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Morning Briefing for pub, restaurant and food wervice operators

Wed 28th Aug 2013 - Jamie Oliver, La Tasca, Living Ventures, Nando’s and Starbucks

Story of the day:

Jamie Oliver – migrant workers are better than UK whingers; London facing a recruitment crisis: Jamie Oliver has claimed that migrant workers make far better employees than young “wet-behind-the ears” UK staff. He argued that EU migrants are tougher and stronger than UK staff and without foreign staff his restaurant business would collapse. In an interview in October’s issue of Good Housekeeping, he said: “I have mummies phoning up for 23-year-olds saying to me, ‘My son is too tired’. On a 48-hour week! Are you having a laugh? I think our European immigrant friends are much stronger, much tougher. If we didn’t have any, all of my restaurants would close tomorrow. There wouldn’t be any Brits to replace them.” Two years ago, Oliver said those leaving school without qualifications need to be able to put in a physical day’s work. “The ones who haven’t got academic verve, they need to have a basic approach to physical work. You need to be able to knock out seven 18-hour days in a row.” Meanwhile, restaurant consultant Adam Hyman has argued that 20 restaurant openings in London in September will aggravate recruitment challenges. He said: “By my count, 20 restaurants are opening in central London in September. These range from 30-cover Soho independents such as Koya Bar to much larger premises from Gordon Ramsay and Angela Hartnett. But this welcome flowering will only exacerbate the principal problem facing all restaurants; conversations with restaurateurs these days turn invariably to the difficulty of finding good staff and to the excessive turnover in jobs. This crisis has stemmed from a widespread perception that the industry does not offer a realistic or sufficiently rewarding career path. Such ignorance is perhaps forgivable given how quickly the restaurant revolution has gathered pace in recent years. But we now need to push a meaningful recruitment drive through schools and colleges, targeting all backgrounds and backed by the government.”

Industry news:

Umami Burger told it can’t trademark ‘umami’: The Umami Burger chain has been told by a judge that it cannot trademark the word “umami”. The California-based restaurant group, which now has nearly 20 outlets in the United States, attempted to get an immediate junction against a newly opened pizza restaurant in Austin, Texas that is calling itself Umami Mia. However, a judge denied Umami Burger’s injunction at a preliminary hearing, on the grounds that “‘umami’ is a common word that cannot be monopolised.” “Umami” was originally a Japanese word, and is used in English for the name of the “fifth flavour”, the savoury taste found in foods from parmesan cheese to soy sauce.

Eating broccoli may help ward off arthritis: Broccoli may help prevent or slow down the most common form of arthritis as it fights the degeneration of cartilage, researchers from the University of East Anglia have claimed. Their research has shown that sulforaphane – a compound found mainly in broccoli but also in sprouts and cabbage – slows the destruction of cartilage in joints associated with osteoarthritis.

Cuba privatises restaurants: Cuba is to turn almost two dozen state-owned restaurants into employee-run co-operatives, in an experiment that could see hundreds more eateries on the Communist island denationalised. The country’s eating-out sector was completely state-owned until reforms five years ago permitted private restaurants for the first time since 1968. Since then, 2,000 private restaurants have opened their doors. But much of the industry still remains in the hands of the state, including the upmarket Palmares entertainment and restaurant chain, which is owned by Cuba’s ministry of tourism.

McDonald’s to launch chicken wings and drums in the US for limited period: McDonald’s is to launch lightly breaded and fried miniature chicken wings or drums, called Mighty Wings, at most US locations on 9 September and at all stores in the US by 24 September. The limited-time offer will be available until the end of November. McDonald’s last tested Mighty Wings in Chicago in January 2013 and in Atlanta on two occasions. Lynne Collier, of Sterne Agee, wrote in a research note: “Based on our channel checks, we believe that Mighty Wings performed very well in test and drove the average check.” McDonald’s will sell Mighty Wings in orders of three, five and 10 pieces, starting at $2.99. 

