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Wed 4th Sep 2013 - Five Guys, Greene King, Living Ventures and Prezzo results

Story of the day:

Prezzo to open 30 restaurants this year; July heat moderated growth rate: Prezzo, the restaurant company led by Jonathan Kaye, will open 30 restaurants in 2013, with 23 of these coming in the second half of this year. The company reported adjusted pre-tax profit 12% higher at £8.5m (2012: £7.6m) in the 26 weeks ended 30 June and sales up 17% to £79.7m (2012: £68.1m). Openings in the first half included Prezzo’s first site in Northern Ireland, in Victoria Square in Belfast, a Chimichanga on Wimbledon Broadway and two units within the new Whiteley Shopping Centre at Fareham in Hampshire. Since the end of June, Prezzo has opened a further six new restaurants and is currently trading from 222 restaurants (2012- 194), with 181 Prezzo and 33 Chimichanga units. The company stated: “With this rate of growth in mind, we continue to strengthen the Prezzo team, with recent key appointments in the areas of property, supply chain and facilities management, to ensure that expansion is carefully managed and costs are well-controlled. The pipeline for openings over the next 18 months is well-developed and the second half will see openings in Windsor, Leeds, Oxford and Wembley. By the end of year, we would anticipate having opened approximately 30 new restaurants in 2013.” Chairman Michael Carlton added: “We are very pleased with the first half performance and while the high temperatures in July did lead to some moderation in our growth rate, with our opening programme comfortably on track and providing some exciting opportunities over the remainder of the year, we remain confident of delivering a satisfactory outcome for the year as a whole.” The company launched a new brand Cleaver in Cobham Surrey in June and will add three more Cleaver sites before assessing its potential for further roll-out.

Industry news:

Quebec hotelier sues over TripAdvisor review: A hotel in Canada is suing a former guest for $95,000 in damages over a review he wrote on the travel site TripAdvisor. It also wants the negative review, which is still online, taken down. But the lawyer for the Montreal man who wrote the review says the “frivolous” defamation lawsuit will be quashed in court like the bedbugs her client claims he found in his room. “Cleanliness is the name of the game in the hotel business,” said Quebec City lawyer William Noonan, who filed the motion in Quebec Superior Court here last month on behalf of l’Hôtel Québec.

First new Pizza Hut in six years opens in New Zealand: The first brand new Pizza Hut store to open its doors in six years in New Zealand has been unveiled. Andy Masood, head of development at Pizza Hut, said the opening of the new outlet signalled a renewed focus on the market and was an exciting time for the brand. “We’re thrilled to see the brand expanding once again in New Zealand,” he said.

Company news:

Koh-Thai Tapas fails in bid to register Thai Tapas as trademark: Lawyers acting for three-strong Koh-Thai Tapas chain have been unable to register the term Thai Tapas as a trademark after writing to a rival Thai concept, the six-strong Giggling Squid, calling on it to stop using the term. Koh-Thai Tapas plans to open up to another six restaurants, at sites in London, Southsea, Bath, Cheltenham, Oxford and Brighton. A letter from lawyers to Giggling Squid in December 2012 stated: “The continued presence in the market of your business operating under the name ‘Thai Tapas’ is likely to cause substantial damage to our client’s reputation and goodwill.” A spokesman for Giggling Squid said: “Perhaps someone will try and claim exclusivity for ‘French Restaurant’ or ‘Indian Takeaway’.”

Alderway Leisure to invest £4m in former Luminar site: Alderway Leisure is to invest £4m in the former Luminar Liquid and Life site in St Mary’s Street, Cardiff. The venue will re-open as Maddison, a bar, restaurant, and nightclub, occupying the former Life site and DC Nightclub, in the former Liquid part of the premises, in November. Managing director Richard Jackson, who oversaw the opening of Liquid and Oceana in the city, said: “We believe we have seen a gap in the market as the night time economy has become stale, with no new proper nightclubs opening for seven years. The Life site will see an exciting new concept bringing quality casual dining into St Mary’s Street, with quality bars and an area for the over 23s to enjoy the whole night.” Food and beverage director is Dave Sims, who owned the city’s most successful restaurant and bar Le Monde, le Brasserie and Champers. “The team at Maddison and DC will set new standards for customers in Cardiff and will start the re-generation of St Mary’s Street back to its former glory,” Jackson said.

