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Morning Briefing for pub, restaurant and food wervice operators

Tue 13th Aug 2013 - Ceviche, Harris + Hoole, JDW, Papa John's and M&B

Story of the day:

Papa John’s set for 20 new openings after incentive scheme attracts seven new franchisees: Papa John’s, which is the world’s third largest pizza company, has signed up seven new UK franchisees for multi-site development plans as a result of its enterprise incentive scheme offer, which launched in February this year. The new franchisees will open 20 pizza stores throughout the North and Midlands over the next six months. The company reported that it had opened its 1,000th international site last week and that like-for-like sales are up 6.8% in the division in the most recent quarter. “Our focus is on growth and we aim to deliver on our promise of having 600 UK stores over the next ten years,” said Anthony Round, business development manager at Papa John’s. “The £2m franchisee incentive scheme we launched at the National Franchise Exhibition at Birmingham’s NEC in February, was designed to encourage enthusiastic franchisees to become part of our success story in specific, designated regional zones in the North, Midlands and Scotland.” As part of its 2013 offer, Papa John’s, for a limited period, reduced its franchise fee and gave away a top-of-the range oven and electronic point-of-sale equipment worth £30,000 plus £10,000 worth of marketing spend to new franchisees for stores opening during 2013 within designated regions. Papa John’s, which operates around 200 franchised sites in the UK, narrowed losses in the UK to £1,028,000 in the year to Christmas 2011 from £1,949,000 the year before. Turnover rose by 21.4% from £18,906,000 to £22,943,000. Papa John’s has set a target of opening 150 new sites in the UK in the next three years. Founder ‘Papa’ John Schnatter said: “We’ve been here in the UK for ten years now and we feel we have the infrastructure in place to start to make waves in the pizza industry.”

Industry news:

CAMRA – buying an extra pint a month would push the industry back into growth: Beer drinkers buying just one extra pint a month in the pub is all it would take to push the British beer industry back into growth after years of steady decline, according to statistics released by the Campaign for Real Ale (CAMRA) to mark the start of its Great British Beer Festival. “Around 32 million people in the UK enjoy a beer at least once a year, but the number of people drinking in pubs has been on the decline, contributing to an overall fall in beer sales,” said CAMRA chief executive Mike Benner. “But with the price of a pint getting a much needed duty cut in this year’s budget there’s never been a better time to get down the pub and help save the Great British pub. Just a pint a month extra is all it would take.”

Heathrow reports passenger number boost in July: Heathrow saw 6.9 million passengers in July, a 5.5% increase on July 2012. The growth is largely attributable to lower traffic in July last year as a result of the timing of the London Olympics. Chief executive for Heathrow Colin Matthews said: “Our passenger figures underline the UK’s urgent need for a single hub airport with the capacity to meet the demand for links to emerging economies. The best solution for taxpayers, passengers and business is to build on the strength we already have at Heathrow.”

RBS launches cashback and rewards debit card: Royal Bank of Scotland and Natwest are trying to attract customers from rivals by tempting them with a scheme that gives them cashback or rewards when shopping with their debit cards at participating retailers. Existing and new customers of the banks, both part of the taxpayer-owned RBS Group, using the “cashback plus” debit card will be offered 1% cash-back when shopping at Caffe Nero among others.

Costa Coffee introduces camel milk coffee in United Arab Emirates: Costa Coffee has become the first coffee brand in the UAE to introduce camel milk options to its menu. The option is now available in over 30 stores across Abu Dhabi, Dubai and Ras Al Khaimah. Camel milk is an alternative to cow’s milk for anyone who is lactose intolerant. It also has 50% less fat and helps reduce cholesterol. Camel milk is high in vitamins and minerals, especially vitamin C, and is rich in calcium.

Rentokil opens pop-up restaurant: Rentokil is marking its 85th birthday this week with a pop-up restaurant serving salted ants and worms dipped in chocolate. Also on the menu are sweet chilli pigeon burgers, salted grasshoppers, BBQ tarantulas and crickets, giant scorpions and chocolate-dipped silkworm pupae. The dishes on the menu will be free to try at the pop-up site at One New Change at Cheapside on Thursday. Rentokil said several organisations had identified insects as valuable foods, because they are rich in protein, zinc, calcium and iron and low in fat.

Premier Inn replaces Hilton as best-known hotel brand among business travellers: Premier Inn has displaced Hilton as the UK’s best-known hotel brand among business travellers in a survey by BDRC Continental. Whitbread’s hotel brand beat Hilton by just one point, meaning Hilton failed to come top for the first time since 1996 when it replaced Forte.

