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Morning Briefing for pub, restaurant and food wervice operators

Wed 29th May 2013 - David Beckham, M&B and Tea Monkey

Story of the day:

Tim Martin – food sales are 50% of turnover at many recent openings: JD Wetherspoon founder Tim Martin has told Propel Info that food sales at the most recent 100 openings within the estate are a lot higher than the estate average of 32.5% of total sales - £10,855 a week on average sales per pub of £33,400 (including VAT). Martin reports that food sales at the most recent 100 openings average around 40 to 42% of total sales – and food sales have regularly hit 50% of total sales in a number of recent small town openings. One site in the suburbs of Leicester has seen food sales climb to 60% of turnover. The estate average of 32.5% has climbed by ten percentage points in a decade – a number of older pubs, opened in London suburbs in the early days of JD Wetherspoon expansion in the 1990s, have food sales at around the 20 to 25% of turnover mark. Martin told Propel: “One or two of our guys say our individual design at new sites may not have enough ‘pub’ about it. In some cases, pubs have reverted to our traditional trading pattern after a number of years. But for our last 100 pubs, food sales are around 40 to 42% of total sales. At our pubs opened in smaller towns, food turnover is not far off 50%. It’s a badge of honour nowadays to say your food sales are high. But you could say it’s an admission of defeat – that it’s increasingly difficult to compete (with the supermarkets) on drinks sales.” In the first half of JD Wetherspoon’s financial year, like-for-like food sales grew by 13.4% while bar sales were up 3.4%. Total food sales at JD Wetherspoon now stand at around £350m a year. 

Propel Info Opinion by Paul Charity: There is a degree of ambivalence in Tim Martin when he talks about burgeoning food sales at recent JD Wetherspoon openings. Food sales within the JD Wetherspoon estate stood at 23.2% of the total in 2003, a ratio that provides fatter drinks business margins. But Wetherspoon is evolving at a rate of knots, driven by customer demand. At least two-thirds of total turnover is now food or drinks consumed on a meal occasion. Wetherspoon has been successful in capturing more food sales within the past decade – food sales have doubled from circa £5,400 a week ten years ago. This is, quite simply, the direction of travel for the Wetherspoon estate – and it’s not impossible to imagine an estate average for food sales of around 45% in a decade’s time as the company continues to retro-fit older pubs. 

Industry news:

SABMiller recruits top Treasury policy advisor: Brewer SABMiller has recruited a former senior HM Treasury policy advisor. Stephanie Farr, who has been considering the sector’s case of reducing VAT to 5% during her two years in a senior policy role at the Treasury, joined SABMiller this month as its regulatory affairs tax manager. She also spent ten years at HM Revenue and Customs as a senior policy advisor. 

Property agent reports surge in premiums for prime West End sites: Property agent David Abramson, of Cedar Dean Gilmarc, has reported a surge in premiums for prime West End sites: He stated: “The resilience of the West End market seems to be continuing, with restaurateurs competing for sites in key locations such as Soho, Covent Garden, Fitzrovia and Mayfair. Ongoing success within these areas, coupled with the uncertainty of trading in locations outside the West End, are continuing to raise premiums, just as new leases become harder to secure. Recent examples of these premium deals include: Scotch Steak House, Wardour St, Soho, Leon, Old Compton Street, Soho, Giraffe, Frith Street, Soho, Automat, Dover Street, Mayfair and Long Acre Bar, Long Acre, Covent Garden. As the London restaurant revolution continues, it is hard to see an end to the rising premiums.” The assignment of the lease on Leong’s Legends restaurant in Chinatown is currently available through the agent for a premium of £310,000 – the rent is £140,000 per annum on a 2,153 square foot property.

David Beckham and Gordon Ramsay plan Las Vegas restaurant: David Beckham and Gordon Ramsay are opening a sports bar and grill in Las Vegas together, according to reports. The 38-year-old footballer - who recently retired - and TV chef have reportedly joined forces with business tycoon Steve Wynn to open a restaurant in his luxury hotel down the city’s Strip. Ramsay already has three restaurants in Vegas - a BurGR joint at Planet Hollywood, a steak house at Paris and a Pub & Grill at Caesar’s Palace. A source told The Sun newspaper: “The Strip has never seen such fierce competition for food, but Gordon’s places are full seven nights a week. He’s one of the best chefs in the world, so it’s only natural that Steve feels he should have a place in his hotel as it’s the most luxurious on The Strip. When you add David Beckham’s global status into the mix it has the potential to be the most talked about restaurant in Vegas.”

