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Mon 13th May 2013 - Orchid, Punch and Wagamama

Story of the day:

Hertfordshire multi-site pub and restaurant operators host MPs at ‘sector issues’ lunch: Three award-winning Hertfordshire multi-site pub and restaurant operators, who employ 500 people between them, have hosted two local Conservative MPs, Peter Lilley and solicitor general Oliver Heald, at a lunch where they set out key issues facing the sector. The lunch was held last Friday at Anglian Country Inn’s Hermitage Road site in Hitchin. It was organised by Anglian’s owners Cliff and James Nye and attended by Oakman Inns and Restaurants founder and chief executive Peter Borg-Neal and Salisbury Pubs founder Becky Salisbury. Among the issues discussed was the jobs creation potential of a reduction in VAT in the pub and restaurant sector – and the inequality between VAT currently charged on supermarket food compared to out-of-home food. Also attending the lunch was ALMR chief executive Nick Bish. “This was an excellent piece of direct lobbying organised by Cliff and James where the powerful arguments around a VAT reduction were explained,” he said. “It was clear that neither MP was conversant with the arguments for lower VAT before the lunch but certainly went away with a much better understanding. There was some support expressed for the argument when it was explained as, essentially, a level playing field scenario.” Propel Info managing director Paul Charity, who attended the lunch, said: “Hosting the lunch at Hermitage Road provided the MPs with an example of how the lines between restaurants and pubs have become blurred. Operators pointed out there is still lower eating out spend in the UK compared to the US - and targeted help for the sector in terms of lower VAT would create many hundreds of thousands of jobs.”

Industry news:

Tim Martin provides recipe for success: JD Wetherspoon founder Tim Martin has given Management Today magazine his recipe for success. He said: “It’s the thousand components. We’re trying to work on the nuts and bolts and get a small advantage. Sir Dave Brailsford (head of the Tour de France-winning Sky cycling team) calls it the ‘aggregation of marginal advantage’ – it’s a bit poncy, but it’s what counts over the long run.”

McDonald’s drops premium product with low margins: McDonald’s in the US has removed its premium Angus Third Pounder burger, priced at $4.39, from menus. Analyst Howard Penney, managing director of Hedgeye Risk Management, said the menu item probably suffered compressed margins as beef prices went up – and had lower margin than the company’s Quarter Pounder product. “They can’t raise prices at the high end,” Penney said. “They don’t have that pricing flexibility. I imagine the margins compressed to the point where they just had to get rid of it.”

US beer market sees growth for craft brewers: The Economist magazine has argued that the beer market in the US “increasingly resembles that of the pre-Prohibition era, when smaller, regional breweries dotted the map”. It added: “Such is the demand for good-tasting beer that, on average, more than one new brewery opened every day last year. Small and independent breweries have thrived during the recession and its aftermath, taking market share away from traditional brands like Budweiser and Miller Lite. According to Beer Marketer’s Insights, a trade publication, craft beer has grown over 13% by volume in each of the past three years. America’s two biggest brewers, Anheuser-Busch and MillerCoors, still account for around three-quarters of the domestic market, to craft’s 6.7%. But even they have noticed the change in consumer tastes. Whereas sales of their big brands have dropped off, gains have been made by offerings derisively called “crafty beer”, which look and taste like craft brews.”

Consumers throw away 18 million processed meals: Consumers have thrown away 18 million processed meals since the start of the horse meat scandal. 24% of Britons say they have cut down on the amount of processed food they eat, according to a survey of 2,000 adults. The survey, commissioned by Tefal, found that 30% of those questioned were put off processed meals by the horse meat revelations. Fruit and vegetables are all making a comeback at the dinner table, with apples, garden peas, cauliflower and cabbage all growing in popularity.

Company news:

Mail on Sunday – Punch talks over debt restructure hit wall: The Mail on Sunday has claimed that talks with bondholders over the Punch Taverns’ proposed debt restructure are approaching stalemate. The newspaper has claimed that should no resolution be found, Punch could default on its repayments and go into administration, which could lead to the break-up of the company. Punch is currently supporting its securitisations with payments of about £2m per month – otherwise they would be breaching their covenants. One shareholder told the newspaper that talks with bondholders were “slow and tortuous”. He added: “The company could end up being forced down a pre-pack route, which would wipe out the shareholders.” 

