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Wed 18th Sep 2013 - Rent reviews, Fuller's, Orchid, Luminar and Starbucks

Story of the day:

Fleurets rent survey reveals majority of rent reviews agreed at zero uplift: The annual Fleurets rental survey has found that a large proportion of reviews, particularly those with upward only review clauses, are being agreed at zero uplift, suggesting market rents are below the contracted rent. The property agent said: “However, it should be noted that despite the market conditions, a third of all reviews resulted in rental increases. Fleurets has dealt with a large number of reviews over the past twelve months, up 37% on the previous year, which perhaps reflects that we are at long last beginning to see an upturn in the market or at least the end of the downturn.” London saw the highest number of reviews and an overall average 8% increase – 62% of negotiations ended with rent increases. In South and West there was an overall average 4% increase in rent at review – 41% of negotiations ended with a rent increase. In the Midlands there was an overall average 1% reduction – 39% of negotiations ended with a rent increase. In the North, there was an overall average 3% increase – 34% of negotiations led to a rent increase. Fleurets said: “We anticipate there being increased activity over the next 12 months. Institutional landlords will be looking for growth given the lack of movement in rents over the past five years. In addition we expect that the pubcos will continue to work within the new Code of Practice guidelines. This is likely to result in rents throughout the country being agreed at affordable levels.”

Industry news:

Yummy founders to present at the next Propel Multi Club Conference: Tim Foster and Anthony Pender, founders of the innovative operator Yummy Pub Company, will present at the next Propel Multi Club Conference. The pair talk about how the company is sweating its assets with a cinema, supper club, basement cocktail bar and takeaway. The event takes place on Thursday 7 November at One Moorgate Place, in the City of London.

Daily Telegraph reports on Tax Parity Day: The Daily Telegraph has reported that tens of thousands of pubs and restaurants will cut their prices by 7.5% next Wednesday (25 September) in support of Tax Parity Day. JD Wetherspoon founder Tim Martin said: “We’re aiming to make it the busiest day of the year. Creating tax parity among pubs, restaurants and supermarkets will create more jobs and raise the amount of tax that government receives. It’s win-win situation for government, voters and our industry.” Jacques Borel, the VAT campaigner who is organising the day, said: “This is going to be an incredible driver of sales. You have to remember these guys are not heroes; they are businessmen. They know that reducing VAT will bring in more custom.”

Family usage of UK restaurants high but need to do more for families: British parents eat out more frequently with their young children (23%) than French (9%) or German (12%) parents, according to research by Global Market Insite. Almost two thirds (64%) of British parents eat out in fast-food restaurants with their young children, and two thirds of those said fast-food outlets suit their needs (42%). Next for meeting their needs are branded restaurants (21%) and supermarket cafes (13%). Although half (50%) of parents take their children to coffee shops in Britain, only 7% feel coffee shops actually suit their needs. It is a similar story for pubs: 44% take their children to eat in pubs, but only 12% say they are convenient for pre-school children. The survey found the majority of parents (59%) have taken their pre-school-age children to a restaurant specifically because of the family friendly facilities it provides. Parents’ top five requests are: a special children’s menu (84%); children’s entertainment such as crayons and colouring book at the table (79%); high chairs or booster seats (74%); baby changing facilities (71%); and child-friendly staff (70%). Ralph Risk, marketing director Europe at Global Market Insite, said: “On the whole, parents of pre-school children feel that the British high street could do better at catering for their needs. There is a real opportunity to make simple changes, from training staff to be more child-friendly to adding new offers and facilities to encourage families to shop and eat out more together. These don’t have to be expensive for business owners – in restaurants, a special menu and some form of entertainment were the top two options parents look for.”

Vietnamese restaurant wins national “best beer bar” accolade: A Vietnamese restaurant called Mekong, near Richmond, Virginia, has been voted best beer bar in the United States for the second year running by readers of, the website for beer drinkers run by the US Brewers Association. More than 37,000 votes were cast in the competition, after an initial 5,000 nominations were reduced to ten in each of five regions. Mekong, founded in 1995, has more than 50 draught beers on sale and more than 200 different varieties of specialist beers in bottles. The runner-up was HopCat in Grand Rapids, Michigan, while The CloverLeaf Tavern in New Jersey was third.

