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Morning Briefing for pub, restaurant and food wervice operators

Wed 24th Apr 2013 - Costa Coffee, ETM Group and Jamie Oliver

Story of the day:

Ethnic restaurants have suffered major loss of trade to supermarkets: Figures from insights firm NPD Group show that the UK’s ethnic takeaways and restaurants have suffered a decline of 123 million visits over the past three years. During the same time period, sales of spicy foods in supermarkets have soared suggesting that consumers are craving ethnic flavours more and more, but are no longer flocking to their local curry house for a fix. Almost all of this loss is due to the decline in evening dining visits to ethnic restaurants rather than takeaways, which accounts for 121.7 million of the lost 123 million visits in the three-year period. An even greater cause for concern for ethnic restaurants is the revisit intent scores. 17 million fewer people would “definitely” choose to visit again, and almost 12 million fewer would “probably” choose to revisit compared to 2009. Guy Fielding, director of business development for The NPD Group, said: “Ethnic food may not be perceived as the everyday good value it once was. To compete with the supermarkets ethnic operators need to change the price/value equation by introducing deals and promotions that resonate with consumers. The recession has made consumers more discriminating in the choices they make. Ethnic operators will need to get more sophisticated about the deal and promotion element of the business if they are to turn this decline around.” The main reasons people gave for dining in ethnic restaurants in 2009 were: socialising with friends, spending time with the family, dining as a couple and fitting in with shopping or running errands. Without exception, significantly fewer people chose these as their primary motivation for seeking out an ethnic dining experience in 2012. Fielding added: “These findings are a real wake-up call for ethnic restaurants operators to take a hard look at their offering. This not only includes the décor, atmosphere, layout and cleanliness of their establishments, but their service levels and promotions too. It’s time to move from dark and dated décor to light and lively to ensure restaurants remain a place people want to spend time socialising with their friends and family.”

Industry news:

Simon French to present at the Propel Multi Club Conference on Thursday 20 June at the Oxford Belfry: Simon French, leisure analyst at Panmure Gordon, will provide an overview of the current state of the UK eating out market - and challenges ahead – at the Propel Multi Club Conference on Thursday 20 June at the Oxford Belfry. Operators can book two free places by e-mailing

Industry VAT campaigner Jacques Borel appears on Radio Four’s Today and Radio Five: Jacques Borel, who is campaigning to reduce VAT in the sector to 5% on behalf of 40 major companies, appeared on the flagship Radio Four Today programme and Radio Five yesterday. Borel told The Today programme: “I have a commitment (from my members) to use 60% of the reduction in VAT to lower prices so that would be a 7.5% decrease in price. When you decrease price by that magnitude you will see an increase in customers of 10-12% and you will be forced to hire new (staff). In our best case scenario, we plan to create 670,000 jobs in three years. In a matter of three years the (tax) investment will be recouped.” Today presenter John Humphrys told his audience after the interview: “He (the Chancellor) doesn’t stand a chance against that bloke.” 

Burger King expands home delivery in the US: Burger King has expanded home delivery to Chicago, San Francisco and Los Angeles with 45 restaurants participating. The service is reported to be performing well in New York, Miami, Houston and greater Washington DC.

Company news:

Wildwood operator Tasty reports sales up 33%: Wildwood operator Tasty has reported sales up 33% to £19,315,000 (2011 - £14,565,000) in the year to 30 December 2012. Five new Wildwood restaurants were opened (Epping, Market Harborough, Ely, Bow Street and Canterbury) and the former Cambridge Chez Gerard restaurant was converted into a Wildwood restaurant. The company had 23 restaurants in operation at the year-end - six DimTs, and 17 Wildwoods. Since the year end, the group’s two Cafe Pasta restaurants at Shaftesbury Avenue and Stratford-upon-Avon, acquired in November 2011, have been converted into a new sub-brand of Wildwood, Wildwood Kitchen. A new Wildwood Kitchen opened in Didcot last month and two Wildwood restaurants, in South Woodford and Newmarket, have opened in April. Tasty said: “The group continually looks to update its menus and for much of the year has successfully offered promotions to encourage growth in sales although less aggressively than in previous years.”