Wear Inns reports turnover surge after TGC deal: Wear Inns, the 26-strong north east managed operator led by John Weir and chaired by former Pubmaster boss John Sands, has reported turnover increased by 58.4% to £11.75m in the year to 31 March 2013, up from £7.42m. The company reported losses of £302,000 in a year it acquired and invested in another 11 pubs. Wear made a pre-tax profit of £64,000 the year before. The company raised £10m in May 2012: £2m from NVM Private Equity and £8m from the Business Growth Fund. It bought nine pubs from Tattershall Castle Group the same day as the funding completed for £6.4m and £400,000 of costs. In September last year it bought two pubs from Orchid for £860,000. Post-acquisition investment took total in the estate to a little over £9m in the year. The company reported a 54.7% increase in gross trading profit in the year.

Greene King applies to open second Hungry Horse in Blackpool: Greene King has applied to open a Hungry Horse at Thornton, near Blackpool, having opened a first, The Cherry Tree, in Blackpool earlier this month. The company plans to build the new premises on an unused greenfield site around 1.5 miles from the town centre, saying there are no suitable existing sites available, and aims to have it open with a year. A Hungry Horse spokeswoman said: “We hope to have the pub ready to welcome in customers by late spring 2014.”

Beannchor to open licensed trade ‘holy grail’ with The National Grand Cafe Bar in Belfast: Northern Ireland multi-site operator Beannchor is to open what its chief called the “holy grail” of the licensed trade, a multi-dimensional site that trades well from early to late. Around 40 people will work in The National Grand Cafe Bar in High Street and Patisserie Mimi next door. The patisserie will include the first fully-fledged bakery to open in Northern Ireland in nearly 90 years. The bar, which is due to open on 12 September, will open first thing in the morning, serving breakfasts cooked in its own kitchen, and baked goods from Mimi. Bill Wolsey, managing director of Beannchor, said: “What we are doing here is the holy grail for publicans, a building which you can open early and operate fully selling food throughout the day and morph into a complete night-time venue. That’s what everyone’s searching for.” Wolsey said the bar would boast “the biggest beer garden in Belfast”, with one part branded Magners Irish Cider and the other, Jameson Whiskey. The building is the former headquarters of the National Bank of Ireland, and there are also plans to open a nightclub in the upper floor of the partly-listed building at a later date. The Beannchor portfolio will expand again at the end of the year to include the Dirty Onion, a traditional music centre and pub in the Cathedral Quarter. Wolsey recounted an experience in London which he said highlighted the challenges of pubs. Passionate members of staff were making coffee and selling pastries to a packed cafe, with coffee drinkers tapping away on their laptops. He said: “Next door there was a old-style Victorian pub with giant windows. It was a beautiful building, but there was just one barman reading the paper and an old man having a drink, and I have never had a clearer illustration of how irrelevant pubs are becoming.”

Douglas Jack – we are Hold’ on Greene King shares but upgrades possible: Numis Securities leisure analyst Douglas Jack has issued a ‘Hold’ note on Greene King shares a target price of 875p for its shares. He said: “First quarter trading is ahead. We are holding our 2014E forecasts (PBT £171.3m; consensus £171.8m), but believe upgrades are possible later in the year. Weather-related comps will be easy for the majority of the financial year. We view the calendar 10.5x EV/EBITDAR valuation as fair owing to the potential for earnings upgrades later in the year. This valuation compares to 9.7x for Marston’s (ADD; TP 185p), 9.9x for Mitchells & Butlers (ADD; TP 500p) and 11.8x for The Restaurant Group (REDUCE; TP 400p). We believe all these companies are capable of generating circa 10% earnings growth in 2014E.”

