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Morning Briefing for pub, restaurant and food wervice operators

Mon 15th Apr 2013 - La Tasca, Orchid and TGI Friday’s

Story of the day:

Zolfo Cooper report – Powder Train had series of management issues: Powder Train, the five-strong operator of pub restaurant freeholds funded by Jack Bowyer, whose family owned Gale’s Brewery for more than 100 years, and linked to Marco Pierre White, had a series of management and operational issues according to a report written by Zolfo Cooper. The company was placed in administration in February this year and its sites are on the market with Christie + Co. But its bank, Royal Bank of Scotland, commissioned a Zolfo Cooper report in October 2012 that found the company had severe liquidity issues, unsustainable Ebitda levels, two sites that were a major drain financially and managerially and unrealistic forecasting. The company, which had made losses in each of the previous three years, also had a “lack of defined reporting lines, financial reviews, structured operations reviews, a business plan and poor financial information”. In February, the company has turned over £129,000, making a profit of £6,000 – although management and other fees of £15,000 produced a loss of £6,000. Bids for The George, Longbridge Deveril and The Kings Arms, Fernhurst, Haslemere were due in on 25 March “due to the level of interest”. A bid date of 19 April has been set for The Chili Pad, North Wansborough, Hook and The Chequers, Marsefield, East Sussex. Administrator Begbies Traynor has warned that unsecured creditors owed £770,000 are unlikely to receive anything. RBS is owed £4.3m and is likely to see a shortfall of around £1.2m, dependent on prices achieved for the company’s freeholds. Bowyer is owed £2.9m but is not likely to receive anything back.

Industry news:

FT – BT Sport will undercut Sky Sports: The Financial Times has forecast that BT Sport will ‘significantly undercut’ the pricing of Sky subscriptions for pubs to take some of the £300m market for showing live sport in pubs. Bruce Cuthbert, director for commercial customers at BT Sport, told the FT the service would be “substantially cheaper” than Sky subscriptions. BT thinks that around 50% of pubs show some live sport but don’t have a Sky subscription – and 20% of pubs show no sport. BT think there is a market here – aside from existing subscribers – for a “lighter” sports package. Cuthbert told the FT: “There is a market that previously has not had sports.” Meanwhile, according to the FT, Sky has already offered some large pub groups heavy discounts of up to 30%. The FT said: “The offers mark the first time in two decades that the powerful sports rights holder has been willing to give substantial discounts.” Pub and club subscriptions account for between £200m and £300m of BSkyB’s annual revenues, according to analysts. The FT added: “Most of this drops straight down to the company’s pre-tax profit due to the cost of the rights being fixed.” Sarah Simon, media analyst at Berenberg, told the newspaper: “This is a very vulnerable profit stream because the revenues are so high-margin. Pubs will leap at some competition from BT because Sky increases the price so aggressively every year.” BT is expected to unveil pricing levels next month and launch two new sports channels in early August. A spokeswoman for BSkyB said: “For more than a year now – and pre-dating the purchase by BT of any rights – our strategy has been to extend our reach into a broader range of outlets via additional pricing options, and to deepen our relationships with existing customers with the rollout of WiFi and great events like the forthcoming Ashes Series.”

Marston’s chef wins ruling that a nut allergy is cause for disability discrimination case: A Marston’s chef has been told he can go ahead with a compensation claim for disability discrimination against his employer - because he is allergic to nuts. Edward Wheeldon, who worked at Marston’s Whittington Inn, between Stourbridge and Kinver, told a Birmingham Employment Tribunal he nearly died after being rushed to hospital after coming in contact with peanuts. Wheeldon is seeking compensation for disability discrimination against Marston’s. He said the allergy had changed his life style and that Marston’s should make adjustments to help him carry out his work. Tribunal judge Mr Bryn Lloyd said he had not dealt with such a matter before but that his decision was that a nuts allergy was a disability. Wheeldon can go ahead with his compensation claim for disability discrimination at a full tribunal hearing later this year – expected to last three days. Tim Jones for Marston’s said the company would be opposing the claim and would provide four witnesses. Lloyd suggested the chef and Marston’s reach an agreement at a private mediation meeting.

