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Mon 18th Nov 2013 - Business rates, Gail’s, McDonald’s, Miller & Carter, JD Wetherspoon

Story of the Day: 

Luke Johnson – profits at Gail’s Artisan Bakery have trebled and is set to make £6.5m profit this year: Sector investor Luke Johnson has reported that profits at Gail’s Artisan Bakery have trebled since his private equity firm, Risk Capital Partners, invested in the business two-and-a-half years ago. Johnson, who was speaking at the Propel Multi Club Conference, outlined the many and varied ways that Risk has helped the business since investing in it. These included advising on a new finance director as well as IT, marketing and operations executives, choosing a new EPoS system, finding new property agents, PR support, architects and builders and negotiating a new loan facility. Other practical and strategic help has included finding and negotiating new sites, finding new auditors, introducing the company’s biggest wholesale customer, choosing new website designers - and even finding a publisher for a forthcoming cookery book to be published next year. Johnson said: “In a small way thanks to that contribution, since we invested in the business two-and-a-half years ago, profits have roughly trebled and this year we’re aiming to make about £6.5m. We’ve got ambitious plans to grow. We’ve trebled the size of the retail estate since we got involved and we think it’s got much further to go. We always act as line partners at the businesses we back. There are owners, founders, executives who are shareholders alongside us. Almost invariably, we invest in straight equity rather than loan stock. It makes a world of difference. Clearly, the vast proportion of all the work and output is down to the full-time executives but I think there can be added value with ‘money’. That is actually why we keep doing this – it’s because it’s much more interesting. I think if we were just money then it would be very boring.”

Industry News:

More companies sign up for Multi-Site Masterclass: Young’s, Everards, Be At One, Barrio Bars, Foundation Inns and Cambcuisine were among the companies that booked places for Propel’s Multi Site Management Masterclass on Friday. They join Prezzo, Loungers, TGI Friday’s, Stonegate Pub Company, All Our Bars, Giggling Squid, Spirit, G1 Group, Maclay Group, Anglian Country Inns, Charles Wells, Snug Bars, Luminar, Admiral Taverns, Domino’s UK, Bulldog Hotel Group, Yummy Pubs and K10 as attendees for the Masterclass, launched last Thursday in partnership with Professor Christian Edger. The one-day masterclass, to be held on Thursday 9 January, will provide insights on the skills required for effective multi-site management. Professor Edger’s seminar, which will include input from industry leaders, looks at how the UK’s most admired companies operate multi-site units effectively and what winners do and losers don’t. The seminar also examines the essential practices of effective multi-site managers and how successful multi-site companies accelerate the development of multi-site managers. Propel managing director Paul Charity said: “The content of this day-long event is absolutely first class – and will shape company strategies for years to come. The demand for places has been incredible.” Tickets are £295 for ALMR members and £345 for non-ALMR members. To book or find out more, e-mail The event will be held at Tanner & Co, 50 Bermondsey Street, London SE1.

Orderella targets 1,500 to 2,000 venues by next October: Orderella, the app that allows customers to pre-order drinks and food, is expected to be in use in around 1,500 to 2000 venues by next October. The app is currently in use at Pub People Company and Fuller’s Parcel Yard. Explaining the thinking behind the app, chief executive Dennis Collet said: “We were in a pub in the beginning of 2012, with two of my co-founders. It was my turn to get a round, and it took ten or 15 minutes until I came back with the drinks.”

Website reports bookings up 14% on last year: The website, which offers consumers free online booking for restaurants, hotels and spa offers, Christmas bookings are well up on last year. A spokesman said: “This year so far, the restaurants on our website have 14% more advance December bookings for parties of eight or more compared to last year, and 46% more compared to December 2011.” Some 80% of the restaurants on the website are in Glasgow, with the remainder elsewhere in Scotland. 5pm’s marketing manager Ruth Broers added: “There does seem to have been a rise in economic and business confidence but there has also been an increase in confidence when it comes to booking online. Most the users who’ve made Christmas party bookings this year through us have booked a dining offer, so while more businesses are looking to celebrate, they’re looking to do so on a budget.”

