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Morning Briefing for pub, restaurant and food wervice operators

Thu 7th Nov 2013 - Ed's Easy Diner, Leeds Trinity, St Austell, Tuk Cho, Whitbread

Story of the Day:

Marco Pierre White – young people seem to have lost my generation’s work ethic: Chef-turned-entrepreneur Marco Pierre White has questioned whether young kitchen staff nowadays share his generation’s work ethic. He told Propel: “I don’t know that young people today are as hard-working as they were when I was a boy. Boys don’t tend to stay as long in establishments as they used to. People drift a lot more now. When I was a young boy in the industry, the only people who worked in the kitchens were from council estates, like myself, working-class boys. It was a trade – it was like being a plumber, it was like being a mechanic, it was like being a bricklayer. You went to work and you did your job. When I started work in hotels, there were men in their 50s and 60s still working in the kitchens, old men. They would do the breakfast shift. Today, it doesn’t happen. It’s a rarity. Chefs today, they want to be famous, they want to be celebrities. When I was a kid, I never asked how many hours I was going to work and how much I would be paid – my dad told me never to ask. I used to sit there just hoping I would get the job. Who cares about the hours, who cares about the money? The reality of it is, you’re being paid with knowledge. And that’s what the young today don’t realise, in my opinion. They want instant gratification, instant results.”

Industry News:

McDonald’s sponsorship with Paris Saint-Germain to include meal deal: McDonald’s has signed a sponsorship deal with the French football club Paris Saint-Germain that will include the creation of “Menu Paris Saint-Germain” in more than 200 restaurants in Ile-de-France, the region around Paris, or around 80% of its restaurants in the region. As part of the promotion, customers who spend more than €35 (£30) can choose from one of nine different collectable miniature figures of a PSG player.

Starbucks to focus US recruitment strategy on military veterans: Starbucks is to develop a comprehensive hiring platform for veterans and “active duty spouses” in anticipation of having a future global workforce of 500,000. In addition, a Starbucks outlet in Lakewood, West Virginia and one in San Antonio, Texas will begin sharing a portion of each sale with the non-profit programmes Operation GoodJobs and Vested in Vets as part of a commitment to establish five such stores in around the United States. Starbucks chief executive Howard Schultz said: “The value we are creating for shareholders is tied to the values that guide us as an organisation. As I look at the opportunity ahead of us, we’re going to need to hire men and women with like-minded values and the right job skills in order to continue our current levels of growth. The more than one million transitioning US veterans and almost one and half million military spouses, with their diverse backgrounds and experience, share our mission-driven sensibility and work ethic and can build long-term careers at Starbucks as they return home.”

Gloucester plans restaurant quarter in the city: Efforts to revitalise Gloucester city centre should focus on an eating-out culture, city leaders have said. Westgate Street and Southgate Street could become a new “restaurant quarter”, a report into the city’s evening economy suggests. Planning rules and regulations could be relaxed to help spark more life into the area, on the back of the Quays regeneration a few hundred yards away. Local councillor Jan Lugg said: “We don’t have so much of an eating-out culture in Gloucester as there is in Cheltenham. I hear people saying they are going out for a meal but it’s usually for something special. Compare that to Cheltenham where there are many, many restaurants and they seem to manage well.”

Trade unites to call for re-think of plan to abolish personal licences: Industry groups, including the British Beer & Pub Association, the BII and the Association of Licensed Multiple Retailers, have called upon the government to retain personal licences. In a joint letter to Norman Baker, the minister responsible for licensing, they said government proposals to replace the current national system with an option for local authorities to impose training conditions on individual licences will lead to inconsistency, with companies working across different local authorities challenged to keep track of where training conditions apply. There was also the risk of increased reviews of licences to impose training conditions, which will lead to extra costs to businesses. The letter, signed by a range of trade associations across leisure, hospitality and tourism, supported the coherence and qualification-based system behind personal licences, alongside the practical benefits of the criminal check system. The status of the personal licence holder in terms of both position and recognition of personal investment in training was also highlighted, with the letter warning against the “gold-plating” of the designated premises supervisor.

LGA calls for review of the licensing system: The Local Government Association (LGA) has called for a thorough review of the licensing system in its response to the Home Office consultation on the abolition of personal licence fees. It said: “We believe that there is scope to consolidate personal and premises licences into a single licence that incorporates the existing training and CRB safeguards we know are valued by councils and industry alike. However, in line with our broader call for government to reform the licensing system, we are urging government to undertake a comprehensive review of licensing, rather than a piecemeal approach, looking at specific licences.”