Company news:

Howard Shultz – Starbucks has cracked the code on universal relevance: Starbucks chief executive Howard Shultz has argued that the company has “cracked the code on universal relevance”, with an 9% increase in US like-for-likes and an 8% global sales increase in the most recent quarter. He said: “The strategy we put in place is resonating with customers. If you go back, five, six years, Starbucks predominantly was a business that occurred between 6 am and noon, and the business was morning coffee. We have transformed things to reflect becoming a primary destination in multiple [parts of the] day. We’ve created products and categories so customers use Starbucks for more than just morning coffee. Our stores domestically and around the world, have become the third place for customers between home and work. The environment, the store design, the free Wi-Fi, everything we’ve been able to do has created this primary destination. We’ve cracked the code on universal relevance.”

Orchid look to build Grandparents’ Day: Orchid Group is planning to build Grandparents’ Day, celebrated on Sunday 6 October, into a major day in its pubs. As the consumer market moves more towards celebrating special occasions, Orchid is marking a first for the sector by placing a big emphasis on saying thank you to Grannies and Grandpas across the UK. The special day is huge in the United States and one Orchid would like to cement into British society. “Mother’s Day is always our biggest sales day of the year, with other key celebrations such as Father’s Day and Halloween following closely behind. As such it is vital that our pubs do all they can to maximise trade on these occasions,” said Simon Dodd, commercial and HR director at Orchid Group. “Celebrating these events with the whole family is really a big draw for customers so we go all out to encourage them to spend the special occasion with us.” As a relatively unknown date, the push for next month’s Grandparents’ Day has already begun with all till receipts being printed with a reminder so that customers are aware of the occasion and can find out what their local pub is doing. Orchid is also sending digital campaigns to their 450,000 loyalty card holders, including members of the Slice, Our Family and Diamond Club schemes, offering triple points on the big day as well as tailored menus.

Fuller’s has ‘two-year pipeline of innovation’: The London brewer and pub owner Fuller Smith & Turner has a “pipeline for innovation” for up to two years ahead to help develop the ale category, according to its marketing chief. Wade Crouch, head of marketing at Fullers, told Marketing Week in a video interview: “Fullers is about how do we develop the ale category and the ale portfolio. That’s seen us develop our new seasonal beers, where we’re bringing out one new seasonal beer a month. There’s a pipeline for innovation over the next 12 to 24 months. We’re really looking at how we develop these seasonal beers in line with what the consumers are looking for. But also on top of that it’s about the craft beer revolution that seems to be happening not just in England, but worldwide.” Crouch said digital marketing had become very important for Fullers in trying to get through to craft beer drinkers: “Digital for us, especially for Frontier, it’s really key, because a lot of the smaller craft brewers, it’s not about shouting, it’s about talking to consumers, and people becoming engaged more with your brands in terms of having a relationship.”

Be At One to open in Wimpole Street next month: Be At One has announced the opening of its latest cocktail bar, in Wimpole Street, off Oxford Circus, central London, on October 9. The company paid an undisclosed sum for the approximately 1,250 sq ft ground floor and basement unit in August. The chain, which was founded in 1998, will have 19 bars after the opening, all but one in London, the only exception being in Reading. Jonathan Moradoff, associate director at Davis Coffer Lyons, described Wimpole Street as “a sought after location, which is underserviced in the bar sector.”

Red’s True Barbecue in talks on Manchester venue: Red’s True Barbecue, which opened in Leeds in September last year, is in talks to take over the Livebait site in Albert Square, Manchester, which closed suddenly last month. Scott Munro, co-founder of Red’s, said the partners were “planning to have a number of sites” around the UK, and the Livebait site “is one target”. However, he said, Red’s was still “quite early in discussions” over taking over the site, and if the talks were successful, there would be no opening until next year. The Albert Square site was one of two Livebait restaurants bought out of administration in February last year after the collapse of its owner, Paramount Restaurant Group, by SBG Restaurants, run by Richard Muir of Cafe Fish in Edinburgh and William Rollason, the former chairman of Paramount. The pair also acquired the Leeds Livebait, which closed last year. Its site in Wharf Street is now occupied by a restaurant and bar called Shears Yard, which opened last month, and which is run by the team behind the Arts Cafe in Leeds, opened 1994. SBG Restaurants was the subject of a winding-up order in Edinburgh in July on the grounds that it was unable to pay its debts, with David Menzies of Begbies Traynor appointed liquidator.

