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Fri 13th Sep 2013 - David Singleton, Dunkin' Donuts, Greene King and Starbucks

Story of the day: 

Travelodge criticised over misleading £39 London bedrooms advert: The budget hotel chain Travelodge has been criticised by the Advertising Standards Authority for a spring promotion in which it claimed to offer rooms in central London from £39 a night. Upholding a complaint from a consumer who had been unable to book a room at that price, the watchdog found the offer breached its advertising code. Travelodge claimed more than 30,000 rooms were available in central London at £39 or less during its promotion which ran from 22 March to 9 June. However, out of the 79 nights for which the offer had run, there had been 17 for which there had been no availability at all at any hotel and a further 22 nights where availability had been significantly restricted, while almost two thirds of availability had been over the 15 Sundays and Bank Holiday Mondays that had fallen during the offer period, the ASA said. Although the ad suggested there might be some limited availability, the ASA said Travelodge needed to demonstrate that availability had been spread reasonably evenly across the offer period and the locations that were included in it so that recipients would have a reasonable chance of being able to take advantage of it. The ASA added: “The ad must not appear again in its current form. We told Travelodge to ensure that, if they promoted a ‘from’ price, they held evidence to demonstrate that rooms were available in sufficient quantities at that ‘from’ price and to ensure that ads stated any significant limitations and qualifications.”

Industry news:

Alex Reilley to present at the next Propel Multi Club Conference: Alex Reilley, co-founder of Loungers, which saw an investment from Piper Private Equity in May 2012, is to present at the next Propel Multi Club Conference on Thursday 7 November. He will set out the ten key challenges of moving into expansion overdrive as the company targets 80 sites by April 2017. Operators can book two free places by e-mailing The event takes place at One Moorgate Place, London.

Top London operators to appear at the Boutique Bar Show: Some of London’s leading operators will be offering business insights at the Boutique Bar Show which takes place on 24 and 25 September at Victoria House, Bloomsbury Square, London. Visitors to the show will be able to learn from some of London’s leading operators including: The Ritz, which will be explaining how to create classic, contemporary and vintage cocktails; The Hawksmoor Group will be showing visitors how to create cocktail opportunities throughout the day from breakfast till late in the night; Opium Bar, operated by Eric Yu’s Breakfast Group, will be discussing guest wellbeing; Rev JW Simpson (part of the successful Bourne and Hollingworth Group, will be hosting a The Foragers Cocktail Bar. Register for free at In addition, Propel Info managing director Paul Charity is to chair a panel of top operators at 11am on Tuesday 24 September. On the panel discussing current industry trends are former Novus chief executive Steve Richards, Yummy Pub Company founder Tim Foster and Cavendish Bars founder Christian Arden.

Company news:

Dunkin’ Donuts to return to UK: Dunkin’ Donuts has signed deals with two franchise groups to roll out the company’s restaurants in the UK. The agreements will see 50 Dunkin’ Donuts restaurants in opened in Greater London over the next five years, with an initial focus on North and East London. The company is also in “advanced discussions” with other potential franchise partners to develop a total of 150 Dunkin’ Donuts restaurants in the UK, including the initial 50 in London, over the next five years. The first two franchisees are the Court Group, chaired by British businessman David Sheepshanks, founder of the company Suffolk Foods, which will open 25 restaurants in East London over the next five years, and DDMG, a partnership formed by three experienced US Dunkin’ Donuts franchisees from the Baltimore/Philadelphia area and two local UK operators, which will develop 25 Dunkin’ Donuts outlets in North London between now and 2018. The restaurants in the UK will feature coffees, teas, espresso-based beverages, frozen drinks, doughnuts, muffins, croissants and sandwiches. The brand will also offer regional menu items to cater to local tastes. Dunkin’ Donuts, then owned by Allied Domecq, appeared in Scotland in 1996, and its products went on sale there and in England through Alldays convenience stores, but Alldays collapsed in 2002. Jim Johnstone, general manager, UK, for Dunkin’ Brands, said: “We continue to look for qualified, multi-unit franchisee candidates who have a desire to develop a minimum of 25 Dunkin’ Donuts restaurants over the coming years.” Sheepshanks said: “We have significant experience in the UK across a number of businesses, and we look forward to leveraging that experience.” Neil Patel, director of DDMG, said: “The UK is a dynamic market, and we are excited about the opportunity to bring Dunkin’ Donuts to North London.” Dunkin’ Donuts has more than 10,500 restaurants in 31 countries. Its sister brand, Baskin-Robbins, currently has 100 locations in the UK, having opened ten new stores in the past 18 months.

