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Morning Briefing for pub, restaurant and food wervice operators

Mon 14th Oct 2013 - JDW, Orchid, Giraffe, Glendola and PizzaExpress

Story of the Day:

Hospitality firms told to beware of the costs of ‘pinches’ and ‘dashes’: Restaurants need to be wary of imprecise measurements in recipes such as ‘pinch’, ‘dash’, ‘drop’ and ‘glob’ that can throw out costings, delegates to the management solutions software provider Fourth’s Customer Conference 2013 at the British Museum in London were told. Carol Gardiner, a senior solutions expert with Fourth, told the conference that a reference to a recipe she was costing up for one hospitality company’s head chef as part of an F&B cost management exercise to ‘a pinch of salt’ in a ten-gallon batch of soup turned out to be, not the five grams the chef initially suggested, but 50 grams, ten times as much. The realisation that because ‘pinch’ had not been properly defined and costed, 400 recipes would have to be recosted saw the blood drain from the chef’s face, Gardiner said. This delayed the costings process by six weeks, and, in addition, it was realised that all the recipes were more expensive than they had originally been costed at, with the inevitable effect on the bottom line, she said. “It is painful to have to account for every single ingredient in every single recipe, especially when it involved things like ‘pinches of salt’ and ‘pinches of pepper’,” Gardiner told delegates. “But with new EU legislation coming in over the next few years, you’re going to need to know all the nutritional information on every recipe, as well as any allergins, so why not invest the time now understanding the actual cumulative cost, as well as being able to say, ‘I know every single ingredient in my recipe?” Gardiner said some Fourth clients had tackled the problems of recipe measuring by having specially coloured ladles, so that a green ladle contained 50 grams, a yellow ladle 100 grams, and so on.

Industry News:

Chief executive quits at Joe Lewis’s US company: Brian Lockwood, the chief executive of Tavistock Leisure, the US company owned by key Mitchells & Butlers shareholder Joe Lewis, has stepped down. Tavistock, the operator of 15 upscale full-service restaurants and fast-casual Freebirds World Burrito chain, has been subject to a number of management exits in recent months. In July, Jim Mizes, former president of Freebirds, was named president and chief operating officer of Pasadena, Calif.-based Blaze Fast Fire’d Pizza. Last month, Jeff Carl, Tavistock Restaurants’ chief marketing officer, left to become chief marketing officer of Dallas-based Taco Bueno. Lockwood had been with Tavistock Restaurants since 2003 when its acquired bankrupt company Constellation Concepts, which included the Napa Valley Grille, California Café, Café del Rey, Blackhawk and Alcatraz brands. Tavistock acquired Freebirds in 2007 and the Japanese restaurant Sapporo in 2009. The company also developed the ZED451 concept in Chicago in 2008. Freebirds has been a primary growth vehicle for Tavistock Restaurants – the burrito chain with a “rock-and-roll attitude” began franchising in early 2012 and has grown to more than 100 units.

John Lewis to offer customers free tea and cake as part of loyalty scheme: Department store John Lewis will offer customers treats such as free tea and cake when it launches its loyalty scheme, “my John Lewis”, at the end of this month. It will not offer points but rather regular prize draws, personalised incentives and free tea and cake in one of the company’s restaurants.

Luke Johnson considers return to bingo: Sector investor Luke Johnson is mulling a return to the bingo industry with a possible bid for parts of the Gala Coral bingo chain, which is due to go on the market with a price tag of £250m plus. Johnson told The Times: “I am looking again at the bingo industry and have been for some time.”

Lloyds Bank pays £1m over mis-sold hotel business interest rate swap: Lloyds Bank has paid circa £1m to a family hotel business mis-sold an interest rate swap. The bank sold a product worth £4.5m to the Khaishgi family, which runs small hotels in London. The family member who bought the product was driving his car at the time and the business argued it did not understand the product. The contract allowed Lloyds Bank to cancel the contract if interest rates rose, but made it very expensive for the client to cancel.

JD Wetherspoon chief executive completes Chicago marathon: JD Wetherspoon chief executive John Hutson completed the Chicago marathon in a time of 4:01:04 yesterday, raising money for CLIC Sargent. He said: “I wanted to beat four hours. (But) it’s ten minutes off my previous best looking on the bright side, and I still have something to shoot for in future.”

