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Wed 13th Nov 2013 - Beer prices, October sales, City Pub Company, Everards, Hawksmoor, Nando's

Story of the Day:

City Pub reports profit ahead of £10m EIS fundraising: City Pub Company, the new EIS vehicle led by Clive Watson and David Bruce, has reported a jump in profit ahead of the next £10m round of fund-raising, due to be launched within a fortnight. City Pub Company East, which runs seven pubs, including the highly acclaimed Cambridge Brewhouse, has reported turnover of £3.09m in the eight-month period until 25 August this year, a £2.56m increase on the year before. Profit before tax was £462,000, up from £29,000 for the same period the year before. It saw Ebitda of £509,000 in the first eight months of the period. City Pub Company West, which operates five pubs, including the Bath Brewhouse and the Henley Brewhouse, has reported turnover of £1.55m in the eight months to 25 August this year, up by £988,000 on the same period the year before. Pre-tax profit was £102,000, against £51,000 the year before. Ebitda was £127,000. The figures are an eight-month snapshot but will reassure investors that the two companies are already profitable, with turnover and profits set to climb higher as sites mature. The Cambridge Brewhouse, for example, only traded for six months of the period. Last month, Propel reported that City Pub Company had acquired the 30-bedroom Georgian House Hotel in Norwich in an off-market deal. The purchase means the company now has around 42 bedrooms in the estate, with its boutique Church Street Townhouse in Stratford upon Avon offering a further ten. City Pub Company will refurbish the site in early 2014 to create a much-improved food and beverage offer. Non-executive director John Roberts told Propel: “It’s a big old building and we think it’s got great potential.” The next £10m of EIS fund-raising will take the total raised to £28m, which is close to the total permissible under EIS rules. The last £10m will be split equally between City’s two subsidiary companies.

Industry News:

Pub and restaurant like-for-likes up 1% in October: Britain’s pub and restaurant groups saw collective like-for-like sales edge up 1% in October on the same month last year, fuelled mainly by a strong London market. Collective like-for-likes inside the M25 were ahead 2.3%, according to latest figures from the Coffer Peach Business Tracker. “It was a better overall performance than September, when like-for-likes grew just 0.4%, but practically all the underlying growth in the eating and drinking out market is coming from London. Outside the M25 saw only a modest 0.4% like-for-like rise in October,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS. Total sales across the 27 companies contributing to the Tracker grew 3.9% during October, reflecting the continued roll-out of new sites. “That top line growth is particularly marked outside of London. While like-for-like growth is harder to find away from the capital, new site openings, particularly from casual dining chains, are maintaining total sales momentum,” added Martin. In general, casual dining had a tougher October than pubs and bars. Although restaurant chains in London were in positive growth, nationally like-for-like sales were down 0.7% for the month. “The pub and bar market has been performing particularly strongly in London. Pubs in the capital saw like-for-like growth of 3.7% in October. While pub restaurants outside also saw growth, drink-led pub sales outside of London were flat,” said Martin.

Report – beer prices down in the off-trade, up in the on-trade: The latest annual inflation figures published today show price deflation on beer for three consecutive months in the off-trade, according to analysis by the Wilson Drinks Report. The Consumer Prices Index (CPI) published by the Office for National Statistics shows that beer prices were 0.5% lower in October 2013 than in October 2012. Prices saw a 0.6% decrease in September 2013 and a 0.7% decrease in August 2013. Inflation on wine and spirits remained much higher: wine prices increased 2.8% in October 2013, whilst spirits rose 6.4%. The rate of inflation in the on-trade has consistently come in between 2.6% and 3.0% since September 2012: in October 2013 it was 2.9%. Tim Wilson, managing director of the Wilson Drinks Report, said: “Beer drinkers had a dose of good news in the March Budget when Chancellor Osborne announced a token cut in beer duty together with the scrapping of the beer duty escalator. These latest CPI inflation figures show that beer prices on average are less than last year, which is good for the consumer. Our analysis of price changes in the marketplace, however, indicates that it is only in the off-trade that beer prices are coming down. Most pub and bar operators are still putting beer prices up despite the cut in beer duty. In fact the alternative set of RPI inflation data confirms a broadening disparity between the price of beer in the pub and the price in the supermarket.”