Greene King adds two new premises licences for ‘Cloverleaf’ openings: Greene King is stepping up expansion plans for its Cloverleaf brand, acquired in January 2011 for £55.8m when it had 12 sites. Chief executive Rooney Anand pointed out at the time that there were ten sites in the pipeline that the company expects to open within the next two years. Progress has not matched acquisition forecasts but now, however, Greene King has secured a licence for a new Farmhouse Inn at Vantage Office Park, off Old Gloucester Road Bristol. This follows on from a grant for another similar development at Cribbs Causeway, Bristol last month.

Starbucks has exited 46 expensive leases in the UK so far: Starbucks has reported that it has negotiated an exit on 46 costly leases in the UK so far – and wants to exit another 30 this year. One store opposite Selfridges on London’s Oxford Street had a rent bill of £850,000 a year. A move around the corner slashed that to £160,000 a year. Its franchise division has completed agreements on 15 deals so far, and is aiming for as many as 200. It plans to have 100 vending machines by the end of the year. 

David Singleton to complete Rosinter contract in December: David Singleton, the highly regarded former Mitchells & Butlers executive who rolled out its Premium Country Dining Group brand to more than 80 sites, is to complete his two-year contract with Russia’s largest restaurant company, Rosinter in December. Singleton is working as marketing director of Rosinter’s IL Patio, the country’s largest restaurant brand. It is understood that Singleton is in negotiations on several projects, both in Russia and back in the UK.

Brunning & Price signs second deal with property company Peel: Brunning & Price, the gastro-pub operator owned by the Restaurant Group, has signed a 30-year lease with Peel to take over Worsley Old Hall in Salford. Brunning & Price will carry out repairs to the Grade 2-listed building as part of the agreement before the pub and restaurant reopen. This is the second deal Peel has done with Brunning & Price after the renovation of Jackson’s Wharf into The Wharf in Manchester’s Castlefield area. Worsley Old Hall became a restaurant in the 1990s and was operated until last month by Whitbread under its Brewers Fayre brand. Graham Price, managing director of Brunning & Price, said: “In 2011 we secured a long lease from Peel on a warehouse style property in Manchester which we successfully converted into a characterful canal-side pub restaurant which has been trading very strongly. Worsley Old Hall has similar potential which the previous operators were unable to exploit, and we are pleased to have the opportunity to reinvigorate a wonderful historic building back to its former glory.”
Yates’s Newcastle throws doors open after first refurbishment in ten years: Yates’s in Newcastle upon Tyne reopened yesterday (Thursday) after a ten-day £200,000 makeover. The pub has hired five more staff in response to an anticipated boost in trade at the busy three-storey city-centre pub, which can accommodate 800 customers. It has been given new decor, furniture and audio-visual equipment, including LED colour-change mood lighting.
BII Licensee of the Year, looking for new challenge, overwhelmed by Propel response: BII Licensee of the Year 2012 Mahdis Neghabian, who is looking for a new challenge in the sector after stepping down as licensee of New Pub Company’s Camden Eye pub, has been overwhelmed by responses after Propel carried the story on Tuesday. Neghabian worked at the site for seven years, taking turnover above the £1m a year mark. She told Propel: “I got an overwhelming amount of response – I spent the whole day answering emails, phonecalls and text messages. I’m meeting quite a few people this week and next.” Her number is (07817) 847438.

