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Morning Briefing Strap Line
Mon 11th Nov 2013 - Marston's, PizzaExpress, Restaurant Group, Whole Food Markets

Story of the Day:

Marston’s chairman – ‘we are a chronically overtaxed sector’: Marston’s new chairman Roger Devlin has argued that the sector is chronically over-taxed. He told the Business in Sport and Leisure conference: “We are a chronically over-taxed and over-regulated sector despite the fact that we are an engine for job creation. Marston’s invests £70m a year opening new pub restaurants, each one of which creates around 50 new jobs in places where jobs are hard to come by, Merthyr Tydfil, Gosport and Dunbar to name but three. For the economy to grow, for jobs to be created, for tax revenue to rise, individuals and companies need confidence. The overall tax burden for pubs is far too high to foster the spirit of dynamism, creativity and entrepreneurialism that this industry is capable of. So I challenge this government to encourage growth by removing obstacles to new development, reduce business rates and cumbersome planning requirements. An extension of the small business rate relief and an increase in the threshold for full relief would help so many small leisure businesses. Look to remove inequity in our tax system. Why do we pay 40% of European beer duty when we only drink 13% of the beer? Can anyone explain why VAT is charged on food in pubs but not in supermarkets? I’ll give you one final killer statistic from my own business, Marston’s. We pay out a total of well over £300m of taxation across the group. We are able to pay £35m to our own shareholders. Does anyone seriously think that represents a fair balance of risk and reward?”

Industry News:

Leading London restaurateurs launch consultancy: The founders and owners of three of London’s top restaurants, including Michelin starred Arbutus and Wild Honey, Anthony Demetre and Will Smith, have launched ADWS Consulting, a consultancy service for the restaurant industry. ADWS Consulting will provide professional advice, support and guidance for restaurants both new and established. From helping to develop and launch a restaurant at creation, through to providing advice to ongoing businesses, Anthony Demetre and Will Smith plan to offer a bespoke service, sharing their expertise and experience, as well giving invaluable industry insight.

One in five Britons visiting a coffee shop every day: Britons are spending an average of £400 on takeaway coffee per annum – and one in five visit a coffee shop every day, according to The Mail on Sunday. The coffee shop segment has grown 7.5% in the last year and the branded segment is now 1,000% bigger than 15 years ago. “Britain has become a nation of coffee drinkers,” said Jeffrey Young, managing director of market research company Allegra Strategies, which predicts that by 2017 the UK coffee shop market will exceed 20,000 outlets with a turnover of more than £8 billion.

Leeds City Council set to discuss Late Night Levy this week: Leeds City Council meets this Wednesday to discuss plans for a Late Night Levy in the city. The proposed levy would apply to all premises licensed to serve alcohol between 00:30 and 06:00 on any day except 1 January. Association of Licensed Multiple Retailers Strategic affairs director Kate Nicholls said: “The ALMR will be pressing the council to exhaust all alternative options before proceeding with a punitive tax on retailers and will be submitting evidence of the benefits of partnership working to persuade the council to work with the trade to solve any problems.” 

Sceptre Leisure increases prices: Sceptre Leisure, the leading provider of AWP machines, has written to customers to notify them of a price rise. Managing director Ken Turner said: “The purchase price of a new machine has risen by some 40% in the past eighteen months, and innovations such as digital gaming and remote monitoring also have significant cost implications for machine operators. Our industry requires significant investment in research, game design and other technology to maintain and improve future cashbox levels for our customers. Operating margins in other areas have also been under pressure, with transport costs in particular increasing significantly year-on-year. Our industry only works if all three parties (retailer, manufacturer and operator) receive a fair return for their input. Whilst retailer revenue has remained stable over recent years, machine operator income has fallen. It is for this reason that we have seen one national operator sold at a significant loss to investors, a number of regional players withdraw from the market due to margin erosion and two significant machine manufacturers close down in the last 18 months. In order to continue providing a quality service for our customers we have no option but to introduce an 8.7% price increase in December 2013. For the vast majority of our estate this will equate to around 50p per machine per day.”