Company News:

PizzaExpress introducing mystery shoppers: PizzaExpress is introducing mystery shoppers to improve the chain’s performance, said the chain’s managing director, James Spragg. Spragg told delegates at a customer conference organised by the management solutions software provider Fourth at the British Museum in London that the chain was taking steps to improve standards across its restaurants, including introducing a “mystery shopper” programme that would involve two site visits a week. Spragg also revealed that on Saturday nights, servers were being given just four tables each to cover. While they had complained at first, expecting their tips income to fall, he said, the result of greater attentiveness had been better tips, more upselling and better customer spend. He also said that the company’s 40 worst-performing restaurants, out of 420, were proving a drag on the overall performance: “If I could get rid of 40 of my restaurants right now, I’d say our business was doing brilliantly,” he said.

Tim Martin’s earnings drop, executive directors earnings rise at Wetherspoon: Wetherspoon founder Tim Martin saw his earnings as chairman at the company fall to £338,000 in 2013 (including £14,000 of taxable benefits related to rail travel), from £351,000 the year before. Chief executive John Hutson saw his total earnings rise to £1,079,000 compared to £847,000 the year before. His salary of £444,000 was boosted by items like a performance-related cash bonus of £95,000, a pension contribution of £51,000, a share incentive plan worth £109,000 and the vesting of a 2005 deferred share bonus of £358,000. Finance director Kirk Davis earned £535,000 in 2013, including a basic salary of £218,000, compared to £400,000 in 2012. Legal and personnel director Sue Cacioppi earned £570,000 (including basic salary of £230,000) compared to £444,000 in 2012. Directors saw a 2.5% pay rise in September 2012 in line with general pay rises across the company. Davis saw a 10% pay rise in “recognition of his performance and with consideration of overall market rates”. Executive directors received 16.5% of their salary as a cash bonus, based on profit growth. A cash bonus equivalent to 5% of salary was paid for carrying out a set number of calls on Wetherspoon pubs per month. 

Sticks ‘n’ Sushi to open second London site in November: Sticks ‘n’ Sushi, the Danish concept that opened its first London venue in Wimbledon last year, will open its second site at the former Walkabout venue in Henrietta Street, Covent Garden on 8 November. The company stated: “Its taken 13 months of blood, sweat and tears to transform 11 Henrietta Street from dump to darling. Now it’s here – shiny, funky, different. (Well, if you ask us at any rate).”

Giraffe gets green light for Aylesbury store: Despite opposition from the town council, a Giraffe restaurant in the car park at the Tesco Broadfields supermarket in Aylesbury has been approved by the district council. Last month, Aylesbury town council said a Giraffe at Tesco Broadfields “would not comply with aspirations for improvement of the restaurants offer within the town centre”. However, the planning committee at Aylesbury Vale District Council has now granted planning permission for the venture. Tesco bought the Giraffe chain for £48.6m earlier this year and wants to open branches near its stores to help create “retail destinations”. 

ETM Group flagship opening delayed: The opening of ETM Group’s new flagship site, One Canada Square, Restaurant has been delayed for a couple of weeks – it was due to be unveiled next week. A spokesman said: “Unfortunately next Wednesday’s launch night for One Canada Square restaurant and bar at Canary Wharf has been cancelled due to delays with our Italian marble shipment.”

Market Town Taverns reports on first 16 months under Heron and Brearley ownership: Market Town Taverns, the Yorkshire operator of cask ale pubs led by Simon Midgley, has reported turnover of £9,312,249 in the first 16 months of Heron and Brearley ownership up until 2 February 2013 (12 months to 2011: £6,592,578). Pre-tax profit was £445,746 compared to £523,561 in the previous 12 months. The company said the extra 40% sales performance is “almost entirely linked to the extra four months trading”. It added: “Administration costs including labour costs have increased 48% almost entirely due to the increased year-end period length but also due to inflationary pressures. The profit before tax decline of circa 15% is a result of increased support costs relating to the acquisition (by Isle of Man-based Heron and Brearley).”

Rainforest Café and Waxy O Connor’s owner reports profit boost: Glendola Leisure, the Rainforest Café and Waxy O Connor’s operator led by Alex Salussolia, has reported turnover and pre-tax profit up in the year to 30 March 2013. Turnover rose to £28,530,000 (2012: £28,511,000) while pre-tax profit climbed to £2,464,000 from £1,894,000 in the year previous. Operating profit was 19.8% up at £2,722,000. The company acquired two Enterprise leasehold sites in London after its year-end, The Crown & Anchor and The Barlow Mow. Glendola has 408 staff.

