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Thu 26th Sep 2013 - Chicago Rib Shack, Greene King, McDonald's and Wahaca

Story of the day:

Downing looks to invest in vertically integrated brewer and pub operators: The active sector investor Downing is looking to spread its pub sector investments by backing a vertically integrated brewer and pub operator. Downing has more than £400m under management, £50m of which is invested in the licensed sector. The firm says it looks to build strong relationships with good quality operators with an aim to helping them grow their businesses. Downing’s current investments include more than 20 sites operated by the Antic London team and a partnership with the Kevin Sammons-led Pub People Company. Steven Kenee, an investment director at Downing who specialises in the sector, said: “Provenance, individuality and diversity are increasingly important in today’s market, not least as it allows a clear point of difference between the on and off trade. The vertically integrated brewery/pub model can offer the consumer all of these things and we are very interested in meeting good quality operators in this field.”

Industry news:

CBI – high street sales grew strongly in September: High street sales continued to grow strongly in the year to September, at the fastest pace since June 2012, and exceeded already solid expectations, according to the CBI’s latest monthly Distributive Trades Survey of 111 firms. This was the third consecutive month of growth, which was broad-based across a number of sectors. Retail sales are expected to grow robustly again in October.

McDonald’s launches 99p breakfast wraps: McDonald’s has launched three new “snack wrap” breakfast options, all priced at 99p, the sausage and egg Snack Wrap; the bacon and egg Snack Wrap and the egg and cheese Snack Wrap. The launch is being supported by a marketing campaign involving television, outdoor, press and radio ads. Alistair Macrow, vice-president for marketing at McDonald’s UK, said: “We know that our customers are leading increasingly busy lives, working varied hours and following different routines, so we’re always developing our restaurants and our menu to offer convenient, affordable choices.”

Company news:

Greene King launches sector’s largest gift card scheme: Greene King has launched the biggest multi-brand pub and restaurant gift card in the UK. The gift cards can be bought and redeemed in more than 900 Greene King pubs, restaurants and hotels across the UK, including Hungry Horse, Loch Fyne Restaurants, Old English Inns, Eating Inn, more than 400 Local Pubs and 90 Belhaven sites. Cards can also be purchased on-line via the new website. Customers can pre-load the cards with any amount from £10 to £200 and they can be used in much the same way as a charge card and topped up at any time. As well as the Greene King gift card, specific card designs have also been created for Hungry Horse, Loch Fyne Seafood & Grill and Belhaven. Any of the cards will be redeemable in any participating Greene King site. The introduction of the gift cards comes in response to customer feedback, Steve Jebson, commercial director at Greene King, said. He said: “This is another good example of listening to our customers and giving them what they want. With Christmas looming, a Greene King gift card is a convenient stress-free present for almost anyone in the family. Why buy dad socks again this year when you can put a real smile on his face by treating him to a great night out with the family instead?”

Chicago Rib Shack lines up first neighbourhood restaurant: Chicago Rib Shack, the business led by Christian Arden, is eyeing up two more sites, including its first neighbourhood site in Battersea Rise, Clapham, South London. The brand, which has sites in Westfield Stratford, East London and in Southampton, aims to open a 60-cover neighbourhood restaurant version. It is also closing in on a site in Birmingham New Street. A site at Leeds Trinity shopping centre is due to open on 17 October. Gary Robins, partner at Rockpool Investments, said last year: “It is very unusual for a restaurant business to be profitable from its first day of trading, which shows just how successful Chicago Rib Shack’s relaunch as a food court restaurant has been. Low set-up costs, and a scalable operating model that is easy to replicate at other sites, mean strong growth is expected.” The first restaurant delivered £100,000 of trading profits on £1m of turnover. The plan is to grow to ten restaurants with a value of £10m within four years. Rockpool has raised two thirds of its planned £1.7m investment in Chicago Rib Shack and has extended its fund-raising deadline until November.

