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Mon 9th Sep 2013 - Bulldog, Costa, Harris + Hoole, Stonegate and Whitbread

Story of the day:

Quick-service outlets see customer satisfaction rise as full-service restaurants slip: Customer satisfaction with quick-service restaurants in the UK is as high as it is for full-service restaurants for the first time since surveys began four years ago, according to The National Customer Satisfaction Index. The index’s second-quarter survey saw customer satisfaction with limited-service restaurants rise 2.6% to 78 out of 100, the fourth consecutive year of improvement for the QSR sector. Full-service restaurants, however, saw their consumer satisfaction rating fall 2.5%, again to 78. Claes Fornell, founder and chairman of the US-based ACSI, parent of the UK National Customer Satisfaction Index, said: “This is bad news for full-service restaurants. If fast food provides the same level of diner satisfaction, what can full-service restaurants compete on? Certainly not price. But they will be forced to.” Among “limited service” brands, McDonald’s saw the biggest year-on-year leap in customer satisfaction, up by 7% to a score of 74, with Burger King by up by 1% since 2012 to 72, its highest customer satisfaction score to date. Greggs kept its lead among large sandwich chains, rising 5% to an NCSI score of 80. Subway rose 1% to 79, matching the average of all other, smaller quick-service and sandwich shops. For the top two coffee shop brands, Costa rose 3% on the year to run neck-and-neck with Starbucks (up 1%) at 76. The two Yum! Brands franchises, KFC and Pizza Hut, saw their joint customer satisfaction levels climb 4%, again to 76. Overall, limited-service restaurants scored well on most customer experience benchmarks, with satisfaction on the quality of the food at limited-service restaurants, at 81 points, not that far behind that of full-service restaurants at 84. However, one warning flag comes over the score for satisfaction with brands’ websites, at only 76, three points behind the score for the category in the full-service restaurant survey. This is against a decline in customer satisfaction overall in the full-service sector, with only Tragus, owner of Cafe Rouge, Strada and Bella Italia, showing a rise, up 1% to 75, while Nando’s and Whitbread stay steady on 75 and 74 respectively and Gondola (ASK, Zizzi, PizzaExpress, Byron), down 3% to 73, while the Restaurant Group (Frankie & Benny’s, Chiquito) fell 1% to 71. The Q2 2013 NCSI report on limited-service restaurants and full-service restaurants is based on interviews with more than 6,000 customers during the second quarter of 2013.

Industry news:

World systems leader to speak at next Propel Multi Club Conference: The world’s leading expert on kitchen systems and volume management will speak at the next Propel Multi Club Conference on Thursday 7 November. Brian Sill, president of Deterministics, the company that introduced kitchen systems at Mitchells & Butlers, currently working for Panera Bread, TGI Friday’s and others, looks at current trends in foodservice systems and how you get organised to deal with high kitchen volumes. Operators can book two free places by e-mailing The event is being held at One Moorgate Place, London.

AB InBev opens test lab to identify new drinking occasions: AB InBev is opening an analytics hub at the University of Illinois to gain insights into consumer preferences and industry trends in the hope of identifying new drinking occasions. AB InBev is to launch a research hub to develop insights into emerging alcohol trends. The “Bud Lab” opens at the University’s research park next month and will focus on using data analytics and developing data research and innovation to solve problems ranging from social media trends to large-scale data programs. Other projects will include pricing analysis, promotional strategies, and on-trade campaigns. The lab is a global initiative that will support AB InBev’s brand teams around the world.

Technomic - for chain restaurants, brand storytelling can get lost: Daren Tristano, vice president of research and insights firm Technomic, has stressed the importance of brands personalising their story. He said: “There are missed brand-boosting opportunities when the chief executive serves as the sole voice of the concept and any other nod to the people behind the brand is relegated to an “about us” page buried on the chain’s website. Restaurant concepts are dynamic, as are their people, and there are interesting personal stories for concepts of all sizes to tell. In fact, it could be argued that the larger the business, the more valuable it is to share stories of those involved most closely in shaping the day-to-day restaurant experience – from corporate executive chefs to unit-level staff. Introducing team members to the public via blogs, social media and even culinary events conveys a message that the chain values its employees and recognises the role that all employees play in helping the concept meet its overarching goals.”

France to debate “home-made” restaurant legislation this week: France’s upper house will debate legislation this week that would force restaurant owners to label dishes made in-house with fresh ingredients – and indicate to customers when they are not. The “fait maison” or “home-made” legislation, which will go to the senate following lower house approval in June, comes in response to what many people in France perceive as rapidly declining restaurant standards.