Luke Johnson – Patisserie Valerie set for £14m of Ebitda this year: Sector investor Luke Johnson has argued the case for making risky investments. In his Financial Times column, he wrote: “I continue to make long-odds wagers, knowing some will prove to be mistakes – but confident they occasionally pay off. Seven years ago when I bought Patisserie Valerie it had revenues of only £5m and was breaking even; most of the management were departing on the sale, and the accounts were rudimentary at best. This year we are projecting £14m of Ebitda on revenues increased 15-fold since purchase with staff numbers up 20-fold.”

Stephen Gould wins Midlands business honour: Everards chief executive Stephen Gould has been named Leicester Mercury Business Executive of the Year. Stephen Gould, managing director of Everards, Enderby, received the award at a gala dinner at Leicester’s King Power Stadium this week. The event was attended by more than 350 business and community leaders. Gould, who also won the Medium Business Executive of the Year award, has led Everards since 2005.

Company News:

Karen Forrester – ‘I don’t know of a time in the sector as dynamic as right now’: TGI Friday’s chief executive, Karen Forrester, has declared that she doesn’t know of a time in the sector as “dynamic as right now”. She said: “Every week you’re reading about something new. I love everything that’s going on around Shoreditch right now and east London, just all the little pop-ups. I love the street food movement, because I think that’s brought an excitement – it’s brought new food, it’s got new ways of eating. I think that’s helping drive the whole kind of social dining piece. I’m a big fan of Pizza East and Chicken Shop. I think Bill’s is doing a fantastic job, and I’ve just seen Grillshack, and that looks really interesting. I think what Jillian McLean [of Drake and Morgan] has done with her business has set a new higher standard for all of us. I love the kind of artisan movement. I think that pushes us all to be better. Good is just not good enough, great is entry level and only excellence can get you through these days, and I think that’s wonderful for the industry. The bar is shifting all the time.”

Craft Beer Co adds fifth site: Craft Beer Co has added a fifth site. Managing director Martin Hayes has secured a free-of-tie lease through Enterprise Inns on The Manor Arms, Clapham Manor Street. He said: “After opening four sites reasonably quickly and without backing, I was keen to keep momentum, but equally keen to select the right site, rather than just another site – I believe we’ve found that in The Manor Arms. Building a business on cash-flow means you cannot make mistakes, you must research your site, understand its trading potential and have the offer to maximize this trading potential. Up to now it’s worked well for us, kept our senses heightened and we’ve got a small estate of cracking sites, each trading well. Looking ahead, we’ll continue to consider the numerous offers we receive from landlords and grow the business diligently and in a sustainable way. We’ve spent a great deal of time looking at other sites across the UK and feel it won’t be long until we’re talking about the next tranche of sites for The Craft Beer Co.” The site will undergo a refurbishment before a planned opening at the end of November.

JW Lees scoops top business award: North west brewer and retailer JW Lees has won the Manchester Evening News Business of the Year Award 2013, beating off competition from Robinsons Brewery and Swizzles Matlow. The judges awarded JW Lees the Business of the Year title in the £50m to £100m category, after edging out the other finalists by demonstrating an innovative growth strategy, backed up by strong financial results. JW Lees impressed judges with its strategy of buying up and turning around under-performing pubs. “This is a business investing in its future and taking calculated risks along the way,” the judges’ commendation said.

Jamie Oliver gets go-ahead for deli and café in St Albans: Jamie’s Italian in St Albans has won planning consent to add a café and delicatessen to its existing site. Jamie’s deli is to open in two vacant shops next to his restaurant in Chequer Street. Construction work is currently being carried out to link his restaurant, in the former Bell pub, to the former Snappy Snaps and opticians’ stores next door. A spokewoman for the chef said the café and deli would serve breakfast and lunch during the day, to dine in or take away. In the evening the bar will serve drinks and snacks to diners waiting for a table at the restaurant or people “just dropping by”.