Orchid like-for-likes up 7% on first May Bank Holiday: Orchid Pub Company has reported like-for-like sales were up 7% on the previous year during the first May Bank Holiday weekend. Chief executive Rufus Hall reported that its Station in Guiseley pub hit a company record of £20,000 net takings in the day with a music festival in the pub car park – it featured nine bands across the day and more than £2,000 was raised for local charities.

Craig Lewis opens his first Tiger Bills franchise: Craig Lewis, the former Greene King operations director and Pubmaster senior operations manager, opened his first Tiger Bills franchise in Birmingham at the weekend, with his second opening due very shortly in his home town of Worcester. He said: “It is really exciting to be bringing the Tiger Bills dining experience to Birmingham and then to my home town. I have lived in Worcester for 25 years and feel passionately that Tiger Bills will really add something to the city and I also believe it is ideally suited to Birmingham too.” Birmingham Tiger Bills is located just off Broad Street - an existing restaurant has been converted to the brand.

Luminar – we’re now looking to acquire sites: Nightclub company Luminar is now looking to acquire sites. The company, which has 18 freehold sites, is close to finalising the assignments of the few remaining leases within its 56 strong estate – and has acquired a nightclub in Guildford. Chief executive Peter Marks said: “The lease assignments we have negotiated and settled demonstrate the increasing confidence landlords have in the new Luminar Group. They have been impressed that we have undertaken numerous high value refurbishments around the estate - 14 sites have been completed to date, with a further 18 committed to over the coming year - at a time when few other late night operators are able to make the same level of investment. In the past 12 months we have been focused on transferring leases across to The Luminar Group, refurbishing and refreshing clubs that had not had any significant investment in a considerable number of years. We have also acquired a nightclub in Guildford and are also looking at other possible acquisitions. Additionally, we have seen improvements in the nightclubs’ performance, where the former owners had for a number of years overseen significant decline. The Luminar Group has shown overall 14% uplift in sales over Easter building on a successful Christmas which delivered 15.5% annual growth.”

Sceptre Leisure secures £20m refinance package: Sceptre Leisure, the UK’s second-largest provider of coin-operated machines, has secured a £20m refinance package to support its next phase of growth. Established in 1998 by Ken Turner, Sceptre has grown to become one of the UK’s largest businesses specialising in the rental and operation of coin operated amusement equipment located in pubs and other leisure businesses across the UK. Turner said: “We are delighted to be working with Chenavari’s UK Private Credit team at this exciting juncture of Sceptre’s growth. With Chenavari’s support, Sceptre is in a strong position to continue to provide its first class service to its existing customer base and exploit further growth opportunities in the UK market.”

WaverleyTBS administrator earns £3.5m: Deloitte, the administrator of collapsed wholesaler WaverleyTBS, has earned £3,537,104 in the six months since it was appointed. Deloitte’s administration is due to continue until the autumn but it expected this might need to be extended. Unsecured creditors, which include trade creditors owed £37,935,000, are set to receive between 4.3p and 7.6p in the pound. The administrator reported that the WaverleyTBS freehold site in Gateshead is still being marketed. A sale was agreed in February with a non-refundable deposit of £75,000 paid but the sale failed to complete. Waverley’s leasehold property was listed at auction in February this year but failed to sell, which “may be due to the onerous lease terms”.

Moto makes £8.9m provision for Travelodge sites: Motorway service station provider Moto has made a £8.9m provision in the wake of Travelodge’s restructure last year which saw the company exit five Moto sites. The provision covers the loss of rent versus future anticipated profit over the course of onerous leases, which run until 2025. Moto is finalising a management contract that will involve the sites being managed on Moto’s behalf on a profit share basis that is “anticipated to be lower than the previous rent”. Moto reported adjusted PBITDA of £77.2m(2011: £77m) on turnover of £849.5m (2011: £864.4m) in the year to 26 December 2012. Operating profit was £38,395,000 (2011: £56,041,000) but the company lost £75,529,000 (2011: £48,444,000) after an interest bill of £114,193,000 (2011: £106,538,000). The company added in a Companies House filing: “The New Year has started well for Moto and directors expect to build the momentum in 2013.”

