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Thu 31st Oct 2013 - Ceviche, Ryan Giggs, Spirit, JDW, Wagamama

Story of the Day:

Ever So Sensible partners Castle Rock for fish and chip concept: Ever So Sensible Restaurants, the company formed by the former Mitchells & Butlers executive Chris Bulaitis, is partnering Castle Rock Brewery to turn Nottingham’s Castle pub into the city’s premier fish and chip venue. Visitors to the pub, directly opposite Nottingham Castle, will now be able to place an order to eat in or take away at the venue’s own fish and chip bar. The beer batter has been created exclusively in conjunction with Castle Rock Brewery using Harvest Pale Ale. Bulaitis said: “It’s quite a bold decision to call time on the current bar menu and move solely towards fish and chips. However, after speaking to regulars and friends, it became clear that the city’s lacking a decent place to get good old-fashioned fish and chips. Of course, we wanted to put our own unique spin on it, which is why we approached Castle Rock. Customers will get a traditional fish and chip experience with us, with food served in boxes, with wooden cutlery. We’re also offering locally sourced sausages and pies, scampi, fishcakes, and of course, mushy peas. However, the emphasis is very much on quality. This is fish and chips taken to a whole new level. And with us being a proper pub, it can be all washed down with a pint of real ale.” Takeaway customers will also be able to purchase a four-pint canister of Harvest Pale Ale to take home, for a great night in. The venue has also undergone a refurb, reflecting the heritage of the building, with new features such as chandeliers, antique light fittings and Edison light bulbs. Ever So Sensible Restaurants also owns four Le Mistral bistros in Nottinghamshire and Derbyshire, Fothergills in Nottingham, the Marquis Wellington and the Globe in Leicester, the Horse and Groom in Lincoln and the newly opened Hume Arms in Torksey, near Lincoln.

Industry News:

Morgan Stanley reports global wine shortage: Morgan Stanley Research has claimed a global undersupply of nearly 300 million cases of wine a year. Australia-based analysts Tom Kierath and Crystal Wang say the shortage comes despite the fact that there are one million wine producers globally, making 2.8 billion cases a year, with circa 50% coming from Europe. Global production fell by more than 5% last year, to its lowest level since the 1960s, primarily due to bad weather in France and Argentina. Production in Europe alone dropped 10% in 2012, the report said while worldwide consumption rose by 1%.
Chicken, beer and sports formula boost Buffalo Wild Wings: Buffalo Wild Wings, the US concept based around the pillars of chicken, beer and sport, has reported third-quarter profit up 67% as the restaurant chain reported strong like-for-likes and lower costs for traditional chicken wings. Results in the latest period were helped by a 4.8% jump in like-for-likes at company-owned restaurants, with 3.9% growth at franchised locations. The restaurant chain also reported that same-store sales at company-owned restaurants and franchised locations were up 5.3% and 3%, respectively, for the first four weeks of the fourth quarter.

TripAdvisor names top ten UK restaurants: TripAdvisor has named its top ten UK restaurants in its Travellers’ Choice Restaurants Awards for 2013.They are: 1 Le Manoir Aux Quat’Saisons, Great Milton, Oxford; 2 Gidleigh Park, Chagford, Devon; 3 Petrus, Belgravia, London; 4 Lumiere, Cheltenham, Gloucestershire; 5 Andrew Fairlie @ Gleneagles, Auchterarder, Scotland; 6 Ocean Restaurant, St. Brelade, Jersey; 7 The Ledbury, London; 8 Castle Terrace, Edinburgh; 9 Maison Bleue Restaurant, Bury St. Edmunds, Suffolk; 10 Le Gavroche, Mayfair, London.

Tim Martin – success of Tax Parity Day indication of great progress in VAT campaign: JD Wetherspoon founder Tim Martin has argued that Jacques Borel's VAT campaign is making great progress. Martin said: “Unfortunately, the VAT debate has recently been side-tracked by relatively minor issues. The VAT Club itself paid its VAT bill late and this is regrettable, but which publican has not been in a similar predicament? Jacques Borel has only met a few MPs so far, but is this a significant factor at this stage of the campaign? Mr Borel has successfully achieved VAT reductions in numerous countries, so he must surely be given credit for his tactical approach. I myself campaigned for years against the euro, but never lobbied any MPs and many campaigns have been won by convincing the public first. The first priority is surely to make the case to publicans and customers and the success of Tax Parity Day is an indication that great progress has been made in this vital sphere.”