UK’s first electronic cigarette bar opens in London: The UK’s first ever electronic cigarette bar opened in London yesterday, set up by the e-cigarette brand Vype. #vypesocial, in Shoreditch, is open until the end of the month and aims to identify the potential for new rituals and etiquettes around the use of electronic cigarettes in social venues. The hope is that new rules could enhance the sociability between smokers and non-smokers during a night out. E-cigarettes have grown in popularity, with an estimated 1.3 million UK adults using them. However, lack of knowledge of the rules and etiquette around e-cigarettes may be stopping people from using them in pubs, bars and clubs, Vype fears. It said three out of five people were very unclear about when and where e-cigarettes could be used, with less than half (49%) believing their use was allowed in bars and only a third (37%) knowing they were allowed in restaurants.

Oceana in Kingston trades final session: Luminar’s Oceana nightclub in Kingston, Surrey has closed its doors for the last time, and will re-open on Friday as Pryzm. The Clarence Street venue, which had its licence temporarily revoked after the murder of clubber Jamie Sanderson last year, hosted a final night on Saturday, 9 November. Owner Luminar spent £1m on reinventing the nightclub in the wake of the fatality in October last year.

Wetherspoon eyes Penrith nightclub: JD Wetherspoon is looking to take over the Toppers nightclub in Penrith, Cumbria (population: 15,155) for conversion to a pub. The company has submitted a planning application to Eden District Council for change of use of Toppers from a nightclub to a drinking establishment, with various internal and external alterations and the demolition of a lean-to extension at first floor level of the listed building. Neighbours of the property have been consulted, with the consultation period ending on 27 November.

Stonegate to re-open pub with cask ale loyalty scheme: Stonegate Pub Company will re-open its Fox Inn in Coton, Cambridgeshire, on Friday (15 November) after a £200,000 refurbishment with a cask ale loyalty scheme. The Fox will re-open with the aptly named ‘Red Fox’ cask ale from Fuller’s, having a choice of three cask ales. It will also introduce a collector’s card whereby for every sixth pint purchased the seventh is free. Another new addition will be a range of nine different whiskies and an enhanced cocktail menu.

Latest Everards’ Project William pub opens: The latest Everards Project William, the Leicester brewer’s partnership with microbrewers, has opened. The Brown Cow on Ratcliffe Gate, Mansfield has been re-opened by the Derbyshire-based RAW Brewing Company. The scheme has led to the rejuvenation of 28 pubs in six years, with 13 of them having gone on to win Camra Pub of the Year Awards. A total of £300,000 has been invested. The Brown Cow will feature a range of Everards and RAW cask and keg ales, plus those of other local brewers, as well as a range of world beers in a bottle.

Tiger Bills to open in Consett: Tiger Bills is to open a 180-cover restaurant in Consett, County Durham, taking over the premises of Giovanni’s, which closed last year. The Thai and Tex Mex restaurant is due to open near the new Tesco store on the former steelworks site in late November or early December. The company reports a “substantial” investment in refurbishing the premises, which originally opened as Soprano’s in 2007. Tiger Bills already operates a number of sites in the South and the Midlands and is now expanding into the region, having recently opened its first North East venue in Whitley Bay.

Hawksmoor founders to launch Foxlow tomorrow: Hawksmoor founders Will Beckett and Huw Gott will open their new restaurant Foxlow on St John Street in Clerkenwell, North London tomorrow. The site formerly housed the North Road restaurant. Beckett said: “For a while we’ve wanted to do a smaller, more intimate restaurant, the kind of thing we wish we had near our homes and where we could go regularly with friends and family. It’s a new restaurant, so we can finally use some of the many ideas we’ve had in the last few years, but it’ll still reflect the things we’re most passionate about – great meat from ethically reared animals, an interesting wine list, phenomenal cocktails and relaxed, friendly service from people who love what they do.”