Luminar makes first acquisition: Luminar has acquired Evoke in Chelmsford for an undisclosed sum. The nightclub operator acquired the 1,200 capacity venue on Market Road, from industry expert Steve Webb of Premier Leisure Group – its first acquisition since being bought out of administration in December 2011. Luminar chief executive Peter Marks said: “We are delighted to acquire this prestigious nightclub in Chelmsford which already has a well-deserved reputation. It’s a stylish, high quality well-invested club which fits perfectly with our current portfolio and we look forward to working with the team at Evoke to build on the foundations laid by Steve.” This new club first opened in July 2012 and features an impressive Ice Bar, large main dance floor, Japanese Inspired Koudo Lounge bar, private VIP booths and a state of the art sound and lighting system. Steve Webb said: “It’s a fantastic venue and we’re really proud of the experience that we’ve created. I’m happy to be handing the reins over to The Luminar Group, who I know will continue to build on our local reputation and further enhance facilities for our customers.” Added Marks: “As part of our strategy, we always said we would look at tactical opportunities to acquire new sites that fit our portfolio and deliver a good return on investment. Evoke Chelmsford is a prestigious club in a great location and we’re pleased to have secured this new venue.” The Chelmsford addition to the Luminar nightclub portfolio reinforces the company’s position as the UK’s largest nightclub operator with 54 venues nationwide.

Blue Rainbow launches ‘alternative tearoom experience’ Tea 42: The partners behind Blue Rainbow, which runs four and five-star serviced aparthotels in Manchester and Edinburgh, are spending £325,000 on launching an “alternative tearoom experience” under the name Tea 42. Will Hannah, managing director of Blue Rainbow Aparthotels and Tea 42, said: “Tea 42 reflects what we have always been good at – creating a new niche by cherry-picking the best ideas in the market and combining them into something truly unique. The new venue will be positioned as an alternative to other market-leading coffee houses and daytime refreshment bars. Initially, we plan to launch Tea 42 sites close to our Blue Rainbow Aparthotels locations, which will allow guests to access refreshments with ease. However, in the future, there is also potential to roll Tea 42 out as a standalone venue in cities without our properties, as we feel the Tea 42 concept is so strong.” The first Tea 42, due to open later this autumn, will be sited close to the group’s High Street ApartHotel, near the Manchester Arndale Centre. It will have an extensive gluten-free food menu, including eight locally brewed gluten-free beers, as well as specialty, hand-blended teas and locally sourced cakes and other produce. Blue Rainbow’s other aparthotels are in the Knott Mill area of Manchester and on Queen Street, Edinburgh. The company plans to grows its annual turnover from just over £4m this year to nearly £13m in 2017.

Punch networking event attracts 70 operators: A Punch Taverns networking event held earlier this month at a London pub attracted 70 UK operators of pubs. The event was aimed at building relationships with high quality multi-site operators with a view to co-investing in the Punch estate. Punch regional operations director Giles Kendall told Propel: “It was a massive success. I can’t believe some of the great operator who turned up: I was delighted to reacquaint myself with Steve Thomas 25 years after we first met. The event was about building a long-term relationship with the kind of people who came along – operators with tremendous stature in the sector.”

Greene King to open next Realpubs site in City of London: Greene King is to open its next Realpubs premium format site next week, Wednesday 25 September. The company will convert its Williams pub, close to Liverpool Street Station, to a Williams Ale & Cider House. The company will also open its first Realpubs site outside of London in October, converting its Anchor pub in Cambridge city centre. A third new Realpubs opening, another City of London site, is expected near to St Paul’s in November. The Greene King annual report, issued at the start of August, said the company had achieved in excess of a 33% return on investment on the seven sites it had converted so far but that returns were expected to reduce over time. Greene King acquired Realpubs for £53.1m in May 2011.

Jam House licence failure and dilapidations bill led No Saints subsidiary company wind up: The failure to get a past-midnight licence on a potential Jam House site in Cambridge, and a subsequent £500,000 dilapidations claim by the property’s landlord led to the winding up a No Saints subsidiary company, Lakeside EIS2, Propel has learnt. A source said: “The company had exchanged on the site but not completed. The landlord tried to claim £500,000 in dilapidations. Rather than fight an expensive legal battle, it was more straightforward to wind up the company.” The company has an estimated total deficiency as regards creditors of £847,000. Law firm Charles Russell is owed £587,000 and HMRC is owed £25,374.

Decision on Leeds lap-dancing test case postponed: Licensing chiefs postponed at the last minute a decision on a lap dancing club’s application for a licence. Members of the Leeds council’s licensing sub-committee were due to rule on whether to grant a sexual entertainment venue (SEV) licence allowing Black Diamond Club in New Briggate, Leeds, to double in size. The licence application by the club’s owner, Illuminati Ventures, is the first since a new policy was introduced by Leeds City Council capping the number of SEVs in the city at four, three fewer than currently operate. However, the decision was postponed at the last minute after it emerged one of the three councillors due to sit on the sub-committee had a “conflict of interest”.

