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Mon 29th Apr 2013 - Greene King, Richoux and Sir Terence Conran

Story of the day:

Greene King sells record 700,000 meals over Easter; achieves like-for-like sales growth every month except March: Greene King has reported like-for-like sales in its managed division rose 2.2% in the 51 weeks to 21 April 2013 – up every month except March. Chief executive Rooney Anand said: “Although trading conditions were more demanding in the second half of our financial year, our business has once again demonstrated its resilience and we have delivered good progress across all businesses. Our commitment to delivering industry-leading value, service and quality to our customers, supported by our strong retail brands and south east bias has driven another year of like-for-like sales growth and margin expansion. Easter was particularly strong this year. We sold a record 700,000 meals over the four-day period and delivered like-for-like cover growth of 5.2%. This drove like-for-like sales growth of 7.1%. Alongside strong underlying growth, we have made further strategic progress, adding an expected 33 new (managed) sites during the year, taking the retail estate to 987 sites by the year-end, and reducing the size of the (leased) estate by 108 sites to 1,272 sites. Despite the impact on trading and profitability caused by the extreme weather conditions in the second half of the year, we expect to meet external full year expectations for profit, cashflow and balance sheet, with continued improvement in group ROCE and a further reduction in group leverage.” The company added: “Like-for-like sales growth of 2.2% was made up of a very strong first half of the year and a slower second half. The second half was negatively impacted by a combination of tough comparatives and unusually poor weather. Despite these challenges, we achieved like-for-like growth in every month of the year except March.” The company will be opening its 200th Hungry Horse site, The Royal Horse, in Leamington Spa. Average EBITDA per pub in Pub Partners, its tenanted, franchised and leased business, is up 4.6%.

Industry news:

2,225 more coffee shops forecast by 2020: Allegra Strategies has forecast that there will 8,500 coffee shops in the UK by 2002 compared to 5,225 today. Whitbread, which owns Costa Coffee, is expected to upgrade its forecasts for Costa profit growth when it reports full-year numbers tomorrow. Liberum Capital Patrick Coffey said: “The target management set in 2011 was that by 2016 Costa generate £100m in EBIT. I expect the company to surpass its £100m target in less than two year so it seems logical that management will upgrade at the full-year results announcement.” 

Tenanted pub company consultation “a waste of government time”: Spirit chief executive Mike Tye has condemned the consultation on statutory regulation of tenanted pub companies as a “waste of government time”. Tye, whose company operates circa 450 leased pubs, reported that the company had not had a single dispute with a licensee leading to arbitration. He argued that the voluntary code had not been given enough time to work. A recent meeting with Chancellor George Osborne on 4 April had centred around a “growth and jobs” agenda, Tye reported. “Making it (an) uncertain (environment) for licensee and pubcos – that will constrain growth,” Tye said. He argued, with some emotion, that the consultation was a “waste of government time” before adding, “Not that I feel strongly about it.” (See bottom of e-mail for more Spirit news, including plans to grow its managed division to 1,200 sites)

Scientists sound soft drinks alert: A report by scientists at Imperial College London has shown that sweetened drinks can trigger type 2 diabetes. The scientists have called for sugar-rich soft drinks to carry cigarette style health warnings. A growing number of scientists believe it is sugar rather than fat that has sparked the current obesity crisis.

Waitrose wins Eurostar catering contract: Supermarket chain Waitrose has won the contract to supply ready meals, sandwiches and drinks on all Eurostar services to Europe. Eurostar head of on-board dining Julian Welham said: “Our new partnership with Waitrose will bring our customers the highest standards of refreshments whilst on the move.”

Beer volumes drop 5.5% in pubs in the first quarter of 2013; biggest drop since the last quarter of 2010: Beer sales in pubs dropped by 50 million pints, or 5.5% in the first quarter of 2013 compared to the same quarter in 2012 – the biggest drop since the final quarter of 2010. The off-trade saw a 0.1% increase in beer sales. The British Beer and Pub Association said pubs were hit by the long winter. “We would hope to see the benefits of the (duty) cut in second quarter sales, where brewers, pubs and pub goers will see beer tax rates at nearly 7% lower than they were due to be,” said chief executive Brigid Simmonds. “Beer has a very special place in pubs, and accounts for 68% of pub drink sales. The duty cut has seen brewers and pub companies passing on reductions to customers.”

