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Morning Briefing for pub, restaurant and food wervice operators

Mon 15th Jul 2013 - Gail’s, Nando’s, Orchid, Tragus and Wagamama

Story of the day:

Sky freezes pub subscriptions for third year: Sky is freezing subscription prices of its Sky Ultimate package for the third successive year. Prices will be held until at least June 2014, meaning that pub landlords will not have had a price increase since September 2010. Sky is also investing in a range of additional features to help licensees get the most out of Sky Sports for their venues. These include a new free third viewing card, which means pubs will be able to screen three live events at the same time and an App exclusively available to Sky venues. In addition, Sky is to offer free training through CPL Training Group – Sky Sports venues will gain access to free online sports-knowledge training and advice on how to make the most out of live sport in their venues. Sky Business managing director David Rey said: “We’ve held our pricing for three years, during which time we have continued to invest more and more on-screen to make Sky Sports even stronger, and in tools allowing publicans to drive strong results for their businesses. However, we recognise that the trading environment remains tough for publicans, which is why we are choosing not to pass on any of our cost increases in what will be one of the most explosive seasons on Sky Sports.” New Sky customers can choose between two Sky Ultimate package contract durations – 30 days or 12 months. Customers signing up to the 12-month contract are offered all of Sky’s additional products for free, including free HD, free 3D, free 2nd and 3rd cards, plus free Wi-Fi (set up costs apply). Customers choosing the 30-day Sky Ultimate agreement will receive a free HD Pack and free 3D. The upcoming season is described as Sky Sports’ biggest to date. In addition to back-to-back Ashes series, there’s every race weekend from the Formula One season, grand slam tennis, golf majors, the Heineken Cup, UEF Champions League, international rugby and 116 Premier League live games across the season, including 77 of the top 100 picks. 

Industry news:

Waitrose to open first in-store restaurant: Waitrose is to open its first in-store restaurant featuring products available in its aisles. The new venture will open next year after the success of small cafés within its larger stores. Waitrose plans to launch the restaurant as a family offer with pizzas, burgers and steaks on the menu. Waitrose managing director Mark Price said: “It is developing the role of branches in an era where online shopping is developing so strongly. We are coming up with new ideas and extra reasons to come into our shops.”

Website launches to allow home cooks to host dinners: A new website has launched,, to allow home cooks to host dinners for strangers looking for a different kind of culinary experience. Founder Guy Michlin said: “We were travelling in Greece and after four days of tourist traps we managed to get an invitation to eat with a local family. It turned out to be a highlight of the trip. I realise there was no platform that allows you to have access to this sort of experience in a safe and easy way – uniting people who are passionate about cooking and hosting, and those who want to have an authentic dining experience.”

Lack of second vacuum-pack machine catches out Marcus Wareing: Two Michelin star chef Marcus Wareing has been awarded one hygiene star by Westminster Council. Inspectors recommended he hire an exterminator to deal with fruit flies, warned of E.coli risks and told him to buy a new vacuum-packing machine. Wareing said: “We simply needed a vacuum-packing machine as we only had one. The Food Standards Agency guidance recommends two. We weren’t aware regulations had changed last year. (We) purchased the new machine within a week.” Inspectors cite a “cross-contamination risk after seeing both raw and cooked foods being packed using the same vacuum-packing machine”.

Booming UK wine production aided by warmer weather: UK wine production is expected to double to reach five million bottles of wine in two years’ time – and is expected to reach eight million bottles by 2025. The key reason for higher production is the number of warmer days that the UK is seeing, meaning growers are becoming more confident about planting vines. Mike Roberts, co-founder of the Ridgeview Wine estate near Ditchling, East Sussex, told The Sunday Times: “A key measure is the number of days you get where temperatures rise above 29C. In the 1960s there were virtually no such days. In the 1970s we had one year and the 1980s there were maybe three such years, but in the 1990s we saw it repeated year after year.”