Bagel Nash letting means York shopping centre full for the first time in five years: York’s Coppergate shopping centre is fully let for the first time since the credit crunch hit in 2008. The centre, which has Fenwick’s as its flagship store, has let a 600 sq ft unit to Bagel Nash on a five-year lease and a 500 sq ft unit to Love Forever, also on a five-year lease. The two lettings mean that the entire 200,000 sq ft centre is now let. Tom Limbert, partner at Leeds-based Central Retail, which has acted as the centre’s sole letting agents for the past ten years, said: “Coppergate reflects returning confidence to York city centre and this is the best picture that we have seen for five years.”

McDonald’s teams up with pasta maker in Italy to Italianise menu: McDonald’s has joined forces with Italian pasta brand Barilla, which has been in the same family ownership for four generations, to allow the company to “Italianise” its menu. Branches of McDonald’s in Italy will now serve up a pennette pasta salad, identified as “a balanced and skilful mix of tuna, tomatoes, peppers, capers and olives, seasoned with a pinch of oregano and salt”.

Buffalo Wings chief executive – craft beer is the key trend for me: Buffalo Wings chief executive Roger David has told Nation’s Restaurant News in the US that craft beer trends are the area of the market he is watching most closely. He said: “With the craft beer craze going on, we’re taking a harder look at our beer line-up and the equipment on that front. I think people are becoming a lot more educated about beer in general, even the kind of vessel it should be served in. Consumer expectations around draft beer are really evolving rapidly, and the more we know about that, the more we can be positioned there, the better off we’ll be.”

Company news:

Tea Monkey opens site in Mothercare: Tea Monkey, the upmarket tea café brand launched by serial entrepreneur Tracey Bovingdon, has opened a branch in Mothercare in Leeds. Bovingdon said the partnership between the two companies was an obvious one as they both have similar values - providing accessible and appealing facilities for families while offering high levels of customer service and great products. Tea Monkey has other branches in Milton Keynes and Bath. It sells 40 types of loose tea and wellness teas. Bovingdon told the Yorkshire Post: “This is my fourth company and I tend to look for gaps in the market. I’m not too concerned about the recession, it doesn’t matter what time you set up your business, it is always going to be tough initially. Coffee has done very well and I can’t knock it. I have no criticism of coffee shops whatsoever. But I don’t drink it and I never have done.” She began the business because she was quite simply “fed up of being treated as a second-class citizen” in some coffee shops for wanting a cup of tea. It dawned on her that there were no modern tea-shops on the high street. Tea Monkey is a modern tea-shop with iPads and apps for children to play on as their parents relax, colouring stations and cookie decorating options.

Costa Coffee to open in one of smallest towns so far - Saxmundham, Suffolk: Costa Coffee has confirmed plans to open a branch in the Suffolk town of Saxmundham at the beginning of next month – the town has a population of just 2,771. The company is moving into the last vacant retail unit of three built at the same time as the town’s Tesco store in Church Street. The supermarket opened opposite Waitrose last year and was followed by the arrival of a bookmakers and a horse charity shop at two of the units. 

Wetherspoon buys Newport nightclub and former church: JD Wetherspoon has confirmed the purchase of an old nightclub building and former church in Newport, Wales. It has bought the former Temptation club, in Lower St James’s Street, which was reopened in 2009 but has since closed its doors. A spokesperson from the chain said the development start date was unknown but confirmed it planned to keep its exiting pub in Newport, The William Coppin, at Coppins Bridge, open. The newly acquired building was the former home of Newport Congregational Church, which sold the last part of the former church to the then owners of Temptation in 2002. The site, which is made up of two distinct areas, the 5,944 sq ft former church, and the more modern, glazed 3,503 sq ft structure next door, has been home to several bars and clubs over the years, including Booker T’s, Bar Bluu and Temptation. Bar Bluu was granted a 24-hour licence in 2006 after extending its 10am to 4am licence.

Jonathan Downey – HMRC official approached us for consultancy work: Jonathan Downey, boss of London bar operator Rushmore Group, has revealed that a HMRC official who was dealing with his company went “private” six months later and then approached his company for consultancy work so “it could avoid paying anything”. On Twitter, he revealed: “A few years back when the tax and National Insurance contribution position on tips wasn’t clear HMRC tried to drag £97,000 out of us, (It was) a total try-on. We settled on £15,000.”