Business Chambers of Commerce calls for two-year freeze on business rates: The Business Chambers of Commerce (BCC) has called for a two-year freeze on business rates and an overhaul of the “iniquitous” and “broken” tax system. The BCC has called for George Osborne to use his statement on 5 December to unveil an “extensive review and completely reform the business rates system by 2015 with a new, more responsive and transparent system enacted early in the next parliament”.

Michelin-starred restaurant claims R&D tax credits: The Nottingham Michelin-starred restaurant Sat Bains has successfully claimed tax credits from HM Revenue & Customs because the experimentation in its kitchen meets the taxman’s definition of research and development. Brian Williamson, of Jumpstart, which helps businesses to claim tax credits, said: “It underlines the case we have been making for years – that R&D is not only to be found in laboratories with men in white coats.”

Company News:

Facebook page set up to oppose Wetherspoon move to Ireland: A Facebook page, called ‘Feck off Wetherspoon’, has been set up to oppose JD Wetherspoon’s plan to expand in southern Ireland. “The Guinness will be (rubbish) and they’ll probably show cricket matches!” complained one of 2,397 fans. Another wrote: “We are becoming more English than the English themselves. Protect our own.” Wetherspoon plans to open around 30 pubs in the country – and is close to securing two site in a south Dublin suburb. “It’ll probably take five to ten years to get established,” Wetherspoon founder Tim Martin told Reuters. “We think we can make a go of it.” Martin agreed that “Ireland is a hard nut to crack,” adding that the firm recognised it would take time to win over Irish customers. “The way it’s been portrayed is that we think we can just get off the boat and make a few million euros and ship them back to Britain, and it’s not going to be like that.”

All Star Leisure reports profit boost: Bowling alley operator All Star Leisure has reported a turnover and pre-tax profit rise. Turnover rose to £2,712,069 in the 13 months to the end of 2012 from £2,284,222 the year before. Pre-tax profit was £558,000 compared to £401,050 the year before.

Luke Johnson lines up holiday firm: Sector investor Luke Johnson’s Risk Capital Partner is lining up an £7m acquisition of skiing and activity holiday specialist Neilson from Thomas Cook, according to The Mail on Sunday. Neilson had sales of £84m in 2012 but posted a £10.1m loss. The newspaper reported a deal is expected in the next couple of weeks.

No Saints to re-open Cheltenham nightclub: No Saints, the company headed by veteran nightclub entrepreneur Stephen Thomas, is to re-open V Club in Cheltenham next week. The club, in its fifth incarnation as a nightclub, offers five multi-functional rooms. “The days of the big room nightclubs are a thing of the past,” said Steve Burrows, who has been responsible for the launch of the club formerly know as Lace. “We’ve got to be able to evolve.” The venue closed for refurbishment in late October 2012 and has since undergone a courtyard extension, increasing its capacity and new smoking area with an outside bar at an estimated cost of £750,000. One floor is to be set aside as a cocktail bar and VIP area.

Miller & Carter to open in Bath this month: Miller & Carter, the Mitchells & Butlers’ steakhouse brand tipped for growth by chief executive Alistair Darby, will open its 30th site in Bath’s Milson Quarter on Friday, 29 November. The most recent opening, at a former Italian restaurant in Brookman Park, Hertfordshire, six weeks ago is understood to have to have further established the brand’s roll-out potential with average net takings of £38,000 per week. 

Chicago Leisure hires new finance director; prepares to open first remodeled Chicago Rock Café: Chicago Leisure, the company that runs ten sites acquired out of the administration of Atmosphere Bars and Clubs, has hired a new finance director, John Agostini. Meanwhile, Chicago Leisure is investing £500,000 in its first new-generation Chicago Rock Café that will be unveiled next week. The company is converting Modello Bar & Kitchen, in Yeovil’s Star Lane, into an updated version of the iconic American-influenced restaurant with bar. The venue will still have a late licence and live music or a DJ on some evenings but a major focus at the re-styled Chicago Rock Café will be steaks, burgers, milk shakes and US beers and wines. The site was chosen by Chicago Leisure as the first of its ten venues to be refurbished, ahead of converting further “Chicago’s” bars next year. It is also actively looking for new sites to expand the Chicago Rock Café brand. Chicago Leisure chief executive Christian Rose said: “We are very excited about the first of our conversions and are confident the dine, drink, dance proposition is one that will provide guests with a great night out.”