Sharp’s accelerates launch of ‘world’s best’ draught lager: Sharp’s Brewery, best known for its Doom Bar cask bitter, is bringing forward the launch of its draught Cornish Pilsner after the beer was named World’s Best Lager at the World Beer Awards 2013. Kegs of Cornish Pilsner, which was launched in bottle last year, are now appearing in pubs across the South of England, London and the Midlands. The lager was developed in collaboration with the Eden Project in Cornwall and is brewed using Pilsner malt, whole Saaz hops, Czech lager yeast and English thyme. To date, the lager has notched up the highest return on sales in the Sharp’s portfolio. It also collected a silver medal in the 2013 International Beer Challenge. Sharp’s general manager, Emma Bebbington, said: “Cornish Pilsner did extremely well straight away, so we decided to fast-track it. We were going to launch it in draught anyway but we decided to do it quicker because of winning such a prestigious award.” Bebbington said overall demand at Sharp’s remains strong and sales growth was outpacing all expectations. “Up to the end of October, on a volume basis we had around a 14% increase on last year, which is 6% ahead of expectations. Doom Bar has always been our flagship brand but others are now contributing more and we’ve got new brands launching next year,” she said. Sharp’s was acquired by Molson Coors in 2011 in a deal thought to be worth approximately £20m. Bebbington said by the end of last year, Coors had put approximately £8.7m in capital investment into Sharp’s, while the company also increased its headcount from 83 to 105, the majority of whom are located at its brewery in Rock, Cornwall. Sharp’s is currently now looking to recruit a new brewing team.

Management buy-out at holiday park firm chaired by ex-Punch Taverns executive: Park Holidays UK, chaired by the former Punch Taverns chief operating officer Adrian Fawcett and led by Jeff Sills, has undertaken a management buy-out supported by Caledonia Investments. Park Holidays owns 21 freehold and two leasehold caravan parks concentrated across the south of England and is one of the UK’s largest holiday operators, with gross assets of £256.5m. The deal valued the business at £172m and was funded by £88m of equity from Caledonia and £90m of bank debt. Duncan Johnson, head of unquoted investments at Caledonia said: “We are delighted to be supporting Jeff Sills and his team in the next stage of Park Holiday’s development. The new capital structure will ensure Park Holidays can continue to enhance its parks around the south of England, as well as allow Jeff and his team to build the business through targeted acquisitions.” The chief executive of Caledonia, Will Wyatt, said that Park Holidays’ business model fitted Caledonia’s unquoted strategy, combining the capability to grow profits and the ability to generate a good annual cash return for shareholders. Caledonia had net assets of £1.3bn as of March 2013.

Private equity firms circle Saudi quick-service operator: TPG Capital and Abraaj Group have teamed up to vie against KKR & Co for a majority stake in the Saudi Arabian fast-food chain Kudu, according Reuters. A stake purchase by either KKR or TPG would be their first investment in the Middle East and shows the heightened interest in the region’s economic growth and its young and increasingly wealthy population.

Novus argues Late Night London portal has boosted UK events industry: Novus Leisure, which runs 47 venues in London, has reported that a £10m investment in the Late Night London website has seen the company’s venues host no fewer than 2,000 of the 360,000 meetings held in London last year. “Late Night London’s decision to invest more in our corporate offerings has proven to be extremely beneficial for the company, and for the UK events industry as a whole,” said Emma Howe, head of corporate sales. “This year we are up 21% year-to-date which is continuing to grow throughout the year. We are constantly updating and refreshing our venues to offer corporates something new for their events.”

Village pub shareholders earn £5 dividend: Shareholders in a village pub have earned a £5 dividend two years after it was saved from closure. The Sorrel Horse, in Shottisham, near Woodbridge, Suffolk was under threat until locals joined together to buy the freehold in August 2011. Since then, 900 shares valued at £500 each have been sold to people looking to own a piece of the pub, with each shareholder retaining no more than 5% of the total value. The investment helped fund an extensive refurbishment at the Sorrel Horse, which has enjoyed an increase in turnover for two years running, with directors reporting a pre-tax profit of £10,921 for 2012/13. The board has decided to give back some of the proceeds to its shareholders, who will each receive a £5 dividend payment.