Enterprise Inns could return to acquiring pubs: The recent successful £100m convertible bond launch by Enterprise Inns will mean the return of a range of traditional options for the tenanted pub operator, including increased capital investment in the estate and the possibility of acquiring pubs. Chief executive Ted Tuppen told Propel: “With the successful launch of our convertible bonds, we no longer need to sell pubs to pay down debt. We will, of course, carrying on making tail-end disposals – but we will be able to reinvest proceeds in the estate. So this will most likely mean capital improvements but could also mean acquiring pubs. It’s a return to what we always used to do up until five years ago.” 

Chester’s only lap-dancing club loses its licence: Chester’s only lap-dancing club, Platinum Lounge, has lost its licence. Cheshire West and Chester Council’s licensing committee ruled that the venue, which has been open since 2005, was too near residential properties. Solicitor Anthony Lyons, representing residents of White Friars Court, said the number of people living nearby had increased from about 16 eight years ago to about 110. He added: “The applicant says this is a commercial area. We disagree. People are turning offices into homes in the area and it is turning into a residential area.”

Wetherspoon to start work on ambitious £3m modernist pub on Ilfracombe seafront: Work is set to start on the site of the new JD Wetherspoon pub on the seafront at Ilfracombe in Devon this Monday. The two-storey pub and restaurant on the former Collingwood Hotel site is to feature a glass dome, beer garden and sea view roof terrace. The development plans had rumbled on for several years, with the company dropping an earlier scheme to build a hotel on the site. It is due to open at the end of April next year.

Subway Wi-Fi roll-out to be complete by the end of the year: The roll-out of 02 Wi-Fi within Subway outlets will be complete by the end of the year. One hundred sites have it installed, with around 600 remaining. The operator said the roll-out will benefit more than two million customers every week, and will build on Subway’s success with its fully mobile-enabled loyalty programme Subcard, which now has more than 1.2 million registered users. Subway UK and Ireland’s marketing manager, Jane Abbott, said: “As well as an excellent Wi-Fi service, O2 demonstrated a breadth of IT capability and services, making them the obvious choice to partner with for the next step in our digital evolution.”

Punch and pub operator pump £85,000 into Princess Royal: A pub in Dresden, Stoke-on-Trent, The Princess Royal, is reopening next week after an £85,000 joint investment by pub operator DT Inns and Punch Taverns. A spokesman for DT Inns, which operates 12 public houses in Staffordshire and Yorkshire, said: “We wanted to enhance the pub which is already popular and give the local community a venue they can be proud of.” Punch Taverns’ partnership development manager, Paul Alldis, said: “Everyone is really pleased with the transformation.”

Campaign group aims to revive historic Spirit site in Huntingdon: Campaigners have revived a bid to take control and re-open Huntingdon’s oldest pub, the Falcon Hotel in Market Hill, which closed in 2008. The move comes after another potential buyer had pulled out of a deal to take on the Grade II-listed building. The group wants to sub-let the premises from leaseholder Spirit Pub Company for a nominal fee and take on the considerable cost of refurbishing the premises. Spirit said that “all potential operators would be considered, providing they go through our sales agent Fleurets”.

Long-term investor reports sale of stake in Marston’s: Long-term investor Nick Train has made a rare sale in his £698.1m CF Lindsell Train UK Equity fund, disposing of his holding in the brewer and pub company Marston’s. Train said that he has a reputation for “never or rarely” selling out of his positions although he exited Marston’s in August after the company’s rise in valuation. “We completed the sale of a position that we established for then clients as long ago as 2001. This was Marston’s – the regional brewer/pub-operator,” Train says in his latest update. “The reason was primarily valuation. Up circa 70% over the last 12 months, the shares had reached our long-established estimate of strategic value.”

Wahaca set for October opening in the City of London: Wahaca, the Mexican street food brand headed by 2005 Masterchef winner Thomasina Miers, will open its first outlet in the City of London at One New Change on 3 October. The venue will be the first in the chain to take reservations. Last month Wahaca partnered All About Food to launch a gift range. Featured exclusively at Boots, it includes a Chile de arbol oil, a spice tower, drizzler set, pestle and mortar and griddle pan (£7 to £20). The brand made its first foray into grocery in 2012 with the launch of a sauce range.