Pret A Manger starts playing Christmas tunes in August: Sandwich chain Pret A Manger has come under scrutiny in the US for playing a loop of Christmas carols in its Manhattan stores this month. Music choice is determined by Pret’s corporate office and piped into all 36 locations around the city, with store managers powerless to do anything but silence the sound altogether. An employee at Pret’s headquarters confirmed that the unseasonable tunes were a mistake that the company is “working to fix”.

Company news:

Villandry to open third site in November: Villandry will open its third site in November, located off St James’s Street, on the corner of Waterloo Place. Villandry St James’s will have 170 covers, with further seating on the first floor, including two private dining rooms, which will look over the main ground floor dining space and bar. The food offering at St James’s will comprise of a French Mediterranean menu made up of seasonal and locally sourced ingredients, with dishes including dressed Devonshire crab salad, avocado and cucumber jelly, grilled sea bass, artichoke, broad beans, olives, sundried tomato, green beans and quails eggs and 28 day dry-aged Galloway steak fillet served with chips and Béarnaise sauce.

Wagamama, Prezzo, Handmade Burger Co, Las Iguanas, Nando’s, TGI Friday’s and Pret confirmed for London’s discount outlet at in Wembley: All but one of the 15 restaurants that will feature at London’s first designer outlet village, which is set to open this autumn near Wembley Stadium on 24 October, has been let. The London Designer Outlet will be the first centre of its kind inside the M25. The developers hope to emulate the extraordinary success of Bicester Village, which is said to have the highest sales per square foot of any shopping centre in the world and where 65% of shoppers are foreign. The London Designer Outlet is more than 70% let, with just one of the 15 restaurant units left.

Six great-crested newts cause six months delay at McMullens new-build: A colony of six great-crested newts have delayed the building of McMullen’s new build pub in Milton Keynes by six months. Peter Furness-Smith, managing director of the Hertford-based McMullen & Sons, claims they have cost his company £20,000 – and the government has lost £250,000 in taxes. The Prince George of Cambridge at Tattenhoe, the first in the country to be named after the new heir to the throne, had been expected to open later this year. But a series of delays mean it now won’t open its doors until early January. Furness-Smith said: “It is bewildering to have experienced bureaucracy Britain at its best. We have been trying to risk investing some £2.5million to create a new pub restaurant on this site for nearly five years. This, if our projections are correct, will create some 30 jobs and generate around £500,000 per annum in tax revenue for the government. The hoops through which we have had to jump, let alone the setbacks we have experienced along the way, have been fascinating. Work was meant to start in April following the newt issue but was held up again for various administrative reasons so we didn’t get going until July.”

Alpha Value reiterates sell M&B rating: AlphaValue has reiterated its sell rating on shares of Mitchells & Butlers in a research note released last Thursday. It currently has a 356p target price on the stock. At the moment, two analysts have rated the stock with a sell rating, six have assigned a hold rating and five have given a buy rating to the company. Mitchells & Butlers currently has an average rating of Hold and an average price target of 426.97p

Starbucks franchisee to open first Isle of Wight site: Starbucks franchisee 23.5 Degrees is to open the first site on the Isle of Wight, opening in St James’ Street, Newport, in October. The franchisee, which has opened seven Starbucks sites so far, plans to open 12 stores across the south of the UK by the end of the year. Mark Hepburn, director at 23.5 Degrees said: “This is the eighth store we will have opened and we are delighted to bring the first Starbucks to the Isle of Wight. Our partnership with Starbucks represents our company’s progression with a brand which mirrors our own values, sincerely caring about the people in our business, and committed to consistently delivering for the customer and the local community.”