Best time to drink first coffee is between 9.30am and 11.30am: Scientists have found the best time of the day to drink a first coffee is between 9.30am and 11.30am. The scientists found that the optimal time to take a caffeine hit is during this period because natural levels of cortisol, which promotes alertness, have begun to dip.

Company News:

Chicago Rib Shack reports ‘awesome’ trading at Leeds Trinity: Chicago Rib Shack boss Christian Arden has reported trading at its newly opened Leeds Trinity Kitchen site, its third outlet, has been “pretty awesome”. He told Propel: “It’s been absolutely brilliant – turnover was three times our budget in the second week of trading at the site.” Chicago Rib Shack is now looking to open a further three sites in the next 12 months and is searching for a suburban neighbourhood in either Ealing or Clapham in London. Trinity Kitchen now has seven permanent restaurants, including Pho Café, a 360 champagne bar, Tortilla, PizzaLuxe, Chicago Rib Shack and Chip + Fish, and five pop-ups that operate on four-week leases. The Financial Times said last week: “Trinity Kitchen breaks the mould of so many depressing food courts through [the] juxtaposition of the permanent and the temporary.”

Ed’s Easy Diner opens in Watford – lines up two more: Ed’s Easy Diner has opened in Watford’s newly rebranded Intu shopping centre (formerly known as The Harlequin) this week. Further openings are scheduled for Westfield Derby on 19 November and McArthurGlen Designer Outlet in York on 10 December. Ed’s plans a further 15 sites before the end of 2014. Chief executive Andrew Guy said: “As we come to the close of a very successful year for Ed’s, we’ve found that some of the openings have performed well above expectations, such as Metrocentre in Newcastle, Meadowhall in Sheffield and now Watford. We now head to high footfall sites Westfield Derby and McArthurGlen in York in the coming weeks and hope to see trading at similar levels going into 2014.”

Former All Bar One becomes The Vault Bar and Dining Room: A former All Bar One in Corn Street, Bristol has been converted into The Vault Bar and Dining Room. Much of the drinks selection is displayed in wooden crates behind the bar. The decoration includes tall leather banquettes, baby blue walls, hanging metal lamps and fans. The bar offers eight draught beers, including Sierra Nevada and Estrella, Aspall cider, and bottles of Innis & Gunn Oak Aged Beer. M&B said: “We sold the site a while ago.”

Zolfo Cooper clarifies Bramwell closures: Bramwell Pub Company administrator Zolfo Cooper has moved to clarify the current level of closures within the estate. A spokesman indicated that there are a total of 36 sites with the Bramwell estate that are closed. However, seven of these were closed before Zolfo Cooper was appointed administrator, and there have been no additional closure since 29 were close last Thursday. 

Former gin distillery becomes a winery: A winery has been constructed in a former Gilbey gin distillery, across the road from West Brompton underground station in London. The grapes will be imported from overseas but the wine produced on site in an attempt to emulate the success of microbreweries in tapping drinkers’ appetite for local goods. Cliff Roberson’s winery joins dozens of craft breweries in London, such as the recently revived Truman brand in the East End. Gin has also made a comeback with companies such as Sipsmith opening microdistilleries in recent years. Roberson, an independent wine retailer credited with introducing Chilean wine to the UK, said London was big enough to support more such businesses. He spent £600,000 of his own money and that of an angel investor refitting the distillery with stainless steel vats and air conditioning to create the right conditions for making wine.

C2 Investment reports turnover up, profit down: C2 investment, the company headed by Matt Jackson that runs four sites in Lancashire, including the Mill at Ulverston, and owns 76% of Lancaster Brewery, has reported turnover rose to £5.4m in the year to 31 January 2013 from £4.4m the year before. Pre-tax profit dropped to £28,300 from £254,000 the year before after an exceptional item of £104,000 linked to dilapidations payable on the surrender of a lease. Ebitda was £369,000, down from £460,000 the year before.

