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Mon 25th Mar 2013 - Giraffe, Wagamama and Whitbread

Story of the day:

Jamie Rollo – Whitbread rumoured to be launching a budget hotel brand; Travelodge to lead fight back with ‘Rolls Royce’ of beds: Morgan Stanley analyst Jamie Rollo has reported on speculation that Premier Inn operator Whitbread is to launch a budget hotel brand. He said: “The second brand will reportedly operate in a more budget segment than Premier Inn, with a lower-cost offering as it will be a smaller room and/or operate in segments not open to Premier Inn (tertiary locations, windowless rooms, converted office buildings). We understand it will not share the Premier Inn brand name, which would be a major step. We have written before about the possibility of Premier Inn operating a second brand as it has been moving more upmarket over the years. Competition in the true budget space is increasing so it might want to claim this ground too, and it might also be worried about a resurgent Travelodge undercutting it on price. It will be interesting to see whether a new brand would accelerate Whitbread’s hotel expansion plans, or simply substitute Premier Inn’s existing expansion plans. If correct, it might also suggest Premier Inn is running out of UK growth.” Meanwhile, Rollo reported Travelodge is intent on winning back market share from Premier Inn with a combination of improved sales and marketing, more advertising, a new yield management system, and a new bedroom prototype. Of the latter, Rollo said: “It has been designed with significant customer feedback, and the main showpiece is an upgraded luxury king size bed, deemed in the industry to be the ‘Rolls Royce’ of beds, and used predominately by luxury hotels worldwide. This focus on quality but for £10 less than Premier Inn could hit Premier Inn’s offer hard, bearing in mind that Travelodge has 500 hotels against Premier Inns 650. Travelodge has said it is investing £57m on its estate refurbishment, and it will complete most of it by autumn 2014, when it will have recommenced TV advertising.” Rollo added that Travelodge had already seen an increase in corporate spend, up to 40% from a low of circa 30% of total revenue.

Industry news:

BT Sport to launch in late summer with multiple channels: BT Sports, which is set to launch the first new dedicated sports channels in 20 years in late summer, will target around 42,000 pubs that show live sports. The company, which has bought the rights to 38 Premier League games, including 18 “first picks” as well as Aviva premiership rugby fixtures and other sports rights, has identified 25,000 pubs that show live sport in the UK. The channel believes these pubs may want to upgrade their sports offer with a BT Sports subscription, which is expected to cost less that a Sky Sports subscription. There are a further estimated 17,000 pubs that currently subscribe to Sky Sports. BT Sports will base its charges on pubs’ rateable value like Sky Sports. BT Sports is making a £1bn investment in buying sports rights and production facilities to launch its new channels, which will be shown in HD. The launch is the first time that customers will have been given an option in buying a disaggregated service. BT Sports director of commercial customer Bruce Cuthbert said: “This is a monumental commitment by British Telecom to high quality sports broadcasting, aiming to make premium sport available to more pubs and bars throughout the country.” No launch date has been given but experts believe early August would be the obvious point to launch with BT Sports owning the rights to show a game on the first day of next year’s football season - 17 August. Existing Sky subscribers will need to add the cost of their Sky subscription cost for next season, expected to be unveiled early summer, to the cost of a BT Sports subscription to work out the total cost of providing customers with a full service. The two rival providers will be busy working out their pricing strategies to ensure they maximise subscriber levels, something which brings a new level of competition to the marketplace that pub customers hope may drive down overall pricing.

Spring edition of Propel Quarterly available online: The Spring edition of the Propel Quarterly magazine is now available online. The edition contains a detailed look at Marston’s Revere Pub Company project, an interview with Mitchells & Butlers chairman Bob Ivell plus interviews with Las Iguanas founder Eren Ali, Luminar chief executive Peter Marks - and Market Town Taverns chief executive Ian Fozard sets out his business philosophy. To read the magazine click here

UK saw the second highest out-of-home spend increase in 2012 among Europe “Big Five”: The UK ranked second in out-of-home food and drink spending increase among the Big Five” economies in Europe in 2012, Paul Pendola, of insights firm NPD Group, told the Propel Multi Club conference. The UK saw an increase of 0.7% whilst Germany was up 2.6% and sales in France rose 0.6%. The Italian market declined by 1.7% and the Spanish market saw a 3.6% drop. In the UK, breakfast and evening snacks are the big growth areas with visits up by 8% and 9% respectively. Lunch visits were down by 1% in 2012, afternoon snack visits dropped by 4% and dinner was down by 2%. Pendola reported that UK consumers are moving towards more social motivations for eating out of home compared to functional reasons – social reasons accounted for 29% of the total (up 1.9% since 2008) compared to 71% functional reasons (down 1.9% since 2008).

