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Wed 31st Jul 2013 - City Pub Company, Domino's, JDW and Laura Ashley

Story of the day:

City Pub Company boss – “an AIM flotation is now a possibility”: City Pub Company will launch its fourth and final round of fund-raising in September aimed at generating a further £10m of investment across its two Enterprise Investment Scheme companies. Chief executive Clive Watson has told Propel that a flotation on the Alternative Investment Market (AIM) is now an option for the company in the medium term. So far, a total £17.8m has been raised for City Pub Company East and City Pub Company West in three over-subscribed rounds of fund-raising. The last fund-raising round will bring the total raised across the companies to £13.9m – just short of the total of £15m allowed under current rules. Watson told Propel that he now has a more favourable view of a possible AIM flotation. He said: “I have softened my view on a possible AIM listing – I once said that I couldn’t see myself doing another AIM listing. But if sentiment towards the sector stays the same (with it being loved again by the City) I can see that an AIM listing is a potential way to give shareholders an exit if they so wished. Most of our EIS shareholders didn’t want to sell when we sold Capital Pub Company to Greene King. The Initial Public Offering (IPO) market has started to pick up and an AIM listing opens up options for everyone, providing liquidity for shareholders who want to sell.” City Pub Company currently operates 12 pubs across its two companies and will open its third brewhouse site in September in Bath. It expects to have 20 pubs within the portfolio by April 2014.

Industry news:

Britons less mobile in the downturn: Mobility during the current economic downturn has fallen back to levels last seen in the early 1970s. Journeys by private forms of transport have reduced by 14% over the past 15 years. The government’s National Travel Survey found that in 2012 the average Briton made 954 trips covering 6,691 miles, 4% lower than in 1995-97.

Broccoli proven to be a wonder vegetable: Scientists at the Institute of Food Research have found that a chemical contained within broccoli helps maintain the health of mitochondria, the tiny ‘batteries’ that power the body’s cells. This, it is thought, helps ward off health problems including cancer and heart disease.

New York higher court upholds ruling against large soda ban: A state appeals court in New York has upheld a lower court desicion that New York City could not ban the sale of large sodas and sugary beverages at restaurants and other venues within its five boroughs. The higher court said New York’s Board of Health had overstepped its authority last September when it agreed to restrict restaurants, sports venues, movie theatres, street carts and delis from selling soda and other sugary beverages in cups or containers larger than 16 ounces.

TV chef Dev Biswal backs “Tax Parity Day” campaign with 7.5% price cut: TV chef Dev Biswal’s will cut the prices of his The Ambrette in Rye and Margate by 7.5% for one day on Wednesday 25 September – “Tax Parity Day” – as part of the sector’s campaign to reduce VAT. Michelin-rated Dev Biswal believes the tourist dependent economies of the Kent and Sussex coastal areas would receive a massive boost, if Chancellor George Osborne was to cut VAT on restaurant bills. At present the VAT man takes £1 in every five spent on dining out. Every one of the 27 EU member states, except Denmark, has reduced its rate of VAT. Thirteen have a reduced rate for restaurant meals. 21 EU countries have lower VAT rates than the UK. The Ambrette has been persuaded to join the movement by the actions of veteran campaigner Jacques Borel, the French Resistance fighter cum restaurateur, who is lobbying the UK Government to slash VAT, in order to boost employment. “Restaurant businesses are highly labour intensive – as more people eat out, restaurants will hire more staff and invest in training,” said Diswal.

US fast food workers protest against low wages: A campaign to demand a minimum $15 an hour that started among New York fast food workers is spreading across the country. Thousands of fast food workers went on strike in cities across the US on Monday as part of a campaign for better wages. Employees of selected branches of McDonald’s, Burger King, KFC and Wendy’s walked off their shifts at various points throughout the day. The Fast Food Forward campaign is calling for workers to receive a minimum of $15 per hour, more than double the federal minimum wage of $7.25. “A lot of the workers are living in poverty, you know, not being able to afford to put food on the table or take the train to work,” Jonathan Westin, director of Fast Food Forward, said. “The workers are striking over the fact that they can’t continue to maintain their families on the wages they’re being paid in the fast food industry.” Walkouts are now due to be held in Chicago, Detroit, Milwaukee, St Louis, Kansas City, and Flint, Michigan.

Technomic – ‘we expect better pizza to follow better burger trend’: US research firm Technomic has forecast that made-to-order pizza is set to follow “better burger” as the next hot category. “Made-to-order pizza can be the next big growth niche because its fresh, gourmet positioning provides a strong platform for popular health and wellness concepts,” said Darren Tristano, executive vice president. “The ‘better’ trend seen in ‘better burgers’ will also drive ‘better sandwich’ and ‘better pizza’ concepts. Not only are made-to-order pizza concepts delivering better quality and fresher ingredients, consumers are able to create their own pizzas that are ready within minutes, a proven recipe for success within the fast casual space.”