Company news:

Administrator – more than 20 offers for Atmosphere Pubs and Bars sites: Administrator Deloitte has reported that 20 offers were received for Atmosphere Bars and Club assets after the company went into administration in May. There were also a small number of further offers after the administrator’s deadline – there were 50 original expressions of interest and 38 Information Memorandums were sent out. Offers ranged from interest in all venues to offers for a limited number of them and offers for single sites. Deloitte reported that Atmosphere made a loss after tax of £3,559,000 on turnover of £19,968,000 in the year to 28 February 2013. There was a further loss after tax of £72,000 on turnover of £2,973,000 in the two months to the end of April and prior to administration. Deloitte reports that sales over the May Bank Holiday were significantly below expectations and it became clear that the company would be unable to pay its creditors as they fell due at the end of June. Deloitte made a trading profit of £265,654 on sales of £828,487 at the 11 Atmosphere sites it ran between administration on 14 May and 17 June after closing the remaining sites in the original estate of 24. Chicago Leisure, headed by Christian Rose, the previous chief executive of Atmosphere, now runs eight sites out of the original company.

Orchid Pub Company awarded Investor in People accreditation: Orchid Pub Company has been awarded Investor in People accreditation. Chief executive Rufus Hall said: “I’m very proud to confirm that Orchid is one of the first pub companies in the UK to achieve Investors In People status. Investors In People is the ultimate, most-difficult-to-achieve accreditation for any business that’s serious about putting people at the heart of what they do – it’s an achievement acknowledged around the world and builds on our Sunday Times Top 25 ‘Best Big Companies To Work For’ success in 2010 and 2011. Investors In People have been assessing both our pubs and our people for more than a year now. Not only have they awarded us official Investors In People status, but they believe we can become a ‘champion’ company, of which there are only a handful in the UK. This is the ultimate confirmation that ‘our people make the difference’ – it’s the quality and commitment of our people that makes us what we are.”

McMullen buys two London pubs from Punch to add to two more since May: Hertfordshire brewer and retailer McMullen have acquired the freehold of The Old Crown in New Oxford Street and The Kings Arms in Great Titchfield Street, both in London, from Punch Taverns. This brings acquisitions since May to four, following on from the purchase of The Quays in Farnborough in May and The Old Crown in Royston last week. Managing director Peter Furness Smith said: “We are delighted to have purchased the freehold interest in four excellent pubs so far this year and particularly pleased with these two well-located pubs in Central London. Although finding good sites remains a challenge we are continuing to look for more well-located pubs in London and the Home Counties. The Quays is a managed house and will be refurbished shortly as one of our destination pubs and The Old Crown in Royston is let out to Bramwell Pub Company on a commercial lease. The two London pubs are let out to well respected operators with tied leases so we look forward to working with them both to fulfill our joint obligations under their existing agreements.”

Nando’s chicken raising standards questioned: The Daily Mail has questioned whether Nando’s is using chickens raised to the highest standards when it uses Red Tractor chicken, which, critics say does little more than meet minimum legal requirements. The RSPCA, which runs its own assurance scheme known as Freedom Foods, believes there are numerous welfare issues associated with chickens reared in this way. Nando’s website claims it is ‘actively looking at RSPCA Freedom Foods and Free Range chicken’ but it ‘also needs to consider the price our customers are willing to pay’. A spokesman for Nando’s told the newspaper that most of its chickens are raised in environments enriched ‘above and beyond’ Red Tractor standards. 

Gail’s Artisan Bakery opens in Belsize Park: Gail’s Artisan Bakery, the company backed by Luke Johnson’s Risk Capital Partners, has opened in Belsize Park, its fourteenth site. Gail’s is an ‘innovative and fresh food concept that celebrates bringing the neighbourhood bakery back to the high street in a fun and modern way’. The first Gail’s Artisan Bakery opened in Hampstead in 2005 on Hampstead High Street. Gail’s bread is now also available in 50 branches of Waitrose, the food court of Harvey’s Nichol’s and online through Ocado.

Tragus opens Bella Italia restaurant at Bentley Bridge: Bella Italia, the 90-strong brand owned by Tragus, has opened a new site at Bentley Bridge in Wednesfield, Wolverhampton creating 35 new jobs. The latest site comes after recent openings in Uxbridge and Edinburgh.

Radhuni Group opens third site: The Radhuni Group, which operates Indian fusion restaurants, has opened its third site, this time in Bedford’s Embankment area. The company also operates site in Flackwell Heath and Princes Risborough, in Buckinghamshire. A spokesman said: “Our fusion menu combines traditional dishes through to our unique specially selected Indian and Bangladeshi cuisine.”