Sankeys in Manchester to re-open: Legendary Manchester nightclub Sankeys is to reopen – just six months after bosses insisted they were “closing indefinitely”. A statement from the club, based in Ancoats, said: “Today is a historical day; we can officially announce that our spiritual home overcame some major adversities and will be reopening soon.” Bosses declined to elaborate any further on the “major adversities” or when its doors will reopen – although a January relaunch is tipped. The dance club first opened in 1994, but current owner David Vincent announced he was to close the venue earlier this year with a May Bank Holiday all-day rave.

Cinnabar Café opens second site: A hybrid coffee house, cocktail bar, restaurant and nightclub concept, Cinnabar Café, has opened a second site, this time in Hertford. Cinnabar Café in Fore Street also has a 14-room boutique hotel – and is licensed until 2am. Cinnabar Café has an existing site in Stevenage, which opened in 2011.

Greene King in talks to sell university pub: Greene King is in talks to sell The Shed, a pub on the University of Lincoln campus – it is due to close on 12 December. The university had been tipped as a buyer. However a spokesperson said: “The Shed has been up for sale for some time. The University has not yet bought it but we know what the place means to students and staff and we want to see it stay open.”

Ascot Property Group lines up coffee shop and restaurant operators for Stoke development: Ascot Property Group is working on a project to build 120 ‘student pod’ rooms along with retail and leisure space on the site of the former Lomax Nightclub and old Danilo Cinema in Stoke. The Liverpool-based developer is to sell the student flats to an unnamed London firm once the complex is completed next year in a £6.5 million deal. But it will retain the 14,000 sq ft ground-floor and basement and is now lining up restaurant and coffee shop operators to lease the units. Ascot Property Group chairman Terry Riley said: “Ascot will hold on to the lower two floors to add to our already buoyant rental portfolio and currently have coffee shop and restaurant and bar operators waiting to lease units once the site is complete.” Ascot initially bought the site from insolvency experts Begbies Traynor in 2004 after Lomax Entertainments went into liquidation.

Tom Parker Bowles – ‘Harvester isn’t for me’: Food critic Tom Parker Bowles has taken his family to a Mitchells & Butlers’ Harvester in Slough – and wouldn’t return. In his Daily Mail column, he wrote: “The meat isn’t just bland, but genuinely horrible, like cleaning out the grease filter of an ancient kebab van with your tongue. The children (children who devour funfair hot dogs and service-station pasties with great greasy grins) take one bite and gag. No more. I feel their pain. We pay up and leave. But Harvester isn’t really a restaurant; rather, a lean, mean corporate feeding machine, a business plan with a short-order grill. Anyway, the place was rammed, and everyone seemed happy. So what do I know? I’d never willingly go back. But many millions would probably disagree”.

Mitchells & Butlers site squatters ordered to leave but escape £23,000 bill: Squatters occupying Mitchells & Butlers’ Bohemia site in Finchley has been ordered by a judge to leave the premises – but escaped a £23,000 legal bill because the administrator of the site Chaneey Vellacott had been “unreasonable” in failing to negotiate with them. The site closed after the failure to agree terms on a new lease with Gregarious, which acquired the site out of the administration of Antic Limited – and the squatter moved in. District Judge Parfitt declined to impose the £23,000 legal costs for the hearing on the occupiers, criticising the administrators and their representatives for being “unreasonable” in failing to negotiate with the squatters before starting court proceedings.

