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Fri 26th Apr 2013 - Giraffe, Peach Pub Company and Spirit

Story of the day:

Spirit reports Ebitda per pub hits £187,000 per annum – set to overtake JD Wetherspoon: Spirit Pub Company has reported Ebitda per managed pub has hit £187,000 pre central overhead, up 35% since 2010. The figure places it just behind JD Wetherspoon, which reported site Ebitda of £194,900 in 2012 and is on track to hit £181,800 this full year if its first half performance is repeated in the second half. Average weekly turnover is now £17,000 per week at Spirit managed, which is up £1,900 since 2010. Return on investment is above the 25% hurdle and improving. The company said that it is working on a refinement of its brand propositions with a smaller version of its Flaming Grill brand in trial. There would be “further premiumisation of the Chef & Brewer and Taylor Walker brands”. In addition Spirit will “infill” with more Wacky Warehouse installations and some new-builds. The company undertook 36 John Barras conversions, 11 Fayre & Square and three Taylor schemes in its first half. The company reported that staff turnover was now down by 50%. Of the leased division, the company said 80% of the estate is now ‘set up for success’ with the ‘right license and the right concept’. A total of nine franchise sites are in trial, mostly as John Barras, with ‘promising early signs for both Spirit and its franchisees’.

Industry news:

Operators and investors – attitude to property has changed: A panel of operators and investors has claimed that attitudes to freehold property have changed in recent years. Sector investor Luke Johnson said that the “bricks and mortars is not as solid” as people think. He pointed out that some of the ‘colossal value destruction’ of recent years has been based on the ‘undeniable value of freehold property that’s not always there’. Peter Hansen, founder of Sapient Corporate Finance, who chaired the discussion, said: “There is much greater acceptance today of the role that leaseholds have to play in businesses than there would have been even five years ago, ten years ago, as long as the leases are not onerous and account for too much of the Ebitda.” Crispin Tweddell, of Piper Private Equity, which has investments in Loungers and Be At One, said: ”Why be a property company as well as an operator?” Tweddell said that he would be concerned if Loungers founder Alex Reilley diverted from its leasehold model and wanted to start acquiring freeholds. Johnson also pointed out that the growing popularity of leisure and retail parks - and acquiring a freehold in these situations is impossible. Reilley added: “Retail seems to have got its head around leasehold businesses.” The panel discussion took place at the Association of Licensed Multiple Retailers Conference. 

Luke Johnson – Google is a gigantic parasite: Sector investor Luke Johnson has criticised Google for exploiting the creativity of others. Writing in The Daily Mail, he said: “Essentially, Google is a gigantic parasite that makes a fortune from exploiting the creativity and entrepreneurship of others. Its search engines do not actually make anything; they just take advantage of the achievements of others. Sadly, Britain is particularly vulnerable to Google’s predations in this regard, since our creative industries are one of the fields in which we are world leaders. Google’s business model means that it siphons off huge amounts of advertising revenue that would otherwise go to genuine creators. The result is that the cultural economy suffers.”

Social stigma of eating alone on the wane thanks to technology: A survey by O2 has found that consumers are far less anxious about eating out in a restaurant alone if they can check e-mails and connect with friends on Facebook. Whether a pub has Wi-Fi is now ranked more important than its atmosphere. One in seven consumers now insist that Wi-Fi access is ‘crucial’. O2’s Gavin Franks said: “People are much happier to dine alone if they can busy themselves online, whether it’s checking their e-mails or gaming.”

Company news:

Peach Pub Company lines up three more openings; like-for-likes turn positive: Peach Pub Company, led by Lee Cash and Hamish Stoddart, is lining up three more sites as it aims to open as many as four sites in 2013. The company will re-open a Spirit Chef & Brewer site, The Chequers Chef & Brewer in Eversley Cross, near Hook, Hampshire – a transfer from the managed to leased division – in June after a £200,000 refurbishment. Cash told Propel: “We worked closely with (leased division head) Chris Welham at Greene King and created a good relationship with him.” Peach opened a single site in 2012, its fourth Greene King venue, The Star and Garter in Leamington Spa, but is now at heads-of-terms stage on a second site for 2013 and there is a third site it is in negotiations on. Peach saw negative like-for-likes in 2012 but has enjoyed stronger sales month-by-month as 2013 has progressed. “We’ve started to go green again,” said Cash. Staff are rewarded with a trip that is linked to company performance. “It’s Spain this year if we hit targets – we’ll do something else that’s fun if not,” said Cash.