JD Wetherspoon unveils plan to open in Hednesford: JD Wetherspoon has unveiled plans to open a new site in Hednesford, Staffordshire (population: 17,000). It wants to convert the vacant Anglesey Lodge in Anglesey Street into a new pub. If granted the go-ahead, developers plan to completely overhaul the Grade II listed building into a restaurant and bar, ready to open its doors in 2015.Wetherspoon has argued that the pub would act as a counter-balance to a new Tesco scheme. A spokesman said: “It will also promote once again a town centre image and bring the centre of Hednesford away from the ‘Tesco town’ development and retain the historic heart of Hednesford in its true and present position.”

Mother and daughter seek £100,000 in crowd-funding for cat café: Mother and daughter team Catherine and Claire Coulthard are planning to open a cat café in Bath called Minerva’s Moggies café. It aims to help reduce stress by allowing customers to stroke and cuddle cats. Claire Coulthard said: “People come in, they can relax and can be completely undisturbed and sit and cuddle up to a cat.” A cat café has already opened in Devon and another is planned in London – and there are many in Japan. Catherine Coulthard has a degree in catering and the mother and daughter team also run their own marketing and design company. They hope to raise £100,000 through a crowdfunding website. If they do not reach their goal, they are in talks with private investors.

La Tasca in negotiations on two franchise deals: Spanish restaurant chain La Tasca is in negotiations on two franchise deals, it has revealed. The company is embarking on an aggressive refurbishment programme within its current estate, closing a site per week up until mid-November in preparation for peak Christmas trading. Current trading is “very buoyant”, with year-to-date like-for-like Ebitda growth of over 125% up after five months. The company has also had 14 out of 17 weeks of consecutive like-for-like sales growth. It is nine months since its company’s CVA and every month has seen Ebitda growth apart from the snow-hit month of March. Chief executive Simon Wilkinson said: “During the second week of September, the whole company is in Logrono, Spain for our annual conference. It will be a large celebration on the back of great trading results. As well as celebrating, we will be sharing our vision and exciting plans for the future. Our employee turnover is at record lows and we are seeing daily approaches from good people within the industry who are hearing great things from our employees about the culture we have cultivated.”

Nando’s overhauls loyalty scheme with Starbucks inspiration: Nando’s have moved its loyalty scheme online for the first time in an attempt to identify new data-driven marketing opportunities to target customers. The company has replaced its old paper-based scheme with the launch of a card diners can swipe in-store. Customers now collect chillies instead of chickens for every £7 they spend, with a minimum of three needed to redeem a reward. It links to the brand’s mobile app, which has been revamped to coincide with the launch, by allowing users to check on their “Chilli Balance” as well as access a menu, restaurant finder and order notepad. Additionally, an online portal alongside PR, social media and in-store marketing will roll out in the coming weeks to promote what the brand claims is the widest range of rewards it has ever offered. Information garnered from the programme will be used to send bespoke content to users and expand the types of rewards on offer. Nando’s says the card will be at the forefront of its marketing plans by enabling it to use the data to move into new areas. A spokeswoman for Nando’s told Marketing Week that its loyalty programme was overhauled after research revealed diners wanted more from the reward options, and kept losing their paper cards. The spokeswoman said: “Nando’s loyalty rewards programme has been in place for over 15 years and has been pivotal to the success of the business in recent years. We believe that the move into a digital space is an exciting proposition for the brand.” The initiative, created in partnership with Kitcatt Nohr Digitas, takes inspiration from last year’s My Starbucks Rewards scheme to drive “a deeper emotional bond” with customers. Customers have until 30 June 2014 to use their existing rewards on the old paper card.

Closed Oxford Hotels and Inns site on the market for £800,000: An Oxford Hotels and Inns site, the closed three-star, 23-bedroom Old Brewery House hotel in Reepham, Norfolk, has gone on the market for £800,000. Oxford Hotels and Inns operated around 40 hotels until December 2012, when Bespoke Hotels took over the management of 34 of the properties. Oxford Hotels and Inns now operates only the Best Western Derwent Manor in Allensford, Northumberland, and the Scole Inn in Diss, Norfolk. Ashley Clark, director at Colliers International, which is selling the Reepham site, said: “We are confident that we will be able to find a new owner to invest in the hotel and realise the great potential of this property. Over the past few years during the difficult economic climate, we have handled many similar cases of hotels which have ceased trading but we have still been able to reach a positive outcome for the previous owners and the local community.”