Wagamama set to replace Waterstone’s in Maidstone: Wagamama has applied to open a new site to replace a Waterstone’s in Maidstone. Agent Advoco Planning has applied for a change of use so that they can establish a 90-cover restaurant, employing 32 staff. The application also specifies that the Waterstone’s branch is due to close, adding: “Waterstones vacation of the unit is a binding commitment, which is not prompted by this planning application.”

Wayne Brown – we remain positive on Restaurant Group with strong cinema attendance: Leisure analyst Wayne Brown, of Canaccord Genuity, has issue a “Buy” note on Restaurant Group shares, with a Price Target of 450p, ahead of first quarter update this Wednesday (15 May). He said: “The first eight weeks of this period was strong with like-for-like sales up 6.5% and whilst comps for the 19 weeks rise to +4%, we see a number of reasons to remain very positive. A strong UK box office performance is helpful and whilst it is not a primary driver of footfall it does support trading. Recent industry data suggests that weekend box office revenues are 13% ahead of last year. This data does not include the release of Iron Man 3, which has been the strongest film opening year-to-date. One should also not easily forget that the film slate from May to August last year was very poor due to the Euro’s, Queen’s Jubilee and Olympics. This provides a platform/catalyst from already strong momentum. The structural dynamics are favourable in terms of the shift away from the high street to out-of-town leisure and retail parks. Restaurant Group remains best-positioned to take advantage of this trend with many landlords converting existing retail space to leisure activity. The group’s newest brand, Coast to Coast, is just at the start of its roll-out. We see this brand could build out to an estate of 50 restaurants by 2016/17, which would add £11m to EBIT”.

PizzaExpress survey finds secret to a career in the kitchen: A study carried out by PizzaExpress has found the secret to becoming a top chef is serving a basic meal by the age of six. A third of British chefs - 31% - reported that they served up their first dish while they were still at primary school. The same percentage reported that beans on toast was the first dish they prepared. Almost half of professional cooks in the UK - 44% - said it was their mother who inspired them to experiment with food in the kitchen. 

Antic to open The Provenance in Colliers Wood: Antic, the pub operator led by Anthony Thomas, will open The Provenance in Colliers Wood, formerly known as The Prince, on 30 May. A spokesman said: “The pub will offer everything you have come to expect from an Antic pub - great ales, many sourced from local south London brewers, a kitchen serving up delicious seasonal fresh dishes and quirky, non intrusive entertainment ranging from the ever popular pub quiz to acoustic acts and ale festivals.”

McDonald’s seeks to highlight supply chain quality by recruiting quality scouts: Rugby star Phil Vickery is kicking off McDonald’s search for a team of ‘Quality Scouts’. The restaurant chain wants to assemble a team of members of the public to investigate how some of its most famous food is made. Phil Vickery – the son of a dairy farmer and a celebrity Masterchef winner a couple of years ago – will help choose the team. McDonald’s says customers have become more interested in where the food they buy comes from and so the Quality Scouts will investigate supply chains from some of the 17,500 British and Irish farms that supply the restaurant chain with ingredients. McDonald’s aims to publish a report revealing their findings later this year. To apply to become a Quality Scout, visit www.whatmakesmcdonalds.co.uk. Applications are open until Sunday 16 June 2013, and interviews will take place this summer.

Nando’s Manchester restaurants in cheeky tribute to Alex Ferguson: Nine restaurants in the Nando’s chain stayed open five minutes late last Wednesday night in honour of the announcement of Sir Alex Ferguson’s retirement after 26 years as the manager of Manchester United. The move was a cheeky reference to the so-called Fergie Time – the extra time added at the end of a match that so often was just long enough to allow the team to score a winning goal. The chicken brand announced on its website: “So, after 26 years in charge, Sir Alex Ferguson is finally calling it a day at Manchester United. Now he can spend time enjoying the finer things in life – golf, extended holidays, and helpings of Peri-Peri chicken. And what better way to celebrate the legend that is Sir Alex, by keeping our Manchester restaurants open for an extra five minutes this evening. We’re calling it #NandosFergieTime.”

Leaf bar to open second city venue in Liverpool – with seating conditions: Leaf bar has been given the go-ahead to open a second site, in Liverpool’s West Africa House, on the condition it provides enough tables and chairs for customers to sit down while they drink. The condition is the first of its kind to be imposed on a premises in Liverpool in a bid to prevent “vertical drinking”. At a licensing committee hearing chairman Christine Banks said the venture – which would see the premises run throughout the day as a cafe and tea room and until 2am as a bar and function room – would be granted a licence subject to the seating conditions.