Company news:

Domino’s non-executive chairman – ‘we will get there in Switzerland and Germany’: Domino’s non-executive chairman Stephen Helmsley has reassured investors that the company is on track to deliver profit in Switzerland and Germany. He said: “Our new markets are both challenging but also very exciting. Switzerland is a turnaround project, where, after many years of underinvestment, we are putting in place all the energy and expertise you would expect of Domino’s. We are already seeing the positive results and we expect to make a profit in 2014 in a market that had never made a profit in the decade before we entered. Germany is a true start up, in one of the most exciting markets in Europe. It will take time to reach scale there, to build enough brand awareness and open sufficient stores to cover our fixed costs. This process will take longer than originally expected. Those of us with long memories will recall that it felt similar in the UK back in the 90’s and we have been through this before. It is important to remember that Domino’s businesses round the world have taken some time to reach critical mass, before going on to be real profit generators.” Simon French, of Panmure Gordon reiterated a sell recommendation with a target price of 380p, said of yesterday’s results: “Commentary on German expansion remains cautious with planned break even pushed back from 2015 to 2016/17 as the group opens fewer stores in 2013 and 2014 than previously predicted. The transition to franchised stores will incur £5-7m one-off costs in the second half of this year.” Wayne Brown, analyst at Canaccord Genuity, said: “The group has incurred exceptional charges of £12.3m relating to impairments of the German business. Whilst the headline UK and IRE like-for-like sales number will make for some positive reading at circa 6.5%, we are not seeing the expected profit flow through that one would expect.”

Laura Ashley opens debut hotel: Interior design and fashion brand Laura Ashley has opened its first luxury boutique hotel in Hertfordshire. Laura Ashley The Manor Elstree will comprise 49 bedrooms which have been designed using the current Laura Ashley Home collection, showcasing the brand’s products. The Tudor property is set in ten acres of natural woodland and landscaped gardens, 11 miles from London. Rooms will cost between £150 for a standard room, up to £500 a night for the premium suite. Laura Ashley acquired the property from Corus Hotels in April 2012 for £5.8m and took six months renovating the hotel. A Laura Ashley spokeswoman said the hotel was a major branding exercise as well as a commercial enterprise. “It’s a shining example of Laura Ashley,” she said. “We have our catalogues in every room. It sells the design service and what you can achieve.”

Noble Inns acquired Punch site for fourth opening: Noble Inns, the gastro-operator led by Scott Noble and Maria Larsen, acquired a Punch Taverns tied lease, The House in Canonbury, off an asking price of £250,000 for its fourth pub, it has emerged. “The House slots perfectly into Noble Inns’ growing estate but it wasn’t being marketed by a specialist leisure agency, which may be why other people missed it – but we do keep an eye on the broader market,” said Panayiotis Themistocli of AG&G. “It’s a big property in a great location, with late licensing hours, 90-cover capacity on the ground floor and an attractive all weather terrace area to the front which provides a further 90 seated covers. The new site will open next month as the SmokeHouse offering around 20 different craft beers, hand-pulled local ales, and an exclusively European wine list from only small family vineyards. Fish and meat for certain recipes will be smoked in-house. The food will have a strong barbecue influence using a real wood and charcoal offset smoker, plus a bespoke robata grill.”

Oceana Kingston to receive £1m investment – and new Pryzm name: Oceana in Kingston, the subject of a licensing battle after a fatal stabbing, is to receive a £1m refurbishment and the new Pryzm name owner Luminar is applying to its estate. Work to convert Oceana into Pryzm will begin in September, with the official launch scheduled for October. Oceana Kingston general manager Dan Corry said: “Oceana was a successful brand for 11 years but fashions and trends evolve and we are delighted to be part of the new Pryzm roll-out which reflects the multi-characteristics of the new design. The refurbished club design will have three dance arenas, an exclusive VIP area plus a chic and stylish bar all under one roof, appealing to a broader and more mature customer base.” The revamp will also create 40 new jobs, including waiters and waitresses offering table service. Corry added: “Now we have a reduced capacity, we want to focus much more on delivering a higher quality experience for a more mature customer and Pryzm offers that.” Meanwhile, crime at five of Kingston’s busiest late night venues has dropped by half since the introduction of a photo ID scanning system, a new police report says. Offences inside Oceana, the Hippodrome, McClusky’s and the King’s Tun have fallen by 50% since the installation of Scan Net in October 2012, with Barcadia in Clarence Street following suit in May this year.