Orchid chooses Segafredo Zanetti as coffee partner: Orchid has become the first managed pub company in the UK to be work exclusively with Segafredo Zanetti - and will serve the brand across approximately 200 of its pubs and restaurants from May 2013. The company said: “Segafredo Zanetti differs from its competitors in that it is the only coffee company in the industry to directly control the entire coffee production process, from the bean to blend to cup, leading to a consistently high quality end product.” Segafredo Zanetti’s coffee specialists will work directly with the Orchid training team in order to develop an ‘Orchid Coffee Standard’ which will be consistent across all pubs. Segafredo Zanetti is also supporting Orchid by supplying branded crockery, point of sale and comprehensive staff training for Orchid’s 6,500 employees. Orchid Group, which is the sixth largest managed pub and restaurant company in the UK, hopes that the Segafredo Zanetti partnership will help build on the 1.5 million cups of coffee sold across the estate each year.

Fat Cat Bars – the snow in January hit our cashflow: Fat Cat Bars founder Matt Saunders has linked yesterday’s administration of the company with the snow in January. He said: “We had a bad period during the snow in January, and that’s knocked our cashflow at a time when we were trading in a weak market. We flagged up the potential problems with our bank, but they declined to help.” Advisers were called and spent the next ten weeks seeking a solution, but ran out of cash. “The administrators have shut the loss-making branches and are hoping to sell the business as a going concern. It’s horrific - the worst day of my life.” Administrators closed sites in Llandudno, Chester and Hanley – a site in Cardiff was closed last year and a site in Wrexham closed in February. Six sites are on the market for circa £2m through Colliers International. Joint administrator Tyrone Courtman, head of restructuring at Cooper Parry in Leicester, said: “The company has been adversely affected by poor trading at a few of their outlets. We believe that those bars continuing are successful performers and we already have significant interest in them continuing as a going concern.” The six sites on the market through Colliers International have a combined price tag of £2m. The venues are located in Nottingham, Leicester, Derby, Bow (East London), Bangor and Frodsham in Cheshire and include one freehold and four free-of-tie leasehold properties.

Eclectic Bars in Manchester United celebration double: Two sites operated by Eclectic Bars hosted the celebration by Manchester United that followed clinching the league title on Monday evening. The team celebrated at Sakura in Manchester and the Living Room, both of which are operated by Eclectic, led by Reuben Harley.

Stonegate Pub Company to add Slug & Lettuce site: Stonegate Pub Company is converting its Fiesta Havana site in Fulham Broadway to a new Slug & Lettuce – the venue is due open this weekend. A Slug & Lettuce was previously operated in Fulham Broadway with the building later becoming The King’s Head and now the Broadway Bar and Grill. Stonegate operates 71 Slug & Lettuce sites around the UK. The company re-opened its Cheltenham site last week after a £120,000 refurbishment.

New-style café and cinema to open in Barton-under-Needwood, Staffordshire: A ground-breaking £700,000 café/restaurant-cum-cinema, The Red Carpet Cinema and Café Bar, is to open at the Barton Marina development. Its website states: “There’s a cinema, just a tiny one. Well, actually, there’s two but the second one’s even smaller than the tiny one. You can take a drink into the cinema, an alcoholic one, or coffee - or don’t go to the cinema at all.”

Mark Sergeant joins Great Northern Hotel: Chef Mark Sergeant is to join the Great Northern Hotel in the role of chef director. Sergeant, who worked for Gordon Ramday Holdings for 13 years, will oversee the 90-cover Plum + Spilt Milk restaurant and takeaway service Kiosk, which will open in King’s Cross next week. 

Innis & Gunn receives Queen’s Award for Enterprise: Brewer Innis & Gunn, which generates three quarters of its £7.5m of sales per annum overseas, has won a Queen’s Award for Enterprise. The company’s beer matures for 77 days in oak barrels previously used for bourbon.