Douglas Jack – a good harvest but no yield at Mitchells & Butlers: Numis Securities leisure analyst Douglas Jack has moved is recommendation on M&B shares to ‘add’ from ‘buy’, with a price target of 450p. He said: “M&B is setting out plans to increase expansion, like-for-like sales and margins. As a result, we believe our cautious forecast assumptions offer attractive medium-term upside, with or without better weather or macroeconomic growth. However, following a circa 20% rise in the share price over the last three weeks and a circa 50% increase in the pension deficit, to circa £0.6bn, we are moving our recommendation to ‘add’, from ‘buy’. The “Heartland” value-food brands (Crown, Oak and Sizzling) took over 1% off group like-for-like sales in H1. This was partly due to losing barely profitable food volumes (caused by price increases) and also partly the result of previous efforts to reposition too aggressively towards food. Management believes this segment could return to like-for-like growth within a year, aided by reintroducing Sky television (already done in 100 sites), adding higher-margin non-carvery dishes and passing on efficiency gains. We believe M&B’s forecast expectations are understated, which one should not misinterpret as a lack of ambition, following a 17% increase in earnings in H1. With an improving outlook for like-for-like sales and margins, we would accumulate the shares, albeit with our enthusiasm tempered by the lack of dividend.”

Hook Norton relaunches pub with a coffee shop: The Sun Inn, part of Cotswold-based brewery Hook Norton’s pub estate, has been relaunched to incorporate a state-of-the-art coffee shop. Taking on-board the requirements of villagers and regulars, the pub, based minutes from the brewery in the village of Hook Norton, has extended its opening hours to include mornings, and now offers quality coffee to guests dining throughout the day.

Uddin family doubles up in Bristol: The Uddin family, based in Bristol, has opened its second restaurant in Bristol. The family, which already operates The Blue Ginger in Whitchurch, has opened Golden Moment on the site of the former Wishbone bistro on Bath Road. Blue Ginger is a past winner of “Restaurant of the Year” competition run by The Bristol Post.

Stonegate invests £180,000 in Bushey pub: Managed operator Stonegate has invested £180,000 in a Bushey pub, The Red Lion, to create a broader offer and ramp up the sports experience. The pub has had a layout change to create more space for a waitress serviced dining area. At the bar a further four cask ale pumps have been installed. As part of the makeover The Red Lion will have four new LCD screens installed inside the pub and one outside in the pub’s garden. Another new development for the pub will be a change to opening hours with doors opening from 8am Monday to Friday for breakfast.

Menzies Hotel goes into administration (again): The parent company of Menzies Hotel Group, which operates 15 hotels, has gone into administration for the second time in two years. KPMG has been appointed to take over the running of Cordial Hotels, which is the non-trading parent company of Menzies. In July 2011, Menzies underwent a management buyout after its previous parent company – Piccadilly Hotels – went into administration. Its portfolio includes The Chequers at London Gatwick, Welcombe Hotel, Spa and Golf Club, Stratford-upon-Avon and Flitwick Manor, Woburn. Its new core ethos was promoted as “You’re in a good place”.

Enterprise lodges application to rejuvenate Gloucester pub: Enterprise Inns plans to rejuvenate The Vaults (formerly Northend Vaults), in Northgate Street, Gloucester and has submitted a planning application to Gloucester City Council. Proposals include a bar area called Flex, a dining area, and another area called The Snug. The plans also include new ceilings, floors and fittings throughout the listed building.

Campaigners win battle to save £4.5m Spirit pub: A fight to save a historic Spirit pub in Farnborough has been strengthened after an appeal against its community value status was thrown out. A campaign has been running since last October to save The Tumbledown Dick, in Farnborough Road. The Tumbledown is linked with a sale to McDonald’s. The Tumbledown was given Asset of Community Value (ACV) status under the Localism Act 2011 by Rushmoor Borough Council in February, but freehold owner Bride Hall called for a review of this. The council has now upheld the pub as an ACV. The ACV status gives campaign group The Friends of The Tumbledown Dick a chance to bid for the building during a six-month period in which it cannot be sold or demolished. However, this period will not kick in until any current agreement between Bride Hall and McDonald’s collapses. The ACV review report revealed that the Spirit Pub Company, the leaseholder of The Tumbledown, stated the costs of the Friends’ proposals for the purchase and opening of the pub are likely to approach £4.5 million.