Company news:

Harris + Hoole closes loss-making site: Harris + Hoole, the coffee shop operator part-owned by Tesco, has closed a shop for the first time, a site in Ruislip. A spokesman for the company revealed that it was ‘simply wasn’t viable’ to keep the shop open because of financial losses. He said the remaining shops were doing well and there are no plans to close any others. The shop in Ruislip High Street ceased trading yesterday, less than a year after opening. Eleven staff members recruited to the store will keep their jobs but be transferred to other shops, which are spread around London and the south east, including an Uxbridge shop in the High Street. Meanwhile, Harris + Hoole is in negotiations to open sites in Kings Cross, New Malden, Sudbury, Surrey Quays, Weybridge, Horsham and Hatfield.

Costa celebrates success of temperature-triggered ads for iced coffee: Costa Coffee has revealed that a series of advertisements at selected London Underground stations during the summer to build awareness of its iced beverages that were activated only when the temperature exceeded 22 degrees brought a dramatic boost to sales. Ben Cook, retail marketing manager at Costa, told Marketing Week: “Throughout June and July, when the ads were running, we had our most successful year ever for Costa Ice. At some points it represented more than a third of our beverage sales, which is a huge improvement.” Cook said the campaign was planned in advance of the heatwave and there was no contingency plan if the weather had been poor. AB InBev also ran heat-activated location-based ads over the summer for its Stella Artois Cidre brand. The ads, developed in partnership with Posterscope and Liveposter, were triggered when the temperature rose two degrees above the average for the time of year in each location.

McLean Inns buys seventh site: Family-owned McLean Inns has bought its seventh site in the south east – The Olde Swan Hotel in Chertsey, which has been acquired off a guide price of £625,000. “It’s always a pleasure to see a pub with such a history continue to serve its area as it always has done,” said agent AG&G’s James Grimes. For further information, contact Michael Penfold on 020 7836 7826 or e-mail

Bulldog Hotel Group reports 8.1% increase in August like-for-likes: Bulldog Hotel Group, the operator of seven coaching inns led by Kevin Charity, has reported that August like-for-likes sales were up by 8.1%, and are 7.6% up in the year to date – 22 weeks from 1 April 2013. Chief executive Kevin Charity said: “We are currently 17% up on overall turnover, excluding our latest acquisition in Market Harborough. If we were to include the eight weeks at Market Harborough then would have been 25% up on turnover. We have been trading well for the last four years and have always been in positive growth – however, this summer has been an extra bonus and looks to continue into September.”

Licence at Richmond Revolution bar suspended for the weekend: The licence of the Revolution vodka bar in Richmond,  owned by Inventive Leisure,  was suspended for the weekend after ‘constant bad behaviour from late night troublemakers’. The Revolution bar was shut at the weekend,  6 to 8 September,  after continuing problems with antisocial behaviour. The late night venue in Whittaker Avenue will have its operating hours reduced when it re-opens on Monday. From Monday,  the venue will shut at 11.30pm instead of 1am. The previous manager has left the venue and a new manager brought in.

Lady Bamford opens Wild Rabbit pub: Carole Bamford,  wife of JCB owner Sir Anthony Bamford,  has opened a pub,  The Wild Rabbit in Kingham in the Cotswolds. Lady Bamford also owns Daylesford Organic farm shop,  which is close by and was launched in 2002. A total of £1m has been spent refurbishing the former Tollgate pub,  which now also offers 12 bedrooms named individually after woodland creatures.

Fuller’s hires new auditor: London brewer and retailer Fuller’s has appointed Grant Thornton as its auditor, in place of Ernst & Young. Fuller’s, which was named Brewery of the Year by the Good Pub Guide last week, took the decision to change auditor after a competitive tender. Fuller’s saw revenues climb 7% to £217.5m for the year ending 30 March 2013, while adjusted profit before tax rose 5% to £31.7m.

Roadchef reports turnover increase: Motorway services operator Roadchef, the UK’s third largest operator with a market share of 22%, has reported turnover of £222.2m in the year to 1 January 2013, up from £203.5m the year before. Losses reduced to £7.3m compared to £11.4m the year before. It receives 42 million visits a year and 68% of these visits result in visitors being converted to a consumer. The company reported recent investment in catering at key sites had reduced the level of non-conversion by ten to 15%. Installation of four McDonald’s in 2012 has produced sales growth of 350% in some units. Like-for-like sales grew overall by 10.3% reflecting the benefit of McDonald’s developments – average spend per Roadchef transaction is £4.59.

Wetherspoon to pay £22m in bonuses: JD Wetherspoon will hand over a £22m bonus pot to more than 20,000 kitchen and bar staff on zero hours contracts this week, The Independent has reported. The company is expected to hand out nearly 90% of its £25m of share and cash bonuses to employees. The Independent reported: “The average £1,000-plus bonus will be a welcome boost to the thousands of staff who are on little more than the £6.09 minimum wage, while many 18-20-year-old employees earn less than £6 an hour.”