McDonald’s sets out growth strategy: McDonald’s has reiterated the company’s long-term annual target of global sales growth between 3% to 5%. Chief financial officer Pete Bensen told investors: “We’re focused on what is within our control: leveraging consumer insights, taking an honest assessment of our execution and sharing best practices with our markets around the world.” The chain will focus on trying to attract consumers to “trade into” McDonald’s from outside the quick-service segment, increase the frequency of current guests and capture additional customers who might return to eating out when the economy recovers, chief executive Don Thompson said. “All companies today are fighting even harder for growth in this environment, and we’re no exception,” he said. McDonald’s plans to open between 1,500 and 1,600 restaurants around the world next year. “The biggest increase will come in APMEA, where most of the emerging-market opportunity resides,” Bensen said. “We’re not growing just for growth’s sake; we’re pursuing targeted opportunities.” He added that the chain would remodel another 1,000 restaurants in 2014. In the United States, company and franchised restaurants would place more focus on expanding kitchen capacity in the back of the house. Historically, McDonald’s has been able to enact menu price increases most years between 2% and 3% to counter usual increases in food or labour costs. However, Bensen said, inflation in general in the United States has trended below 2%, and prices at grocery stores are running only about 1% higher than a year earlier. He noted that McDonald’s “captures less than our fair share of the overall beverage category” and that seizing that opportunity could translate into $3 billion of annual sales worldwide. “We’ve learned that breakfast and coffee sales go hand in hand and many emerging markets with aspirations of 25% of sales coming from breakfast have learned to grow that daypart with coffee. It’s that loss leader that gets [customers] in and trades them up.”

Wharfedale’s first brewpub has opened: Wharfedale’s first brewpub, The Flying Duck, has opened after a £200,000 refurbishment. The business was formed in late 2012, when 16 businessmen and women, all with a close connection to Ilkley, formed two companies, Flying Duck Enterprises Ltd and Wharfedale Brewery Ltd, and acquired the lease of the former Mallard Inn – more recently The Albert – on Church Street. Jonathan Shepherd, one of the investors, said: “The work that has been undertaken is first class and a credit to everyone who has been involved. Both the pub and the brewery look absolutely fantastic. It has taken a little longer than we had hoped but I am certain that everyone will be enormously impressed and agree that it has been well worth the wait. We would like to think that it will be a venue for everyone – men and women, young and old, families, dogs, walkers, cyclists and so on.” The pub will serve nine cask real ales on rotation. The brewery, which predominately serves the pub, can be viewed from a gallery via a decked beer garden located between the two buildings.

Jersey considers later opening at nightclubs: Nightclubs in Jersey could be allowed to stay open later to serve soft drinks and food under new proposals being championed by the Home Affairs Minister. Senator Ian Le Marquand believes that extending opening hours but with a no-alcohol restriction would help reduce the problems currently caused by the 2 am rush. He also thinks that if venues were to serve food it would reduce overcrowding around the Weighbridge when people leaving nightclubs rush to nearby takeaways. He also says it would reduce the amount of rubbish in the area.

Wagamama opens two – and has two more lined up: Wagamama has opened sites in Maidstone, Kent and Derby’s Westfield shopping centre to take its UK total past 100. Glyn House, operations director, said: “This is an important milestone for us and we are thrilled to surpass the total of 100 restaurants across the UK. We have come a long way from our humble beginnings in Bloomsbury, London, in 1992 and we are excited by the opportunities for further expansion that lie ahead. These openings in Derby and Maidstone signify a historic time in Wagamama’s development. Wagamama is a fantastic brand and we are immensely proud to increase our footprint across the UK with two new sites. Our popularity continues to grow with each new restaurant and we now look forward to adding two further sites to our portfolio by end of January.”

Brunning and Price to open two more before Christmas: Brunning & Price, the gastro-pub operator group owned by the Restaurant Group, will open two more sites before the end of the year. The Inn at Shipley, with some 160 covers, is scheduled for 10 December and Worsley Old Hall, North Manchester, which will have just under 200 covers, is scheduled for 17 December. It opened its latest pub last week, The Sparrowhawk in Formby, Liverpool. “Our property pipeline is coming along very nicely,” said managing director Graham Price. “So we are going to be even busier next year, though are working hard to ensure the new openings are spaced out more evenly.” Brunning and Price have been awarded the Pub Group of the Year four times by the Good Pub Guide, and its pubs have won County Dining Pub of the Year on 26 occasions.