JD Wetherspoon plans for 20 hours of trading each day in Cardiff: JD Wetherspoon has had an application to extend its opening hours at The Gatekeeper pub on Westgate Street in Cardiff, beginning at 7am and until 3am, approved by Cardiff council’s planning committee. An application for permission to sell alcohol from 8am to 2.30am at the premises will go in front of a licensing committee at a later date. The Gatekeeper had operated with opening hours of 8am until midnight. In a design and access statement provided as part of its application, the company said: “JD Wetherspoon offers a friendly service that is responsive to the needs of its customers.”

Tavistock Leisure opens £800,000 venue: Tavistock Leisure has invested £800,000 in opening a gastro-pub called The White Lead in Hebburn, South Tyneside. The site was formerly known as Dougie’s Tavern and was closed for several years. Tim Kilmartin, co-owner and general manager of the pub, said: “We have 37 staff in all, with some transferring over from other parts of the business, and we have created 24 new jobs, with some of these people experiencing employment for the first time, which means we can train them to our own standards. We wanted to reflect Hebburn’s history and got expert help to decorate the pub with images from the town’s past.”

McDonald’s beats opposition to put restaurant in 17th century pub: McDonald’s has been granted planning permission to turn a pub said to date back to the 1600s into a restaurant, despite a petition signed by 3,000 people against the plan. Rushmoor Council’s development control committee approved the plan to convert the Tumbledown Dick in Farnborough, Hampshire by seven votes to three. The plan includes partial demolition of the pub and refurbishment of the remaining buildings, with a single storey extension and the reconfiguration of the car park to include a drive-through lane. The pub closed in 2008 after failing a health inspection. Mike Williams, head of acquisitions for McDonald’s, spoke in favour of the application at the committee meeting, but was jeered by a large audience as he said the restaurant would benefit the area. Fran Beauchamp, the chairman of a campaign group called Friends of the Tumbledown Dick, received loud applause as she urged councillors to ignore council officers’ recommendation to approve the proposal, arguing it would cause traffic chaos and make Farnborough a “poor relation” to surrounding towns. However, one committee member, Councillor Rod Cooper, said he felt the McDonald’s proposal would at least bring life to the vacant building and was the only realistic proposal on the table. “To leave the building as it is not an option,” he said.

Roux family to cook at Whiting & Hammond venue: Albert and Michel Roux will be cooking for a night at Whiting & Hammond’s Chaser Inn in Shipbourne in aid of Saint Giles church and Farmers’ Market. A spokesman said: “The church and the pub have had a great relationship over the last ten years with it hosting a farmers market every Thursday in the grounds. To celebrate ten years of this partnership, The Chaser Inn will host a charity dinner cooked by father and son. All the ingredients used for this memorable meal will be seasonal produce from the Farmers’ Market.” Brian Whiting, managing director of Whiting & Hammond, added: “What a great honour it is having these gods of the hospitality industry descending on us for this wonderful occasion. My kitchen brigade are very excited to be working alongside these legendary chefs for the evening – the event was massively oversubscribed.”

Provincial chain hotels outperform London across the board: Provincial hotel chain properties turned in better increases across the board than hotel chain properties in the capital for the first six months of 2013, according to figures from HotStats. Provincial hotel chain occupancy was up 1.5 percentage points for the period, to 67.1%, against a 1.4 percentage point rise in London, to 78.3%. Average room rates in the provinces were up 1.7%, to £68.26, against a fall of 0.3% in London for the period, to £140.22. Provincial revenue per available room (RevPAR) rose 3.9%, to £45.79, against a 1.5% rise in London, to £109.78. Total RevPAR in the provinces for the period was up 3.9%, to £86.50, while in London total RevPAR rose just 1.5%, to £153.33. Provincial hotel chain properties saw gross operating profit per available room (GOPPAR) rise 3.6% to £21.98, while London saw GOPPAR up just 0.8%, to £68.29.