Simon French issues ‘Sell’ note on Whitbread shares: Panmure Gordon leisure analyst Simon French has issued a ‘Sell’ note on Whitbread shares ahead of its Second Quarter results tomorrow (10 September). He said: “Quarter Two comparatives are challenging with like-for-like sales growth of 3.2% at Premier Inn, 4.6% at Restaurants and 5.4% at Costa. Recent hot weather will likely have modestly boosted restaurants but slowed Costa’s like-for-like sales growth. Premier Inn comparatives will be impacted by the London Olympics in the comparable period last year. We reiterate our Sell recommendation and 2644p Target Price implying circa 16% potential downside.”

Family restaurant ‘hub’ for Newquay: A “hub” housing three full-service restaurants in the centre of Newquay has been given planning permission by Cornwall Council. The identities of the chains set to move into the hub, to be opened at the town’s old bus station site by next summer, remain secret, but the developer has told The Cornish Guardian newspaper that fast food chains, including McDonald’s, “would not feature”. Debbie Hume, planning agent for the developer, Monmouth Properties, said: “We are delighted that the application has been approved and are very excited to move forward. This will be an attractive development to replace this derelict site, enhancing this part of Newquay. It is just what the town centre needs to underpin its family-friendly offer.”

New Gordon Ramsay restaurant set for 16 September: Gordon Ramsay’s new London restaurant, Union Street Café, will open on Monday 16 September with chef Davide Degiovanni leading the kitchen. His dishes will focus on seasonal ingredients sourced from especially selected speciality produce from the Mediterranean with an emphasis on Italian artisan producers – mainly supplying in the small batches they produce in. This will be complimented with what is daily available from the immediate vicinity of Borough and Maltby Street markets. Ramsay said: “I’m delighted to welcome Davide to the team. He is incredibly talented and it’s been great working with him over the past couple of months and see his ideas come to life. The site we have chosen is an amazing space.”

Simon French issues ‘Buy’ note on Wetherspoon shares: Panmure Gordon leisure analyst Simon French has issued a ‘Buy’ note on JD Wetherspoon shares ahead of results this Friday (13 September). He said: “Consensus forecasts are for £76.2m profit before tax (45.5p EPS). We anticipate a solid current trading update accompanying the full year results with circa 2% like-for-like sales growth despite a tough comparative of 8.4%. We therefore reiterate our Buy recommendation and 806p Target Price implying circa 11% potential upside.”

Itsu set for £1m Oxford opening: Itsu will open in Oxford this month after a £1m investment. It will occupy premises formerly occupied by The Works stationery store in Cornmarket Street. Chief executive Gerard Loughlan said: “Itsu has grown significantly from an independent sushi restaurant to a chain of Asian-inspired, healthy fast-food shops. We now have more than 40 restaurants and shops in the UK, and it’s fantastic to see this expansion continuing with a new store in Oxford. Oxford was our first choice when thinking about a location outside London and will be an ambitious, exciting step. It’s a hotspot for students and professionals alike.” Itsu has more than 8.5 million customers and has an expansion programme of up to 12 new outlets a year, with plans to extend to the US in the next four years.

Council ordered to pay wine bar’s appeal costs: City of York Council has been ordered to pay a wine bar’s full costs after being found guilty of “unreasonable behaviour” in turning down a retrospective planning application for a change of use. Councillors ignored planning officers’ recommendations to refuse White Rose (York) Ltd, owner of the Lucia Wine Bar and Grill in Swinegate Court, permission for a mixed-use ground-floor restaurant and first-floor bar on the grounds that the proposed operating hours, to 2am on Friday and Saturday nights, would lead to more noise and disturbance late at night and have an undue impact on nearby residents. However, a planning inspector said the area around the restaurant was predominantly commercial in character, continuing: “The living conditions of local residents are well worthy of protection, but those living in this sort of location cannot reasonably expect the same level of protection from noise as could be expected if they were not living in the heart of a major tourist city.” Restaurant director Osman Doganozu said White Rose would donate some of the costs it has been awarded, which add up to thousands of pounds, to a children’s charity.

Stonegate opened new Slug & Lettuce in Croydon: Stonegate Pub Company has opened a new Slug & Lettuce in Croydon on the former site of Bar 10 on Park Lane. The company wants to double the size of its Slug & Lettuce estate and has hired agents to find sites. General manager Sarah McKeown said: “We’re delighted to be opening a Slug & Lettuce in Croydon. The investment will reflect the Slug & Lettuce brand as well as focussing on the interior of the bar, making it look more up to date and modern. We’ve enhanced the bar area due to the success of our cocktail offer ensuring that the design of the bar will make it easier and quicker for us to serve customers as the demand for cocktails grows.”