Hall & Woodhouse shows support for national VAT campaign: A total of 52 pubs owned by Dorset brewers Hall & Woodhouse will be joining other pubs and restaurants in the national Tax Parity Day on Wednesday 25 September by lowering prices on food & drink by 7.5% for 24 hours. The day has been organised to support the campaign to highlight the amount of VAT hospitality businesses pay on sales compared to supermarkets and what could be achieved if this was lowered. The price reduction of 7.5% represents the amount prices would be expected to fall if VAT in the hospitality sector were cut from 20% to 5%. Managing director Anthony Woodhouse said: “Currently UK hospitality businesses are charged 20% VAT on food sales, whereas supermarkets pay no VAT on ready meals. This seems a disparity that disadvantages an industry which can generate jobs and meaningful careers as well as supporting local producers. Hall & Woodhouse are delighted to be supporting this campaign which if successful has the potential not only to create tens of thousands of jobs across the UK, but would also encourage sustainable growth in the UK economy.”

Stonegate Pub Company appoints Dave Just as head of purchasing: Stonegate Pub Company has appointed Dave Just as head of purchasing. Just will report to Suzanne Baker, Stonegate’s commercial director and be responsible for a team of four. His remit encompasses the purchasing of drink, utilities non-consumables and future food contract across the 573 strong estate. He joined the company at the beginning of September. Just said: “I’ve long admired Stonegate with its people-focussed culture, it’s quick decision making and planned growth strategy. I’ve joined the company at an exciting time with the recent acquisitions including the 13 Living Room sites. I look forward to making a successful and positive impact on the business.”

Innbrighton lists Zeo: Innbrighton, which operates 45 sites in Brighton and London and with plans to expand significantly over the next few years, has chosen Zeo to be its adult soft drink of choice. Innbrighton will be launching a flagship venue in Acton, West London this November, where Zeo will be featured in the garden area. Gavin George, InnBrighton co-founder, said: “The diversity of beers, wines and spirits in pubs is constantly expanding and developing to meet the demands of discerning and adventurous customers. In Zeo, we see that the same is happening in the soft drinks category.”

Glendola takes City of London site: Glendola Leisure, headed by Alex Salussolia, has acquired the lease of The Door Oyster Bar & Grill at 33 Cornhill, London for an undisclosed premium. The rent for the 4,500 sq ft restaurant is £144,000 a year on a 17-year unexpired lease. The Door will close this week and the site will be converted to a new concept developed by Glendola Leisure. The Noble Organisation, which owns Angus Steak House among other assets, has owned the restaurant for over five years. Nick Weir, director at the agent Shelley Sandzer said: “This is a prime spot on a busy thoroughfare in the heart of the City, directly opposite the Royal Exchange. The Noble Group has owned The Door for some years and felt it was time to sell the restaurant to a more City-focused operator.” The Door Oyster Bar & Grill site is set across two trading floors and currently has 90 covers.

Greene King’s head wine buyer becomes a Master of Wine: Greene King’s chief wine buyer has been named a Master of Wine. James Davis joins a small group of just 312 worldwide who have been honoured by the Institute of Masters of Wine. He joined the Greene King in 2007 and has studied for five years for the award. Greene King chief executive Rooney Anand said that wine had become an integral part of pub culture in recent years, and showed how far the industry had come. He added: “Greene King is proud to have a Master of Wine in the team. This is one of the toughest professional qualifications to gain, which makes this achievement even more impressive. It is pleasing to see James join this elite club. It is rare for a pub company to have a Master of Wine and we are excited by the commercial opportunities and competitive edge that this appointment will offer us in the future.”

Grand Union opens eighth site: Grand Union, the London bar operator led by Adam Marshall and 50% owned by investor Luke Johnson, has opened its eighth site, a Star Pubs & Bars site in Chancery Lane in the City called The Blue Anchor, which has been renamed Chancery Grand Union. Marshall recently told Propel: “We’re not spending a lot of money on the Chancery Lane site – it has lots of fixtures and fittings already and we’re not paying a premium. It’s more of a rebrand. It has a 2am licence every day of the week and the area is crying out for a decent cocktail bar – it’s an area with lots of boozers.” Marshall reported that trading currently is “amazing” with company like-for-likes up 16% in July – site Ebitda conversion rates since the start of the company’s new financial year in April have been 24%. Another site, a private free-of-tie lease in nearby Farringdon is in negotiations.