Six sector companies make the Sunday Times profit growth list: Six companies in the sector have made The Sunday Times’ annual list of private companies with the fastest profit growth. Cote was placed fourth with 145.08% profit growth over three years to hit £8,374,000. Amber Taverns was placed 56th with 60.51% profit growth to hit £4,673,000. Pret A Manger came 85th with 47.63% of profit growth to £18,699,000. Three drinks companies also made the list. Cellar Trends has increased profits by 100.79% to £11,452,000 and claimed 14th spot while drinks distributor LWC has lifted three-year profits by 84.23% to £3,461,00 to earn the number 24 spot. Bibendum Wine grew profit by 53.68% to achieve profit of £4,424,000 and claim 68th slot in the list.

Company news:

TGI Friday reports 19% sales growth to nearly £150m: TGI Friday’s, led by Karen Forrester, has reported sales rose 19% to £147.7m in the year to 30 December 2012. Ebitda pre-exceptionals was £17.2m compared to £16m the year before. Pre-tax profit was £7.5m, marginally ahead of the £7.4m of the year before. Like-for-like sales grew by 7.1%, only slightly down on the 7.7% of the year before. The company stated in a Companies House filing: “The directors are delighted with the performance in the current economic climate. The group’s operating cashflow was strong during the year with operating cash inflows of £22m - the group ended the year with a cash position of £7.3m. During the year the company opened four new sites which are performing in excess of expectations an the company is actively seeking new sites.” The company, which is owned by US leisure firm Carlson, had an onerous lease provision of £680,000.

La Tasca reports £4.67m operating loss in the year before Company Voluntary Arrangement: La Tasca has reported a £4,673,000 operating loss at its the 64-strong estate in the last full year before it entered a Voluntary Agreement that saw the company shut 23 sites and vary terms on other leases. The operating loss occurred in the year to 26 February 2012 when turnover was £50,193,000 – there was also exceptional operating items of £7,426,000, including impairment charges of £6,413,000, to create an overall pre-tax loss and pre-interest loss of £11,228,00. (The year before it had lost £7,922,000 on turnover of £58,457,000.) The Company Voluntary Arrangement took effect on 29 September 2012 – it was approved by 85.2% of its unsecured creditors. La Tasca currently has banking facilities in place through to 30 September 2014. The company reported its financial covenants are currently set at a level the directors feel are suitable for the business. The CVA also saw a rent reduction on 19 sites. Sites the company left behind in the CVA were producing annual losses in excess of £2m. La Tasca is owned by Icelandic bank Kaupthing and German’s Commerzbank.

Pizza and cider concept takes on third site: The Stable, which operates two site in Bridport and Weymouth in Dorset that focus on 57 types of cider, ten types of pizza and four choices of hand-crafted pie, has acquired its third venue – The Hole in the Wall restaurant in Bath. The company has submitted a planning application to Bath and North East Somerset Council to make alterations to the basement restaurant ready to open later this year. The Hole in the Wall, was opened by chef George Perry-Smith in the 1950s, and pioneered haute cuisine in Britain. The restaurant went into administration in 2011. Last year it was put up for sale through Christie + Co for £175,000.

Luke Johnson explores sale of 3Sixty Restaurants: The Sunday Times has reported that sector investor Luke Johnson is exploring a sale of 3Sixty Restaurants, led by James Horler, after receiving an unsolicited approach. The business operates two brands, Rocket pizzeria and cocktail bars and Ego, which serve Mediterranean food. Sales are almost £13m and the business is valued at around £8m. 3Sixty Restaurants was bought from LDC, the private equity arm of Lloyds Bank, three years ago.