McDonald’s UK – our staff are happy with zero hours contracts: McDonald’s UK’s vice-president of people, Jez Langhorn, has defended the fast-food chain’s use of zero hours contracts. Speaking to HR magazine, Langhorn said the majority of the company’s employees are on “flexible contracts”, which entitle them to all the benefits and rewards, and access to training and qualifications, of a permanent contract. “We never have, and never will have, people sitting at home on standby waiting for the phone to ring,” he said. “We spend a lot of time and money training our people, so it wouldn’t make sense for them to be at home with zero-hours.” He cited himself as an example of how the controversial contracts work for McDonald’s staff. “When I first started at McDonald’s, at the age of 16, I wanted to work ten-hours a week and that is what I got given,” he said. “Then when my exams came, I wanted two months off to study, and the flexible nature of my contract allowed this. After my exams I wanted full-time hours, and again the flexibility in my contract allowed me to work 40-hours a week. We do an annual staff survey to gauge thoughts on a whole host of different issues and one question we ask is around employee contracts,” he said. “From a response rate of 90%, around 94% of our employees said they were happy with their hours and the flexibility of their contract.”

New Richard Caring concept Grill Shack opens today: Grill Shack, the new Richard Caring-funded all-day grill concept, opens in Beak Street, central London today (4 September). The food menu focuses mostly on grilled items prepared in an open kitchen with value price points. The all day menu runs from 11.30am and offers grilled rump steak with shoestring fries and smoked butter (£9.95), a 100% British beef burger (single or double patties with optional Monterey Jack and bacon for £4.95 or £1.95 more for a second patty), grilled half chicken with choice of Grill Shack sauces (£7.95) and halloumi salad with green leaves, quinoa and beetroot (£7.50). Side dishes include French fries (£1.95), grilled corn with chipotle (£2.95) and green salads (£1.95). Breakfast, served between 8am and 11.30am, is a large part of the offer and includes a full grilled breakfast (maple bacon, fried eggs, sausage, grilled tomato and sourdough for £5.95), buttermilk apple pancakes with syrup (£3.50), cinnamon French toast (£2.50), bacon brioche roll (£3.50) and grilled sourdough with two fried eggs, scramble eggs or bacon (£1.50). The stripped-down drinks list includes a specially crafted Grill Shack lager by Brewers & Union (£2.75 for a 284ml glass) and a selection of wines on tap (£3.25 for a 175ml glass). It also offers fizzy drinks from a self-serve drinks counter with one free refill (£1.95), a range of healthy juices including homemade green juice (£2.95) and filter coffee in hand-made American diner mugs with one free refill (£1.95). There is a choice of two puddings – carrot and walnut layer cake or ice cream cookie sandwich (£2.95). Service at Grill Shack will be focused on ordering at the counter but members of staff dressed in industrial denim aprons will also be on hand to help guests who choose other ways to order: touchscreen order points for self-order and payment and a Grill Shack app for ordering and payment at the table, which is claimed to be the first in the UK. The directors of Grill Shack are Mark Askew, previously of Gordon Ramsay, and Hannah Bass, previously of Hakkasan and ETM Group. Richard Caring also backs Cote and Bill’s and funded the opening of Balthazar in Covent Garden, London. Grill Shack seats 70 upstairs and 20 downstairs.

TGI Friday’s hires social media agency Telegraph Hill: TGI Friday’s has hired the social media agency Telegraph Hill to support its upcoming autumn cocktail campaign. Barry Pilling, co-founder of Telegraph Hill, said: “Having delivered campaigns for some of the biggest brands in TV and Radio, we’re thrilled that TGI Friday’s has recognised the value of our new content marketing methods. Social media marketing needs lots of great ideas to succeed and we’re looking forward to rolling out our ambitious new approaches with the forward thinking team at Friday’s.” Telegraph Hill will also be involved in handling the ongoing 2013 social activity for TGI Friday’s.