ETM Group hires top chef for Cadogan Arms: ETM Group, the gastro-operator headed by Ed and Tom Martin, has hired Sam Hawkes as head chef of The Cadogan Arms on the King’s Road. He joins ETM Group from The Fellow, Kings Cross where he was head chef for two years. Before that he held positions at The Owl and The Pussycat, Shoreditch and The Bull and Last, Highgate. Hawkes said: “I am really excited to be part of ETM, a group I’ve always admired for their desire to use the very best of British ingredients.”

Arran Brewery set to take crowd-funding route: Arran Brewery is to seek “Cloud Funding” with its offer set to be launched later this month. The first breweries to use this method were in the USA in 1995 when Spring Street Brewing Company, a microbrewer, successfully used the internet to raise $1.6m from 3,500 investors in a direct IPO. They sold over 870,000 shares at $1.85.

Whiting & Hammond venue wins county dining award: Whiting and Hammond’s The Little Brown Jug in Penshurst, Kent has been awarded ‘Best Family Dining Venue 2013’ at The Kent Life and Kent on Sunday Food and Drink Awards. Managing director Brian Whiting: “It’s great for the team to have all their hard work and effort recognised with this award – I’m very proud of them all.”

Restaurateurs disqualified for transferring business assets to their wives: Mizanur Rahman and Sadiqur Rahman, who ran restaurants in Lichfield and Stafford have been disqualified from acting as directors for seven years each for transferring the businesses and assets to their wives for far less than the businesses were worth. Mizanur Rahman (39) and Sadiqur Rahman (40) gave undertakings to the Secretary of State for Business, Innovation and Skills (BIS), not to promote, manage, or be directors of limited companies until October 2020. Mizanur Rahman and Sadiqur Rahman, ran Panache Restaurants Limited, a restaurant business in Walsall Road, Lichfield and Panache Restaurants (Stafford) Limited, Stafford. The companies went into liquidation on 4 October 2011 with no assets and liabilities of £528,006 (Lichfield) and £307,010 (Stafford). The investigation found that the businesses and assets were transferred to new companies run by the directors’ wives on or around the time the companies ceased trading and instructions were given to place them into liquidation. This was at a time when the directors were aware of an impending inspection due by HMRC.

Former Diageo boss takes satellite chairmanship: Former Diageo chief executive Paul Walsh has been named as the new chairman of stock market listed satellite communications company Avanti. Walsh, who is already in line to become chairman of catering group Compass next year, has been appointed deputy chairman of Avanti and will move up to the top seat in March. Avanti’s current chairman, John Brackenbury, said Walsh’s “outstanding track record in growth markets and at the top of international corporate life” would be invaluable as the company moves to the next stage of development.

Simon French – we reiterate our ‘Hold’ recommendation on Enterprise Inns: Panmure Gordon leisure analyst Simon French has reiterated his ‘Hold’ recommendation on Enterprise Inns shares ahead of tomorrow’s full year results. He said: “We think the group will have struggled to reach its Q4 like-for-like profitability target given most companies saw weaker demand following a strong July-August. As such we have reduced our earnings forecasts by circa 2% per annum over FY 2013-15E. For FY 2013E consensus forecasts are for circa £120m profit before tax and we are now in-line with consensus. We reiterate our ‘Hold’ recommendation and 123p Target Price.”

Douglas Jack Restaurant Group’s Quarter Three results a “reasonable outcome”: Numis Securities leisure analyst Douglas Jack has described The Restaurant Group (Hold, TP: 550p) Q3 results, which showed like-for-like sales slowing to 3.5%, implying circa 1.5% over the last four months as a “reasonable outcome” given that half of the company’s restaurants are next to cinemas, for which attendance fell 0.8% between July-September. He added: “Subsequently, the company had positive like-for-like sales in October despite weekend cinema footfall falling 34% over the last six weeks due to comps that include Skyfall. About 20% of turnover is generated in airports, for which passenger volumes rose 4.3% between July-September.”

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