New Marston’s chairman to speak at BISL conference:
The new chairman of Marston’s, Roger Devlin, will present on "the value of leisure business" at the Business in Sport and Leisure (BISL) conference on Thursday 7 November. The Olympic athlete and coach Darren Campbell will speak on "the value of sport" and the chief executive of Springboard UK, Anne Pierce, will deliver a talk on "the value of people in the hospitality industry". The shadow minister for small businesses and regulation, Toby Perkins, will offer the opposition's view of the leisure industry. The event coincides with the Propel Multi Club Conference, which sold out seven weeks ago.

London pie and mash shop receive Grade II listing: A pie and mash shop in East London described as “a unique part of the capital’s history” has been awarded Grade II listing. L Manze Eel, Pie and Mash Shop on Walthamstow High Street has been recognised for its “beautifully preserved interiors”, English Heritage said. Heritage Minister Ed Vaizey said: “Pie and mash shops are as intrinsically linked to London as black cabs and beefeaters. L Manze’s in Walthamstow is a unique part of the capital’s heritage and is as relevant and popular now as it was when it first opened in the 1920s.”

Company News:

Ryan Giggs and Gary Neville to launch Cafe Football in Westfield Stratford: Footballers Ryan Giggs and Gary Neville will launch Cafe Football, a 140-seat venue at Westfield Stratford in East London, in December. They claim it will be “inspired by the game” and “capture that authentic football culture” through its food, cocktails and decor. Desserts include Half-time Orange (parfait and cream with orange cocoa butter and green marzipan, giving the appearance of a real citrus fruit), Pistachio Turf (pistachio sponge and chocolate in the form of a football pitch), and Melting Chocolate Football. Giggs said: “The food at Cafe Football will be a unique take on all of the traditional matchday favourites. We want it to be the place where guests can enjoy themselves while eating classic football dishes with a modern twist. There is a real sense of community within fans and we want that fun atmosphere to spread to Cafe Football – it will be a place that reflects the spirit of fans coming together after a match.”

Wetherspoon set to buy first Irish pub in next few weeks: JD Wetherspoon expects to buy its first pub in Ireland in the next few weeks. A spokesman told Propel: “Things are moving slowly but it should happen in the next few weeks.” Previously, The Irish Independent has claimed that Wetherspoon is set to buy two pubs in Ireland at around €1.5m (£1.27m) each. The newspaper reported that agent Bill Morrissey is currently completing the sale of the 40 Foot in Dun Laoghaire and the Tonic in Blackrock, both in Dublin, to Wetherspoon.

Douglas Jack – Flaming Grill Lite is producing double Spirit’s target return rate: Numis Securities leisure analyst Douglas Jack has issued a ‘Buy’ note on Spirit Pub Company shares with a Target Price of 100p. Jack reported that early trials to introduce a Flaming Grill Lite format at formerly wet-led pubs is doubling company return on investment targets. He said: “Spirit has the lowest valuation in the licensed retail sector on almost every metric, even though it continues to generate above-average managed pub like-for-like sales and margin growth. With the leased pub estate now stable, the proposed refinancing of the A1 and A3 bonds should pave the way for a return to expansion – for which early trials of Flaming Grill Lite are achieving double the company’s return hurdle rate. The managed estate should continue to outperform, having increased average EBITDA/pub by 36% since 2010. Like-for-like sales growth accelerated to 4% in September/October despite capital expenditure falling 55% last year. In 2014E, like-for-like sales should benefit from improvements to: brand positioning; service standards; product range; pricing strategy; brand loyalty trials; marketing utilising new CRM systems; and new online booking systems. We believe Spirit’s low rating reflects historic concerns in relation to trading and the debt structure. As these concerns are being dealt with, the shares should soon be in a position to re-rate, to properly reflect the sustainability of Spirit’s above-average growth. We believe Spirit offers an attractive way in to the sector, given a low relative valuation, strong management team and attractive growth prospects.”

Starbucks reports 7% like-for-likes in fourth quarter: Starbucks, whose shares are up nearly 50% this year, reported record earnings in its fourth quarter last night. Chief executive Howard Schultz described the 2013 financial year as “by far the best year in Starbucks’ 42-year history”. Profit climbed 37% during the fourth quarter to a record $0.63 per share. Revenue increased 13% from the year-ago period to $3.8 billion, in line with expectations. Global like-for-likes sales grew 7%. The company currently operates 19,209 Starbucks locations worldwide, with plans to open an additional 1,400 stores in 2014.