Young’s reiterates jazz is safe at The Bull’s Head, Barnes: Young’s has stressed again that jazz is safe at The Bull’s Head in Barnes, which has been converted from its tenanted estate to become a Geronimo Inns site. Campaigners have been vocal in voicing fears that jazz will be lost to the famous music venue when its music room is converted to a dining room. But Ed Turner, managing director of Geronimo, said: “I can understand that people are nervous about it, but read my lips: there will be jazz (at The Bull’s Head).”

Apprentice star opens Mexican restaurant: Apprentice star Tim Stilwell has opened a Mexican restaurant at the Merry Hill’s food court. Stilwell has launched Burrito Kitchen at Eat Central. The 23-year-old businessman from Birmingham was one of the early victims of the boardroom back in May. But he enjoyed success before the show with his Burrito Van, which sold fresh fast Mexican food to students on campus at Birmingham University. He said: “After the success of Burrito Van, I’m excited to bring the concept to Westfield Merry Hill. The centre is a great place for us to set up – it’s got a fantastic reputation, is always busy and is in a great location. It’s brilliant that the centre is willing to invest in young independent businesses rather than just chains. I plan to be very hands-on with the business and will be managing the restaurant. I’m looking forward to meeting – and feeding – lots of hungry shoppers.”

Firmdale results show strength of London hotel market: Firmdale Hotels, which runs eight boutique hotels, including its flagship 52-bedroom Charlotte Street Hotel, has reported turnover up 5.2% to £78.4m in the year to 31 January. Operating profits increased to £13.4m. Finance director Malcolm Soden said: “Across the London division our like-for-like average room rate increased 3% to £322 as each of the six individual properties improved upon their own individual record. Over the past five years the individual room rate has increased by some 21%.” In April 2014, Firmdale will open a 91-bedroom hotel near Piccadilly Circus.

Wagamama eyes second Nottingham site: Wagamama is looking to open a second site in Nottingham. The company has applied to convert the former Sleepers store in Central Avenue, West Bridgford to a restaurant. The planning application is for a 300 square metre floor space and could bring up to 32 local jobs to the area if successful. The plan comes around 15 years after Wagamama opened its city centre site in Nottingham.

Gordon Ramsay’s new business model boosting profits: Gordon Ramsay’s new business model, which means he licences his name to overseas ventures rather than runs them, is boosting profits. The company takes a fee for the Ramsay name and earns a 6 to 8% royalty on openings abroad bearing his name. Stuart Gillies, who runs Ramsay’s restaurants, told The Sunday Times: “Take Las Vegas. We have three restaurants there and they turn over $52m a year. Eight per cent of $52m is a big chunk. “The company made a pre-tax profit of £1.4m last year and is set to increase that to £2m this year. “Earnings will be £6m, up from £4.9m last year and profits will follow, ” added Gillies. Debt is down to £2m from almost £10m during the credit crunch. New overseas territories set for Ramsay openings include Hong Kong, which will see three openings, Dubai, Singapore, and Atlantic City. There are currently 20 Ramsay branded sites overseas.

Pop-up Finsbury restaurant launches with unique dining experience: A three-level pop-up drinking and dining venue has opened in Finsbury. Kitchen Party, in Northampton Road, is an immersive three-level establishment which promises to bring ‘some of the most exciting and cutting edge names in food together under one roof’. It’s only open three nights a week and will disappear after four months. But each night, up to five different installations will take over the space, with the schedule changing every few weeks. The venue has been pulled together by the team behind basement cocktail bar Bourne and Hollingsworth and the first few weeks will feature a portable version of their venue – complete with the eccentric 1920s decor it’s known for.

Bespoke Hotels takes on former Beefeater and Premier Inn: Bespoke Hotels has taken over the former Beefeater pub and Premier Inn known as Worplesdon Place, Worplesdon near Guildford. Whitbread vacated the property in June following the expiry of its lease. Bespoke is led by Robin Sheppard and Haydn Fentum, who have entered a management agreement at the site. Leisure property specialist Fleurets advised the freeholder on the transaction.