Company news:

Glass Investments takes fourth Punch Taverns site: Glass Investments, the gastro-pub operator headed by Jasper Gorst, is to open its fourth Punch Taverns pub, the former Grand Union site in Ravenscroft Park. The venue will re-open as The Oak in mid-May after a joint investment with Punch. The offer will be based on its Oak in Westbourne Park, Notting Hill, which the company first opened in 2001. It also operates The Bear in Hampstead Village. Its third pub was added in mid 2012 with the acquisition of The Bird In Hand in West Kensington. Gorst secured a 20-year lease and undertook a total refit and it has emerged as an upscale pub/restaurant with a slightly different twist to the other two with a private dining room on the first floor. Grand Union surrendered the lease on Ravenscroft Park pub in October last year. At the time, Grand Union managing director Adam Marshall said: “The area wasn’t quite the right demographic and target market for us.” The venue operated as pop-up whisky and burger venue over Christmas.

Sir Terence Conran to roll-out British bakery café: Sir Terence Conran is to roll-out a chain of British bakery cafés in the wake of selling his 51% stake in D&D Restaurants. The Albion concept has been trialed at a site in Shoreditch – it offers its own food shop, an in-house bakery and a cake counter with an emphasis on British food and drink. A second site is lined up for of the ground floor of the NEO Bankside offering 160 covers. Conran said: “Albion has been a smash hit in Shoreditch and we believe it is a popular concept that will work well.”

Richoux plans fourth Dean’s Diner as it enters a growth phase: 14-strong Richoux is to open a fourth Dean’s Diner, its classic 1960s American diner, at Whiteley Village in Fareham next month, the company reported this morning. It plans to open a total of five new restaurants in 2013. It currently runs Dean’s Diners in Chatham, Port Solent and Braintree. The company reported turnover up 9.4% to £9.85m in the year to 30 December 2012. Net profit was £880,000. Chairman Philip Shotter said: “I am pleased to report the restructuring of the group’s property portfolio has now been completed and we now present financial results which represent the profitability of our existing restaurant estate. With a strong balance sheet in place, the group is well placed to enter a growth phase with a number of new openings across all of our Villagio, Dean’s Diner and Zippers brands planned in 2013.” The company raised £1.95m last October to fund expansion. It has four Richoux restaurant, six Villagios, with the most recent opening in Chiswick last month and one Zippers site.

La Tasca to make “many acquisitions” after adding New Brighton site; reports strongest sales since 2011: Spanish tapas concept La Tasca has moved on the front foot after a Company Voluntary Arrangement last year by picking up a site in Wirral’s booming New Brighton development. Chief executive Simon Wilkinson told Propel the new site would the “first acquisition of many” with the company achieving the “strongest sales since the management took over the operation in 2011”. La Tasca is taking over a site previously occupied by Brooklyn’s and will launch in May. Operators report exceptional trading at the Marine Point development in New Brighton. Prezzo boss Jonathan Kaye told Propel that its Prezzo site had done so well that it had added a Chimichanga at the development. Wilkinson said: “Marine Point is a first class leisure scheme and we are delighted to be opening a new restaurant in partnership with Neptune Investments. The north west is the heartland of La Tasca.” Marine Point is owned and operated by Neptune Investments, which is landlord at La Tasca’s Liverpool restaurant.

McDonald’s plan breakfast all day and delivery: McDonald’s has reported that it is considering serving breakfast all day, offering rewards to frequent diners and even delivering to homes and offices. In an interview with CNBC, chief executive Don Thompson said the world’s largest fast-food chain “has looked at breakfast across the day” and “innovative ways” to expand hours in the United States, noting that it’s already happened in other countries. “I think we’ll be seeing some of those things in the near future,” he said. Burger King already delivers in Washington, DC, Chicago, Houston, Los Angeles, Miami, New York City and San Francisco. Thompson admitted the company had been “a little bit late” to the growing desire for delivery, and he sees “big, big opportunity” for delivery, especially where drive-throughs don’t exist. Nearly 50% of McDonald’s are open 24 hours.

Bridgepoint in the box-seat to buy Cote: Private equity firm Bridgepoint is thought to be in pole position to buy 40-strong Cote, the brasserie chain owned by Richard Caring, having gone cold on the deal earlier, according to The Sunday Times. Bridgepoint has an existing investment in Pret A Manger.