Lacons re-commences brewing in Great Yarmouth: Lacons brewery has begun brewing again in Great Yarmouth after a 45-year gap. The brewery and its famous falcon have been revived thanks to the efforts of Mick Carver and Trevor Hourican, who together run Lowestoft-based drinks distributor JV Trading. The Lacons Brewery, in Great Yarmouth, closed down in 1968 after more than two centuries in the seaside town. Yeast from the original beer was held in deep freeze at the Norwich-based National Collection of Yeast Cultures. Head brewer Will Wood said reinventing the artisan ales for a modern day palate had been “difficult”. Lacons Brewery was an integral part of life in Great Yarmouth and beyond from 1760. At its peak it was shipping 50,000 casks of ale a week to London pubs. Wood spent six months developing the reinvented ales. The brewery owned more than 50 public houses in the capital during the 1850s.

Fire breaks out at Raymond Blanc’s Le Manoir: A fire at Raymond Blanc’s flagship Le Manoir Aux Quat’Saisons was tackled in the early hours of Monday. Firefighters were called to the two Michelin-starred restaurant and hotel in Church Road, Great Milton, at 12.54am on Monday morning. Crews on the scene reported a small fire in a tumble drier in a ground-floor laundry room. Nobody was hurt, but firefighters remained on the scene until 7.24am yesterday morning cooling the machines.

Ministry of Sound lobbies Boris Johnson to block flats scheme: The Ministry of Sound superclub has given Mayor Boris Johnson a “site visit” tour as part of an attempt to persuade him to stop plans for a block of flats directly opposite its entrance. The club’s bosses are concerned that if any of the new residents complain about noise from the club, where up to 1,600 revellers gather on Friday and Saturday nights, its licence and its long-term survival will be in jeopardy. Lohan Presencer, chief executive of the Ministry of Sound Group said he wanted to prove to the Mayor that the proposed site of the Eileen House tower - just 20 yards from the club - was entirely unsuitable. He said: ”We showed him videos of the people queuing up outside and he could see it was busy and noisy. When we turned on the sound system he could hear the “thud, thud” from outside and said he could see how it could be really irritating if you lived nearby.”

Tokyo Industries only opening Hull nightclub once or twice a month: Nightclub company Tokyo Industries is only opening its Tokyo Hull nightclub, opened in the former Tower Cinema at a cost of £1.2m last year, a few times a month. Tokyo Industries took over the former Tower venue in Anlaby Road in August last year. Nigel Holliday, the club’s business development manager, said: “We have found it hard but we are still dedicated to Hull and have no intention of closing the Tokyo venue here. The building is freehold so we don’t have to answer to a landlord and don’t have massive pressures. We have looked at what we can do to move forward and have decided to run it more like an O2 Academy, opening only for big events. We want to hear from local promoters and aim to bring back Hull’s Roadblock club nights to run alongside our Déjà Vu events.” Tokyo Industries has admitted that Hull is “the most difficult place it trades” alongside Lincoln and York.

Whitbread short-listed for employee share scheme: Whitbread is among the employers shortlisted for the ‘Best Employee Share Scheme’ at the Employee Benefits Awards 2013.The judges looked at how share schemes are communicated, how organisations handled any fluctuations in share price, and the impact of schemes on measures such as retention, staff engagement and productivity. Whitbread was short-listed for its Whitbread Employee Sharesave Scheme. The winners will be announced during a lunchtime ceremony at the Artillery Garden, London, on 7 June.

Hugh Fearnley-Whittingstall – local authority is slowing us down: Chef Hugh Fearnley-Whittingstall’s business has been explaining its lack of engagement with local people over controversial plans for a new restaurant in Winchester. River Cottage Canteen & Deli plans to open at Abbey Mill in Colebrook Street later this year. A statement from Rob Greacen, managing director, said: “River Cottage is very keen to open its next Canteen in Abbey Mill and has been working with Winchester City Council (the landlords) to finalise a lease for the property. However, despite our best efforts the contract is not yet ready for signature, albeit we believe that it will be soon. We would like to engage with the local community and discuss our project, the philosophy behind the Canteen business and explain how we will be working with local suppliers. Regretfully however, it is difficult for us to do anything until we have a documented agreement with the council.”