Douglas Jack moves Punch Taverns recommendation from ‘Buy’ to ‘Hold’: Numis Securities analyst Douglas Jack moved his share price recommendation from ‘Buy’ to ‘Hold’ yesterday, with a target price of 15p. He said: “Full year profit before tax, at £49m, is slightly behind (us and consensus forecast £50m) with core estate like-for-like net income down 2.4%. Like-for-like net income is in line in early 2014E (full year guidance is 0 to 1%). With the shares having reached our target price and debt restructuring talks ongoing, we are moving our recommendation to Hold, from Buy. Punch’s shares trade at big discount to Enterprise Inns. We believe the new deadline for the bond restructuring is December; if it succeeds, this valuation gap should narrow, in our view. A share price of 30p would equate to 9.6x EV/Ebitda (2014E) based on the proposed restructuring terms.”

Stonegate investment continues with Yates’s site: Stonegate Pub Company’s investment in its UK estate has continued with a £270,000 investment in a Yates’s site in Hastings – the site re-opens today. Changes include a new state-of-the art sound and lighting system, the installation of a large video wall and improved and enhanced sports viewing. New pre-bookable VIP booths are also being introduced as part of the investment. It will be offering Lavazza and offers include two meals for £7.95 and two-for-one on all desserts.

Fuller’s hosted site visit yesterday: The London-based brewer and pub company Fuller Smith & Turner hosted a site visit yesterday for sell-side analysts at its Griffin Brewery in Chiswick. The visit included presentations from senior management on the Fullers Beer Company’s strategy, current innovation and marketing plans. The next trading update for Fuller’s will be interim results for the 26 weeks ended 28 September 2013 on 22 November 2013.

Coca Cola Enterprises reports turnover and profit rise: Coca Enterprises has reported turnover up 1.8% to £1.8bn in the year to 31 December 2012 with a 0.9% rise in pre-tax profits to £258.7m. Operating profit rose 2.1% to £252m. A dividend of £186m was paid. Companies House documents stated that a restructuring programme involving sales and marketing, finance and supply chains was due to be completed this month.

Draft House late addition to Tax Parity Day: Draft House, the London bar operator led by Charlie McVeigh that has investment from Luke Johnson, was a late addition to Tax Parity Day. McVeigh said: “5,000 pubs have closed in the past two years. All Britons should have a pub nearby. Allowing pubs to compete with supermarkets will ensure that more areas of the country will be able to support a pub, not just wealthy areas. Do we want a nation drinking tins of cooking lager in front of the TV? Or would we like to have the pub affordable for all?”

The Stable unveils opening date for fourth site: Pizza and cider concept The Stable will open its fourth site, in Bath city centre, on 11 October, occupying the former Hole in the Wall site. The group, founded in 2009, has venues in Bristol, Bridport and Weymouth. The Stable will also offer almost 60 different varieties of bottled and draft cider. The Stable was founded by Nikki and Richard Cooper, who also own a boutique hotel ,The Bull in Bridport, Dorset.

McDonald’s adds pumpkin-spiced lattes: McDonald’s has added “aspirational” pumpkin-spice lattes to its US menus, aiming to attract Starbucks customers. The McCafe pumpkin latte, a mix of espresso, milk and flavoured syrup, will come in three sizes and be available with whole or nonfat milk. A 16-ounce latte with whole milk has 340 calories and will cost $2.89. A regular coffee is $1. McDonald’s has been introducing pricier items such as chicken wings, McWraps and steak breakfast sandwiches to maintain profitability in the face of higher labour, occupancy and operating costs. At the same time, the company is expanding its value menu to draw bargain-seeking diners. John Gordon, principal at the Californian company Pacific Management Consulting Group and adviser to restaurant franchisees, said: “They’re trying to further refine the so-called ‘barbell’ strategy of selling low-priced, value items along with more expensive fare.”