Geof Collyer – no sign yet of JD Wetherspoon sustained improvement in bottom line performance: Deutsche Bank analyst Geof Collyer has argued that there is no sign of sustained Wetherspoon bottom-line performance that would allow the shares to re-rate. He said: “One gets the overriding impression that the eventual like-for-likes performance is not something that the company really knows how to forecast. And possibly, that is the crux of the matter – if you cannot control real life intervening, why should the market re-rate the performance - especially if circumstances outside company’s control can have a more important part to play in the eventual profits outcome? Management can manoeuvre the business to be in the best possible position to either take advantage of unexpected upswings in sales or offset cost pressures. Consistently achieving success in these areas deserves a re-rating. We do not see that series of events occurring just yet at JDW. Back in 2007, the group put through a 7% price increase – which we think broadly stuck in terms of holding volumes. And since then, post the disruption of the smoking ban, above inflation excise duty increases and the recession, it may well be that the group’s operational performances have been steadily improving, but like-for-like sales growth has not translated into like-for-like profits growth – and it is here that we have a major issue with the re-rating. We would argue that there is no clear evidence of a sustained improvement in bottom line performance.” 

Prezzo supports triathlon: Italian restaurant group Prezzo has become the corporate partner for the ‘tri for life’ 2013 triathlon. The triathlon, which takes place at Woburn Abbey on Sunday 8 September, raised £375,000 last year for its four partner charities, and aims to exceed that this year. Tri for life 2013, sponsored by Prezzo, will be raising money to fund specific capital projects for Great Ormond Street Hospital, Rays of Sunshine, Breakthrough Breast Cancer and Whizz – Kidz. Prezzo has supported tri for life for the past three years, raising more than £50,000. It aims to have more than 140 of its staff competing in the triathlon, including its chief executive Jonathan Kaye. He said: “We are proud of our association with tri for life and the excellent work it does in raising funds for four superb charities. We are delighted that this year the triathlon is being Powered by Prezzo and we hope it is the most successful to date. The Prezzo team is looking to raise £100,000 towards the overall total.”

Leisure Venues to launch new cocktail bar concept in Middlesbrough: Bar and nightclub operator Leisure Venues is to launch high-end bar Kalinka – a flagship development for the company’s latest cocktail bar concept. Andy Sutton, managing director of Leisure Venues, said: “This is the flagship venue, the first under our new concept. We want to develop a national chain of serving fresh drinks in an environment that’s trendy and opulent. Kalinka is a Russian dance - and many of our drinks are based around Vodka.” The new bar will open to the public for the first time on Friday, 9 August.

Dales Management plans 69-bedroom hotel and pub at fire-damaged pub near Anfield: Plans have been submitted to Liverpool City Council by Dales Management Company to bring the fire-damaged Cabbage Hall pub back into use as a 69-bedroom hotel and pub. Dales is looking to refurbish and extend the premises, which date back to the early 1900s, by adding an additional storey across the width of the building and four-storey extensions to either end. Cabbage Hall, in Breck Road near Anfield Stadium, was the target of a suspected arson attack in summer 2010 and is currently vacant.

Papa John’s franchisee adds four sites: Papa John’s franchisee Tony Singh has bought four more UK outlets. Singh, who joined the pizza brand in 2002 after working as a delivery driver for a rival pizza company, has taken over three stores in the Milton Keynes area and a store in Colchester, Essex. The additions mark a total of 14 outlets that Singh now runs across the South East as part of his ‘mission’ to develop the chain’s franchise network. Business development manager for Papa John’s, Anthony Round, said: “Tony is one of our most capable and successful franchisees and after eleven years he is still hungry for success.”

First food venue opens in Olympic park: The first food venue has opened in the Olympic Park. Unity Kitchen Café in the Queen Elizabeth Olympic Park will be operated by the Camden Society, whose Chairman, Gerald Oppenheim said: “The combination of this beautifully designed café and flexible community space will provide a great place to relax and eat and drink with everything from community classes, to yoga sessions, business breakfasts and parties. We aim to make the most of the training and employment opportunities which the cafe will offer to people with disabilities, as it will be an additional venue for in-work training of our apprentices.”

Marston’s pub re-opens – offering allotments: A Marston’s pub, The White Hart Hotel, in Alton, near Ashbourne has re-opened offering allotments among its new additions as part of a garden makeover. Mark Waller, the licensee of The White Hart Hotel, said: “It’s actually something quite quirky and the kind of thing you don’t really find in a typical pub.” A new water pipe line has been installed in the garden to help anyone who wants to grow food in the allotments.

Schnitzel and spritz operation to open in Soho: Schnitzel and spritz operation Boopshi’s is to open in Soho in early October after it acquired the 20 year lease on 31 Windmill Street in London at a rent of £58,000 per annum. Rob Meadows, of agent Davis Coffer Lyons, said: “We are delighted to have found a buyer for this unit, which benefits greatly from its proximity to Charlotte Street and its exciting bars and restaurants. Securing a substantial premium for a shell unit in an emerging location highlights our ability to maximise value for our clients.”