Hotel company complains about government bail-out of rival: A multi-million pound bail-out to save a hotel group is “biased and unfair”, according to a rival hotel chain. Last week, the Manx government announced a rescue package for the Sefton Group, totalling more than £4.5m. The package includes a £1.3m loan plus an additional £3.2m to buy a Douglas site earmarked for development. Managing director of Sleepwell Hotels Mark Wilson said the move “creates a biased and dysfunctional commercial environment, with unfair competition”. He added: “This makes it extremely difficult, if not impossible, for Sleepwell Hotels to trade profitably in the future. The Sefton Group is now free, with its government support, to undertake a policy of anti-competitive discounting and uncapped re-investment secure in the knowledge the government will have to support its underwriting.” The Sefton Group is a Manx company, which owns the Sefton and the Palace Hotel Casino on Douglas promenade, along with the Sefton Express hotel near Ronaldsway airport.

Coca-Cola warns of job losses: Coca-Cola Enterprises (CCE) has warned that 288 jobs are at risk across the UK, due to the end of its delivery service to pubs, restaurants. The company, which produces and distributes Coca-Cola drinks across Europe, said it was proposing to end direct deliveries to restaurants. The jobs could go at CCE’s sites in Bristol, East Kilbride, North London, Northampton, Sidcup and Wakefield.

Second former Mitchells & Butlers executive joins Timothy Taylor board: A second senior former Mitchels & Butler executive, Mike Bramley, who oversaw the pubs and bars division before retirement, has joined the board of brewer and retailer Timothy Taylor. Tim Clarke, the former Mitchells & Butler chief executive, joined the board several years ago as a non executive director.

Byron set for £7m Strand building: The thirtieth Byron better burger site will open in The Strand, London, paying a rent of £225,000 per annum. The freehold of the building has been bought for £7m by Enstar Capital, advised by agent Shelley Sandzer.

Adam Kaye nets £300,000 with Prezzo share sale: Restaurant entrepreneur Adam Kaye has sold 350,000 shares in Prezzo, the company founded and led by his cousin Jonathan Kaye. Adam Kaye sold the shares at a price of 93p per share, which netted him over £300,000. He has a stake of just over eight million shares left which represents a 3.5% stake in the business. Adam and his brother Sam hold a combined stake in Prezzo of nearly 7% between them. The pair have been non-executive directors of Prezzo since 2008.

Costa Coffee reveals secrets of Costa Coffee Club: Costa Coffee marketing director Kevin Hydes has revealed that eight million Costa Coffee cards have been issued, of which three million are active. Of the three million active card users, 1.6 million are “registered,” meaning they have provided email addresses to receive twice monthly Costa Club Card e-mailings. Hydes has reported the Coffee Club’s key principles are: keep it simple by not over-complicating club mechanics or messaging; get personal by sending only relevant and timely e-marketing communications; be democratic - rather than demanding all club members share personal data, extra points are offered to those who chose to do so. The key lessons are: encouraging club members to redeem points is key; if they don’t, interest can lapse; get it right and actively engaged customers visit more frequently, spend more per visit, and promote Costa more actively among their peers.

Heston Blumenthal company pays dividend of £750,000 for 2011-2012 financial year: Heston Blumenthal’s SL6 company saw pre-tax profit climb to £1,153,637 in the year to 31 May 2012, up from £768,565 the year before. Turnover rose to £11,197,219 from £10,106,239 the year prior. The company said: “The Fat Duck continued to be in considerable demand and both the group’s public houses enjoyed successful years. The Hinds Head was awarded a Michelin star after the balance sheet date, which means both establishments offering the group’s historic British cuisine now have the same distinction. Commercial relationships with key partners Waitrose and Channel 4 prospered with the respective sales of branded food products and programme viewing figures both reaching encouraging figures.” The highest paid director earned £207,117.