Bristol restaurateur set to restore Reading lido: The company that restored the Clifton Lido in Bristol after 18 years of closure has been awarded preferred bidder status to redevelop the King’s Meadow baths in Reading. Clifton Lido Ltd told Reading Council’s policy committee that its plans for the King’s Meadow baths included a spa, restaurant and bar, as well as operating an open-air pool all year round. Mark Thwaites, general manager of the Bristol lido, said since the restoration of the Grade II listed lido in Bristol it sees 350 swimmers a day throughout the year. He said King’s Meadow Baths would be run on a similar business model, with the heated pool open from 7am to 10pm, a cafe bar serving breakfasts from 7.30am and a restaurant serving meals from noon to 11pm. Councillors heard that English Heritage believed the Clifton Lido bid was the most likely to generate the necessary funding to restore the King’s Meadow building and to give it a sustainable future. Restaurateur Arne Ringner, a director of Clifton Lido Ltd, who also runs the Glass Boat restaurant in Bristol, told the Reading Post he heard about King’s Meadow pool from a Reading man who was visiting the Bristol lido, and contacted the council. Ringner said: “Finally, now we are in a situation where we have been given the go-ahead to take the best parts of what we do in Bristol and bring it over to Reading.”

Adnams extends craft beer range with its first ever lager: Suffolk-based brewer Adnams has extended its craft beer range with its first ever lager. Dry Hopped Lager is the latest addition to the Southwold company’s Jack Brand range of craft beers which was launched in April this year with Innovation, closely followed by Clump Sagin and Rye IPA, in June. Adnams’ head brewer, Fergus Fitzgerald, said: “For our first true lager we were keen to make a beer that had the appearance that everyone is familiar with but with the twist of more fruit-driven hops. We did several trials on our pilot brew kit to try to get the right balance and eventually settled on this recipe.”

Mitch and Harold Tillman sell historic Mayfair site: One of the oldest pubs in Mayfair, central London, the Running Horse on Davies Street, has been sold by agent Davis Coffer Lyons on behalf of Mitch and Harold Tillman to a new independent operation run by James Chase and Dominic Jacobs. The pair have taken a new 15-year lease on the 3,500 sq ft premises at a rent of £80,000 a year and a substantial premium. The Running Horse will reopen in early October with a traditional pub atmosphere on the ground floor and a more modern cocktail bar on the first floor. There will be an extensive fine wine list and a special tasting of some of the best vintages in the newly restored vaults. Chase said: “Dominic and I are really excited to be launching our first independent venture together. We both have strong backgrounds in the drinks business and are confident that we can use this, coupled with an unrivalled list of connections, to create something very special. The building is absolutely amazing and while we need to install modern equipment we are committed to ensuring it looks and feels how it did 50 to 100 years ago.”

Pho ‘not pursuing’ trademark case against smaller rival: The Vietnamese restaurant chain Pho Cafe has said it will not, after all, pursue a trademark case against a South London outlet called Mo Pho, after its actions caused a storm on Twitter and Facebook. The Mo Pho restaurant in Brockley want sent a letter by Pho Holdings, parent company of Pho Cafe, saying its use of the word “pho” was confusingly similar to Pho Cafe’s trade mark, registered in 2008, constituting an infringement and passing off. Mo Pho said in a statement: “We feel this unfair as we ensured the look and feel of our brand was different to any established restaurants when designing our brand and logo. Our biggest surprise was that trademarking the word pho was possible, especially as it’s our national dish which is used widely in our trade as a Vietnamese cafe/restaurant. As a small family business, taking on a successful chain such as Pho will be a big risk to us, therefore we opted to take down our signages until we are fully rebranded.” However, after Pho was accused of bullying by Twitter users, and on Mo Pho’s Facebook account, Pho founders Stephen and Juliette Wall said the company, which now runs seven restaurants in London and one in Brighton, would not be taking any further action against Mo Pho.