Company News:

Karen Forrester – we’re still talking to planners about launching our new brand in Fulham: TGI Friday’s chief executive Karen Forrester has told Propel that parent company Carlson Restaurants is still in negotiations with planners to launch a new brand called Ticket Hall at a former TGI Friday’s site in Fulham Broadway. TGI Friday’s occupied the most prominent corner site on Fulham Broadway from 2005 until 2010, when it left and was replaced by the upmarket Union Market grocery store. However, this brand ran into financial trouble 18 months after opening and it closed its doors on 12 February 2012. An accompanying planning statement for the site, which it called The Old Station, states: “The proposal is to use the premises as one of the first UK concept restaurants by Carlson Restaurants. Ticket Hall, as it will be called, will be a restaurant where the food and drinks are lovingly crafted and are as sociable as the atmosphere. The proposals seek to retain an element of retail within the ground floor use by the installation of two timber retail display cabinets, each to be located within the front windows either side of the main entrance. These display cabinets would be locked and would exhibit items that can be purchased by members of the public from staff over the counter at the restaurant. It is envisaged that such items would include pastries, freshly ground coffee, wood chips, home smoking kits for food, cook books, fresh herbs and condiments.” Forrester said: “We’re still in the battle with the planners because since Friday’s (occupied the site) they’ve changed the local licensing and introduced a cumulative impact policy. So we’re trying to work on that because I think we’ve got a great offer that would be incredibly sympathetic to this beautiful building – and we’ve got an offer that I would love to get off the ground. We’ve been working on it for a few years, it’s not Friday’s, it’s got nothing to do with Friday’s other than it’s probably the values that it represents would be similar and it would be people at its core.”

Redcomb Pubs scoops award for best Spirit leased operator of 2013: Redcomb Pubs, led by Dan Shotton and Mark Draper, which operates three Spirit leased pubs, has won the award for best Spirit Pub Company leased operator of 2013. Other finalists were multiple operators Chris Windle and Sean Flynn. Spirit leased managing director Chris Welham said: “We have some incredible independent operators in our leased pubs so choosing three finalists was extraordinarily difficult and then a winner was even more so. All three of our finalists operate fantastic pubs with the very best in service and standards. It was great to be able to recognise Redcomb Pubs, in particular. Their style of operation and the way they do business is to be admired and they really deserve this award”.

Aspall Cyder reports turnover and profit rise: Suffolk-based Aspall Cyder has reported a turnover and profit rise in its most recent year. Turnover climbed to £19,848,070 in the year to 30 March 2013 from £17,958,233 the year before. Pre-tax profit rose to £523,474 from £397,786 the year prior. Gross margin jumped to 27% from 22% the year before.

Whole Food Markets sales near £$13bn: Whole Food Markets, the company with eight sites in the UK, has reported 5.9% like-for-likes sales growth for its most recent full year. Chief executive John Mackey said: “Our sales approached $13 billion, translating to sales per gross square foot of $972. We opened 32 new stores, expanding into ten new markets and increasing our ending square footage 8% to 13.8 million.” The company sees demand for 1,000 locations in the US alone, and has 94 stores in its development pipeline, in addition to the 47 new leases the company signed in the last 12 months. Average weekly sales per site are $694,000. One new opening in Lynnfield, Massachusetts has a greenhouse on the roof supplying produce to the store. Whole Food Markets operates in the UK and Canada as well as in the US.

Living Venture’s Smugglers Cove opens Thursday: Living Ventures’ latest outlet, a rum-themed cocktail bar and restaurant in Liverpool’s Albert Dock called Smugglers Cove, opens its doors this coming Thursday (14 November). The bar is in a 5,000 sq ft unit on Britannia Pavilion, a 19th century Grade 1 Listed former warehouse building, and the drinks menu features 150 different types of rum. The Smugglers Cove is the fourth venue under Living Venture’s New World Trading Company (NWTC) flag, which is backed by the Hill Capital Partners Food and Beverage Fund, and is Living Ventures’ second outlet at Albert Docks, after its Gusto restaurant and bar. Tim Bacon, chief executive of Living Ventures, said: “This is an exciting time for NWTC. Our current offering has proved to be a success in a tough economic climate and we feel Liverpool is the obvious choice for the next evolution of NWTC.” New World Trading Company has a forecast turnover of £9.5m for this financial year with an expansion planned for London in 2014.