Hoi Polloi to open in Shoreditch: Hoi Polloi, a new restaurant from Bistrotheque and Shrimpy’s operators Pablo Flack and David Waddington, is to open in Shoreditch’s Ace Hotel. It will be an all-day restaurant and bar, and accessed through the hotel’s Hattie Fox’s Flower Shop. The same menu will be offered at the restaurant, which seats 100 and where customers can book tables, and at the bar, which seats 50 but will be kept specifically for walk-ins. It will open on 3 October.

Vinoteca to open fourth site in Chiswick: Wine bar, restaurant and wine shop concept Vinoteca is to open its fourth site in Chiswick, West London in late September. It will be located on the site of the former Oriental Brasserie on Devonshire Road. The restaurant will feature a wine list of more than 270 wines from around the world. Vinoteca has sites in Farringdon, Marylebone and Soho in central London. Of the new site a spokesman said: “After three sites in central London locations, Vinoteca is excited to have been able to secure a fantastic little site in Chiswick. We feel that our emphasis on carefully sourced, high quality and great value wines alongside our daily-changing seasonal menu will complement Chiswick’s diverse range of bars and restaurants. We look forward greatly to being part of the Chiswick scene.”

Simon French – we are ‘Hold’ on Punch Taverns shares: Panmure Gordon leisure analyst Simon French has issued a ‘Hold’ recommendation and a Target Price of 7p on Punch Taverns shares after yesterday’s trading update. He said: “The group says that a consensual balance sheet restructuring can be launched during H2 and will provide an update in due course. The stock trades on a CY 2014E adjusted EV/EBITDAR of 10.7x (compared to Enterprise Inns on 10.0x) but we think the only certain equity value is in the group’s shareholding in Matthew Clark (circa 7p per share). We therefore reiterate our ‘Hold’ recommendation and 7p Target Price.”

Wimpy in Enfield closes after 30 years: The Wimpy site in Southgate, Enfield, North London has closed its doors after 30 years of trading. The chain was established in 1954, with its first shop opening in Coventry Street in central London. It then reached heights of more than 1,000 stores across 23 different countries during the 1960s and 1970s. In 2007, the Wimpy South Africa franchise purchased Wimpy UK, and the chain has gone under major re-branding with a completely new menu.

BBC to air documentary on Living Ventures’ quest to gain Manchester’s first Michelin star: The BBC will air a documentary next spring on the partnership between Living Ventures and chef Aiden Byrne to open the first restaurant in Manchester to gain a Michelin star. The 76-cover collaboration Manchester House restaurant and lounge opens on 17 September with a “fresh and innovative menu boasting modern British cuisine with a twist”. Living Venture chief executive Tim Bacon said: “It’s great to be doing something that is not being driven by commerciality. Manchester House is all about pushing the boundaries, delivering our interpretation of fine dining and staying true to that endeavour. I want people to come here and enjoy the experience in both the restaurant and lounge in a relaxed environment. I want our customers to feel as if they belong – and if we manage to get a star along the way that would be marvellous.” Byrne said: “This is a fantastic new challenge for me and my team. We have been very working hard to ensure Manchester House will be a memorable dining experience and we’re excited to finally unveil it on the 17th.”

Five Guys opens second UK site: Five Guys, the better burger concept, has opened its second site, at the Oracle centre in Reading. The opening comes after the launch of the brand in Covent Garden, central London. Steve Belam, general manager at The Oracle, said: “We’re very proud to welcome Five Guys to The Oracle to complement our existing food offer. This will be only the second store for the brand in the UK, a real honour for the centre and for Reading. The arrival of Five Guys also means that the centre is 100% let in terms of retail space, a fantastic achievement and one that further enhances our reputation as a leading destination in the region.”