Cains makes 38 redundant as it ends own label brewing and canning: Liverpool brewery Cains has made 38 staff redundant after closing its supermarket own label brewing and canning operation. The move comes as it prepares to submit plans for a multi-million pound tourism, leisure and retail scheme at its city centre site. It is intended that the Cains brand and pub operations are unaffected by the move, which follows increased competition in the supermarket sector. Managing director Sudarghara Dusanj said: “The own label brewing and canning business for the supermarket industry has been deteriorating for some time because of competition from modern, purpose-built operations, many of them overseas. We have been working with our professional advisors in an attempt to restructure and continue this part of the business but it has not been possible. The company will be submitting plans in the summer for a £50m scheme to develop a national visitor destination which will create 800 jobs. The scheme, called Brewery Village, would see the restoration of the historic Grade II listed building to its former glory, housing the traditional Cains craft brewery and tour with a spectacular ‘Sky Bar’ in the roof which would offer views over the city and the River Mersey. The building would also house a 100-room boutique hotel, digital work studios and a large open plan delicatessen-style food market and restaurant for independent artisan producers to make and sell their produce on site. There would also be a spa and gym and function rooms. The existing historic Brewery Tap pub would be restored and retained and a four-screen independent art-house cinema, separate food store, high quality apartments and car parking would be created.” If consent is granted work would start next Spring.

Starbucks plan to expand retail business globally: Starbucks has expanded its partnership with Green Mountain Coffee Roasters for the production of K-Cup packs, tripling the number of brands available for the single-cup platform, the company said. The new five-year agreement comes as the Seattle-based coffee giant positions itself to take its consumer packaged goods division global. Last week, Starbucks said it was restructuring management to set up growth for its retail business overseas. “Starbucks’ new agreement with Green Mountain strengthens our leadership position in the premium single-cup category, the segment of our industry that has grown nine times faster than the overall coffee category during the past year and a category that now accounts for more than 25% of total coffee sales in grocery,” Starbucks chief executive Howard Schultz said. “The new agreement also affords us the opportunity to expand our successful K-Cup and Vue pack portfolio of products and brands beyond North America and to market them on a truly global scale over time,” he added.

Whitbread boss earns £3.4m: Whitbread chief executive Andy Harrison earned £3.4m in cash and shares last year. His basic salary of £717,000 was topped up by an increase in his bonus from £546,000 to £897,000 – his package the previous year was worth £1.4m. Head of hotels and restaurants Patrick Dempsey earned £1,624,258 compared to £1,661,356 the year before and head of Costa Coffee Christopher Roger earned £2,202,256 compared to £2,051,576 the year before. Nicholas Cadbury joined the board on November last year on a salary of £460,000 per annum.

Tuk Cho launches summer menu: Tuk Cho, Mitchells & Butler Asian street food brand with one site in Ealing, has launched new dishes on its summer menu. These include: chumni ribs Cambodia - pork ribs marinated and served with a sweet soy and star anise dipping sauce; maphrao kung Thailand - wok fried prawns with young coconut, asian aubergine, chilli, bamboo shoots, baby corn and lime leaf; sua Gai Laos - grilled chicken breast with Chinese leaves, carrot, mint, ginger, chilli and lemongrass topped with sesame seeds.

Brewdog launches delivery service in London – with plans to roll- it out across the UK: Scottish brewer and retailer Brewdog has launched Brewdog London Direct, aiming to deliver craft beer to customers with a promise to deliver within 24 hours. Its website states: “With almost 35 local craft beer breweries, small specialist beer bars and restaurants getting in on the hoppy action too, London has well and truly signed up to the craft beer revolution. In support of this, we’ve taken a look at what we can do to help anyone who’s based in London serve more top notch craft beer to their customers. Say hello to Brewdog London Direct – a brand new innovative service aimed to deliver craft beer faster as well as providing retailers with much needed flexibility. All the ordering is done online. Just pick what you want and when you want it delivered on our new www.brewdogdirect.com website. This is a brand new business model - a new type of beer distributorship that puts the power into the hands of the customers and drinkers. Order what you want, when you want to be delivered within 24 hours at a time that suits your business!”

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