Fuller’s produces another rare beer: London brewer and retailer Fuller’s has once again delved into its rich history of brewing to produce a fourth beer in the highly acclaimed Past Masters range of unique ales. Past Masters 1966 Strong Ale, which is 7.3% ABV, has been recreated by Fuller’s brewers to a recipe that dates back to the year of flower power, The Beatles and a certain successful football tournament. It also harks back to a time when brews were planned longhand, without the use of calculators or computers.

Sheps continues with sales of ‘too small’ pubs: Despite the growth of the “micropub” movement in its Kentish heartland, the Faversham-based brewer Shepherd Neame is continuing to dispose of small community wet-led pubs, the company says. At the end of June it had six properties pending disposal, after selling six other pubs during the financial year to June 29. Overall, Sheps saw operating profits stay flat at £12.7m for the 52 weeks to June 29 2013, compared to the 53 weeks of the preceding financial year, as profits climbed 1.4% to £134.9m, giving a slight drop in profit margin from 9.41% from 9.55%. Profit before tax and exceptionals was down 4.76% to £8m after higher interest charges. Ebitda for the year slipped 1% to £19.2m. Own-beer volumes were up 0.9%, against an industry average of a 4.8% decline, though volume sales of leading brands Spitfire, Bishops Finger and Asahi were up 2.7%, 1% and 9.4% respectively. The company currently runs 304 tenanted and leased pubs and 46 managed ones. Like-for-like food sales at its managed pubs were up 5% on the previous year, though average spend per head remained steady at £11.23, with drink sales up 2% and average Ebitdar per managed pub up 4%. Food sales represent 29.5% and accommodation 10.1% of total managed house turnover. In the tenanted estate, revenues were down 1.1%, against an improvement in 2012 of 2.2% and like-for-like Ebitdar fell by 1%. In the ten weeks to 7 September, like-for-like managed house sales were up by 10.2%, like-for-like Ebitdar in the tenanted estate (to 31 August) was up 1.7%, total beer volumes were up 9.3%, and own beer volume up 11.9%.

Loungers boss attacks ‘cumulative impact’ policy after Truro win and Liverpool defeat: Loungers managing director Alex Reilley has attacked local authorities’ handling of “cumulative impact” policies in licensing hearings, after his company was granted a licence for a new bar in Truro, Cornwall today, just two days after failing to win a licence in Liverpool. Both hearings swung on whether a new Loungers bar would breach the cumulative impact policies in force in the two areas, which dictate that any new licence applications should normally be refused. However, Reilley said, if an area had problems with behaviour by customers using local bars that caused a cumulative impact policy to be brought into force, local authorities were simply protecting the operators whose premises were causing the problems by prohibiting new entrants. Instead, he said, they should allow in “good” operators, who could “socially engineer” the area, and drive out or reform the bad operators. Loungers’ application for the Truro licence was opposed by Truro police on the grounds that it ran counter to the cumulative impact policy. Inspector Mark Richards, of Truro police, said: “The fact is that we are at capacity in Truro in terms of the number of punters we can fit in to go drinking on a Friday and Saturday night.” Richards said that if the bar were allowed to open, “we would expect to see a rise in anti-social behaviour and assaults. We are using the cumulative impact policy exactly as intended, to freeze the night-time economy at a certain size.” Reilley said before the licence hearing that the company’s cafe-bars were food-led and would enhance the city rather than resulting in an increase in anti-social behaviour. Cornwall Council’s licensing committee granted the application at a hearing in St Austell this morning (Wednesday). On Monday the company, which aims to reach 55 sites by the end of 2014, was refused a licence for premises in Allerton, Liverpool, despite having won planning permission for converting the premises to a bar, after local councillors successfully argued that a new bar breached the cumulative impact policy. Reilley also attacked the double hearings for planning permission and alcohol licence that companies like his had to go through, saying it added to everybody’s time and expenditure.

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