Miller & Carter introduces free sauces on new menu: Miller & Carter, the 26-strong steakhouse brand owned by Mitchells & Butlers, has introduced free sauces with any steak choice as part of its new menu. New on the day-time menu is French bistro classic steak frites and Gloucester Old Spot sausages with caramelised onion mash. Lamb cutlets and calves’ liver are new on the evening menu and there’s a new side dish, mac and cheese.

Geof Collyer upgrades Whitbread shares to ‘buy’: Deutsche Bank analyst Geof Collyer has upgraded Whitbread’s shares to ‘Buy’ on prospects of the company returning capital to shareholders. He said: “We see the self-help element of Whitbread’s long term growth story as fundamentally appealing, providing a significant degree of comfort for our forecasts over the next five years. Whilst we do not at this juncture see any material mergers and acquisitions activity on the horizon for the group, it seems logical that the Board might be tempted to join Accor and IHG in returning capital to shareholders. We see the possibilities extending to as much as 27% of the current equity value over the next four years if the group sticks to its self-imposed gearing guidelines. We have raised our target price from 2,710p to 2,920p and upgraded from Hold to Buy.”

Marston’s is negotiations to let Que Pasa in Taunton to nightclub operator: Midlands-based Marston’s is in talks to let its empty Que Pasa site in Taunton to a nightclub operator. The town’s Bliss nightclub venue, operated by Yellowhammer, closed earlier this year and a JD Wetherspoon pub in the town has been charging £1 for admission after 10pm on a Saturday night. An application has been submitted to extend trading hours at the venue, closed since 2009, by one hour to 3.30am from Monday to Sunday. Alterations include replacing the kitchen with a dance floor and seating. A Marston’s spokesman told Propel: “This is a leasehold site that Marston’s isn’t currently trading. We are in negotiations with a nightclub operator to sub-let the property.”

Technomic – US operators building brand loyalty with secret menus: Insights firm Technomic has reported US restaurant brands, including Panera Bread, are building brand loyalty with secret menus. Technomic stated: “For consumers, ordering off a “secret” menu, promoted mostly through word of mouth, means gaining instant access to an exclusive club of in-the-know guests. For operators, it’s one of the cheapest marketing and brand-building tools around. A secret menu prompts enthusiastic fans to take to social media and other online forums to share – and sometimes brag about – the times they’ve gone rogue with their order. Panera’s hidden menu takes “stealth health” to a new level. For in-the-know Panera guests looking for more-healthful choices, the new menu gives them new options – and in so doing can help spur that invaluable brand loyalty.”

Richard Branson attacks Pussy Drinks advert ban: Virgin founder Richard Branson has attacked a ban on an advert for Pussy Drinks. In his blog, he wrote: “A new advertisement from Pussy Drinks has been banned by the Advertising Standards Agency (ASA) for causing offence. The strapline for the energy drinks posters states: “The drink’s pure, it’s your mind that’s the problem. The authorities always seem to play into the hands of those they are trying to censor in cases such as this. All banning an advertisement, or a song, or a film, ever achieves is tonnes of free publicity for the company and many more people seeing their product.”

Starbucks reports 6% like-for-like rise in sales but 2% down in Europe: Starbucks increased sales by 6% in its latest quarter. “While there’s been some choppiness that others have been reporting out there, I think what’s remarkable about our results is the steadiness of our (like-for-like) growth in the US for example,” Starbucks chief financial officer Troy Alstead said. Sales at sites open at least 13 months, also rose 6% globally. However, sales were up 8% in China but down 2% down in Europe, the Middle East and Africa. The US contributes around 75% of Starbucks’ revenue. The company reported a 26% rise in quarterly net income to $390.4m.

Trade accountant to open venue: Odette Gibson, trade accountant at Volensis, is to open a site Bar Titania on Charing Cross Road. Gibson said: “Having initially been approached by a new client to help them close down their unsuccessful bar and effectively limit damage, I felt that the site had huge potential but needed refurbishment and a complete overhaul of operations to create a luxurious sophisticated venue – a departure from the existing operation. The client had lost heart and, in truth, didn’t have the expertise to make changes necessary, so I suggested that rather than walk away and lose everything, that we go into partnership and get the offer right”. Volensis now has a controlling interest in the bar and has started the turn-round to create a gay friendly concept. Bar Titania will open on 16 May.

Greene King faces traditional sign opposition in Abingdon: Greene King is facing opposition from conservationists and real ale enthusiasts campaigning to protect Abingdon’s traditional pub signs. Greene King wants to remove pictorial signs from pubs and replace them with ones featuring different images and corporate logos. But opponents say this will detract from the town’s history and character and make it a less interesting place to visit. Greene King has put in applications to amend pub signs at The White Horse in Ock Street, at The Boundary House in Oxford Road, and at The Midget in Midget Close.