Greene King to open town centre Hungry Horse: Greene King is to open a town centre Hungry Horse in the St. Modwen development in Longbridge in the West Midlands. The venue has been named after the Austin Cambridge car, acknowledging the car manufacturing heritage of the site. The family-led pub occupies a position overlooking Austin Park and the River Rea and will have a mezzanine floor and outdoor seating. Initially, it will create up to 50 full and part time jobs. Greene King has signed a 25-year lease on the 6,000 sq ft premises and joins Sainsbury’s, Costa Coffee, Premier Inn, Beefeater Bar & Grill and Greggs in the development.
Morecombe entrepreneur re-opens town’s only nightclub: Morecombe entrepreneur Jim Hancock, has re-opened Morecombe’s only nightclub, The Carleton, as C2. The Carleton shut down in spring 2012 after the previous management went bust, unable to turn the club into a profitable business in a flagging economy. Hancock said: “It’s a risk but I’m a risk taker. You’ve got to grab hold of an opportunity. I’ve been running my business Hancocks Skip Hire for seven years now after taking over from my dad and I’ve been looking for a nightclub for some time.”

Guests rank Britannia Hotels lowest: Customers have ranked Britannia Hotels, the company that owns Pontins, as the worst hotel operator in the country, with leaky showers, squeaky beds and peeling wallpaper. A league table drawn up by the consumer watchdog Which? gave it 36%, less than half the score of Q Hotels, which came top of the table with 78%, followed by Radisson Blu’s Edwardian brand, with Premier Inn in third place.' Leisure analyst Wyn Ellis, of Numis Securities, said: “The average score for each hotel rated in the survey (36 hotel companies) was 64.7%. Whitbread's Premier Inn did well, scoring 76%. The results highlight the significant gulf in customer satisfaction between it and its major competitor, Travelodge although Travelodge's customer score did improve to 50% from 46% in 2012.”

Domino’s hires new PR agency:
LightBrigade PR has begun work as the first central press office for Domino's Pizza after a two-way pitch. The agency pitched against Iris Worldwide, which is responsible for Domino's creative and digital development. It began work at the end of last week supporting the roll-out of Domino's latest product development, chocolate dough balls. Sarah McGhie, head of PR at Domino's, said: "We need to kick start a proactive press office, and we need something fast.”.

Swallow Hotels site relaunched after multi-million makeover: A landmark former Swallow Hotel in Lancashire is set to reopen after a multi-million pound refurbishment. The former Swallow Hotel, in Preston New Road, Samlesbury, is being relaunched as the Samlesbury Hotel. The hotel closed suddenly under the previous owners in April but is set to reopen after being bought by Squire Hotels, which was launched earlier this year by Manchester-based lawyer Chris Eddlestone. The Samlesbury Hotel will be a modern contemporary four-star hotel with 80 new bedrooms, state-of-the-art meeting rooms, and a main function room accommodating up to 160 people. A ground floor bar and grill will be open to the public daily from 6.30am

Famous Cotswold pub back on market: The famous Mason Arms in South Leigh, near Witney, Oxfordshire is back on the market after a sale fell through at the last minute. Peter Brunt from Colliers International said: “We were just 12 hours away from exchanging contracts on the Mason Arms when the pub company involved pulled out due to a change of heart. But there was considerable interest from potential buyers and I am confident it will be snapped up before long.” The Mason Arms, the first pub in Oxfordshire to be prosecuted for disregarding anti-smoking laws, has been placed on the market by its larger-than-life owner Gerry Stonhill. Described by Raymond Blanc as his all-time favourite pub, it comes with its own helicopter pad. The Mason Arms is back on the market with a price tag of £700,000 freehold.

Cider maker says battered Irish pub market may have turned corner: The cider maker C&C says the Irish pub market may have turned a corner after the company's sales volume in bars there outperformed off-licences for the first time in seven years. Sales have fallen by a third since 2007 in Ireland. C&C, which bought Ireland's leading beverage distributor, Gleeson Group, last year, said volumes in the Irish pub sector declined by 1%, against a 2% fall in the off-trade channel. Price increases led to overall growth of 3% in value terms.

Ceviche appeals for more sites: The Peruvian restaurant operator Ceviche, which was founded in Soho, central London in 2012, is about to open a second site in Shoreditch, East London called Andina, and has advertised for more sites. It is looking for sites of between 2,000 and 5,000 sq ft, with a minimum ground floor of 1,000 sq ft. Its target locations are all in London: South Kensington, Borough Market/Bermondsey, Islington, Covent Garden, Marylebone, Holborn, Kings Cross, Leadenhall Market, Smithfields, Southbank, Mayfair, Liverpool Street, Camden, Victoria, Canary Wharf, Westfield, Shepherds Bush and Fitzrovia. Suitable properties should be forwarded to Ceviche opened a pop-up restaurant in the Virgin Upper Class Lounge at Heathrow in July.