Beefeater launches new Spring/Summer menu: Whitbread’s Beefeater Grill brand has launched its new menu. New dishes include steak or chicken nachos, the ultimate haddock and chips, wild or mild roast chicken (wild includes a chilli sauce and mild includes a lemon and herb sauce), a Beefeater steak salad and a mixed berry Eton mess sundae. New side dishes include macaroni cheese and cheese-topped sourdough bread. Burgers are served with the guarantee of 100% farm-assured UK and Irish beef.

Greggs reports like-for-likes down 4.4%: Greggs has reported like-for-likes down 4.4% in its first 17 weeks to 27 April. The company added: “The most recent two weeks indicate an underlying rate of like-for-like decline of around 1.5% reflecting in part the beginning of the weaker comparisons seen last year. We are continuing to experience lower footfall across much of the estate although average transaction values have increased marginally.”

Starbucks defends itself against obesity claim: Starbucks has defended itself after health minister Anna Soubry accused coffee chains of contributing to childhood obesity by serving large syrup-laden coffees topped with marshmallows and cream. A Starbucks spokesman pointed to the fact that the brand has “calorie boards in all its stores”, offers “increasingly offer healthy options”, and was an “early adopter” of the government’s Responsibility Deal initiative.

Realpubs opens The Grove in Ealing: Greene King opened its latest Realpubs site on Friday, The Grove in Ealing, a pub that was a traditional Irish drinking pub when it was first acquired. Kate Nicholls, the Association of Licensed Multiple Retailers (ALMR) strategy director, who attended the launch, said: “There is lots of subliminal messaging with an open pass, a zinc counter and white tiles – you can see fresh food is being served as soon as you walk in. One wall has been moved back to create an 80-cover dining area. Greene King looks to have got a cost-effective, subtle makeover – a lot of things have just been taken out, including a number of partition walls, to create an open, fresh feel. The pub hasn’t been gentrified, it’s just been tweaked and had Nick Pring and Malcolm Heap’s Realpubs magic sprinkled on it. Menu standard has gone up several notches and above all there’s an obvious customer focus from a re-energised staff. The Grove is an asset to Ealing and officially designated the ALMR’s local.”

Best Western Hotel forced into administration by competition from budget hotels: A hotel in Somerset which had been trading for more than 60 years entered administration after an attempt to sell adjoining land was prevented because of an issue regarding access to the site, a new report has revealed. The hotel, which operated under the Best Western brand, was impacted by budget hotels operating nearby as well as the issues caused by the economic downturn, according to the administrators. Graham Randall and Simon Girling of BDO were appointed joint administrators of The Shrubbery Hotel Ltd in Ilminster at the start of the year. Prior to the appointment of BDO, the hotel had been marketed for a guide price of £1.4m, but agent Christie + Co has now advised this should be reduced to £995,000. About £1.1m is owed to the company’s secured creditor NatWest, including more than £150,000 as an overdraft to continue trading while in administration. If the business and assets of the business are sold as a going concern, NatWest may be repaid in full and there may also be a distribution to unsecured creditors.

Frankie & Benny’s opens in Barrow today: The Restaurant Group’s Frankie & Benny’s brand opens in Barrow’s Hindpool retail park today. The restaurant has created 40 new jobs. David Kuchczynski, general manager at Frankie and Benny’s Barrow, said: “We are looking forward to welcoming the residents of Barrow through our doors to offer them a real taste of New York.’’ Frankie and Benny’s now has more than 200 sites nationwide.

Benugo set for July opening in Lincoln’s Inn Fields: Café concept Benugo will open in Lincoln’s Inn Fields this July, bringing al fresco dining to the historic gardens. Lincoln’s Inn Bar & Kitchen is opening on the site of a café that closed two years ago. The venue will be similar to the company’s existing Serpentine Bar & Kitchen in Hyde Park, with space for 64 diners inside and 24 outdoors. Benugo also operates restaurants at the British Museum, Natural History Museum, Westminster Abbey and at the British Film Institute on the Southbank. It will also operate a restaurant at the not-for-profit members club The House of St Barnabas when it opens in Soho this autumn.