Giraffe introduces summer menu: Giraffe, the restaurant business acquired by Tesco for £50m, has launched its summer menu. New dishes include yakitori asparagus with wasabi and sesame crunch and an anti “tapas” sharing platter, roasted vegetable and black bean burrito and Jamaican Jerk Spiced Chicken as main course dishes. New desserts include lemon meringue “drizzle” sundae and chocolate eclair cake with dark chocolate sauce. The breakfast menu includes a new choice omelettes and the croque “Giraffe” – its version of toastie.

Club Cardio launches at Luminar’s Oceania in Kingston: 24 year-old entrepreneur Irina Alionte has partnered nightclub company Luminar in launching “Club Cardio” at its Kingston Oceania venue. Club Cardio aims to combine exercise with current dance trends in otherwise unused nightclub venues. The Club Cardio workout party experience aims to help even the gym-shy people of the UK feel more comfortable and more confident in moving. Alionte said: “I used to notice how self-conscious many people felt in a gym environment. The bright lights and the mirrors in aerobic studios gave me the feeling that everyone is checking on me. But I’ve always felt at ease on the dance floor, so I decided to propel exercise to the non-judgmental setting of a nightclub!”

Ammanford nightclub blocked by Welsh Assembly: Plans for a new nightclub in the centre of Ammanford have been blocked by the Welsh Assembly. Carmarthenshire county council initially refused proposals for a music venue at 18 Wind Street, which would have seen the snooker club that currently occupies the site moved to the ground floor, last October. Following rejection of the scheme by county planners, applicant David Alan James appealed to the Welsh Assembly in a bid to have the ruling overturned. However, that too has now been refused.

Former Giraffe and Wagamama marketing chief Vicki O’Neill praises restaurant for use of Twitter: Former Wagamama and Giraffe marketing chief Vicki O’Neill has praised restaurant brands for their use of Twitter. She told Brand Republic: “Pick a restaurant you know and the chances are they’ll be on Twitter. It’s the perfect platform to communicate to existing and potential customers. There are restaurants, bars and cafes out there generating unprecedented loyalty and kudos via Twitter, therefore securing huge amounts of positive publicity. Just have a look at Byron, Patisserie Valerie, Tortilla, Vapiano, Hawksmoor, Gail’s Bakery and The Ship pub in Wandsworth – all with a loyal Twitter following and a fun, engaging, informative feed which without doubt helps create brand awareness and drives people in spending money. The key with tweeting for restaurants is the same as it is for any business - don’t sell. Just talk, listen, engage and the sales will follow.”

The Original Bowling Company reports strong performance: The Original Bowling Company Limited, operating 43 bowling centres under the Hollywood Bowl and AMF Bowling brands, has reported like-for-likes sales up 4.3% in the six months to 31 March 2013. The company stated: “Despite unhelpful trading conditions and adverse weather disruption, TOBC has continued its strong performance of the previous financial year, delivering continued growth, successfully opening its first new centre since 2010 and improving the quality of its portfolio.” Like-for-like centre Ebitda rose 14%. Total Ebitda after central costs was up 13%. Easter trading ‘comfortably exceeded last year’s record performance’.

Castell Developments buys Punch pub: Colwyn Bar based Castell Developments, which is developing Grwych Castle in Abergale as a luxury hotel and spa, has bought a historic pub, Tal y Cafn, in the Conwy Valley from Punch Taverns that has been closed for three years and will re-open it by the summer. Jason Sanderson, chief executive of Castell Developments, said: “We have already started work on the site, and hope to be granted our planning application from Conwy County Council very soon, so that we can reopen by mid summer. We wanted to buy the pub as it’s well known in the area, and the news that we have bought it seems to have gone down really well with the local people we’ve spoken to. We want Tal y Cafn to offer a menu filled with well priced, locally sourced produce, and to a place where locals can come in for a pint.”

Greene King pub re-opens with a smoking oven: A Greene King pub in Steyning, West Sussex, closed since January, re-opens today (26 April) as The White Horse Smokehouse and Grill. Business partners Craig Gillett and Kevin Boyd have taken on the tenancy from Greene King. Gillett said: “We have really tried to listen to what the people in Steyning want and they didn’t want a pizzeria in a pub. The pub has been refurbished with all floors sanded, chairs upholstered and a smoking oven has been installed in the kitchen which will produce platters of pulled pork and brisket of beef as well as hot smoked salmon for a summer salad.”