Matthew Sankey doubles up: Matthew Sankey has expanded by opening The Old Fish Market on The Pantiles in Tunbridge Wells as a ‘champagne and seafood bar’ – after two years of planning delays. The new bar can accommodate around 50 customers with seating both inside and outside. The new champagne bar will complement Sankey’s Seafood Bar and Brasserie on Mount Ephraim and its fishmongers on Vale Road, which is now in its fourth year of trading. Matthew Sankey is also the key seafood supplier for the Whiting & Hammond gastro-pub chain headed by Brian Whiting.

Two PizzaExpress freeholds and JD Wetherspoon freehold to be auctioned by Allsop: Two freeholds that are occupied by PizzaExpress as a tenant and a JD Wetherspoon site are to be auctioned by Allsop. In Crawley, a freehold where PizzaExpress has a lease until 2022 and is paying £77,000 per annum is offered for £1.1m plus. In Warwick, a freehold where PizzaExpress has a lease until 2033 and is paying £40,317 per annum is offered with a guide price of between £625,000 and £650,000. Meanwhile, a freehold in Bury St Edmunds where JD Wetherspoon holds a lease until 2030 and pays a rent of £70,000 per annum is offered with a guide price of between £925,000 and £950,000. The auction takes place on 3 December. 

Giraffe, Las Iguanas and Harvester lined up for Bury site: The site of the former Sol Viva nightclub in Rochdale Road, Bury could be home to outlets for Giraffe, Las Iguanas and Harvester if plans submitted to Bury Council are approved. Planning permission was originally granted in November 2012 to redevelop the building into four retail units. The latest plans involve design-based changes. The site was originally planned to be used as retail space with leisure facilities above it. According to the planning documents submitted by the owner of the site, Thornfield Properties (Bury), a total of 83 jobs would be created. Work has already begun on the demolition of the nightclub building, and is expected to be over by Christmas.

Douglas Jack – I was slightly wrong on The Restaurant Group: Numis Securities leisure analyst Douglas Jack has upgraded his recommendation on Restaurant Group shares to ‘Hold’ with a Price Target of 550p. Ahead of this coming Friday’s Third Quarter trading update, he said: “September trading should have been reasonable (cinema attendance was up 4.7%; airports up 3.1%), but weekend cinema attendance fell 44% in October due to comparatives including the opening weekend of Skyfall. Owing to half of The Restaurant Group’s restaurants being located close to cinemas, like-for-like comparatives are very difficult (at 7.5%) through to the end of the year. Seven restaurants were opened in H1 and a further 23-28 are expected in H2. The addition of another 60 cinema developments by 2018 can only benefit an already excellent site pipeline. We have moved to ‘Hold’ (from ‘Reduce’). We remain concerned about restaurant supply growth, but the error in our negative recommendation was partly our expectation that the Restaurant Group’s competitors would be quicker to move into leisure parks and that they would all be competent when they got there. That scenario is unlikely to change much in 2014E, a year in which The Restaurant Group can look forward to easy weather comparatives in March–September, offset by the football World Cup”.

JD Wetherspoon to re-open closed pub in February: JD Wetherspoon will re-open a pub in Shoeburyness, Essex (population: 20,201) that has been closed since November 2012 in February 2014. The company has begun work on a £1.3m refurbishment of the 250-year-old Parson’s Barn pub, in Frobisher Way. The new pub is scheduled to open on 18 February, providing more than 40 jobs. Since closing in November 2012, the pub has been the victim of repeated vandalism.

Marston’s submits new-build plan for Welwyn Garden City: Brewer and retailer Marston’s has submitted plans for a new-build pub restaurant on derelict land near the corner of Bessemer Road and Bridge Road East in Welwyn Garden City. The new 689 square metre venue would create 20 full-time jobs and 40 part-time roles. Planning documents submitted to Welwyn Hatfield Council also revealed there will be a 64 space car park created if the proposal is rubber stamped.