Stephen Crawley to step down at Caledonian: Stephen Crawley is to step down from his position as managing director of Caledonian Brewing Company at the end of December after 20 years with the Edinburgh company. Crawley joined Caledonian in 1993 and became managing director in 2001. A recruitment process is now under way to find his successor. Keith Hogg, chairman of Caledonian, said: “Stephen has successfully led the Caley through a significant period of change, and we will all be very sad to see him go. He leaves, having put the business in a very strong position, poised to further benefit from the increased interest in cask beers. He has developed an excellent senior management team, and has worked tirelessly to find new markets for our great beers.”

Simon French – we’ve made minor upgrades but still think Whitbread is overvalued: Panmure Gordon leisure analyst Simon French has revised his valuation of Whitbread shares upwards but still thinks they are overvalued. He set a new target of 2753p, saying: “The current share price implies that Whitbread Hotels & Restaurants (WHR) is valued on the same multiple as InterContinental Hotels Group and Costa on the same multiple as Starbucks Corporation. In our view these are not wholly comparable companies and therefore the stock is overvalued. Given that Costa is already seemingly valued on the same multiples as Starbucks Corporation and Domino’s Pizza Group we see little logic for demerger other than it would then have full control over its international growth ambitions. We think these are currently being thwarted by a lack of capital allocation from the plc.”

Charles Wells lease on Rockingham estate pub ends: A village pub owned by the Rockingham estate, the Sondes Arms, near Corby, Northamptonshire, leased to the Bedford brewer Charles Wells has closed for a major refurbishment programme and is expected to open in the middle of 2014. The Charles Wells lease with the Rockingham estate has come to an end and it will reopen under a new lease with different operators. Landlords John and Deanna Ellis have now taken over the Guinea in the village of Moggerhanger, in Bedfordshire.

St Austell sells one pub in village to focus on its rival: Cornish brewer and retailer St Austell has sold one of the two pubs it owns in the Cornish village of St Stephen, the Kings Arms, to focus £240,000 of investment in the other pub under its ownership, the Queen’s Head. Landlady Paula Nankivell and her partner Jason funded £40,000 of the investment. St Austell Brewery’s estate director, Adam Luck, said: “We all know the challenges facing many rural and village pubs, so we took the difficult decision to sell the nearby Kings Arms and to focus our investment and support on the Queen’s Head. We are delighted with the refurbishment, with all work carried out by local craftsmen and now, with Paula at the helm, St Stephen has a pub to be proud of and we hope the Queen’s Head will play a key role at the heart of village life for many years to come.”

M&B’s Tuk Cho brand wins TripAdvisor plaudits: Mitchells & Butlers’ fledgling Asian food brand Tuk Cho is winning increasingly warm praise on TripAdvisor, with the last ten scores averaging 4.5 out of ten. The second most recent reviewer, giving it five out of five, said: “The service was incredibly good and the waiting staff are smiley and incredibly attentive with no qualms in checking up on, making small changes to dishes and Amy in particular is a real asset to the restaurant. There were eight of us dining and we paid a bill, that was rather heavy on alcoholic drinks, of about £200. Considering the food we’d eaten, the service we’d experienced and the great night this was more than affordable! Go now … it’s fantastic!”

Arkell’s spends £500,000 to add ten bedrooms: Arkell’s Brewery has invested £500,000 to add a ten-bedroom hotel at the Sun Inn at Coate Water, near Swindon. Landlord Andy Moss said: “We’re right next to Coate Water Park and the new hotel rooms look right over the park entrance. It’s also away from the road, so our guests should hear birdsong, not car engines as they drop off to sleep.” Brewery director George Arkell said: “There is a growing demand for good accommodation in this part of Swindon, which is almost next door to the Great Western Hospital and the Richard Jefferies museum, as well as Coate Water Country Park.” Arkell’s now has around 500 bedrooms across its estate of 100 pubs and hotels in Wiltshire, Gloucestershire, Oxfordshire, Berkshire and Hampshire. Arkell said: “The more income-generating opportunities a pub has, the better. If we consider that good-quality accommodation would be of benefit to a pub and would serve the local community, then it’s sensible to make the investment.”

Café Rouge closed by huge fire: A “huge fire” has badly damaged the Café Rouge site on Tenterden high street in Kent. About 60 firefighters tackled the fire, which is believed to have broken out on the ground floor of a hardware store before spreading to Waterstones and Cafe Rouge through the roof.

Costa Coffee finance director joins Moneysupermarket: Costa Coffee finance director Matthew Price has been named as the new chief financial officer for the price comparison website Price will succeed Paul Doughty and will be appointed executive director in the first quarter of 2014, when Doughty leaves.