Costa Coffee lines up first drive-thru site in Wales: Costa Coffee has applied for planning consent for the first drive-thru Costa coffee in Wales, located on the Enterprise Park in Swansea. The drive-thru style outlet is planned to be built on Heron Way, between an Asda superstore and a Premier Inn hotel. The Swansea development,should be open by summer 2014. The coffee shop will anchor a £2 million development by South Wales-based developer Actoris.

Douglas Jack – we’re expecting circa 5% like-for-likes at Greene King: Numis Securities analyst Douglas Jack has forecast Greene King will deliver a strong first quarter trading update on Tuesday 3 September. Jack has a hold recommendation on the shares with an 875p target price. He said: “We expect trading to be strong and ahead of our assumptions. In our view, 2014E forecasts (PBT £171.3m; consensus £171.7m) should be held at this stage, but are likely to be upgraded later in this 53 week year, aided by the year-end almost coinciding with a year (to March 2014) of easy weather comparables. Managed like-for-like sales rose 3.3% over the eight weeks to 23 June with food and accommodation outperforming. Trading was boosted by better weather (20% less rainfall) but it was still a good result against a 7.1% comparable (that included the Diamond Jubilee and Euro 2012). Over the last two months, the comparable has eased to 3%. Given this and favourable weather, Quarter One like-for-like sales should be up circa 5% in our view.”

Wayne Brown – The Restaurant Group is well-positioned for long-term growth: Canaccord Genuity analyst Wayne Brown has issued a “Buy” note on Restaurant Group shares with a target price of 650p ahead of first half results on Friday. He said: “We appreciate some investors are reluctant to pay, or over-pay if necessary, for ‘quality’ but we feel Restaurant Group is well positioned to deliver long-term growth. Whilst some investors may be put off with the current valuation, one should recognise the consistency yet improving trend of the group’s returns. With negligible debt, cash returns to shareholders could rise. The current market cap places a value of circa £2.3m per restaurant versus an average circa £1m per site fit-out cost. A multiple of 2.3x is not excessive for a business that achieves cash payback in just over two years.” On the company’s new fourth brand, Coast to Coast, Brown said: “Confidence behind the rollout of its fourth brand Coast to Coast is growing such that our initial expectation of 50 restaurants by 2016/17 may prove light.”

Living Ventures to open fourth pub site: Living Ventures, the company co-founded by Tim Bacon and Jeremy Roberts, will open its fourth pub site under the New World Pub Company (NWPC) name later this year. The new site is to be called Smugglers Cover and will open in Liverpool’s Albert Dock in November. Living Ventures co-founder Tim Bacon said he planned to open up to four to five New World Pub Company sites a year. Its existing sites are Oast House in Manchester’s Spinningfields, the Botanist in Alderley and a second Botanist in Leeds Trinity shopping centre. Living Ventures currently has 32 sites across the UK. It will open Manchester House with Aiden Byrne, which the group hopes will win a Michelin star for Manchester, in September.

NatWest strengthens leisure team after three deals: NatWest has strengthened its leisure team after concluding new finance deals with three sector companies – Bloc, Banana Tree and Polpo. Relationship director Steve Crosswell, Senior relationship manager Michael Tsachtsiris and deal support manager Jay Patel join the hotel and leisure team for London and the south east, led by Stavros Beyiazi. Andrew Taylor, head of leisure for commercial banking at NatWest, said: “We take the appointment of new managers very seriously and we are delighted to be further strengthening the team. I am delighted that Steve, Jay and Michael are now part of this expanding team, which has recently concluded transactions with operators such as Bloc, Banana Tree and Polpo.”