Company news:

Administrator reports good progress on Bramwell Pub Company lease assignments: Barracuda Pub Company administrator PricewaterhouseCoopers (PwC) has reported good progress on assigning leases to Bramwell Pub Company in the wake of Barracuda’s administration in September last year. PwC reported that 29 leasehold sites had required third party landlord consent to assign the lease to the new company. As of March this year, 14 assignments had been completed, two consents in principle had been obtained, 11 sites had negotiations ongoing and on two sites an agreement had not been possible and the sites were handed back to the administrator. PwC has earned £168,000 from the administration so far.

Stonegate acquires Living Room business: Stonegate Pub Company has bought the 13-strong Living Room estate from Premium Bars & Restaurants. The precise value of the deal is not known but it has been suggested the Living Room estate is worth around £10m. This transaction is in addition to the recent acquisitions of The Queens Head in Frodsham, Cheshire and a new larger site for the Slug & Lettuce brand in the O2 Greenwich arena. Stonegate chief executive Toby Smith said: “We are delighted to have acquired The Living Room business and are looking forward to working with the current team to operate what are undoubtedly some of the finest sites in the UK.” There has been speculation that Stonegate may look to convert some of the sites to its Slug & Lettuce brand, which the company is looking to double in size after three years of consecutive double-digit sales growth. The Living Room estate is understood to have been trading well in the past year. It has been managed by Eclectic since August last year and before that it was run by Orchid Pub Company. The Living Room estate includes sites in London, Manchester, Liverpool, Glasgow, Edinburgh and Bristol. The brand was founded by Tim Bacon in 1999 and was bought by Ultimate Leisure in 2007 for £28m. Stonegate Pub Company is the largest privately held managed pub operator in the UK with revenues approaching half a billion pounds and employs over 10,500 people. The company has 573 pubs which are split into the following segments: Classic Inns, Local Pubs, Great Traditional Pubs, Slug & Lettuce, Scream, Yates’s, Bars & Venues and Missoula.

Marston’s hires former M&B staffer in marketing role: Midlands brewer and retailer Marston’s has hired former Mitchells and Butlers insight director Una Beck Johnson as marketing director at its managed division Marston’s Inns and Taverns – she starts on 27 August. Most recently Beck Johnson was UK marketing director at Staples. She said: “Marston’s is a business that I have admired from a distance for some time. Its ability to focus on superb operational excellence is well respected and to join the business at this exciting time is a great opportunity.” Marston’s Inns and Taverns managing director Pete Dalzell added: “Una brings with her a wealth of experience from inside our sector and outside which will be invaluable. Her knowledge of operations and depth of insight and passion for excellence will be a valuable addition to the management team.”

Coffee shop chain Harris + Hoole adds two Jessops sites: Expanding coffee shop chain Harris + Hoole has taken a pair of new leases – on former Jessops stores in Guildford and Ealing. The firm has taken on ten-year leases at the sites – Harris + Hoole is advised by property firm Morgan Williams. Retail Week revealed last week that Harris + Hoole is launching its first app later this month which enables customers to ‘check in’ in store and pick up their usual order.

Bank of America raises Mitchells & Butlers price target: Bank of America has raised its target price on shares of Mitchells & Butlers from 450p to 470p in a research note issued yesterday. The firm currently has a “Buy” rating on the stock. Bank of America Corp’s target price suggests a potential upside of 11.85% from the company’s current price. Analysts at Barclays Capital reiterated an “overweight” rating on shares of Mitchells & Butlers in a research note to investors on Tuesday, 6 August.

Supply chain lecturer praises McDonald’s ‘mature’ UK supply chain: A lecturer in supply chain management has praised McDonald’s after touring the company’s UK farms and factories. Alan Macdonald, who teaches at the City of Glasgow College, was one of 15 people chosen from 1,700 applicants to take part in the “quality scouts” initiative. On the first day of a two-day trip in July he visited a farm in Chichester growing lettuces, a bakery in Banbury turning out up to 72,000 buns an hour and then a beef farm in Buckinghamshire – one of the 16,000 British and Irish farms that supply the burger chain. He said: “We had access all areas. We had the opportunity to talk to all the people. I took a bundle of pictures and notes. It was all very open and transparent.” On day two, he went to an abattoir – Dawn Meats in Cardington, Bedfordshire – that supplies McDonald’s with cuts of forequarter and flank. 