East Midlands operator buys two Fat Cat sites: The East Midlands multi-site operator Eddie Rathaur has bought two former Fat Cat Cafe bars out of administration, in Chapel Bar, Nottingham and in Derby. Only the freehold and Fat Cat business in Leicester remain available from the original portfolio of 12. Rathaur said: “These two fantastic, well-known venues complement our existing portfolio in the East Midlands. We have great plans for both bars, building on their reputations as key parts of the city centre leisure sector.” Four Fat Cat Cafe Bars sites have now passed into new ownership, including one, the Queens Head in Frodsham, sold to Stonegate Pub Company earlier this year. The Queens Head re-opened at the weekend after a £200,000 refurbishment to convert it to Stonegate’s Classic inns brand.

Japanese knotweed delays signing of Spirit lease: A plan to convert the Grand Hotel in Leigh-on-Sea, Essex to a hotel and spa have been delayed by Japanese knotweed. Workers are now trying to clear the plant, but it is delaying Mick Norcross, who runs the Sugar Hut in Brentwood, Essex from signing the lease on the Grade II listed building. Norcross said: “Japanese knotweed is a serious matter and so has delayed the signing of the lease. It can be expensive to clear and so the current owner has to take responsibility for it like anything else that arises before the lease is signed.” Spirit is the current leaseholder of the empty building in the Broadway.

Stonegate names Minories as its Business of the Year: Stonegate Pub Company has named its Minories pub near Tower Hill Tube station in London as its Business of the Year. Star performers at the company will b taken on a trip to South Africa. Stonegate's chief executive, Toby Smith, said: "I am delighted that the whole Stonegate management and support team were able to contribute to a brilliant event and celebrate the exceptional performances from 2013. The winners are in for a trip of a lifetime hot on the heels of last year’s superstars trip to Las Vegas."

Caffe Nero to open flagship Windsor site: Caffe Nero is to open a flagship site in Windsor in November, occupying a former Millets store at the lower end of Peascod Street that has stood empty since June. A Caffe Nero spokeswoman said: “I can confirm that the store is due to open sometime in the week commencing November 18 and we will be employing approximately six local people as baristas.”

Fourth Prezzo director sells shares: Kuldip Sehmi, an executive director at the Italian restaurant chain Prezzo, traded in 200,000 shares last week, reducing his stake to 682,244 shares, equal to 0.29% of the issued share capital. Sehmi, who is responsible for the day to day running of approximately half the Prezzo estate, sold the shares at 117p each for a total trade value of £234,000. The size of the transaction in much smaller than those made by chief executive Jonathan Kaye and two of its non-executive directors last month, when they each traded in 1.3m shares in the company.

Mark Dorber wins Beer Academy award:
Acclaimed pub landlord Mark Dorber, who turned Mitchells & Butlers’ White Horse on Parson's Green, West London into a haven for beer enthusiasts, has been given the Beer Academy’s highest honour, its annual “Honorary Beer Academy Sommelier” award. Beer Academy director Simon Jackson said: “Mark was a business analyst who left a job in the City of London to pursue his love of beer as landlord of the White Horse. Here he pioneered innovative standards of cellarmanship and took particular pride in training a new generation of beer connoisseurs, who can be found managing their own pubs and microbreweries all across the world. His famous tutored tastings and beer dinners led to the White Horse being a regular on TV, radio and the national press – and prompted legendary beer writer Michael Jackson to dub it 'Beer Central'. His new pub, the Anchor at Walberswick in Suffolk, continues this pioneering tradition.”