Frankie & Benny’s for Gateshead: Frankie & Benny’s is set to open a 4,570 sq ft, 120-cover restaurant in the new £150m Trinity Square development in Gateshead next month. The outlet will be close to the soon-to-open multi-screen Vue cinema at the heart of the development. Two more “big name” restaurant operators are due to be announced soon for the development, with openings expected to be in time for Christmas, according to Steve Henderson, director at Savills the leasing agents for Trinity Square.

Quarter of hotel sales involved distressed properties: More than a quarter – 26% – of hotel sales in 2012 involved distressed transactions, according to research by Colliers International Hotels. However, Colliers said that despite the widely held belief that most hotels were being sold by owners in financial difficulty, the vast majority of hotel deals last year involved new entrants to the market or expansion by existing hoteliers. Julian Troup, head of Colliers International Hotels Agency, said: “Despite these extremely challenging times, we’re encouraged by the increase in the number of new buyers who saw the opportunity to invest in the hotel market after taking a long-term view on an improvement in real estate and recognising the immediacy of trading gains under their ownership. Although there continue to be sellers that have to dispose of properties for financial or health reasons, this was surpassed by those who made the decision to sell for reasons such as retirement, or a change of occupation.” Colliers said it was encouraging that a third of buyers were new entrants into the hotel market, while most of the remaining purchasers were existing hoteliers growing their portfolios or selling one hotel to acquire another or corporate buyers who planned a change of use. Troup said he expected 2013 to be similar to 2012 in terms of the level of activity and prices achieved. “There are still buyers out there with cash or those supported by bank funding,” he said. “We have seen an uplift in the level of demand from private and corporate buyers looking to invest in UK hotels. There are reasons for real optimism in terms of the transactional activity taking place in the UK hotel market – contrary to the belief of some. We have also seen a marginal increase in private equity backed interest, together with new-to-the-market buyers who see the opportunity to acquire and run a hotel underpinned by the comfort of alternative use in the event of the hotel venture not being to their liking.” Troup said Colliers International had sold or acquired 91 hotels and hospitality businesses with a combined value of in excess of £150m in the 12 months to July 2013.

Orchid to launch new All Inns menu on 22 October: Orchid Pub Company is to launch its new autumn/winter All Inns menu on 22 October. New items include a number of mega dishes – a two-foot tikka, a mighty meaty combo and a mega breakfast burger for those with hearty appetites and anyone who wants a food challenge. Also new is an “Inn The Dog House” – pork hot dogs with a variety of toppings. The company also promised new twists and versions of customer and staff favourites across the sharing platters, main meals, grills, burgers and curry corner sections of the menu. Orchid staff can also be found modelling on the front of the new menus, with pub managers and their children featuring on the main menu and an over 50s couple featuring on the cover of the Diamond Club menu. Care Schuler, marketing executive for All Inns, said: “People are at the heart of what we do at Orchid, so getting our staff to showcase the new menu and talk about it in a way that suits their character and personality is the very best way of highlighting the great food and also the great service.”

LWC opens Yorkshire distribution centre: LWC, named the fastest-growing privately owned drinks company in the UK by The Sunday Times in 2013, opens its eleventh distribution centre in Leeds today (14 October). Since 2007, LWC has seen sales rise from £83 million per annum to £157 million this year. LWC sales director Steven Brewer said: “Yorkshire is a wonderful hot bed for the hospitality industry in the UK.”

East Surrey biggest nightclub closes: The biggest – and most troubled – nightclub in East Surrey has shut down. Flirt! nightclub, in Horley, led a troubled nine-month existence and was the police’s most-attended nightspot in Reigate and Banstead, and the second worst in the whole of Surrey. The 600-capacity Consort Way venue was raided by police on its opening night on New Year’s Eve 2012, and police have since been called 65 times – more than one visit for every two days it was open.

Former Oceana manager secures £4.5m of investment to open 2,500-capacity double venue in Cardiff: Former Oceana manager Richard Maddison has secured £4.5m investment to open a restaurant and bar called Maddisons and a nightclub next door called DC, on the site of the former Liquid and Life in Cardiff’s St Mary Street. Jackson is the brother of Sky Sports News presenter Charlotte Jackson, who is engaged to Wales’ football manager Chris Coleman. He said: “St Davids did a fantastic job lifting the shopping offering in Cardiff and now we want to do the same for the night-time economy.”