Young’s re-opens White Hart in Barnes with Masterchef finalist in kitchen: The London pub operator Young & Co has re-opened the riverside White Hart pub in Barnes, South London with a new dining room, the Terrace Kitchen. In the kitchen is a BBC MasterChef finalist, Tom Whitaker. Other additions include an on-site smokery and the Wren’s Perch, a wooden viewing box suspended off the Barn Elms Terrace on the ground floor.

Brewpub to host tap takeover: The Brandling Villa in South Gosforth, which has a brewery in its cellar and is regarded as one of the most innovative pubs in the North East, will host a “Tap Takeover” from 14 to 17 November showcasing 12 beers from North Yorkshire’s Ilkley brewery. The hope is that the effort will help further boost the profile of the brewery and ale drinking as a whole in the area. Landlord Dave Carr said: “I think part of the role of a local boozer is to show its regulars and visitors what beer is good and upcoming. There is a real danger that people always drink the same beer and that pubs just give them what they want. We really want people to try something new and realise what flavours and aromas different ales have to offer.” To help regulars appreciate the different beers, the pub will be offering drinks in glasses that hold only a third of a pint. Carr said: “People will get to try a lot more of the ales and find out what they really like from our selection.”

Falkirk’s oldest nightclub diversifies to survive: Falkirk’s longest established nightclub has been given the go ahead to open earlier in the day to let it host children’s parties and fitness classes. Storm, formerly known as Doaks Ballroom, Oil Can Harrys and the Maniqui, has been an institution in the town for 80 years. But changing times have forced the owners to look to look at ways of expanding the business by offering a more diverse range of services as well as opening up the premises during daylight hours. Falkirk Council’s licensing board members agreed to vary Storm’s premises licence, allowing the Meadow Street nightclub to open for longer throughout the week and be hired for private functions. The board heard Storm was looking to add conference facilities for daytime business meetings and also planned to host private functions such as weddings, funerals, wedding receptions, birthdays, live music, fitness classes and more.

Former Luminar nightclub to become homes: Planning permission has been granted for a housing scheme that will see 25 homes built on the site of the former Zoots nightclub in King’s Lynn, Norfolk, which was operated by Luminar until 2005 when it closed. The 1930s art-deco building, off John Kennedy Road in King’s Lynn, once known as the Pilot Cinema and Zoots Nightclub, will be demolished as part of the development. The site has been unused since Zoots closed its doors in 2005 just nine years after it opened following a £2m refurbishment.

Entrepreneur aged 22 opens his own restaurant: A 22-year-old entrepreneur has quit a career sailing the world on a superyacht to open a pub and restaurant in his home town of Consett, County Durham. After three and a half years touring tropical islands, Rhys Turner returned to Consett in February and has teamed up with his parents, Vicky and Norman, to buy the Smelter Arms in Front Street. Turner has invested £250,000 in buying and refurbishing the community pub, including new kitchens and toilets, which has been supported by a £95,000 Lloyds Bank commercial mortgage.

Fuller’s invests £7.5m in Bath: London brewer and pub owner Fuller Smith & Turner is investing £7.5m in a trio of pubs in Bath, the Crystal Palace, the Huntsman and the Boater. The Crystal Palace, a Grade II listed building on Abbey Green, has re-opened after having its interior completely refurbished including log fires and a large patio garden created at the rear. The Huntsman, on Terrace Walk, North Parade, will be officially reopened on November 27 and will include fine dining with a refurbished restaurant called the Elder Room. The Elder Room is named after the architect John Wood the elder, who designed Prior Park and the Royal Mineral Hospital in Bath. During the Bath Christmas Market, the pub will have a Fuller’s Brewery shop selling gifts. The Boater on Argyle Street is due to relaunch later in the year once its work has been completed.

Starbucks increases UK prices: Starbucks has raised beverage prices in the UK for the first time in three years. The price of filter coffee has increased 5p while lattes and hot chocolate were raised 10p. While milk and energy costs have increased this year, Arabica coffee futures dropped 28% in New York. “The cost of doing business is going up, from wages to milk to energy, so our prices have to increase slightly,” the company said. “Coffee commodity costs historically comprise less than 10% of our overall store operating and occupancy expenses.”