Company news:

Upmarket pizza deliver firm seeks investor: Upmarket pizza delivery firm Firezza is seeking an investor so it can triple in size, according to The Times. The company, which sells more than 500,000 pizzas a year from 11 sites in London, has been placed on the market through Alaris Capital with a price of tag of around £6m. YFM Equity Partnrs holds a 25.3% stake in the business currently. The Times claims that the firm has collected preliminary interest from Luke Johnson’s Risk Capital Partners, which sold Giraffe to Tesco a fortnight ago. Firezza, which is a combination of the words fire and pizza, was set up in 2001 in Battersea - it has added sites in Wandsworth, Chiswick, Crouch End and Ealing. The business has turnover of £5.2m and operating profits of £1m. Nicholas Stone, of Alaris, told The Times: “They are focusing on cracking the London market. Once they’ve got to 30 (sites) they will have the bridgehead to go into larger cities like Manchester and Birmingham.” Firezza sells pizza by the metre and devotes a section of its menu to pizzas and side dishes that use buffalo mozzarella.

Brewer Harveys sells depot site in Lewes to cinema and community project: Lewes-based brewer and retailer Harvey’s has sold its depot site in Lewes to a charitable trust that wants to create a permanent four screen community cinema. The intention is to retain the external warehouse walls to form part of the new cinema, whilst the interior will be completely refurbished with a contemporary frontage sympathetically designed to blend with the local environment. The remaining part of the site will, in the medium term, be landscaped for cinema users, with an emphasis on green areas, but reserved for future community use. The cinema, which will also house a restaurant, will provide a programme of daily films and events to appeal to all sectors of the Lewes community. In addition to mainstream films and art movies, the cinema, for example, will work with local groups and businesses to offer discounted screenings, special interest events, exhibitions and festivals celebrating local film makers. The cinema will trade under the name ‘Depot Cinema’.

Starbucks hires corporate affairs director in the wake of tax controversy: Starbucks has appointed Simon Redfern as its new director of UK corporate affairs in the wake of being embroiled in a tax controversy last year. Redfern, who is due to take up the position next month, has previously acted as a consultant for the firm. He joins the company after the departure of Tim McCoy, former head of communications at Starbucks UK, who joined energy supplier EDF last September. Redfern’s current position is partner at communications consultancy firm Pagefield.

Levi Roots to close south London restaurant: Levi Roots, the entrepreneur behind Reggae Reggae Sauce, is to close his restaurant in Battersea. He opened Papine Jerk Centre in 2007 after appearing on Dragons’ Den. The venue has become a community hub, supplying lunches to a nearby schools. Roots - real name Keith Valentine Graham - said he would now be shutting the restaurant to focus on his ready-to-cook spiced chicken products, curry sauce and stone-baked pizzas business.

Joule’s starts nine-pub expansion with acquisition: Shropshire brewer and retailer Joule’s has launched the start of its £1 million investment and expansion scheme with the acquisition of the first of nine pubs it plans to open in the coming year. The company has bought The Talbot Country Inn, in Ruyton, near Oswestry. The brew house at its Red Lion pub in Great Hales Street, will also double in size. The brewery now has more than 17 tap houses across Shropshire, Staffordshire and Cheshire. When the expansion plans were first announced in January boss Steve Nutall said all nine new pubs will open within a 40 minute drive of Market Drayton. The Talbot Country Inn is due to change to the Joule’s name on 4 April.

Tavistock Leisure to invest £750,000 in South Tyneside: Tavistock Leisure is to invest £750,000 in restoring a Victorian pub in South Tyneside. The former Dougie’s Tavern, in Blackett Street, Hebburn, will re-open in mid-July as a pub and restaurant complex called The White Lead, taken from its original industrial nickname. Tavistock spokesman Jonathan Graham said: “The pub will be a multi-functional venue, with a restaurant and bar and facilities for live music and sports on TV.”

Giraffe offers free food for kids on Easter Sunday: Giraffe, the family-friendly restaurant chain bought by Tesco a fortnight ago, has emailed its database to offer free kids food on Easter Sunday. The company told its database: “Bring the little ones to Giraffe on Easter Sunday and for every adult main course purchased you’ll get a kids meal deal absolutely free! Kids mains include Pasta Pomodoro with toasted garlic focaccia, all-beef hot dog or popcorn chicken and fries – all served with selection of drinks.”