Subway opens 40,000th site – in England: Sandwich chain Subway has opened its 40,000th outpost worldwide – at an Applegreen petrol station in Ipswich. The company has added 1,761 outlets since the start of 2013 and plans to add another 10,000 new locations by 2017. Subway executives believe it might be possible to cross the 100,000 location threshold by 2030.

Le Coq rotisseie opens: The Le Coq rotisserie restaurant has been opened by sisters in St Paul’s Road, Islington, London. The restaurant describes itself as a simple neighbourhood rotisserie. Co-founder Ana Morris is a Leith’s-trained chef who has cooked at Rochelle Canteen, La Trompette, while Sanja Morris helped to found the Salt Yard group. Their new venue offers a weekly changing menu of two or three courses built around free-range Suffolk chickens served with triple-cooked chips and sides such as rainbow chard with pancetta.

Elysium Group plans £5m Colchester hotel, restaurant and wine bar: Essex-based Elysium Group has submitted a £5m plan to knock down a Colchester town centre pub and replace it with a boutique hotel, restaurant and bar. The Elysium Group wants to flatten most of the River Lodge venue, in Middlesbrough, and build a 50-bed hotel and a “high quality” wine bar and restaurant in it place. The proposals will be displayed to the public for the first time at a consultation event on Tuesday evening, ahead of a submission to Colchester Council’s planning team later this year.

Orient-Express completes Le Manoir refinance: Hotel group Orient-Express Hotels has completed a €30m (£25.8m) refinancing with Barclays of two of its hotels, Le Manoir aux Quat’Saisons in Great Milton, Oxfordshire, and Reid’s Palace in Funchal, Madeira. Established in 1984 by Raymond Blanc and the holder of two Michelin stars, Le Manoir today has 32 bedrooms, a cookery school and a renowned kitchen garden, while the five-star Reid’s Palace has 128 bedrooms and 35 suites. Orient-Express acquired a majority stake in Le Manoir from Sir Richard Branson’s Virgin Hotels for £27.5m, in a deal that included a 50% holding in Le Petit Blanc.

Searcys to open Birmingham site: Contract and event caterer Searcys is to open the Birmingham Repertory Theatre’s (REP) Centenary Bar & Brasserie on Centenary Square this September after a two and a half year refurbishment. Searcys, the company behind the catering at the Gherkin, St Pancras Grand and 30 Euston Square in London, was rewarded the £13m contract after a tender process late last year. The company will be providing all catering at the venue, which will include the 90-cover restaurant, external terrace and onsite café and bars, as well as the dedicated conference and banqueting offer, over the next five years.

High level of interest in Convivial package: Agent Christie & Co has reported “great interest” in the six-strong Convivial London Pubs portfolio Bidders for the pubs for sale, The Mitre Hotel in Greenwich, The Lamb Brewery and The Crown & Anchor in Chiswick, The Clifton Hotel in St John’s Wood, The Botanist Brewery in Kew and The Hansom Cab in Kensington, have been set a first-round offer date by Christie & Co of 9 September. Neil Morgan, director and head of pubs at Christie & Co, said: “The response of the market to this unique opportunity is most encouraging.” Offers should be made by 12 noon on 9 September in writing or by recorded delivery to Neil Morgan, Director, Christie & Co, Whitefriars House, 6 Carmelite Street, London EC4Y 0BS.

D&D restaurant installs ‘anti-suicide’ fence: The D&D-owned Coq D’Argent restaurant in the City of London has erected a two-metre “anti-suicide” fence around its rooftop garden after four deaths in five years caused it to be regarded as a “suicide hotspot”. The restaurant, on the seventh floor of One Poultry, hired a special security guard to patrol the terrace and announced its intention to install the heightened barrier earlier this year. However, the new barriers have not met with the complete approval of the restaurant’s customers. One told The Daily Star newspaper at the weekend: “The gardens are wonderful, but these new barriers are an absolute eyesore. It has spoiled it for me. Just because a few sad souls felt the need to end it all.”

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