Only pub on Scottish island for sale for £545,000: The only pub on the Scottish island of Colonsay has been put up for sale by its owners for £545,000, eight years after it was rescued from closure. Colonsay Estate, which is owned by the laird of Colonsay, officially informed locals, on behalf of the hotel partnership, that the eponymous Colonsay Hotel, a former drover’s inn, which dates back to 1750, was being marketed for sale by Christie’s. The 120 islanders are investigating whether it is feasible for them to buy the business, which is a vital part of to the island’s economy. Colonsay is heavily reliant on self-catering tourism, and having a hotel, restaurant and pub is seen as vital to attracting visitors. The nearest pub to Colonsay is in Oban, which is two hours and 20 minutes away on the ferry. The only alternative is a 15-minute plane journey to visit a pub on Islay. The island, in the Inner Hebrides, as left without a pub just before Christmas 2004, when former owner Christine McNeill closed it. Soon after that, the laird of Colonsay, Alex Howard, the son of the main local landowner, Lord Strathcona, bought it with a partnership of friends. Mr Howard’s wife, Jane, told The Scotsman: “We have built it up to a really good, healthy business. It’s a real opportunity for a couple to take over, but we are happy to sell it to the community if they are interested. We are completely supportive of the community putting in an offer.” Colonsay is home to the Colonsay Brewery, which makes it the smallest island in the world with its own brewery. It employs 10% of the island’s working population – Chris and Bob.

Fifty Five Bar acquires second site: North London cocktail venue operator Fifty Five Bar will open its second outlet at The Royal Oak opposite Clapham North Station on Clapham High Street after the leasehold was sold by Davis Coffer Lyons on behalf of Rhubarb Trading Ltd. The three-storey venue benefits from approximately 2,110 sq ft of space on the ground and first floors as well as three bedroom accommodation on the upper floor. Fifty Five Bar already operates an existing free of tie bar in Camden purchased through DCL in 2006. Owner and managing director of Fifty Five Stuart Powick said: “Fifty Five is an unpretentious cocktail bar, which serves the best cocktails in Camden to a killer soundtrack. We are going to bring these principles to The Royal Oak but with twist. Not only will we serve up the best party at night, we will also provide the comfort and homeliness of your favourite local pub throughout the day. We are thrilled to have opened our second venue and joined the Clapham neighbourhood.”

Kentucky Fried Chicken reports turnover up, profit down in the UK: Kentucky Fried Chicken, which is owned by Yum Brands, has reported turnover rose to £423,345,000 in the UK in the year to 2 December 2012, up from £394,244,000 the year before. Operating profit dropped to £42,913,000 from £50,127,000. Pre-tax profit also dropped to £39,137,000 from £47,232,000 the year before. The company paid £13,742,000 in tax in 2012 and £11,365,000 the year before – critics of Starbucks will contrast the £25m paid over two years by KFC to the low levels of tax paid historically by the fellow American-owned company. The company stated: “Against the tough macro economic climate we have continued to develop our new products and new sales layers including non-fried, whilst strong advertising and continuing investment in enhancing and maintaining our restaurant estate have helped deliver a 7.1% increase in sales. Despite the global increase in food commodity prices the company saw a decrease in cost of sales to 51.5% (2011: 52.3%). However, the business has increased administrative expenses by £22.4m to £165.6m (2011: £143.2m) as a result we have delivered operating profit of £42.9m (2011: £50.1m). Of the company’s earnings, £388,347,000 comes from company-run sites with £34,998,00 derived from franchised sites. Franchised earnings rose by £1.4m compared to the year before while company sites saw a £28m rise in turnover as new sites opened.” At the start of 2013, KFC introduced freshly ground Lavazza coffee as it aims to broaden its appeal and take on coffee chains and fast food rival McDonald’s in the growing coffee market. The fast food chain is selling the premium coffee for £1.29, which it claims makes it the “best value” freshly ground coffee available. KFC also introduced a loyalty scheme, which offers customers a free cup of coffee for every three purchased to encourage regular purchases. The campaign was launched in April. Speaking to Marketing Week, Jennelle Tilling, KFC UK vice president of marketing, said KFC is taking steps to encourage consumers, particularly women, to reappraise the brand and consider it for occasions beyond dinner time. As part of this strategy, it is refurbishing its store portfolio and introducing new ranges. It has introduced a new dessert range. The chain has also introduced a breakfast menu in a number of UK restaurants and is rolling it out across Scotland.

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