Red Oak Taverns re-opens Whitchurch pub: Red Oak Taverns has re-opened The Kings Arms in Whitchurch, Shropshire, after a major refurbishment. Mark Grunnell, director of Red Oak, said: “We are delighted to continue the extensive refurbishment programme within our estate by bringing The Kings Arms back to its best. Whether through our tenanted or managed divisions, Red Oak strives to offer the best pub experience we can in the communities in which we operate, and The Kings Arms is no exception.”

Ampthill Brewing Company lines up new brewery: A market town is set to get its own brewery – more than 80 years after the last one closed down. A planning application has been put into Central Bedfordshire Council to convert a Grade II listed building in Woburn Street into a new brewery for Ampthill Brewing Company.

Tommy Flynn’s brand opens at fourth Spirit leased pub: Multiple operator Sean Flynn has opened a fourth pub under the Tommy Flynn’s brand with Spirit Leased, Tommy Flynn’s in Northampton. Kiernan Lynch, operations director for Spirit Leased, said, “This is the result of a great relationship with a high-calibre multiple operator and Spirit Leased. We’re really pleased to be able to offer some of the best business opportunities to people like Sean and his company, London Metropolitan Taverns.”

Four restaurants in phase two of Whiteley Centre under offer: Four of the five restaurants that will open in phase two of the Whiteley Shopping Centre in Hampshire, which opens in May 2015, are under offer, with Wagamama and YO! Sushi both set to open at the centre shortly. Alice Keown, associate director at Davis Coffer Lyons, said: “Whiteley Shopping continues to go from strength to strength. YO! Sushi and Wagamama are fantastic brands which complement perfectly the other restaurants already trading successfully at the scheme. Phase two is proving to be incredibly popular and to have already got four of the units under offer shows how much restaurant operators want to be part of the scheme. We hope to be able to announce more exciting names shortly.” Wagamama opens at the centre before Christmas while YO! Sushi opens in spring 2014.

Tim Martin – ‘we have no interest in Bramwell, it’s a busted flush’: JD Wetherspoon founder Tim Martin has told Propel that the company has no interest in buying packages of Bramwell Pub Company sites, although the odd one or two sites might be of interest. He told Propel: “I think they are best converted to restaurants and shops. Most of them opened unusually close to us. There’s been two or three reincarnations of Barracuda Pub Company and I think it’s a busted flush.” Asked whether the decision to ramp up new openings from 30 to 50 this year reflected increased optimism at the company, Martin said: “It’s hard to be precise about levels of optimism, We feel we can open 50 and it’s a financial issue – we extended our banking facility by £100m the other day.” Martin said the move to extend food service times by an hour to 11pm is making a slow start. “The anecdotal evidence is that we are serving three or four meals in the extra time in some pubs. It’s in the nature of an investment for the future – I doubt if it will be immediately profitable.” In the wake of first quarter results, Numis Securities leisure analyst Douglas Jack has maintained his Wetherspoon earnings forecast, as faster expansion is evened out by margin erosion, and maintained an “Add” recommendation with an 815p price target. Jack said: “Wetherspoon now anticipates opening 40-50 pubs this year, up from previous guidance of 30 and last year’s 29 openings, helped by a number of recent acquisitions. Guidance on 2015 and 2016 expansion is unchanged at 30 openings per annum. Reflecting the extra openings, we forecast 8.4% total sales growth this year versus Quarter One’s 7.6%. Margins fell 30bps to 8.3%, a disappointing outcome after the 41bps increase to 9.0% in the second half of [the last financial year]. The company cited labour, repairs, marketing and central overheads. Overall cost inflation is 4% (food and drink 3%; utilities 5%; plus Machine Gaming Duty and pension enrolment), but is likely to be 3% after cost mitigation and offsetting the forthcoming benefit of maximum machine prizes rising to £100. Our Add recommendation reflects what we believe is a fair valuation and expectations of circa 15% earnings growth next year.” Simon French, of Panmure Gordon, issued a “Buy” note after the results announcement with a target price of 806p. He said: “Christmas Day falling on a Wednesday is about as good as it gets for the licensed retail trade, so we expect continued good growth over Q2. We also expect the increase in Category C gaming machine prizes to £100 in January to drive machine revenue growth over the next 18 months. We expect the group to be a modest beneficiary of the FIFA World Cup at the end of its financial year.”

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