Bramwell’s Wild Lime Bar & Kitchen launches three new pizzas: Bramwell Pub Company has launched three new pizzas for its Christmas menu including a dessert version called the “Pudding Pizza”, a mix of banana and Nutella served with vanilla ice cream. The two savoury pizzas on the menu include the “Cape Point Pizza” with butternut squash, blue cheese and thyme topped with freshly torn mozzarella and the “Columbus Christmas Pizza”, a combination of chorizo, fennel and freshly torn mozzarella topped with gremolata. Sarah Weir, Bramwell’s commercial director said: “Wild Lime Bar & Kitchen was born out of fresh thinking and the need for a truly distinctive concept which is why we’ve made a conscious decision not to go with tradition. We want to introduce customers to Christmas the Wild Lime way.”

Gloucester nightclub to re-open as music venue: The Gloucester nightclub Cracker to close after 23 years and re-open as The Institution, a live music venue aiming to provide the city’s equivalent of Rock City in Nottingham. Rob Smith, the new owner of the Bruton Way venue, is in the final stages of agreeing the lease. It is expected to be finalised this week with a planned opening on 1 November. Smith said: “We want to offer live music and club nights with a variety of music styles and genres from metal to northern soul. I love all kinds of music and I want this to be Gloucester’s version of Rock City in Nottingham.” 

Celebrity chef Bryn Williams to open Colwyn Bay site: Celebrity chef Bryn Williams is to open a new restaurant at Porth Eirias in Colwyn Bay. Williams worked at the London restaurant, Odettes in Primrose Hill, where he became head chef and owner in 2008. He won the Great British Menu 2006 and is a regular on TV shows such as Saturday Kitchen. Williams said the bistro, expected to open before Christmas, will focus on locally sourced ingredients. He said: “I call Porth Eirias The People’s Palace, as they are the ones who chose it. I want it to be a modern and sociable place to eat with a high standard of food.”

Whitbread wins premises licence for former Brain’s site in Aberystwyth: Whitbread has secured a new premises licence to develop a derelict Aberystwyth hotel and reopen it as a Premier Inn. The Aberystwyth Bay Hotel on the town’s seafront has been boarded up since 2009 having previously been leased by the local authority to the Cardiff brewer Brain’s. Ceredigion Council sold the site to the developer Opus North, which has leased the site to Whitbread with a view to opening a 62-room Premier Inn.

Zizzi and PizzaExpress take Glasgow sites: Two Gondola Group brands, Zizzi and PizzaExpress, have been named by property developer Hammerson as the first of nine restaurants to take up residence in the £20m extension to the Silverburn shopping centre in Pollok, Glasgow. Zizzi and PizzaExpress will open 3,300 square feet and 3,600 sq ft restaurants respectively, both with open kitchens and both in prime locations near a planned 14-screen Cineworld cinema. The first phase of the 10,700 square metre extension, almost half of it devoted to the cinema, is due to open in November 2014. The names of another seven restaurants that are due to take up places in the development are due to be announced soon. Chains currently represented at Silverburn include Coffee Republic, Costa Coffee, Frankie & Benny’s, La Tasca, Nando’s, Pizza Hut, Prezzo’s, Starbucks, Wagamama and Yo! Sushi.

Japanese restaurant chain plans 30 UK sites: Toridoll, operator of the Marugame Seimen restaurant chain, which opened its first outlet in Russia in February, has announced that it will open its first British outlet in London as early as March 2014, on the back of the global fad for Japanese food and the auspicious start to European operations in Moscow. Toridoll, which has almost 1,000 restaurants in Japan, said it plans to be operating 30 restaurants in Britain within five years. The company said it has already set up a British subsidiary, capitalised at £700,000. Toridoll began expanding its Marugame Seimen restaurant chain overseas in 2011, when it opened a “Marukame Udon” outlet in Hawaii. The company currently operates about 40 restaurants in China, Taiwan, Thailand, Indonesia and elsewhere.