Greene King starts work on new Cloverleaf site near Sheffield: Greene King has started work on a new Cloverleaf site near Sheffield – the company now calls the brand Farmhouse Inn. The new pub restaurant is being built at the Beighton Link development beside the A57 at Beighton. A spokesman for Greene King said: “We are building a new Farmhouse Inn, which is expected to open in the autumn and will bring about 60 full and part-time jobs. Customers can expect to enjoy a tasty carvery, homemade cakes and an extensive selection of great food and drink, seven days a week.”

Newquay hotel business owed £2.9m to Santander at administration: A business operating hotels in Newquay entered administration owing almost £2.9m to Santander. A new report has also revealed the company, which owns The Reef Surf Lodge and Reef Island hotels, was hit by the impact of the economic downturn on the Cornish town’s tourist trade. Its bank is now set to face a “substantial shortfall” on its lending. Reef Surf Lodge Ltd entered administration on 25 March 2013 with Anthony Spicer and Panos Papas of Smith & Williamson appointed as joint administrators by Santander. According to the administrators’ estimated outcome, it is “likely to face a substantial shortfall as regards its lending”. As well as the money owed to Santander, a total of £104,972 is owed to unsecured creditors and there is expected to be no funds available them. A buyer is currently being sought for the hotels and the administrators have continued to trade them while in administration. Santander has provided further funding and hotel manager Licensed Solutions Ltd has been brought in. The acquisition of the two properties was funded by Santander in 2007.

AG Barr – revenue up 2.4% in the 15 weeks to 12 May: Soft drinks firm AG Barr has reported total revenue for the 15 weeks to 12 May 2013 increased by 2.4% versus the equivalent period last year. The company stated: “This compares favourably with the overall soft drinks market (as measured by Nielsen) which was flat in revenue terms in the same period, having been impacted by the unseasonable weather and a strong prior year performance. Whilst it is still early in our financial year, our core brands continue to perform well despite the weather, economic challenges and significant increases in competitor promotional activity. In the period our margins have performed in line with our expectations. We have continued to commit significant marketing investment across all of our core brands, maintaining our strategy of investment in long-term brand building, whilst delivering excellent value for consumers. We are making excellent progress with our investment in operating capacity at Milton Keynes. Having taken possession of the site at the beginning of May, installation of plant and machinery is well underway.” 

Student wins round-the-word-trip with Red Hot World Buffet: A Nottingham student has won a round the world trip after entering a competition at Red Hot World Buffet. The prize will see the winner chauffeured to the airport before spending the summer touring four continents across 25 days. Helen Dhaliwal, director at Red Hot World Buffet, presented 21-year-old Elizabeth Cornwall with the prize at the restaurant on Saturday night. Cornwall has chosen to take her cousin, Daryl Bledman, on the trip and both family members joined Dhaliwal for a VIP meal at Red Hot World Buffet to celebrate their win this week. Dhaliwal said: “This is the biggest competition we’ve ever run, but we wanted to do something extra special to say thanks to our loyal Nottingham customers, who have supported us since launching our new flagship site in the Cornerhouse earlier this year. As such a family-focused company, we’re delighted to hear Elizabeth will be joined by her cousin on the holiday, which promises to be a trip of a lifetime for both of them.”

Crown Estate finalises Chop Shop opening for new St James’s dining quarter: The Crown Estate has finalised a deal with US based Altamarea Group to bring a new restaurant concept, Chop Shop, to St James’s at Haymarket. The deal will see the restaurant group take a ten-year lease on the entire ground floor and basement of 66-68 Haymarket (2,350 sq ft) in its first ever venture outside of the US. Over the last few years, The Crown Estate has set out its plans deliver a £500 million investment programme to transform St James’s, creating a premier central London shopping and dining destination. This process has thus far seen it bring forward high profile restaurant lettings, including to San Carlo Group last year for its new central London flagship restaurant, Cicchetti. Altamarea Group, founded by Ahmass Fakahany and world renowned chef Michael White currently operate a number of successful restaurants in the US, including Marea and Ai Fiori in New York City. In total, restaurants owned and managed by the Group have gained several Michelin stars and Relais & Chateaux recognition. The group has brought Will Guess, formerly of Rowleys, his family business, on board to assist in developing a vibrant, accessible concept, Chop Shop, with a view to opening late summer. Ahmass Fakahany for Altamarea Group said: “Having seen The Crown Estate’s ambitious plans for St James’s, we are convinced that this part of London will soon be one of the country’s most exciting restaurant quarters. With our talented team, we look forward to bringing a unique concept restaurant to this fantastic part of the West End.” Davis Coffer Lyons advised The Crown Estate.

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