Wagamama set for Derby Westfield – by popular demand: Noodle chain Wagamama is expected to take a site in Derby’s Westfield centre. The unit Wagamama is expected to take became available when Raresupply, which trades as the Sony Centre, went into administration in January and administrators Deloitte shut outlets in Derby, Nottingham, Leicester and Lincoln. A spokesman for Westfield Derby confirmed that it was in negotiations to bring Wagamama to the city. Before the £340 million centre opened in 2007, Marketing Derby revealed plans to attract eight major brands – on top of the 150 that were to open in Westfield – and Wagamama was top on the list. The list was compiled by John Forkin, managing director of Marketing Derby. He said: “This looks like really good news for Derby. For some time, we have been trying to attract premium brands to the city centre and with some success. We have been courting Wagamama for some time – it was a question of choosing the right time and venue. One thing we can guarantee Wagamama is that, once its restaurant opens, it will be full. When we have questioned people about what brands they would like to see in Derby, Wagamama has been consistently at the top.”

Michelin star chef John Noon re-opens Lancashire pub: Chef John Noon, who was awarded a Michelin star when he worked at Lancaster’s Ma Cuisine, has reopened The Horns Inn in Churchtown, Lancashire, with partner Jeni Perrin after a £370,000 refurbishment. He said: “Creating exciting food is my passion and something I love to share with customers. I’ve worked at some of the best restaurants in the UK and used some of Lancashire’s finest produce along the way. To create the top quality dishes you need the very best ingredients. We’re fortunate that in Lancashire they’re here on our doorstep.” The Horns Inns has been closed for two years.

Mountain Capital sells pub for £350,000: Mountain Capital has sold the ‘Simon the Tanner’ pub in Bermondsey, south London for £350,000. The pub has been bought by the United St Saviours Charity, reflecting a net initial yield of 10%. The newly refurbished pub occupies 800 sq ft on the ground floor with a 750 sq ft basement. The upper floors of the pub have been converted to residential and sold off on a long leasehold basis. The pub is located close to the bustling Bermondsey Street which is fast becoming a sought after pitch for restaurateurs and bar owners. Henry Wilson of Shelley Sandzer, which acted for Mountain Capital, said: “Bermondsey has undergone significant regeneration in recent years and the ‘Simon the Tanner’ pub is at the heart of it. It enjoys a great location with the Bermondsey square hotel development immediately opposite. It is a very trendy up and coming area and we’re seeing considerable demand from operators keen to gain restaurant, pub and bar representation in the area.” 

Be At One to open first site out of London this week: London-based cocktail specialist Be At One will open its first site outside of London this Wednesday (27 March). The company has converted the former Sahara Bar in Reading’s Gun Street. The company opened its sixteenth site last week, on Upper Street in Islington, the third opening of 2013. The company also revealed that like-for-like sales had risen by 9% in its most recent financial year. Be At One, which received investment from Piper Private Equity in October 2011, is hoping to grow to 30 sites within the next three years. Director Steve Locke said last week: “We spent time in 2012 gaining momentum and consolidating the existing business which has allowed us to be able to expand very quickly in a short space of time.”

Harvester offer free brunch for kids over Easter: Harvester, the 205-strong brand owned by Mitchells & Butlers, is offering free brunch for two children when two adults eat at Easter. The offer applies until Sunday 21 April. 

Innventure sends cheeky post-Budget message to 15,000 customers: Innventure, the six-strong pub restaurant company headed by Chris Gerard, has sent a cheeky message out its database of 15,000 customers in the wake of the George Osborne’s move to knock a penny of duty off the price of a pint. The company told its customers: “To celebrate the chancellor’s extraordinary generosity to all who enjoy a beer we are pleased to provide a penny back for every beer you buy. Bring this voucher with you whenever you visit, as many times as you like with as many friends as you know. For an entire year - or at least until he changes his mind!”

McGuire steps down from “alternative role” on M&B board: Managed operator Mitchells & Butlers (M&B), has disclosed that Richard McGuire ceased to be the alternative non-executive director on its board for Doug McMahon on 21 March. McMahon is the representative on the M&B board of Piedmont, the investment vehicle of Joe Lewis - McGuire, another Piedmont representative, was his alternative from 1 October 2012. McGuire is managing director of Tavistock Europe and is a non-executive director of Timeweave and DCD Media. M&B is still looking to appoint at least one more independent non-executive director. 

Businessman makes £350,000 investment Wellington in pub – negotiates option to buy the freehold: Businessman Ben Smith will re-open Wellington Pub Company’s George pub in Windsor Road, Wraysbury this week after a £350,000 refurbishment. Smith has taken a 20-year lease with Wellington plus an option to buy the freehold if the business takes off. Smith has also extensively planted the pub’s two gardens, seeding 50 olive trees and potatoes, vegetables and cucumbers that will be sold in meals served at the pub.

Star Pubs & Bars partners foodservice firm 3663: Star Pubs & Bars, the leased pub arm of Heineken, has partnered with 3663 to offer its lessees the most comprehensive food support package seen in the leased pub sector to help them capitalise on the growing pub food market. Called The Good Food Partnership, the programme extends far beyond the menus and food supply that leased pub companies usually offer to encompass consumer and market insight, consultancy support and training.