Developer buys Shepherds Bush pub for substantially above the guide price: A developer has bought The Prince pub on Goldhawk Road in Shepherds Bush, West London (formerly known as the Raving Buddha) for around £1.2m, substantially above its guide price, through licensed leisure specialists AG&G. “Interest in the property was phenomenal,” said AG&G’s David Gooderham. “The buyer is a developer with a track record of pub purchases in this area and we understand that The Prince might be converted to flats above and retail on the ground floor.”

Hounslow pub sold for £850,000 – to stay as a pub: A pub in Hounslow, West London occupying a corner position with more than 12,000 sq ft of space, is to remain operating a pub despite interest from convenience store operators. AG&G’s James Grimes said: “We had huge interest from convenience store operators and developers and the winning offer came from a buyer who saw the obvious potential of the location and bid accordingly.” It will stay as a public house, operated under tenancy. The sale price was off an asking price of £850,000.

McDonald’s trials mobile phone order-and-pay app: McDonald’s is testing an app that will allow customers to place an order via their mobile phone before picking up their food in the restaurant, at the kerbside or from drive-through windows. The service is being trialed at restaurants in Salt Lake City and Austin, Texas, and includes special offers and a loyalty programme. Chipotle Mexican Grill already has a mobile ordering app for customers in the US, while other chains that have either introduced or trialled mobile payment apps include Dunkin’ Donuts, Tim Hortons, Subway, Burger King, Wendy’s and Dairy Queen. McDonald’s has had an app since 2011 that lets customers locate restaurants, find nutrition information and search for jobs. Bob Goldin, executive vice-president at the restaurant researcher Technomic, told Bloomberg that mobile apps appeal to millennials and teenagers. “You have to look at the whole generation that’s coming up and I think we’re moving to a cashless society,” Goldin said. “It’s a worthwhile investment.”

Analyst – M&A activity strongest since 2007: Numis Securities analyst Douglas Jack says the merger and acquisitions market in the sector is now the most active it’s been since 2007. Jack has, however, questioned whether Cote’s owner, Richard Caring, may have raised more money if he had chosen to undertake an Initial Public Offering (IPO) rather than sell his stake to a private equity firm. Jack said: “Yesterday, Cote, the 45-strong French brasserie chain, was sold to private equity firm CBPE for £100m and William Pears Group commenced exclusive talks to acquire 300 tenanted pubs from Greene King. In terms of acquisitions, the licensed retail sector is the most active it has been since 2007, largely due to the return of private equity. The Cote deal is the restaurant sector’s sixth major transaction since November, following Rutland Partners acquiring Pizza Hut (330 sites), Tesco acquiring Giraffe (48 sites), Lloyds Development Capital acquiring D&D London (32 sites), Bowmark Capital acquiring Drake & Morgan (6 sites) and Kout Food Group acquiring Little Chef (78 sites). Cote was acquired for 10.0x July 2012 Ebitda. This compares to the stockmarket valuing The Restaurant Group on 12.7x and Prezzo on 12.1x mid-2012 EV/Ebitda a 21-27% premium to the acquisition multiple private equity paid. Should Cote have considered an IPO? The Restaurant Group and Prezzo are currently valued at 11.3x and 10.2x EV/Ebitda, respectively, based on December 2013, to which Cote must have been sold at an even larger discount given that its Ebitda was growing at 47% in 2012. With renowned management, a good brand with 53% of its sites in London, a strong expansion pipeline and favourable operational metrics, Cote might not have been valued at such a large discount by the stock market. Greene King’s planned disposal of 300 tenanted pubs would reduce its tenanted estate to just over 900 pubs, down from 1,514 in May 2012. Although large tail-end disposals tend to bring a lotting discount and short-term earnings dilution, we expect the proceeds to be recycled quickly into higher-return, growing segments. After all, Greene King has stepped up expansion and is willing to be acquisitive. We believe this long-term strategy is right and that it is likely to be fully supported by its investors. The willingness of public and private equity to inject capital into the sector has to be positive, facilitating the re-allocation of assets to more appropriate owners and managers. After five inactive years, this opportunity should not be overlooked.”

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