700 apply for 62 jobs at Marston’s new-build pub: Between 600 and 700 applications were received for 62 jobs at the Red Sails in Beacon Way, off Brighton Street, Hull, a new-build Marston’s pub restaurant, which opened this week. Manageress Vicki Thompson said: “The response was quite overwhelming.”

Greene King loses Marlborough Head pub in Farnham to Compulsory Purchase Order: Greene King’s Marlborough Head pub in Farnham will be subject to a compulsory purchase order (CPO) to allow for a major development called Brightwells. Despite hundreds of objections, the plans for a cinema, shops and 239 new homes in East Street, Farnham are now set to go ahead after the purchase of the pub was approved by the Secretary of State for Local Government, Eric Pickles. The CPO was approved after years of delays following the approval of the original Brightwells scheme in October 2008. Waverley Council’s possession of the pub site was seen as crucial as it is earmarked as a place to provide the main pedestrian access to the new development.

AB-Inbev takes Stella premiumisation strategy to the on-trade: AB-Inbev is taking its Stella Artois premiumisation into the on-trade with bar staff encouraged to refer to Stella Artois by its full name, and not “Stella”, as part of a marketing drive to promote the quality and craft of the beer. The strategy revolves around the pouring ritual of the beer, which sees bar staff use specially branded skimmers, glassware and drip trays to emphasis the taste of the beer over its rivals. Additionally, around 6,000 trained staff will be promoting the food pairing qualities of the beer. Those outlets taking part in the “Connoisseurs Programme” are rewarded for promoting the brand’s premium positioning with cash prizes.

Wetherspoon identifies five new sites in founder’s home county: JD Wetherspoon has identified five new sites in its founder Tim Martin’s home county of Devon. Martin lives in Exeter, which already has four Wetherspoon pubs. New locations indicate the way Wetherspoon is focused on a combination of smaller towns and larger towns where it can open a second site. The company said it has identified locations for new pubs in Seaton (population: 7,111), Okehampton (population: 5,700), Torquay (population: 110,360), Plympton (population: 30,224) and Tavistock (11,018) but remains on the lookout for more sites in the region. The company opened its 888th pub, the Star Inn in Honiton, Devon (population: 11,822) in July.

Nextep Inns goes into administration: Nextep Inns, the operator of four pubs in Lancashire and Cheshire led by brother Peter and John Knowles, has been placed in administration. The company has planned to expand to around six sites within three years. The pubs it operated are The Feilden’s Arms, Mellor, Lancashire, The Bay Horse at Osbaldeston, Lancashire, The Red Lion at Wybunbury, Cheshire and The Bayley Arms in Hurst Green, Clitheroe, Lancashire. Last year, Peter and John Knowles also set up a new company, Ipay-U, which provides tax benefits for employers and employees. The Ipay-U umbrella company engages freelance workers just as any other business employs staff. The employees are engaged under an “overarching” contract of employment. Their services are then provided to third parties, with employees enjoying full employment and statutory rights. The administrator of Nextep is Andre Rosler of Ideal Corporate Solutions.

Miller Brands poaches AB-InBev sales director: Peroni brewer Miller Brands has poached Tim Clay from AB-Inbev as sales director. He served as sales director for on trade and wholesale channels at AB-InBev UK. Gary Haigh, managing director of Miller Brands, said: “I am delighted that Tim will be heading up the team for our strong and growing business. The team will benefit from his wealth of experience in the beverages industry and his proven track record of driving growth for brands.”

Zizzi names opening day for Gloucester outlet: Zizzi is to open its latest restaurant, in the Gloucester Quays leisure quarter, on November 16. The restaurant, with 140 covers, will be the chain’s second outlet in Gloucestershire, after Cheltenham. The new restaurant’s general manager, Sophia Storey, said: “We have a lot of people who go to our Cheltenham restaurant who are from Gloucester. They will love to be able to go out for dinner in their own city. As someone who lives in Gloucester myself, I know that at the moment we don’t have a great deal of choice here when it comes to restaurants, but that is about to change.”

Six boutique hotels to open in Shoreditch in the next 24 months: Six high-profile boutique hotels will open in Shoreditch, East London over the next 24 months, led by the Ace Hotel’s first property outside the United States. The spate of new hotels marks a shift in traveller interest from the usual London attractions of the West End to the funkier environs of the city’s east. Andrew Sissons, the head of regeneration projects at Hackney Council, the local authority in Shoreditch, said: “All the hotel operators moving in to the area say that their target demographic, the 18-to-45 age-group, no longer want to stay in the West End. St Paul’s, Westminster Abbey, Selfridge’s – that’s not what they want anymore.”