Chef Ben Spalding to undertake residency at Lucky Voice: The ‘Stripped Back’ dining concept by Ben Spalding is venturing down to his hometown of Brighton for two nights of residency on 3 and 4 September at Mike Palmer’s Lucky Voice café under the arches on Brighton seafront. It will be Spalding’s first time cooking in Brighton since going to the Brighton City College in 2003.

Notting Hill Kitchen to open next month: Fresh Creation London has acquired the Notting Hill Brasserie, which was closed last year. The 2,677 sq ft restaurant – which consists of six dining rooms situated within three Edwardian town houses – will re-open as the Notting Hill Kitchen next month. The new restaurant, under award-winning Head Chef Luis Baena, will offer an eclectic Spanish and Portuguese menu including slow-cooked Iberian milk-fed baby lamb and seared pink swordfish, with seaweed. Jonathan Moradoff, Associate Director at DCL commented: “We are delighted to have found a buyer for this stunning restaurant unit. Its location, just off the Portobello Road, is highly desirable and has one of the Capital’s most affluent catchments.”

Six Convivial London pubs hit the market for £16.9m: Six high quality Convivial London Pub Company sites are to be sold through agent Christie + Co. The pubs for sale include five freeholds and one very long free-of-tie leasehold (994 years with nominal £1 per annum ground rent). Two have successful micro-breweries that are fully visible and operating within the public trading areas, offering a possible platform for regional brewers to showcase their expertise and range in the capital. Convivial is looking to offer the company for sale on a share, or individual asset basis – with offers in excess of £16.9 million sought for the entire share capital. The pubs available are: The Mitre Hotel, Greenwich SE10 – freehold – offers in excess of £6 million; The Lamb Brewery, Chiswick W4 – freehold – offers in excess of £2.8 million; The Clifton, St John’s Wood NW8 – freehold – offers in excess of £2.9 million; The Botanist Brewery, Richmond TW9 – freehold – offers in excess of £2.5 million; The Crown & Anchor, Chiswick W4 – freehold – offers in excess of £2 million; The Hansom Cab, Kensington W8 – long-leasehold – offers in excess of £700,000. All the pubs are well-established on the London circuit and have benefited from major capital investment in recent times. With the exception of The Clifton, all the pubs are Grade II Listed. Neil Morgan, director and head of Pubs at Christie + Co, said: “The sale of Convivial London Pubs represents a unique investment opportunity for a group or individual asset sale.”

Circle 360 Champagne and cocktail bar owner seeks to raise £100,000 through crowd-funding: Cribbs F&B, the company founded by Craig Ince that operates aspirational 360 Champagne & cocktails bar brand within regional shopping centres, is looking to raise £100,000 in return for 20% of the company’s equity through crowd-funding website Crowdcube. Developed in 2011 by Craig Ince, an experienced bar operator, the 360 pilot site at Intu Trafford Centre, Manchester, delivered significant profits in year one and revenue in year two is on track to increase by at least 20%. On the back of this success, second and third bars at Intu’s Metrocentre, Gateshead and Braehead, Glasgow were launched last year. There are openings lined up at Buchanan Gardens in Glasgow, Trinity Leeds and Lakeside, Essex before the end of the year. The fund-raising is to allow the company to expand its marketing efforts to franchise the brand – although it expects corporate sites to expand to around ten before franchising begins. Although the company wants to expand the brand into the top 20 shopping centres it is also looking at airport and transport hub sites. The company states: “Regional shopping centres offer shoppers “everything under one roof” with an extensive restaurant, cafe and coffee shop offering but the bar offering is poor, usually just a budget pub, completely unsuitable for the majority of female shoppers. 360 exploits the gap in the market by providing a premium, affordable bar. Securing sites in busy centres, where footfall can reach 600,000 visitors per week, is challenging but we have invested over £20,000 to secure an additional three sites for 2013 with many more in the pipeline. Currently there are no franchise champagne and cocktail bar chains in the UK. Existing champagne and cocktail bar operators are fragmented and largely single site operators. 360 have an opportunity to become the dominant champagne and cocktail bar operator within the regional shopping centre arena, if we move quickly.” Investors are told revenue will be generated from two streams - initial franchise fees and franchise royalties. The Crowdcube pitch added: “The company is also able to generate a third, significant revenue stream in the form of landlord incentives. The franchise business model means we can grow rapidly without having to deploy our own capital. We will grow the business in two phases, phase one will be about domestic franchises and phase two will target international growth. We plan to raise £100,000 for a 20% share of the company to fund the promotion of the franchise.” 360 Champagne and cocktail bars sell 20 types of champagne, made-to-order cocktails and barista coffee. 

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