Las Iguanas set to open in former Pitcher & Piano in Exeter this week: Las Iguanas is set to open in Exeter’s Queen Street this Thursday (14 November), occupying a former Pitcher & Piano site that closed in September. A spokeswoman for Las Iguanas said: “We have had loads of bookings already as word seems to have spread like wildfire that we are opening. Being Bristol-based we have of course had our eye on Exeter as a great place to be for several years and our recent opening in Royal William Yard in Plymouth means we are delighted to open two branches in particularly lovely buildings in Devon within six months, which is brilliant.”

PizzaExpress founder hotel to get new restaurant: Peterborough’s Great Northern Hotel, which was owned by PizzaExpress founder Peter Boizot at one stage, is to open a new restaurant called “1852 Steak, Fish and Grill” – using the year the hotel was built – that will reflect its industrial heritage. The menu will feature a variety of steaks, fish dishes and grill – mostly cooked on a charcoal-fuelled Bertha Oven to give the food a barbecue-style taste.

Punch Taverns and Alfreton Pubs co-invest £200,000 in Peterborough pub: Punch Taverns and multi-site pub operator Alfreton pubs have co-invested £200,000 in a refurbishment of The Whittle in Peterborough Stanground area. The pub, which has always been known for its sports, has a new sports area with five big screens. The Whittle has expanded its drinks offer with two cask ales and one cask cider, while a new food menu has been created, serving traditional pub classics and there is a sports menu and a children’s menu.

Wadworth sells pub car park for Sainsbury’s Local: The Wiltshire brewer Wadworth is selling part of the car park at one of its pubs for the development of a Sainsbury’s Local, a move it says is needed to keep the pub open. Wadworth said the car park at The Badminton Arms in Coalpit Heath, South Gloucestershire is underused and the sale of the land would help secure the future of the pub. It said The Badminton Arms would remain fully open, together with customer car parking, and existing play facilities would be relocated and improved. Ricky Humphreys, a director at Box Property Group, which is buying the land from Wadworth to develop it as a Sainsbury’s Local, said: “The Badminton Arms public house is an important local facility that Wadworth are looking to underpin through additional revenue created by the proposed development. Our agreement provides the opportunity to secure this revenue, whilst providing a high quality local convenience shopping facility at a highly accessible site. The scheme will provide local choice and increase the attraction of Coalpit Heath and Frampton Cotterell for local residents and pass-by trade.” Oli A’Court from J Sainsbury said: “We believe these proposals provide a win-win solution, earning the public house owners increased revenue through the sale of an underused part of their car park, while providing greater choice and convenient shopping for local people.” The plan for the new supermarket on the car park is subject to planning permission.

Seven restaurants and a cafe proposed in cinema development: The owner of Yate Shopping Centre in South Gloucestershire has submitted plans to South Gloucestershire council for a development alongside the centre involving a six-screen cinema, seven restaurants, a riverside cafe and three retail outlets. Mark Hull, managing director of Dominion Corporate Trustees, which owns Yate Shopping Centre, said: “We believe we now have a scheme that is viable and is appealing to the market. Several operators have told us they are prepared to commit to leases and we now just need to get planning so we can start the ball rolling.” The proposals are expected to go before the council’s planning committee in early February. If approved, work would begin in late 2014 with a view to the project being completed by late 2015.

Greene King puts two Essex pubs on the market: Greene King has placed The Queen’s Head in Rayne Road, Braintree, and The Rose and Crown in Bocking on the market. A Greene King spokesman said: “Following an extensive review of the pubs, we have made the difficult decision that The Queen’s Head and The Rose and Crown no longer fit in with our core estate and we have therefore put them on the market.”