Grade II Listed hotel in Aberaeron is put up for sale: The freehold of the Harbourmaster Hotel, the acclaimed Grade II Listed hotel and restaurant in Aberaeron, Ceredigion, has gone on the market for £2.7m. This venue has 13 bedrooms and a 50-cover restaurant and bar. Jonathan Hill, director of hotels for Christie + Co in Bristol, said: “The Harbourmaster is one of the most visually distinguishable buildings on this part of the Welsh coastline, and a superb hotel and restaurant business to boot. Its chic and cool styling makes it an extremely popular destination for dining and accommodation, with good year-round trade generated from both locals and tourists alike.”

Masterchef finalist takes Star Pubs & Bars site: Masterchef finalist John Calton and his business partner James Laffen are the new tenants of Star Pubs & Bars New Dolphin on Fish Quay in North Shields, which will see a £291,000 investment from the company to turn it from a run-down drinkers’ pub into a destination food pub. The investment is part of a total spend of £932,304 by Star Pubs & Bars over the next three months in six pub refurbishment schemes in the Newcastle area, adding additional income streams wherever possible to broaden the pubs’ appeal and ensure they remain at the heart of their communities. Prior to taking on the lease of The New Dolphin John was head chef at The Harbour Lights in South Shields and The Duke of Wellington in Newton near Corbridge. Both pubs featured in the Michelin eating out in pubs guides. He has also worked at three different Michelin-starred restaurants. Said Calton: “One of the things that attracted me to take on the lease was the fact that Star Pubs & Bars was prepared to invest in the site. You’re not going to get that kind of money from a bank. How else would I get the chance to get involved with the kitchen design and run a fantastic pub serving really good seasonal food in such a great location.”

Scottish ‘world buffet’ restaurant for Blackpool: A “world buffet” restaurant in Ayr, Scotland is opening south of the border as the first new tenant in a former bus station spruced up as part of a £6m makeover. Basrai World Buffet serves Chinese, Indian, Italian, Mexican, sushi, piri-piri, barbecue and “classic British” dishes. It has now signed up to move into one of the ground floor units being created in the former bus station beneath the redeveloped Talbot Road car park in Blackpool’s business district. Restaurant owner Raghbir Singh Basrai said: “We already have one thriving seaside location, and are looking forward to getting started in Blackpool.” At the same time two other food outlets are set to take leases in a nearby development being built as part of the £220m Talbot Gateway Central Business District scheme that will house new council offices. A lunchtime self-service restaurant and take-away outlet called Snack, and an “internationally known food outlet”, whose name has not yet been revealed, have agreed leases. Richard Beckett, from Snack, said: “We are a local family-run business and we’ve been looking for something like this for some time.”

Biotechnology entrepreneur buys Scottish hotel in Glenshee ski area: Biotechnology entrepreneur Dr Roger Aston has bought the 17-bedroom Dalmunzie Castle Hotel in Perthshire off an asking price of £1.4m. It lies within the Dalmunzie estate and golf course and is close to the Glenshee ski area. It was previously owned by Scott and Brianna Poole. Dr Aston is executive chairman of Pitney Pharmaceuticals and serves on the boards of several start-up companies and pharmaceutical companies. A major investment programme to enhance the position of Dalmunzie as one of the prime castle hotels in Scotland is planned. Ken Sims, director of Christie + Co in Edinburgh, said: “While the traditional hotel market has encountered difficulties over the past five years, quality castle hotels have seen strong demand. There was substantial interest in Dalmunzie from both UK as well as overseas buyers from India, South Africa, Australia and the US, as well as Europe. Demand for this type of business certainly exceeds supply which is encouraging for the hospitality industry.”

Wrap it Up! opens ninth outlet: Gourmet wrap chain Wrap it Up! has opened its ninth outlet, with two more opening in early September. The three openings will bring the number of Wrap it Up! outlets in London to 11. The first of the three has opened in Monument in the City, with the next two opening nearby in London Wall and Aldgate. The company has also launched a new breakfast menu at Monument to coincide with the opening. The menu features a sausage and egg wrap, made with British beef, chestnut and oyster mushrooms and scrambled eggs, as well as a toasted cheese and tomato flat wrap. Wrap it Up’s chief executive, Tayub Mushtaq, said: “We are delighted to have opened our ninth store and look forward to opening our next two outlets in the coming weeks. The Monument outlet is the first within the company to incorporate the new-look in terms of signage, interiors and artwork, undertaken by leading designer Julian Bigg. The introduction of our new breakfast menu is another important step in the company’s development and we will be looking to add other new wraps to our menu in the coming months.” The Monument outlet and those at London Wall and Aldgate are on the site of the former Flying Burrito outlets, purchased by Wrap it Up! in July.

