Vintage Inns, the Mitchells & Butlers destination country pub brand trading at 190 sites, launches a James Martin range of pie today (19 March). Research by Vintage Inns found pies make up 17% of its overall sales in its Norwich sites, 16% in the East Midlands, 15% in the North West of England and 13% in Scotland. The James Martin range of pies includes Lamb Shank Shepherd’s Pie, Pulled Ham and Leek Pie and Spiced Lamb Pie. Vintage Inns also holds a Vintage Pie Day on Wednesdays when there is a choice of six pies.

Punch Taverns to make £200,000 investment in pub with a pie shop: Punch Taverns is make a £200,00 co-investment in turning The Rising Sun in Cromford, near Ashbourne into a pub with a pie shop. Its new licensees are Stephen Merrick and Laura Clarke. Merrick said: “By relocating the kitchen we will be able to extend the food offer and strengthen the focus on serving good quality home made food. The Rising Sun pie shop will be created, selling pies baked on-site and other locally sourced products - which we are sure will become very popular. The plans look fantastic. We will be offering the community something different.” The pub is due to remain open until the Monday, 15 April, when it will close for two weeks for the final stages of the refurbishment.

Papa John’s seeks franchisees in the south east: Papa John’s has announced several new franchise opportunities in the south east. Premises which have now been secured and are awaiting shop fit-out include Fareham, Reading and Eastleigh and are available to franchisees looking to run their own Papa John’s pizza store. “We are focused on growing the number of franchised Papa John’s outlets throughout the UK,” said Anthony Round, business development manager, Papa John’s. “Outlets in Fareham, Reading and Eastleigh have already been acquired and, following the fit-out process, they are ready for an entrepreneurial business person to take over.”

Great British Menu chef takes first site: BBC2’s Great British Menu chef Mark Greenaway has acquired his first restaurant – the long-term lease on Librizzi’s, a well-known Italian restaurant in Edinburgh. Greenaway’s reputation was enhanced by his week-long appearance on BBC2’s Great British Menu in February where, despite progressing to the Judges’ Chamber, he eventually lost out to Michael Smith from The Three Chimneys on the Isle of Skye. Christie + Co acted on behalf of the owners, Fillipo and Veronica Librizzi, in securing a long-term lease to Mark Greenaway. Barry McNeil, associate director of agent Christie + Co, said: “We are delighted to have secured Fillipo and Veronica Librizzi a high-quality, long-term tenant. We would like to wish them a happy retirement and Mark and his team the very best of luck for the future.”

Lovely Pubs suffers fire at Baraset Barn venue: Lovely Pubs, the company led by Paul Salisbury and Paul Hales, suffered a fire at its Baraset Barn venue on Saturday afternoon. Two fire engines were called to a fire in a storage outbuilding measuring three by ten metres shortly before 2pm. The restaurant on Pimlico Lane was closed while firefighters, who were at the scene for three hours, put out the blaze. A Warwickshire Fire and Rescue service spokesman said: “It wasn’t a big fire. It was confined to that building which was a safe distance from the restaurant. The kitchen staff wouldn’t have been affected and it didn’t prevent them from opening in the evening.”

JD Wetherspoon launches new menu with ‘Nando’s flavours’ and first hot dog; updates on customer complaints: Managed operator JD Wetherspoon, which saw food sales increase by 13.4% in its most recent half year in the 26 weeks to 27 January, has launched a new menu with a host of additions. The company is on track to record £400m of food sales this financial year - food sales are currently growing three times faster than drink sales (up 4.1%). Ribs, peri peri chicken, southern fried chicken, a gourmet foot-long hot dog and fresh coleslaw are among key additions. New menu items are: a full rack of ribs with BBQ sauce, coleslaw, beer-battered onion rings and chips, a peri peri half roast chicken with onion rings and chips, Southern fried chicken strips with a Jack Daniels honey glaze, coleslaw and chips, a classic and gourmet foot-long hot dog smoked over beechwood with onion rings, sweet American mustard and chips (the gourmet version offers cheese and chilli con carne), a Tennessee Burger served with a Jack Daniels glaze and a chicken burger, a honey glaze gammon steak. Its children menu sees the addition of cheesy pasta, a hot dog, spaghetti bolognese and a banana split. Its Indian Club menu, offered between noon and 10pm on a Thursday night, has a new Indian Sharer dish and a poppadum tower. The company’s Sunday Club has added a large char-grilled roast half chicken. On Friday, Wetherspoon reported that all its pubs are open by 8am for breakfast with some open at 7am. Food sales have increased from 23.2% of sales in 2003 to 32.5% this year. The company also published its in-pub magazine today, outlining the areas where customers have been “venting their anger”. Customers have complained that its latest menu had less gluten choice, there was slow service in pubs and that some of its promotions were a “bit too popular” and items were unavailable. Dirty tables were, again an area of complaint. “It’s still an issue but we are pleased to see fewer complaints in the mailbag,” the company said. One customer complained of dirty cutlery. Founder Tim Martin said: “There is some truth in what you say, I have to admit. I went into one of our very well-run pubs the other day – and the cutlery was just not ‘it’. We’ve had a lot of initiatives in this area, including spending a couple of million pounds on cutlery polishers, but the improvements we expected have not materialised (although many of our pubs do very well, I should emphasise). There’s no magic dust available, but I’m going to go back to the drawing board and will make sparkling cutlery a main priority.” There was praise from customers for its club nights and Christmas Day meals. Last Friday, Wetherspoon reported the details of a Peach Brand Track survey which showed that it came top of a brand choice survey - 11% of respondents would choose Wetherspoon given a choice of major brands compared to Nando’s (9%), Harvester (8%), PizzaExpress(7%), Pizza Hut (7%) and Frankie & Benny’s (7%).

Mark McQuater – I want to take Inventive to the next level: The new chief executive of Inventive Leisure, Mark McQuater, who takes up his position today, has told Propel that he wants to take the business to the next level. “The next level is about getting a lot bigger. There are a number of acquisition opportunities. We’d clearly like to grow the business and it’s absolutely capable of growing a lot bigger although that is a two to three year view. The business is profitable. It’s got a premium position with a quality environment and things like table service – and a great culture.” McQuater said part of his brief involves putting more robust systems in place to allow expansion, drawing on his background in running bigger businesses. Turnover has risen to an annualised total of £115m at Inventive Leisure, up from £109m, in the year to June 2012. Underlying Ebitda is around £14m. He said the departure of Ellis is “very amicable”. “He’s had a great run and will still be on the board and large shareholder.” Inventive was founded in 1996 by Roy Ellis and Neil Macleod who opened the first Revolution Vodka Bar on Oxford Street in Manchester. The company has been in Sunday Times ‘Top 100 Companies’ for the last three years in a row. Macleod, who oversees the company’s marketing, is to continue in an operational role. Inventive Leisure has enjoyed success in the past two years with a second brand, Revolucion de Cuba, which is operated as a co-located offer at 13 vodka bars and at five stand-alone sites. McQuater told Propel that one of the recent co-located openings in Cambridge is “going great guns”. Ironically, the fifth stand-alone Revolucion de Cuba is a 10,000 square foot former Barracuda site in Derby. Ellis told Propel at the end of last year that there are “four or five sites” currently in legals. Ellis said its first four Revolucion de Cuba sites were performing in line with average site takings at vodka bars – around £35,000 per week of turnover each. The larger Manchester site occupies 15,000 square foot of trading space and is understood to take around £60,000 per week.

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