Nando’s first to confirm for Walthamstow: Nando’s has been announced as the first major chain for the Scene at Cleveland Place development in Walthamstow, East London. The brand will open a 4,000 square foot alongside a nine-screen, 1,200-seat Empire cinema. More retailers are expected to be announced in the coming months. The Scene is due to open in winter 2014. Meanwhile, Nando’s has donated £500 to the Royal British Legion and apologised for playing rap music during the two minutes’ silence held as part of Northampton’s Remembrance Sunday service.

Costa Coffee doubles up in King’s Lynn: Costa Coffee plans to double up in King’s Lynn, Norfolk and has applied for permission to convert the vacant Laura Ashley shop into a new coffee bar, close to its current site in the Vancouver Quarter. The company insists the plan would not affect its existing store.

Fifth of Orchid workforce line up to celebrate colleagues in Halo Awards: A fifth of Orchid Group staff are so impressed with the dedication, expertise and skill of their colleagues that they have come forward to nominate fellow workers in the Halo Awards. “We’re so pleased that all our staff members, from kitchen porters and general managers to development chefs and accountants, realise how important recognition is for staff morale and so have submitted a nomination for their colleagues,” says Simon Dodd, commercial and people director at Orchid Group.

Colliers sells two freeholds in Burford: Colliers International has sold a brace of sites in Burford, Oxfordshire. Liu and Yna Ming have bought Burford Lodge on the main road off a freehold asking price of £950,000 while the mother, husband and wife team of Jane, Dan and Michelle Arnell have acquired the Highway Inn Hotel in the High Street off a freehold asking price of £1.3m.

Byron lines up York site: Byron, the gourmet burger chain now owned by Hutton Collins, has lined up a site in York. It is set to acquire the lease of the Danish Kitchen, in High Ousegate, which opened in 1977. The owner claims the business in no longer viable because of high street coffee shop chains pushing local businesses out. The closure of Danish Kitchen is subject to York Council approving a licensing application submitted by Byron to cover opening hours, sale of alcohol, recorded music and late night refreshments.

Blumenthal plans airport diner serving UK favourites: Chef Heston Blumenthal is to open a diner at Heathrow’s new Terminal Two in June next year, serving “British favourites” such as fish and chips, burgers and pizza. There will also be a bar and deli that will be the Fat Duck’s owner’s first shop. Blumenthal said the unnamed venue was inspired by his BBC Two series “In Search of Perfection”, in which he took traditional dishes such as roast chicken and fish pie and added his own twist to the recipe. The 130-seater restaurant in the departure lounge will have a maximum turnaround time of 11 minutes. He is building the first wood-fired pizza oven at a British airport that can be made hot enough to cook pizzas in a minute. That bakes the base quickly but leaves the topping still “thick and sloppy.”

Dwell founders launch Zumura: Aamir Ahmad, Sean Galligan and David Garrett, co-founders of the award-winning contemporary furniture retailer Dwell, have launched an Indian restaurant called Zumbura in Clapham, South West London. The 50-cover restaurant will showcase the traditional cuisine of the Purab region of North India. Ahmad said: “I have always been really disappointed by Indian food in the UK. It’s not what we eat at home. What most restaurants serve is a British invention which has been changed so much from the original that when friends come round and eat at my house, they are surprised by the depth and breadth of the dishes I serve. I wanted to be able to provide the kind of food I ate when I was growing up, but within a restaurant setting.”