Wetherspoon plans to open in Stamford, Lincolnshire in doubt over restrictive hours: JD Wetherspoon’s plan to spend £1.2m on a new venue in Stamford, Lincolnshire could be at risk unless restrictions on opening hours are lifted. The company was granted planning permission by South Kesteven District Council in June to turn the Stamford Mercury office in Sheep Market, Stamford, into a pub. But the chain has now submitted a second application to increase the opening hours of the proposed venue, arguing that initial restrictions imposed by councillors were “unreasonable and unnecessary”. The district council’s development control committee approved the plans in June on the condition that the pub would only open from 8am to 11.30pm Monday to Saturday and 8am to 11pm on Sundays. But JD Wetherspoon wants to open from 8am to midnight Sunday to Thursday and 8am to 1pm Fridays and Saturdays. In a letter attached to the most recent planning application, Julian Sutton, of Signet Planning, said JD Wetherspoon was happy for the suggested times to apply to the beer garden but not the pub itself. He said: “This restriction is considered unreasonable and unnecessary. JD Wetherspoon is proposing a substantial commercial investment into Stamford of £1.2 million. However, a robust business case is required. The vast majority of public houses within Stamford town centre are permitted to retail alcohol for longer hours than my client’s proposed premises. JD Wetherspoon simply seeks a level commercial playing field in which to operate within the town. In the absence of this, its investment and the creation of 50 jobs for local people is now in doubt.”

Virgin Atlantic to open Ceviche pop-up: Virgin Atlantic has partnered Peruvian restaurant Ceviche to open a pop-up restaurant in the Virgin Atlantic Clubhouse from 12 to 18 August. Mark Murphy, clubhouse food and beverage executive, Virgin Atlantic said: “Our aim at Virgin Atlantic is to constantly surprise our customers when they travel with us. It’s our aim to offer Upper Class customers an ever-changing experience and this will give them the chance to enjoy the tastes of Lima with the buzz of Soho before they fly.” Ceviche founder Martin Morales said: “Innovation is key in what we do and above all it’s fun to do new stuff. It’s only on for a week so it’s a real one- off treat for us all.”

Smokery brand seeks investors for new site: North London family smoker Hansen & Lydersen, based in Stoke Newington is seeking investors for a new smokehouse, restaurant and shop at an unnamed site in central London. An investor presentation is planned for next week which will include tasting from its menu. The company supplies Sake No Hana and the Albion pub. Contact for more information.

Jamie Rollo – we think statutory control for pubcos is unlikely: Morgan Stanley leisure analyst Jamie Rollo has argued that the proposed introduction of statutory control of tenanted pub companies is unlikely to go-ahead. He said: “Pressure has been rising on the government to implement the BISC’s proposed statutory code for tenanted pub companies. We think a statutory code is unlikely to be introduced by this government given the difficulty it would face with existing commercial contracts, the additional administrative burden it places on the industry, the likelihood of appeal by the pubcos, the risk some pubcos become pure landlords (or REITs?) and thus reduce tenant support, and the fact the current voluntary code seems to be working well (or at least needs more time to be tested).”

Gin parlour and creperie plan for Northampton shop: An empty shop in Northampton town centre’s most fashionable street could soon be converted into a gin parlour. The former Chanse Leathergoods shop in St Giles Street has been empty since the firm moved to Abington Street earlier this year. Abington resident Suzanne Paterson has now applied to Northampton Borough Council for permission to convert the building into a bar which would operate as a Parisian cafe during the day and a gin parlour at night. In documents submitted to the council, she said: “The proposal is to provide a unique, members-only, relaxed and sophisticated gin parlour, dedicated to the consumption of glorious gins.” To get into the gin parlour, which would serve 50 different types of gin, customers would have to ring a bell to get through a locked door, which would be covered by CCTV. During the day however, the venue would operate as a Parisian cafe – known as Cafe C’est La Vie – which would sell breakfasts and lunches and have an ‘all-day crepe bar’.

Richoux Group lines up fifth Dean’s Diner: Richoux Group is to open its fifth Dean’s Diner restaurant in October. The classic 1950s inspired American diner is opening in the Pioneer Centre development in Bicester, Oxfordshire. The company is spending £500,000 developing the restaurant and 20 jobs will be created. The latest Dean’s Diner opened within the Whiteley Shopping Centre in Fareham in May. Dean’s Diner will offer a wide choice of meals, specialising in burgers, ribs, rotisserie chicken, wraps, fries and sides. It will also serve 13 different milkshakes, a selection of American beers and wines, authentic American pancakes, sundaes and desserts. Dean’s Diner will have seating for 80 diners, of which eight will be seated at the counter. Richoux Group managing director Ed Standring said: “I’m confident that the new Dean’s Diner will prove popular with people of all ages. Our most recent opening at Whiteley Shopping Centre has been an outstanding success and we are looking forward to the same level of success at Pioneer Square.”

Freedom Brewery plans to double capacity: Freedom Brewery has unveiled plans to double its brewing capacity by the New Year to meet current and grow future demand for its award-winning craft lagers. The Staffordshire-based brewery has been sold recently to new owners who plan to invest £500,000 in new brewing and storage facilities as well as developing a wetland drainage system to treat waste water from the brewing process. The new management team - led by Tim Massey as managing director and Andrew Taylor as finance director - aims to continue the brewery’s current 60% growth trajectory with its range of quality, hand-crafted premium lagers.