Damson team to open Dock Yard Pub in Manchester’s Media City UK: The team that opened Damson restaurant in Manchester’s Media City UK, Steve Pilling and Simon Stanley, and The Red Lion in Stockport, is opening a second Media City UK site, a pub called The Dock Yard, at the end of October. This will be located across from the present Damson’s. Food will be adapted for the more rustic setting of their new pub operation with a menu featuring a spit-roast free range chicken, handmade pies and handmade burgers. Stephen Wild, managing director at Media City UK said: “Media City UK is a rapidly evolving destination and it is great to have Steve and his team involved in our growth. Damson has built an excellent reputation amongst our community and those visiting from further afield and we are certain that his latest venture will prove to be a hit with those frequenting it.” The Dock Yard will serve an array of keg and cask ales, pales ales, beers and ciders, as well as a wine list curated by wine expert Steve Pilling himself.

Australian town raises $40,000 to send protest delegation to McDonald’s HQ in Chicago: A delegation from the Australian town of Tecoma, near Melbourne, is due to arrive at McDonald’s corporate headquarters in Chicago today (Wednesday) with a 93,000-signature petition opposing the construction of a McDonald’s restaurant in their community. Garry Muratore, who started the petition, compared the building of a McDonald’s restaurant in Tecoma, near the Dandenong Ranges, a protected national park, to opening a McDonald’s next to Mount Rushmore. “McDonald’s plans to build a huge 24/7 store and drive-through in our town in the beautiful Dandenong ranges – demolishing local iconic buildings on the site and ensuring it goes directly opposite the kindergarten and school,” he told The Chicago Tribune. “For our kids, the nearby national park and our beautiful small-town culture, there could be nothing worse.” Muratore said the plan to build a McDonald’s in the area has been opposed by 90% of residents, and was also rejected by the local council. McDonald’s has appealed against the rejection of its plans by the council, and will go ahead with the construction of the restaurant, according to a news release. The trip to the US, along with a half-page advertisement in the Chicago Tribune, was funded to the tune of $40,000 by crowd-sourcing donations from signers of the petition.

Tim Martin – corporate governance rules don’t always serve shareholders well: JD Wetherspoon founder Tim Martin has outlined the dangers of strictly observing corporate governance guidelines. He was particularly critical of rules that prevent chief executives becoming chairman and block long service. He said: “A strange paradox is that companies in the pub business which have complied least with governance guidelines seem to have fared the best. Family brewers like Fuller’s, Young’s and Shepherd Neame, which have often had a chairman who had previously been chief executive, a majority of executives on the board and non-executive directors who are either not ‘independent’ or have been on the board for more than the recommended time, have tended to do well, whereas the compliant boards of the large pub companies have struggled greatly, in many cases, in the last decade. One reason may be that the non-compliant boards have been more resistant to the sometimes foolish ideas which take hold of financial markets. The main misconceived fashion of the last decade and a half has been in relation to so-called ‘efficient balance sheets’. This fashion encouraged excessively high levels of debt and arrangements such as ‘opco/propco’, which also increased financial gearing. A related matter concerns the huge increase in the size and incomprehensibility of annual reports and accounts; this has been exacerbated by corporate governance reports. As has been well documented, remuneration committee reports, for example, are often extremely difficult to understand. Many corporate governance reports are full of business jargon and repetition. The financial reports themselves are often the worst offenders, frequently using obscure language and definitions. The net effect of this is that annual reports, which should be read by shareholders, have become extremely difficult to digest – and many people have given up. Wetherspoon has attempted, no doubt imperfectly, to reduce jargon and repetition in its report and accounts.” Martin criticised the rule that prevents non-executive directors for staying in place for more than nine years. “It usually means that directors have not seen the effects of a recession. It may be desirable, in principle, for companies to have non-executive directors who have been there longer than nine years, but it is important for the board and the chairman to take a commonsense view, to reduce the dangers of ‘cronyism’ or excessive familiarity which might reduce a director’s good judgment,” he said. He also argued that bonuses linked to targets can be a bad thing. “Setting of targets has been a key factor in the demise of the banks and many other businesses since it has encouraged excessive debt. A considerable percentage of Wetherspoon share awards is not based on targets, other than the requirement of working for the company at the time at which the shares are issued. Naturally, the future value of the shares will depend on the success of the company.”

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