Pizza Pilgrims to open next month: Pizza Pilgrims, a new pizza company incorporated in November last year and chaired by Geronimo Inns founder Rupert Clevelym will open its first site in Dean Street next month. Recently, Clevely told Caterer magazine: “They have a pop-up place on Berwick Street Market in London. It’s a very exciting concept, with Thom and James Elliot, the sons of Nick Elliott who opened the Chelsea Ram (the first Geronimo pub) with my wife - Nick sadly died in a car accident about seven years ago. The boys set this business up and it has been highly successful so far.”

ETM Group to open pop-up in Sloane Square: London gastro-operator ETM Group is to open a pop-up bar in Sloane Square, close to its Botanist venue, in May for the centenary year of the RHS Chelsea Flower Show. From Wednesday 22 May until Saturday 25 May (inclusive), The Botanist will be running an Oyster and Joseph Perrier Champagne Bar in the Square, complete with daily performances from a string quartet. Freshly-shucked wild Colchester, Jersey, Lindisfarne or Prestige Speciale de Claire oysters can be enjoyed individually from £2.50 or by the half dozen from £14.

SABMiller chairman diagnosed with brain tumour: SABMiller has revealed that its executive chairman Graham Mackay has been diagnosed with a brain tumour. He underwent surgery on 22 April and will now embark on a course of treatment. The board has accelerated the planned promotion of chief operating officer Alan Clark to chief executive with immediate effect. Clark was appointed as chief operating officer in July 2012 with a view to succeeding Mackay as chief executive in July 2013 after a transitional period of one year, when it was intended that Mackay would become non-executive chairman. The board will keep Mackay’s position under review pending the outcome of his treatment. A spokesman for SABMiller said: “Our thoughts and prayers are obviously with Graham and his family at this difficult time. We wish him well and look forward to his recovery. He has made an immense contribution to making SABMiller what it is today, but the transition from Graham to Alan in accordance with our succession plans is already in its final stages. SABMiller has a strong management team, with considerable depth of talent.”

McDonald’s names four key growth categories: McDonald’s US chief executive Don Thompson’s has named the company’s four key growth areas as chicken, premium beef, breakfast and beverages. Chief operating officer Tim Fenton said the US will import more menu items from other territories to grow sales. “We’re doing more with existing products we had in different countries and we’re finding out that great products travel really easily across country borders,” he said.

Loungers secures two more sites – remains on target to open 12 sites in 2013: Loungers, the café bar concept headed by Alex Reilley and Jake Bishop, has concluded two more property deals. It has signed to open Lounge sites in the Brewery Square development in Dorchester, where builders are already on site, and the Peel Group-owned Gloucester Quays development. Reilley reported that like-for-like sales at Loungers grew 9% in March. “Whilst the business is growing at a significant pace, it’s the performance of our older sites that’s really pleasing. We’re on a very good run of like-for-like sales at the moment and coupled with the speed of the roll out it’s fair to say it’s exciting times at Loungers at the moment. Whilst the Lounge model very much remains a secondary high street, suburban model we have enjoyed considerable success in mixed used schemes in Plymouth and more recently in New Brighton – and where we feel that the Lounge concept is well suited to a scheme we’re keen to open sites”. The group is also thought to be close to closing out a number of deals in the north west as well as negotiating on a couple of sites in Cornwall as it looks to reach its target of opening 12 sites in 2013. Loungers will open its 33rd site, Bosco Lounge, in Woodley on May 3rd.

Jamie Oliver lines up third Australia opening; Jamie’s Italian to plead guilty to serving ‘not of the nature demanded by purchaser’: Jamie Oliver is to open a third restaurant in Australia – this time in the capital of Canberra. He said: “I’m thrilled that our Jamie’s Italian restaurants in Australia are going down a storm – we started out in Sydney and are still going strong, we’ve recently opened to a fantastic reception in Perth, and Canberra is next on the list.” Meanwhile, Jamie’s Italian will plead guilty to serving a customer a meal containing gluten after she requested non-gluten. Kristy Richardson asked staff at Jamie’s Italian in Portsmouth three times for non-gluten tagliatelle. But she was served normal pasta — which left her vomiting for days and weak for months. Jamie’s Italian will plead guilty next month to “selling food not of the nature and quality demanded by the purchaser”. Richardson has already been awarded £2,500 in a civil case. A spokesman for Jamie’s Italian Restaurant said: “We deeply regret the illness suffered and will enter a guilty plea.”