Luminar re-opens Preston site with a new name: Luminar has re-opened its Preston nightclub, formerly known as Lava & Ignite, as Evoque. The Church Street venue has seen a £500,000 investment and 50 new jobs created at the 23,291 square foot venue.

No Saints refurbishes Southampton nightclub: No Saints, the company headed by veteran nightclub operator Stephen Thomas, is re-opening Provenance in Southampton as Myth in September – the nightclub is held by a No Saints subsidiary. Following discussions with the police and city council the club will open until 2.30am from Sunday to Monday and to 3.30am on Fridays and Saturdays. Among the conditions imposed is an agreement to not carry out “irresponsible promotions” by offering free or discounted alcohol in relation to promotions and to operate a Challenge 25 policy.

More details emerge on Le Bottega team and plans: More details have emerged on the new team that will run Le Bottega, which has been acquired for £5m by venture capital firm Pembroke. Dinah Meister, previously an operations director at Wagamama, has joined the company as operations director under new chief executive Piergiorgio Le Greco. Greco said: “We are living in a period of change in the way people relate to food: whilst sophistication of demand is increasing, preference is given to time efficient, high quality and competitively priced supply. Italian food is the essence of taste and simplicity.” Andrew Wolfson, chief executive of Pembroke, said: “La Bottega represents a unique roll-out opportunity in the café and restaurant market. The business has fantastic brand awareness in Chelsea and is renowned for serving excellent food and coffee. We are delighted to be backing the management team and to be part of the continued roll-out of La Bottega.” In addition to funding the purchase consideration, the investment funds, which exceed £5 million include development capital compliant to HMRC’s Enterprise Investment Scheme, and will be used to open at least twenty new sites by 2018.

Catlin’s Brewery seeks to raise £40,000 through Crowdcube: Catlin’s Brewery, a new microbrewery headed by Richard Catlin, is looking to raise £40,000 to set up in north London in return for 30% of the company’s equity. So far, 11 investors have invested £2,410, which is 6% of the target sum.

Orchid’s new website designed to showcase people and pubs: Orchid Pub Company has launched a new website - Tracy Read, head of development and communications at Orchid Group, said: “The new website better demonstrates Orchid’s core values and feels interactive, modern and personable. There’s a real sense of the Orchid personality and family feel.” The added functionality makes the website search engine friendly and gives direct links into blogs. The new site fully integrates Orchid’s social media streams including Facebook, Twitter and Instagram, encouraging users to interact and post their own images alongside those from the Orchid team.

Nightclub operator acquires prime Maidstone site: Experienced Kent nightclub operator Marc Gordon has acquired the former Ethos nightclub and coffee shop, located in the Kent county town of Maidstone. Ethos is housed within Grade II Listed property, split across three levels, totalling approximately 6,370 square foot and is in a shell condition. In addition, the property has two self-contained flats, and generously proportioned courtyard, and a separate coffee shop opposite the entrance to the shopping centre. Agent Christie + Co saw a very strong level of interest in the site from multinational companies, retailers, nightclub operators and restaurant owners. Paddy Power has taken a new lease on the ground floor area of the property, which has now been fully refurbished to a high standard, and has been open and trading for almost a year. Gordon has taken the remainder of the building and plans to fully refurbish the upper floors and coffee shop and open to the public in the coming weeks.

Spirit pub in Farnborough retains community value status despite £4.5m cost to re-open it: A historic Farnborough pub has retained its Asset of Community Value status after an appeal against the status was thrown out. The Tumbledown was given Asset of Community Value (ACV) status under the Localism Act 2011 by Rushmoor Borough Council in February, but owners Bride Hall called for a review of this. The council has now upheld the pub as an ACV. A report of the review, carried out by council chief executive Andrew Lloyd, read: “The council notes that there have been no submissions suggesting that council’s procedure in making the original decision was improper. The property will therefore remain on the ACV list.” 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. 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.

Inglenook Taverns to open eleventh pub at the end of August: Inglenook Taverns will open its eleventh pub, The Coach and Horses on Dig Street, 22 August after a major co-investment of £300,000 with owner Punch Taverns. James Waddington, director of Inglenook Inns, whose estate is spread across Yorkshire and the North West, said: “We could see the pub’s potential to become a pivotal part of the community; our ethos has always been based on business and community working together, each one supporting the other. We serve simple, but inspirational food, using producers that we know and trust and using traditional family recipes. Our coffee, cake and afternoon teas uses recipes passed down through the generations – some are from my Grandma!” The pub is Inglenook’s sixth Punch pub.

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