R Capital puts Little Chef on the market: The Sunday Times has reported that turnaround firm R Capital has put the Little Chef business on the market – and could fetch “tens of millions after a successful but savage restructuring”. Interest is expected to come from Welcome Break and Moto as well as coffee chains such as Costa and Starbucks. R Capital acquired Little Chef in 2007, buying nearly 200 restaurants. The company reduced the estate to a core of 80 sites, all of which are thought to be profitable.

Orchid reveals ‘retro, diner chic, customisation and mega dishes’ as food trends for summer: Food trends this summer are set to encompass a whole variety of flavours, cuisines, eras and styles, according to Orchid Group head of food Sarah Thomas. She said: “There is still a big call for retro dishes, and this is only going to increase, and provenance remains an important issue. Customers increasingly want to know where there food comes from and be reassured that each dish uses the best possible ingredients, that are fresh and locally sourced so far as possible.” Bigger meals for those with hearty appetites, the classic tastes of the US and using favourite flavours in new ways are among menu trends on new Orchid menus. The retro food trend means ‘BBQ sauce on everything and lashings of custard with desserts’. Do Drop Inns are introducing a ginger beer chessecake. Milkshakes and hot dogs are coming to Free House Dining pubs. Orchid ‘hawt dawgs’ are loaded with chilli, cheese, sour cream and American mustard. As Propel forecast, Pizza Kitchen Bar pubs are also introducing Dough Dogs – a twist on the classic hot dog, cooked and served wrapped in dough instead of a bread roll. The ‘old flavours, new ways’ trend will see a Bakewall ice-cream cake and the flavours of the Ploughman’s lunch injected into a tart. The customisation trend sees Pizza Kitchen Bar customers given a choice of heat levels, toppings and sides.

Spirit to invest £300,000 in flagship former Tom Cobleigh pub in Lincoln: Spirit Pub Company is to invest £300,000 on converting a former Tom Cobleigh flagship pub, The Pride of Lincoln, to its Fayre and Square brand. The Pride of Lincoln, off Whisby Road in North Hykeham, has served its last pint in its current format yesterday (Sunday, April 14). The pub also has an adjoining Good Night Inns hotel offering 20 bedrooms and a function room with a capacity for 350 guests - the hotel will be kept open during the 11-day closure of the pub. The current brand at the pub, Two for £10, is being phased out, with only a handful of the pubs left in the country.

Dan Bolton joins Hi-Spirits as managing director: Dan Bolton is joining spirits marketing and distribution specialist Hi-Spirits as managing director. Bolton, currently managing director of Louis Latour Agencies, takes up his new role on May 1. As managing director, Bolton will have day-to-day operational oversight of the company, as well as playing a strategic role in guiding the company’s continued growth as part of the senior management team. The appointment gives Hi-Spirits co-founders Jeremy and Sue Hill more scope to focus on innovation, marketing and further development of Hi-Spirits portfolio of co-owned and partner brands. Dan Bolton was national account director at Matthew Clark and director of sales at Bibendum Wine, before joining Louis Latour Agencies in April 2011. Hi-Spirits chairman and co-founder Jeremy Hill said: “I’ve known Dan for more than ten years, and enjoyed seeing his career progress. He’s an excellent fit with Hi-Spirits, and we’re looking forward to working with him.”

Retail Recruitment Company rebrands: Leading sector recruitment company Retail Recruitment Company, led by managing director Dawn Redman, has re-branded and changed its name to Hospitality and Retail Recruitment. The company has won a host of prestigious clients in the hospitality sector in the last two years and decided its name should more accurately reflect its focus. The company has also introduced an innovative “hire to retire” one-stop solution to recruitment, training and human resources needs among small and medium-sized hospitality businesses. Redman said: “From talking to clients it’s become clear that there is a big need for a more holistic approach to recruitment and staff development. Our new “hire to Retire” service means that we find and hire quality staff for businesses, develop their skills through training, with online support in partnership with CPL Training - and provide day-and-night human resources support. This involves everything from contracts of employments and maternity leave though to handling workplace grievances and holiday and sickness management.” Hospitality and Retail Recruitment’s new website is