Grand Union Group replaces Monster with Pussy: Grand Union Group, the seven-strong London company led by Adam Marshall, is to replace Monster energy drink with Pussy, the 100% ‘natural’ energy drink created by UK entrepreneur Jonnie Shearer. Pussy, which had an advert banned by the Advertising Standards Authority last week, has listings in Selfridges, Booker, Bestway, and Ocado, but has had a limited on-trade presence so far. Pussy, which has seen investment from Richard’s Branson’s children, Holly and Sam, was created by Shearer after he left university and is an energy drink made from botanical ingredients. Grand Union Group will serve it starting this Wednesday (1 May). Meanwhile, Grand Union has sold its Islington Upper Street site to Beranmoor, the operator of five unbranded London sites headed by Costa Tofan, off an asking price of £175,000 for the remainder of a 25-year Enterprise lease. The site will be refurbished in August and re-open in the style of Beranmoor’s Betsy Smith site in Kilburn.

Luminar wins more time over Oceania Kingston revocation after progress on crime reduction: Nightclub company Luminar has won two more months of time before it faces a hearing where it will try to overturn a licence revocation hanging over its super-club, Oceania, Kingston. The date of the licence review hearing has been postponed from May until 8 July and will give the club an opportunity to demonstrate further progress in reducing levels of crime. Luminar’s director of operations Tony Marshall said: “We’ve already made significant progress on the key commitments that we outlined and welcome the opportunity to have more time to build on initial successes.” In the last three months, there has been almost an 80% decrease in reported crimes of theft and there has only been two reported cases during April compared to 28 this time last year. The club has also implemented a major mobile phone safety campaign targeting students, which has helped to further reduce crime statistics. Crime involving acts of violence has also reduced significantly. Marshall added: “It’s fair to say that people are starting to recognise the efforts we have made.”

Prestbury Investments puts 24 Spirit pubs on the market: Nick Leslau’s Prestbury Investments has placed 24 freehold pubs tenanted by Spirit Pub Company on the market. The pubs have an asking price of £42.3m, producing £3.4m income per annum or a 8% yield for any prospective buyer. The pubs are being sold through CBRE with Spirit holding leases until 2044. The pubs are part of a package of 220 acquired in 2004 when Spirit was owned by private equity and a sale-and-leaseback was undertaken.

Better Fish reports turnover nears £7m: Better Fish, which operates five fish and chip shops in Yorkshire under the Wetherby Whaler brand, now including the original Harry Ramsden’s site in Guiseley, has reported turnover of £6,960,704 in the year ended 31 October 2012, up from £6,237,710 the year before. Profit before tax was £728,723 compared to £941,899 the year before. The company invested £500,000 re-opening the Guiseley Harry Ramsden’s, closed for six month, under its own brand during the year.

Spirit Pub Company news:

Mike Tye – our five-brand portfolio can take us to 1,200 sites: Chief executive Mike Tye has reported the company is now ready to acquire sites to add to its managed division. He said that its existing portfolio of five brands - John Barras, Flaming Grill, Fayre & Square, Chef & Brewer and Taylor Walker – would support growth by 400 sites to a 1,200-pub estate. He said: “We’ll be looking for sites to complement our existing brands. It will be a slow process but we’ll start to be actively looking. If small parcels of pubs come up we’ll look at it, but we won’t pay brand premiums. However, there is an opportunity for growth by buying assets to extend our brands.” 

Mike Tye - numbers already fantastic at super-premium site; three more planned: Chief executive Mike Tye has reported the numbers are already fantastic at its new “super-premium” site, The George in Haverstock Hill, which opened a few weeks ago. He told City analysts: “We’re very pleased by guest reaction at The George and we haven’t really promoted it. We plan to start work on three more very quickly. In early fiscal year 2014, we’ll be ready to take a roll-our decision.” Tye said the trial of the new super-premium pub was driven by the marketplace, which is “becoming more polarised between price and premium”. Tye said Taylor Walker and Chef & Brewer are “sort of premium and can go further” in developing a premiumised offer.

Talent development a focus: Tye reported that the company wanted to increase internal succession to pub manager position as from 60 to 75%. Additionally the company was “investing in enhancing leadership skills, starting with me”.

Warm weather improves April sales: Spirit has not provided any guidance on April sales. But Mike Tye told analysts: “I was jigging around the streets this morning when I saw the figures.” 

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