Robin Couling becomes managing director of Bath Ales: Bath Ales have appointed Robin Couling as managing director with immediate effect. The move is part of a strategic shift in management responsibilities which sees current managing director Roger Jones transfer into the new role of executive chairman to oversee running of the business and the board. Couling has been promoted from within at Bath Ales where he has worked since 2008 as retail director. As well as taking on the role of managing director, Robin will remain actively involved in the direction and strategy of the retail division, supported by retail area manager Phil Brown and the senior retail team. Since he joined the business, Robin has transformed the small Bath Ales pub estate with the innovative restaurant concept, Graze, and craft beer bar, Beerd. Couling said: “Bath Ales is now in a very strong position both as a highly reputable brewer and excellent pub operator thanks in no small part to the fantastic dedication of our team and the high quality of our offering. In my new role as managing director I will be looking to continue the path Roger has set. Interest in beer is returning and that creates opportunities. Following commitment to a huge amount of development and improvement across the business, particularly in our retail division, I have a great platform from which to drive further growth.” Roger Jones, one of the original founders, said: “In the last year alone, we grew the business by around 25%, which was driven by our retail success as well as strong beer sales. We’re making this shift to meet the demands of the business and strengthen the team at the top. Robin has done a fantastic job for Bath Ales over the past five years in the retail division and I have every confidence that he’s up to the challenge of leading the business and inspiring the staff.”

Murray Roberts becomes managing director of Beds and Bars: Murray Roberts has been promoted to managing director of pan-European hostel provider Beds and Bars. He will be responsible for the day-to-day operation of the business, reporting to founder and chief executive Keith Knowles. Meanwhile, Duncan Robertson has been promoted to group sales and marketing director. Tim Sykes remains as chairman. Knowles said: “I will focus on being an ambassador for the company, finding new opportunities, both people and sites, and overseeing the future strategy of the business. The company is moving into a different phase of its journey.” Last week, occupancy levels across the company’s estate hit 90%, helped by the company’s current level of 3,300,000 website visitors per annum and 350,000 subscribers to its newsletters. Beds and Bars currently offers a total of 3,875 hostel beds across the estate with around two-thirds of those at European sites. It is understood that the company is also in the process of strengthening its non-executive directors. The company held its annual conference last week. Knowles said: “It was, without question, the best conference we have ever had. We had brand expert Howard Saunders with us as the key speaker. He talked about brands and the ways we may wish to improve our brand identities, and used such examples as Ace Hotel, Citizen M. For me the key resonant statement was: ‘show some love’.” In August, Beds and Bars opened a 38 million Euros 592-bed hostel at the Gare du Nord in Paris – last week the site enjoyed 99.7% occupancy. Knowles added: “We have a total of 1,000 beds in Paris now. The digital media team we have is simply the best in the business. The product development and delivery are amazing - and not a single zero hours contract to be seen. I am very proud to have the company I have and of the people in it.” In September, company web and mobile sites were +60% up in traffic terms compared to last year. The news of internal promotions at Beds and Bars comes in the same week as Propel revealed that group operations director Eddy Passey is to join the board of Red Hot World Buffet after an approach from interim chief executive James Horler.

Caffe Nero pushes up revenue almost 11%: Boosting store numbers by a net 7.5% and pushing up like-for-like sales by 2.8% helped Caffe Nero increase revenue by 10.7% to £204.3m for the financial year to the end of May, the company announced today. Gross profit for the year was up on 2012 by 10.8% to £49.2m, with store margins flat at 24.1%, pushing Ebitda up 10.8% on the previous year to £34.9m, with Ebitda margin again unchanged at 17.1%. Operating profit rose 10.5% to £21.1m, though the operating profit margin slipped slightly to 10.3% from 10.4% in the year to the end of May 2012 as admin costs rose 10.8% and the cost of sales rose 10.7%. Profit before tax rose 10.5% to £21.1m. The company opened 45 new stores during the year and closed six, giving it 519 stores in 247 UK towns and cities. Cafe Nero said it intended opening another 45 new stores this coming year, and it saw potential in the UK market for at least 750 Caffe Nero stores. It said among its key performance indicators, Ebitda, which controls its ability to fund future store openings without recourse to external finance, continued to grow despite a challenging economic environment, thanks to the continued expansion in the number of its stores, the growing maturity of younger existing stores, which meant increasing store profit in absolute terms, and “careful cost management”. The increase in like-for-like sales was almost exactly in the middle of the company’s target range of 2 to 4% a year. 

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