Administrator appointed to budget hotel group: Simon Thomas and Shelley Bullman of insolvency and restructuring firm Moorfields Corporate Recovery have been appointed administrators of three-strong Restover Lodge. The independent budget hotel group has three locations across the UK in Peterborough, Doncaster and Rotherham. Moorfields will continue to trade the hotels to ‘maintain their business and protect value whilst they are marketed for sale’. Interested parties should contact Moorfields Corporate Recovery LLP on 0207 186 1144 for further details.

Ed’s Easy Diner to open at Gloucester Quays: Ed’s Easy Diner is to open a site at Gloucester Quays in June. It will be located in the new restaurant area close to the planned cinema. Ed’s Easy Diner already has 21 outlets in the UK and one in South Africa. Managing director Andrew Guy said: “Gloucester Quay Outlet was a natural choice for us and we are delighted to further be complementing an already growing catering offer within the centre.”

Douglas Jack – statutory code not good for sentiment: Numis Securities analyst Douglas Jack has argued that the proposed statutory code for tenanted pub companies is not good for sentiment. He said: “Any changes would require the approval of the Chancellor and Prime Minister. Given this, the OFT’s conclusions and the operators’ compliance with the existing Code, financial risk should be limited, but these reviews are never good for sentiment. The impact assessment also fails to reflect higher rents in the free-of-tie market, as reflected by Wellington (a free-of-tie company) charging an average rent of £33,000 versus Punch Taverns’ £27,000 and Enterprise Inns’ £31,000. Given the relative quality of these estates, this is consistent with the OFT’s conclusion (in 2011) that tied tenants are no worse off than free-of-tie tenants.”

Greene King’s Rooney Anand – self-regulation is the best route: Rooney Anand, chief executive of Greene King, has reported that his company introduced its own code of practice 15 years ago and the “unnecessary” statutory code would have negative consequences for the UK pub industry. He added: “We will contribute fully to the consultation outlining our position that responsible self-regulation is in the best long-term interests of both licensees and landlords.”

Heineken reports 8.7% volume decline in western Europe in the first quarter: Brewer Heineken has reported volume decline of 8.7% in the first quarter. The company said: “Severe cold and wet weather conditions across key markets were compounded by the difficult economic conditions and government-imposed austerity measures which continued to impede consumer spending. Volume in the UK, Italy, Netherlands and Spain all declined in the mid-to-high single digits. The first quarter is seasonally less significant in terms of volume and profit contribution. In 2012, the first quarter represented 21% of consolidated beer volume and considerably less in terms of profit contribution.”

Pieminister set to open in Manchester’s Smithfield Buildings: Pieminister, the gourmet food brand will take a ground floor 728 square foot unit at the Smithfield Buildings scheme, which is based in Manchester’s Northern Quarter. Pieminister’s Graham White said: “We are thrilled to have anchored the brand in Manchester. The Northern Quarter is absolutely the right place for Pieminister and the Smithfield Building with its existing culinary mix is the perfect context.” Claire McAllister-Ince of Urban Splash said: “Pieminister is a fantastic UK brand and we are thrilled to have secured its first Manchester venture within one of our buildings. Smithfield’s already got a great retail and food mix and this is really going to add to the offering.”

Pizza Hut franchisee opens fourth site – plans fifth: Pizza Hut franchisee Lee Humphries has opened his fourth site in Ilkeston – he started out as a part time delivery boy for the firm at 16. Lee and his wife Sarah have opened stores in Mansfield, Sutton-in-Ashfield and Hucknall and now plan to open one in Chesterfield.

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