Gondola appoints Richard Hodgson as chief executive: Gondola Group has appointed Richard Hodgson as the new chief executive of PizzaExpress. Hodgson’s appointment follows the departure of Mark Angela in July 2011 - Gondola chief executive Harvey Smyth has been running the business since then. Hodgson was group commercial director of Morrisons and earlier served as commercial director at Waitrose. He also launched Waitrose’s value range, Essential Waitrose, and the advertising campaign featuring Delia Smith and Heston Blumenthal. Hodgson worked at Asda between 1996 and 2006.

The Sun – Greggs has slapped customers in the face: The Sun has claimed that baker Greggs has slapped loyal customers in the face by shrinking its pasties and putting up prices. The Sun said: “We are pleading with Greggs to restore its tasty pastries to full size. Under the baker’s changes, pasties have shrunk 5% from 190g to 180g, with the protein content — the meat — falling 14 %. The breakfast bacon roll is 18% smaller.” Greggs said changes were typically down to “improvements to specification” such as cutting salt.

Easterbrook returns to McDonald’s: Wagamama chief executive Steve Easterbrook has stepped down to rejoin McDonald’s as its global chief brand officer. He’ll oversee marketing, menu development and consumer and business insights. Easterbrook held the post briefly before. He succeeds Kevin Newell, who recently moved up to the new post of chief brand and strategy officer for McDonald’s USA. Easterbrook will report to Don Thompson, McDonald’s president and chief executive.

KFC like-for-like sales dropped 16% in March in China: Like-for-like sales in China fell 16 % in March and the chain is now facing a new round of avian flu concerns that broke out in China in early April. The sales fall results partly from negative publicity surrounding an investigation of Yum’s chicken supply by Chinese officials. A spokesman said: “Historically in these situations we have educated consumers that properly cooked chicken is perfectly safe to eat and we will continue to do so.” Yum China had already rolled out a new marketing campaign that detailed the ways in which its 5,400 restaurants had purged more than 1,000 small producers of poultry from its supply chain, as well as other quality assurance investments.

Iqbal Wahhab – supporting local cultural activities has a business benefit: Cinnamon Club and Roast founder Iqbal Wahhab has reported on the business benefits for his Roast site in supporting local cultural activity. In his blog, he wrote: “The more reasons people have to come to London or to go out in London, the more our economy benefits. A couple of years ago, I met the very talented people behind The Hip Hop Shakespeare Company. Together with Southwark Council, I sponsored an event of theirs near Roast on the basis that Shakespeare was a local lad . An unintended consequence of this was that Roast became viewed by many as a cultural player in the neighbourhood and brought us patronage from new quarters. So, just as people tell me they choose to come to dine with us because of our work with ex-offenders and also because of the diversity of our workforce (surprising how often I hear this), people from the arts world show their appreciation in a similar way.”

Newcastle United launch new bar with 33 wall-mounted televisions: Newcastle United has opened Terrace Bar, a 700-capacity bar that is the first new drinks venue to open at St James’ Park in more than a decade. The venue, at the south west corner of the ground in an area that was formerly the club’s ticket office, will be run by Sodexo Prestige, which operates the catering and events at Newcastle United. It will open four hours before kick-off for all home games and remain open for two hours after the final whistle with fans able to enjoy premier league games on 33 wall-mounted televisions. Colin Perkins, Sodexo Prestige regional account director, said: “Not only is the Terrace Bar at the heart of St James’ Park, but it’s at the heart of the city of Newcastle.”