Wagamama 3, La Tasca 0: Wagamama has opened its third Bristol restaurant, in Cabot Circus. It replaces a former La Tasca, which has gone from having three restaurants in Bristol a few years ago to now having none at all.
Geof Collyer – Spirit has a cunning plan: Deutsche Bank analyst Geof Collyer says Spirit Pub Company "has come up with a cunning plan that could/should free up some much-needed cash for reinvestment rather than be required for debt amortisation." The "cunning" part of the debt re-profiling plan, Collyer says, is that it is voluntary, "since we do not believe that the bond holders would vote for a 15-year deferral of repayment whilst Spirit continued growing its dividend. However, the plan now means that the group will probably need to refinance in 2018. Cash flow should remain tight and investment rationed." Collyer said the bank was giving the company a "hold " recommendation "as we believe most of the good news is in the price. We value Spirit Pub Co on an 11.5x EV/Ebitda multiple for the year to August 2014, based on Ebitda that excludes the provision credits. This multiple reflects a half way house between the pub groups that are more geared to operating leases in the sector and those that are asset rich. The Spirit asset mix is one third operating leases at group level, but 45% in the managed estate, of which around one third are loss making. We would have increased our valuation to just 73p if we excluded the 53rd week benefit. Even if we used the same multiple for the more heavily asset backed groups like Greene King and M&B (12x), there would still not be enough upside to move to a Buy, in our opinion."
Thomas – No Saints profitable now after £3.4m loss:
Nightclub veteran Stephen Thomas, who founded and ran the Luminar nightclub business for many years, has told Propel that his No Saints nightclub operation is now profitable after reporting a £3.4m loss in the seven months to September 2012. Thomas says that the £3.4m loss occurred after a third and fourth round of fund-raising did not materialise, and the company had to write down the value of a number of venues where investment was no longer possible and sites were surrendered back to landlords. Losses on the write-down of the value of assets and discontinued sites amounted to £3m. Trading losses of around £400,000 account for the remainder of the loss but the continuing business was profitable after central costs over the course of the full year. The company, which is now split into Jam House and Dancing Division segments, is forecast to make around £1.5m profit on turnover of around £16m this year. Thomas told Propel: “We haven’t done as well as we’d have liked but it is nothing to do with operational excellence. This is a profitable business: we had a series of site issues around lease and capital commitments to sort out after our third and fourth tranche of funding did not come through. We had to focus on our profitable sites.” Thomas said that the Jam House division made £460,000 Ebitda from its sites in Edinburgh and Birmingham, and the Dancing Division, which includes four sites where the company holds an investment and four sites it wholly owns, has made Ebitda of £609,000 in the most recent full year. He said: “We are not a stagnant company – we have a pipeline of new sites that will come online during the course of the year.” A new site in Cheltenham is due to open in mid-November, and the company re-opened Oceana, Wolverhampton at the start of this month. A spokesman added: “The discontinued operations represent sites that we have subsequently exited in 2013 and their costs will also be reflected in the 2013 accounts. However, agreements have now been concluded with all landlords.”

Realpubs founders to launch new company: Nick Pring and Malcolm Heap, who sold Realpubs to Greene King for £53.1m, are looking to buy up to ten pubs in London as they plan to launch a new company that will seek to evolve the Realpubs premium offer. The business partners left Greene King at the end of April, and a six-month non-compete clause elapsed this week. Pring told Propel: “We would like to pick up a package of pubs to get us started – a group of between six and ten pubs would be ideal. We will be looking at everything, including free-of-tie commercial leases and tied leases. There are lots of opportunities out there. If it’s not possible, we are happy to go the route of cherry-picking pubs in ones and twos. We are starting a new company and we’re chomping at the bit to get going. We’re looking to get the property pipeline moving, and trading by February or March next year.” Pring said the new company, which is without a name at the moment, would focus on London: “It’s about being able to get around them on my bike,” he said. “We’ll be looking to create an evolution of the Realpubs offer.” Pring and Heap are already directors of London Ordinaries, a company led by Michael Buurman that runs two pubs. It has won rave reviews for its second opening, the Crooked Billet in Upper Clapton, East London, an Enterprise Inns free-of-tie lease. The company has built an outside bar to cope with customer numbers. The Crooked Billet re-opened as a “drinking pub” as compared to the company’s other pub, The Empress of India in Homerton, East London,, a pub acquired from Tom and Ed Martin’s ETM Group in March 2011, which is more food-focused. Pring said: “We’re involved in London Ordinaries at a distance.” The acquisition of Realpubs in 2011 by Greene King has been a success, with the first site outside of London, the Anchor in Cambridge, converted to the premium format this month. Industry sources have even suggested that Greene King will attempt to use its Realpubs format in transport hub sites in the future. On Greene King, Pring said: “We still have a very good relationship with Greene King.” Last month, Propel reported that Heap, who will be spending several weeks this winter following the Ashes in Australia, has become chairman of the London brewery Truman's, which has opened a site in Hackney Wick. James Morgan, managing director of Truman's, which has taken the name of a former London brewery that closed in 1989, said at the time: “With Malcolm’s arrival, we have the team to make Truman’s a great name in British brewing once again. Malcolm’s industry experience is immense and, most importantly, he shares my passion for Truman’s and everything that it stands for.”

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