Pizza Hut wins gluten-free award: Pizza Hut has won an award for best gluten-free pizza at the Freefrom Food awards. The company won the award in the ‘manufactured for food service – savoury’ category. Chez Gawen, head of food at Pizza Hut, said: “We are thrilled to be recognised with this prestigious award, as it really reflects our commitment to providing good-quality menu choices for a range of customer dietary requirements.”

Whitbread plans £6.5m investment in Farnham: Whitbread will invest £6.5m in building a £6.5m 60-bedroom hotel and 200-cover Beefeater Grill restaurant on Guildford Road in Farnham. The site, next to the Farnham Retail Park, is currently occupied by businesses including Farnham Carriage Company, a second-hand car sales business. The leasehold site is one of five in the region included in Premier Inn’s ongoing national expansion plans. The others are in Farnborough, Fleet, Portsmouth and Wokingham. If planning consent is granted later this year, Whitbread hopes to open in 2014.

Soda nightclub to open second site in Swindon: Soda nightclub, which has operated in Cardiff for five years, will open a second site in Swindon today. General manager Chris Jaffa said: “There are three different dance floors with different music so it gives people the opportunity to wander about. Hopefully we can cater for everybody’s tastes.” It occupies the site of Tiger Bills in Newport Street, Old Town that closed last year, just three months after opening.

Drinks wholesaler goes into administration: A wholesaler of alcoholic and soft drinks turning over £12m per annum, based in Tameside, greater Manchester, has slipped into administration. Metropolitan Drinks Company, which was based in Dukinfield, supplied drinks to pubs, restaurants and nightclubs in the Greater Manchester area. It was founded in July 2005 and posted turnover of £7.3m in the year to September 2010, increasing to £12m in the 16 months to the end of 2011. Despite the revenue rise, the company posted a loss of £113,903 in that 16-month period with higher losses expected to come, according to administrators. Jason Elliott and Craig Johns, from the Manchester office of financial services firm Cowgill Holloway, have been appointed joint administrators. A statement from Cowgill Holloway said: “Subsequent losses are anticipated to be substantially higher. In March 2013, an external investor injected approximately £45,000 into the business. However, this has not alleviated creditor pressure. Furthermore, a number of creditors had elected to exercise their reservation of title clauses and recover unpaid stock and a number of customer orders were therefore not being fulfilled. As a result, the company could not continue to trade in its current form.” Administrators secured a pre-packaged sale of the stock and physical assets of the company to an unnamed shareholder.

Nick Pring and Malcolm Heap to leave Greene King today: The founders of Realpubs, Nick Pring and Malcolm Heap, are to leave Greene King today, two years after the Suffolk brewer and retailer acquired its 14 sites. The day of their departure sees the re-opening of The Grove in Ealing in the Reapubs format, the eighth conversion undertaken in the two-year integration period overseen by Pring and Heap. It is not known what Pring and Heap plan to do next but it is thought they will remain the sector. The next Greene King conversion will be the Grove in Surbiton, where work has begun prior to opening on 17 May. Greene King is also thought to be looking at acquisitions to add to its Realpubs estate. The departure of Pring and Heap will come three months after John Winder and Gary Douglas stepped down from the Cloverleaf pub restaurant business that Greene King acquired in January 2011. The expansion of Realpubs by Greene King since acquisition will mean it will have out-stripped both Loch Fyne and Cloverleaf in terms of site conversion numbers in the two-year post acquisition period. Greene King has also successfully expanded Realpubs’ trading locations with an opening in a Zone One London site last September – The King Stores in Bishopsgate. Other pubs within the Greene King estate converted to Realpubs include The Island Bar and Dining Room in Kensal Rise, a former Capital Pub Company site. Realpubs was sold to Greene King by management and Brockton Capital for £53.1m. 

Hall & Woodhouse freezes prices for the fifth year running: Dorset based family brewer Hall & Woodhouse has frozen the wholesale prices of its draught cask ale to licensees for the fifth year running. The company is also setting aside a £3 million budget to refurbish and repair pubs in its tenanted estate. Seven pubs have already enjoyed extensive refurbishments, to the combined value of £700,000, including the Harbour Inn, Axmouth and Barley Mow, Wimborne. Matt Kearsey, Hall & Woodhouse business partnerships director, said: “We are continuing our firm commitment to both cask ale and our Business Partners with these announcements. Not only are we ensuring that the feel-good factor of the budget continues, we’re also investing in the future of Hall & Woodhouse pubs.”

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