Controversial Otley pub is to go back on the market six months after Chinese restaurant opens: An Enterprise Inns pub in Otley that launched the town’s first Chinese restaurant in 25 years, The Dynasty, last October is back on the market. The pub, on Westgate, is reported to have been closed for several weeks while discussions took place between its licensees, Jo Karpowicz and Steve Harvey, and Enterprise Inns. The pair have now left the hotel and will focus on running their other pub in Otley, The Bridge, while Enterprise will be putting The Black Horse up to let. Last July, Karpowicz told The Guardian: “The restaurant will be completely separate from the pub, which is where we currently serve breakfast for our hotel guests. We will also be using the upstairs function room, which will give us an extra 80 covers, and is where we are going to be hosting banquet and cabaret evenings. We came to Otley looking for a challenge, because The Black Horse is a pub and hotel and we’d only ever run pubs before - and now we find ourselves opening a Chinese restaurant.” A spokeswoman for Enterprise Inns said: “We can confirm that negotiations with the current publican are still ongoing, but we hope to be able to start a recruitment campaign for The Black Horse very soon.” The pub has been a source of ongoing discussion between firebrand local Liberal Democrat MP Greg Mulholland and Enterprise.

Luminar has launched a ten-point action plan at threatened Kingston superclub: Oceana Kingston, the Luminar superclub under threat of licence revocation, has launched a ten-point action plan to address anti-social behaviour and reduce noise for its neighbours after feedback from residents. The club has already introduced a new queuing system to lower noise disruption and a litter collection scheme in the locality. The new points include supporting the provision of portable toilets, sponsoring litter bins in front of the venue and working with street pastors to extend patrols throughout the town centre. Luminar’s operations director Tony Marshall, said: “We take the concerns of residents seriously and have been working in partnership with Kingstonfirst, the police and other late night operators in the town to help ensure that Kingston is a safe and secure place for people to enjoy a night out. We are proud to be spearheading this effort to reduce anti-social behaviour and hope that this ten-point action plan demonstrates a serious commitment to minimise disruption to local residents. It’s important to remember that this issue is not isolated to Oceana, which is a well-run, professional nightclub that has been at the heart of the Kingston late night scene for a long time.” A licence hearing is due to be held in May when Luminar will appeal against a decision to revoke Oceania’s licence in the wake of a fatal stabbing at the club.

Pesto Restaurants reports small loss on £6m turnover: Pesto Restaurants, headed by Neil Gatt and Sarah Edwards, has reported a pre-tax loss of £117,234 (2011: £88,746 profit) on turnover of £5,966,016 in the year to 30 June 2012 (2011: £4,637,386). A Companies House filing stated: “The core estate of mature restaurants remained stable, with strong margins and robust cashflow. The company has developed a new strategy involving free-of-tie leasehold pubs that can be converted to Pesto at a fraction of the capital cost of the first four restaurants. The first two of these sites opened at Cabbage Hall and Widnes in Cheshire in November 2011 and April 2012 respectively. Both have traded well ahead of expectations, delivering very strong returns on a modest investment. As a result of the success of these sites, further openings after the year-end have taken place at Prune Park in Allerton, Yorkshire and at The Dibbinsdale Inn on the Wirral. Two more openings are scheduled for April and June 2013, with further developments planned in the future.” 

Ninth Tony Macaroni restaurant to open in Glasgow: Scottish restaurant chain Tony Macaroni is to open its ninth site in Glasgow city centre. The restaurant will open at the site of the former Zizzi at the corner of West George and Renfield Street tomorrow (Tuesday, 16 April). The 120-seater venue will offer breakfasts from 8am in the morning. The new opening is the ninth Tony Macaroni restaurant in central Scotland since 2007. The city centre restaurant is next door to the new Park Inn by Radisson hotel, which opens at the former General Life Assurance offices on 16 April. Plans are now under way for the tenth Tony Macaroni, which opens in May in Dunfermline. The restaurant chain has a diverse menu offering traditional Italian pizzas and pastas and ribs, risottos and burgers with takeaway options available.

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