Douglas Jack – our enthusiasm for M&B tempered by lack of a dividend: Numis Securities analyst Douglas Jack has issued an ‘Add’ recommendation on Mitchells & Butlers (M&B) shares with a target price of 450p, ahead of the company’s third quarter trading update on Thursday 27 July. He said: “We expect like-for-like sales to have picked up, aided by favourable weather and easy comparatives. This should result in forecasts being held, on which basis M&B’s shares are on a 7% EV/EBITDAR discount to the licensed retail sector. These ratings factor in pension deficits, of which M&B’s is by far the largest, at an estimated £600m. M&B should open 20 new sites and complete five conversions this year. Subject to returns, expansion could resume at 40-50 new sites in 2014. We believe M&B’s forecast expectations are conservative, following a 17% increase in H1 earnings. Favourable weather and easy comparables should boost like-for-likes (particularly in M&B’s country pubs) into which M&B is operationally geared. Given this and M&B’s self-help plans, we would accumulate the shares, albeit with our enthusiasm tempered by the lack of dividend.”

Kane Property Group acquires Loch Fyne site: Kane Property Group has acquired the freehold of the former United Reform Church in Gosforth, currently let to Loch Fyne Restaurants. The 6,240 square foot property in the High Street, comprises ground floor and mezzanine levels within the former church building, and is let to Loch Fyne over a 25-year term. The current rental is £80,000 per annum. Peter Kane, managing partner of Kane Property Group, said: “Loch Fyne is a very strong covenant, the location is prime and the conversion has been completed to a very high standard. It is without doubt the jewel in the crown of this prestigious high street. We are extremely pleased that Gavin Black & Partners have been able to deliver this off-market deal for us.”

Marston’s landlord who faked his own robbery escapes jail: The licensee of a pub in Wolverhampton who faked his own robbery to steal thousands of pounds from Marston’s has been handed a suspended prison term and ordered to carry out community service. James Harding arranged for two of his friends to pretend to attack him as he walked down the road with a bag of cash from his pub as if he was taking it to the post office. He even agreed to be punched in the stomach to make his ordeal seem more realistic, Wolverhampton Magistrates Court heard. Sukhi Rai, prosecuting, said that police became suspicious when they learned that Harding had been due to leave The Castle, on Wood End Road, on the same week as the faked attack. She added that the plan was to split the money three ways. The court was also told that Marston’s had refused to pay Harding back his £4,000 deposit because his stock had been down by more than £7,000 in April and May. Ms Rai said stock had been down due to Harding hosting lock-ins with his friends and offering them free alcohol. Officers then discovered that the amount of money ‘stolen’ from Harding during the faked robbery – £3,881.75 – was similar to the amount the brewery had refused to pay him back. He was yesterday given 12 weeks imprisonment suspended for 18 months. Magistrates also ordered him to serve 100 hours of community service and said he must be supervised for 18 months.

Burger King returns to Paris 15 years after quitting the country: Burger King is returning to the French capital 15 years after it closed its 39 French stores in 1997 due to disappointing sales – but only under a franchise agreement. Burger King is planning to open a branch in St Lazare train station. Currently, rival McDonald’s has 1,200 site in France. A Burger King restaurant was opened in Marseilles airport last December. The restaurant chain is returning to France as part of an agreement with Italian chain Autogrill, which operates restaurants in motorway service stations, airports and train stations.

McDonald’s to quit Iceland after economic crisis makes costs prohibitive: McDonald’s is to close its business in Iceland because the country’s financial crisis has made it too expensive to operate its franchise. The company said its three outlets in the country would shut – and that it had no plans to return. Besides the economy, McDonald’s blamed the “unique operational complexity” of doing business in an isolated nation with a population of just 300,000. Iceland’s first McDonald’s restaurant opened in 1993. The franchises are run by a firm called Lyst – owner Jon Gardar Ogmundsson saying the decision was “not taken lightly”. He said that the restaurants imported a number of key products from Germany, but that costs had almost doubled, with the falling krona making imports prohibitively expensive. Ogmundsson said the restaurants had “never been this busy before... but at the same time profits have never been lower”. “It just makes no sense. For a kilo of onion, imported from Germany, I’m paying the equivalent of a bottle of good whisky,” he added. He now plans to run the restaurants under another name so that he is able to buy cheaper Icelandic products.

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