Vimac Leisure closes Kendal’s only nightclub and puts it on the market: Vimac Leisure has closed the only nightclub in Kendal and put it on the market. Vimac Leisure, based in South Tyneside, has run the club since September 2006 and gave it a £500,000 revamp in 2009. It was previously run as Idols Sports Bar and Passions nightclub. Employees at the Studio-Loft club, on Kent Street, say they had to find out through Facebook that the club had closed its doors for good after the building was boarded up last Tuesday. Westmorland and Lonsdale MP Tim Farron, who said he had frequented the club himself, said: “It’s bad for the local economy as well as for those who have lost their jobs in the run-up to Christmas.” The four-floor building, with a capacity of 850, is now on the market for £425,000.

LT Pub Management partners iNTERTAIN in procurement review: The sector’s leading out-sourced management and back office services company, LT Pub Management, has partnered Walkabout operator iNTERTAIN to oversee the key early stages of its triennial procurement review. LT Pub Management was commissioned by iNTERTAIN in July of this year to draw up the full tender document for suppliers, including its full range of drinks products, and to oversee the first and second rounds of supplier reviews. The review process culminated in a presentation by LT Pub Management to iNTERTAIN executive board members, which provided the key information needed for choosing stocking policies and new suppliers starting on 1 January 2014. Whilst there are still a number of brand decisions to be finalised, the suppliers will be briefed during the coming weeks. LT Pub Management chief executive Billy Buchanan said: “We were delighted to be asked by iNTERTAIN to become involved in its liquor procurement review. With more than 1,000 pubs, restaurants, hotel and nightclubs under our management, procurement is an area where we are able to offer great experience and expertise. Essentially, we were able to do much of the heavy lifting in the early stages of the procurement review, enabling the gathering of key information from which iNTERTAIN was able to move to finalise its new supply agreements. The key advantages for iNTERTAIN relates to time saved for its key executives in the early information gathering stages combined with the benefits of LT Pub Management’s expertise in this area and knowledge of the wider market.”

Peter Marks – Luminar invested nightclubs seeing record numbers and could return to the stock market: Luminar chief executive Peter Marks has reported that company nightclubs that have seen investment are enjoying record sales and the company could return to the stock market one day. He told The Times: “Go to Bristol, Preston or Nottingham. Many of our well-located nightclubs, well-invested businesses are having record numbers – the best for five or six years – which tells us there’s not a structural problem per se with nightclubs, although there are towns, particularly in the North and the Midlands, that are finding the going tough.” On a return of the company to the stock market, he said: “It’s a simple business that is very cash-generative. If we are sensible and don’t do anything silly, then who knows?” Meanwhile, Luminar will re-open its flagship Oceana site in Kingston as Pryzm next Friday (15 November) following a £1m investment. Marks said the company will debrand or rebrand all 55 of its nightclubs. The Liquid brand will be rebadged under a new brand that is still on the drawing board.

Risk Capital makes £400,000 investment in upgraded Red Hot World Buffet site: Risk Capital Partners has made its first major investment in a Red Hot World Buffet site since it took a majority stake earlier this year. Red Hot World Buffet, located in the Theatre District area of Central Milton Keynes, has re-launched with a new look, a new management team and a new menu after a £400,000 investment. The Milton Keynes site now offers dishes spanning Thai, Chinese, Japanese, Mexican, Indian and Italian. There is also a selection of dishes for vegans, vegetarians, those with nut allergies or for guests who favour halal and gluten-free options. Red Hot World Buffet general manager Mellissa Rynn said: “We set out to create a unique atmosphere that provides a dining experience unlike any other – it’s all about eater-tainment.”

Rufus Hall – food-led businesses need capex; consumers want to eat better: Orchid Pub Company chief executive Rufus Hall has argued that there is a difference in the investment requirements in relation to wet-led pubs and food-led pubs. Hall, speaking to the Propel Multi Club Conference, said that the company has found that, with wet-led pubs, it’s “not about how much you spend as much as the offer you put in”. He pointed to the example of a wet-led pub in Sunderland, the Royal Marine, where the company had spent just £62,000 installing a “lite” version of its Pizza Kitchen and Bar offer – and got its money back in year. However, he stated “food-led businesses need capex” but there is a need to “do the right thing locally in terms of design, pricing and precise food offer”. But he added: “People are eating better. The sales of healthy options are up 20% at sites that have seen investment.”

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