Scots angry to be excluded from Krispy Kreme promotion: Krispy Kreme customers in Scotland have expressed anger at being excluded from a UK-wide doughnut giveaway. The company is offering to give customers across the rest of the UK 12 free doughnuts when they purchase a dozen, but makes clear in its small print that this offer does not apply to the new Hermiston Gait branch in Edinburgh, where customers queued for hours when it opened last month.

Kalton & Barlow opens fourth pub: North west operator Karlton & Barlow has opened its fourth pub, The Dog at Over Peover in Cheshire, after a spend of £1.1m on acquisition and refurbishment in conjunction with MJI Properties. Kalton & Barlow also operates The Crown in Goostrey, The Swan in Tarporley and The Boat which sits on the banks of the River Dee in Erbistock, Wales. Founder of MJI Properties Mike Irlam said: “My family has always lived in this area, so The Dog has been an important part of our lives. There are so many communities that lose their pubs, which is a crying shame. So when I heard The Dog was up for sale I just wanted to make sure it would survive these difficult times. Knowing Simon Kalton and Edward Barlow, and seeing their success first hand, I knew they would be the right operators to take The Dog forward. I’m now handing over the keys and the responsibility to arguably the safest pairs of hands in the north west and I hope the community and visitors from further afield will come and enjoy being part of The Dog’s next chapter.” Matthew Parker, Kalton & Barlow’s executive chef, said: “The menu we’ve rolled out is full of Kalton & Barlow pub food classics - mainly British with a few twists along the way.” Kalton & Barlow is seeking other leisure/licence businesses. Their criteria are: on which to stamp their mark: leasehold free-of-tie licensed premises in quality town, large village or urban locations with good car parking, outside areas, a minimum 2,500 square foot trading area. Bedrooms and function rooms are desirable.

Arkell’s buys hotel in Royal Wootton Bassett: Wiltshire brewer and retailer Arkell’s has bought The Angel Hotel in Royal Wootton Bassett, for an undisclosed sum. Brewery chairman, James Arkell said: “We are thrilled to have purchased this lovely hotel which was previously privately owned and where the former owner has done a great job on a sympathetic and elegant refurbishment.” The Angel, a Grade II listed building, has 18 bedrooms and a function/meeting room that can accommodate up to 80 people, along with a smaller function room. “Over the 170 years’ since Arkell’s first began brewing and buying pubs, we’ve continually added to and adapted our estate of pubs to fit with the requirements of our customers and of the prevailing economy,” said Arkell. “As costs rise for small businesses, a small hotel has more income-generating opportunities than some pubs, though we continue to invest in those where there is a vibrant and supportive local community.” Arkell’s estate of 100 pubs and hotels now has nearly 500 bedrooms. “We believe in Royal Wootton Bassett,” added Arkell. “It’s got a big heart and a thriving community.”

TCG to donate the Chancellor’s penny to charity: Managed pub and bar group TCG is to donate the Chancellor’s ‘penny off the pint’ to Cancer Research UK from Monday 25 March, up to the busy Easter weekend. The company will donate a penny for every pint of beer sold in all its 75 pubs and bars nationwide. The move follows the abolition of the unpopular Beer Duty Escalator in the Budget, along with a 1p duty reduction on a pint. TCG chief operating officer Nigel Wright said: “The Chancellor’s move was great news for the trade after much campaigning, but also took pubs and brewers by surprise. While we still have some beer in stock paid at the old rate, and we’re waiting for new prices from our suppliers, we decided the fairest thing all round was to donate Mr Osborne’s ‘penny off the pint’ to Cancer Research UK.”

Costa Coffee manager ‘snapped’ over long hours: The manager of a Costa Coffee site stole more than £3,700 from the company safe and jetted off on holiday after he “snapped” over the long hours he was working. Mark Crowley, 36, who ran the Costa branch in Tesco, off Newmarket Road, Cambridge, helped himself to the store’s takings and splurged more than £1,400 of it on a two-week holiday to Tunisia, city magistrates heard. Paul Brown, prosecuting, said Crowley, who was sentenced to 250 hours of unpaid community work, was fed up with working 60-70 hours a week. He said: “He said that one day he was very tired from all the hours and snapped. He went into the office, went inside the safe, took the money and went on a holiday to Tunisia for two weeks.” Meanwhile, Costa will open its second Chichester city-centre branch in East Street. Costa Coffee, which already has a store in West Street, will take over the former Santander building in East Street. There is also a Costa Coffee outlet inside Waitrose supermarket in Chichester.

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