UK Vapiano staff member wins global award: The Italian fresh casual dining restaurant group Vapiano has named the general manager of one of its UK restaurants as its “Vapianisti of the Year 2012/2013”. Alex Fisher, general manager at the Great Portland Street restaurant in central London, won the title after being chosen ahead of 5,000 other members of staff worldwide, by the company’s chief executive, Gregor Gerlach and senior management. He was awarded the title at the international restaurant group’s annual convention in Vienna. Fisher, 31, who has worked for Vapiano since 2010, was presented with a Rolex watch by Gerlach, who said: “Alex has delivered a very strong culture of sales and standards at his restaurant. He is a team player who assists his fellow Vapianisti to develop within the company.” Vapiano UK’s managing director, Phil Sermon, said; “I am immensely proud of Alex. This is a major award within the company and it is wonderful that a manager at one of the two Vapiano restaurants in England has triumphed ahead of strong competition from Vapianisti at our 135 restaurants worldwide.” Another member of staff at the Great Portland Street restaurant, assistant manager Ermi Benayoun, also won an award. His innovative ciabatta bread recipe won him “idea of the year”, and he was awarded a Vespa.

Greenaway to open second Edinburgh site: Award-winning chef Mark Greenaway plans to open a second restaurant in Stockbridge, Edinburgh. The new venture, called Bistro Moderne by Mark Greenaway, is due to open in December and will be housed in the recently closed Café Fish on North West Circus Place. Greenaway said: “I’ve been looking for suitable opportunities for a second restaurant in Edinburgh for a while now. The Bistro will offer simpler versions of my restaurant dishes as well as introducing some new styles of food from my repertoire, all served in a friendly and relaxed setting.” Bistro Moderne will take the classic French bistro concept and add a dessert bar and a five-course grazing menu matched with whisky, beer and spirits to showcase drinks produced in Scotland. He added: “I’ll be using the same fresh Scottish ingredients that I use at Restaurant Mark Greenaway.”

Virgin Wines in management buy-out: Virgin Wines, the major UK wine retailer, has announced that Mobeus Equity Partners and Connection Capital have provided a combined debt and equity package to support the £15.9m management buy-out of the business from Direct Wines Limited. The management team will be led by chief executive Jay Wright, chief finance officer Graeme Weir and marketing director Paul Adams. Virgin Wines was founded in 2000 and acquired by Direct Wines in 2005. Wright had previously built a successful mail order wine business, Warehouse Wines, which was acquired by Direct Wines in 2002. Wright, Weir and Adams took over Virgin Wines in 2008 and merged it with Warehouse Wines in 2009. The management team has successfully grown the combined business to a turnover in excess of £35m. The company sells over 600,000 cases of its niche range of exclusive boutique-quality wines to 150,000 customers around the UK. In keeping with its philosophy – “Life’s too Short for Boring Wine”, over 90% of its wines are exclusive to Virgin Wines, sourced directly from producers and therefore unavailable from other providers.

Kings Park Capital buys majority stake in coaching inn business: The private equity firm Kings Park Capital (KPC), led by Jason Katz, has acquired a majority stake in Inn Collection for a total transaction value of £10 million. Inn Collection comprises three existing Inns located in the north east of England and managed by Keith Liddell. As part of the transaction a fourth site is being acquired. Three of the existing units have freehold tenure with one long-term lease. The business operates pubs with rooms in the north east of England, catering to the local population as well as leisure and business travellers. Approximately 20% of the business’s revenue is derived from room sales, 56% from food and the balance from drink. KPC intends to back the incumbent management team to grow the business in the north east of England and surrounding area by acquiring additional sites. Inn Collection looks to acquire undermanaged or under-invested assets, and has a proven track record of improving performance under its management. As a part of the transaction Paul Clark, the former chief executive of Virgin Hotels, will be joining the Board to support management in the next phase of growth. The business was first established by Keith Liddell in 2006 with the acquisition of Lindisfarne Inn, which opened in 2007, with the additional units added in 2009 and 2012. The like-for-like estate has shown strong growth under Inn Collection management with like-for-like growth of 7% in 2012 and 6% in the nine months to September 2013. The transaction has been financed with senior debt facilities provided by Santander.

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