Hotcha aims to be UK’s number Chinese takeaway: Bristol-based Chinese takeaway chain Hotcha has opened its first site in Swindon and its eighth in total. The company has opened an outlet at Regent Circus and created about ten new jobs with the scheme. Hotcha is planning an ambitious roll-out of its sites over the next five years. It has appointed the Bristol office of Smith & Williamson to support the expansion. James Liang, the founder of Hotcha, said: “We are delighted to be opening our first Swindon store, which marks the start of our expansion along the M4 corridor. I am confident it will be as successful as the others stores have been. These are seriously exciting times for Hotcha. We have ambitious growth plans and aim to be the number one takeaway chain in the UK in the next few years.”

Brewdog fund-raising hits £3m: Scottish brewer and retailer Brewdog has officially broken its own crowdfunding record, raising £3m in two months through selling shares to beer fans with its “Equity for Punks” scheme. The record-breaking start to the campaign takes the brewery three quarters of the way to reaching its ambitious £4m target in less than a third of the time it allocated to the programme. The company – Britain’s fastest growing food and drinks brand – made 42,000 shares available to anyone to buy online at £95 each, ignoring traditional methods of funding to support its continued rapid growth. Brewdog co-founder James Watt said: “Raising £3m in just two months demonstrates the epic support behind the craft beer revolution. We are now well past our previous record of raising £2.2m in 2011, and fast approaching our £4m target, with over 10,000 individual investors now owning shares in Brewdog. Equity for Punks is rewriting the rules of business finance and it’s putting our customers right at the heart of our operation. The phenomenal success of Equity for Punks has proven how much our fans believe in our mission to redefine the UK beer scene. We want this expanding community of beer punks to share in our growth and come along for the ride.”

DHP Family to open major East London food and music venue: The music venue operator and promoter DHP Family is to launch its first London venue, Oslo, at a 7,000 square feet site next to Hackney Central Station, where a new 15-year lease has been granted by Network Rail. In addition to an all-day restaurant and café, Oslo will be home to a new music-led venue. DHP Family also operates Rock City in Nottingham and Thekla in Bristol. Oslo is due to open this autumn with a 3am licence. This is the first London venue from DHP, which also runs the 20,000-capacity Splendour festival in Nottingham, as well as Dot to Dot in Nottingham, Manchester and Bristol and Gathering in venues across Oxford. Alex Hill, an associate director at Colliers International, who oversaw the acquisition, said: “Hackney and East London are one of London’s fastest growing leisure hubs and this venue’s location in the dynamic and burgeoning area of Hackney Central will appeal to the strong cultural identity of this part of London. This acquisition represents a fantastic opportunity for DHP as their first London venue. It will cater for both daytime and night time trade, maximising the opportunity to provide an exciting new destination for all aspects of the local and wider communities in Hackney Central and East London.” DHP Family was awarded National Promoter of the Year at the Live Music Business Awards 2012 and was nominated for a Music Week Award in April. It also recently reported that turnover had grown by more than 66% since 2009 to £15m in 2012. As a promoter, it currently puts on more than 1,200 gigs per year and has promoted tours by Lana Del Rey, Ed Sheeran, New Order, Flaming Lips and many more. George Akins, managing director at DHP Family, said: “It’s great to be making an impact in East London. Following on from the opening of our London Fields office last year, it’s really exciting to be bringing the Oslo venture to Hackney Central. And, of course, it’s pleasing to reflect a bit of my Norwegian roots in the Oslo name.”

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