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Fri 29th Nov 2013 - Benito's Hat, Ping Pong, Inventive, KFC, Marston's

Story of the Day:

Inventive Leisure reports 30% profit rise at Revolution invested sites: Inventive Leisure is to increase the planned investment in its Revolution vodka bar estate from £7m to £10m after invested sites saw a 30% rise in profits. The planned £7m investment covered 26 of the 66 Revolution bars. The extra £3m will cover 11 more sites by May 2014. To support the programme and the continued evolution of its brands, the business has also strengthened the current management team with three new appointments. Godfrey Russell, currently development manager on the property team, will be promoted to director of property. Kate Eastwood has been leading the catering team since June and will take on the new position of director of business development with responsibility for catering, customer insight and pre-booked revenue. New executive chef Mark Rush will report to Eastwood. Before joining Inventive Leisure, Eastwood was head of sales and marketing at the Barracuda Group. Myles Doran, formerly drinks and retail procurement consultant, has been promoted to the new position of director of drinks trading. Before joining Inventive Leisure eight months ago, Doran was head of sales and marketing at the Barracuda Group. Inventive’s chief executive, Mark McQuater, said: “We’ve been investing the thick end of £1m every month since July as part of the evolution of the Revolution brand and at its completion in May 2014 we will have transformed over half of our estate. No other bar operator is spending at this rate on their core estate. We’re already reaping the rewards of the high-end transformation at the evolved sites, with sales currently up towards 20% and profits lifted by 30%.”

Industry News:

Handful of places left for ALMR National Restaurant Association study tour to Chicago: The Propel and Association of Licensed Multiple Retailers (ALMR) 2014 Chicago study tour has just a handful of places left. The trip, sponsored by CPL Training, takes place between Thursday 15 May and Monday 19 May. The ALMR trip provides insights from industry experts on the rise in fast-casual dining, social media, new and emerging brands, menu development, staff management and a host of other issues, with 70 free education sessions; involves a tour of Chicago’s hottest concepts; and a market overview briefing sessions from US experts. The group is staying at the Hard Rock Hotel in Chicago. Paul Charity, managing director of Propel Info, said: “The NRA show is a fantastic opportunity to find fresh inspiration and understand the emerging trends shaping the fast-changing US market.” To get more information or to book, e-mail

Zomato to make UK its European headquarters: The restaurant review service Zomato, based in India, is to make the UK its European headquarters. Zomato launched in London in January and now has 25,000 restaurants listed across the UK, with 800,000 monthly visits to the site. It launched in Edinburgh and Glasgow earlier this month. A spokesman said: “We have a small team in the office, only 25 to 30 people to cover the UK. In the next 18 months, it will become our European headquarters as we try to enter the Continental Europe market.” There are plans to increase staff numbers to 150 people in the coming months.

BT Sport signs deal to NBA basketball: BT Sport has signed a deal with the NBA (National Basketball Association), to show live television coverage of top NBA games and programming in the UK and Ireland. The multi-year agreement between BT Sport and the world’s premier men’s professional basketball league starts on Sunday 1 November.

Speakers unveiled for Casual Dining show: Jens Hofma, chief executive of Pizza Hut UK, Alex Reilley, managing director of Loungers, and Andrew Guy, chief executive of Ed’s Easy Diner, have been confirmed as speakers at Keynotes at Diversified Communications UK’s new Casual Dining trade show next February. Hofma, Reilley and Guy will be sharing their observations and expertise on the casual dining market over the course of the two-day show, which takes place on 26 and 27 February at the Business Design Centre in Islington, London. The free Keynote programme will also include sessions by Mark McCulloch, former head of marketing at YO! Sushi and Pret A Manger, Scott Elliot, director at CGA Peach, and Jason Katz, founding partner at Kings Park Capital, who will be discussing the role of private equity in the leisure sector. To register in advance for a free trade pass, please visit

Glasgow does u-turn on 1am opening: Plans to extend pub opening hours to 1am in Scotland’s largest city have been axed amid pressure from the police. Glasgow’s licensing board had announced earlier in the autumn that it intended to give around 225 premises an optional extra hour which would have been implemented before the end of the year. But after a public consultation, the board has announced a U-turn on the move that would have brought Glasgow into line with Edinburgh and Aberdeen. Plans to allow several nightclubs outside the city centre’s boundaries to open until 3am have also been halted, with the current curfew of 2am remaining in place. But the licensing board has allowed “on-sales licensed premises”, essentially pubs and clubs, to remain open an hour later throughout the Glasgow 2014 Commonwealth Games.

Company News:

Ping Pong reports lower turnover and increased losses from operations: The restaurant chain Ping Pong has reported turnover dropped 7% to £14.42m in the year to 31 March. Losses from operations were £127,000, up from £7,900 the year before. Total losses for the most recent year were £296,000, with finance costs included. However, the year before also had a £1.59m impairment charge. Ebitda before franchise fee was £1.25m, down from £1.58m the year before. Ping Pong closed three sites during the year because of a change in strategy. It said: “Following the disposal of three sites and the removal of all bank debt, the company is set for the next stage of growth in its UK-based estate. Two specific larger sites have been identified to develop and are expected to open potentially as relocations of two smaller existing sites. The new sites are planned to open as part of a revitalised branding strategy, with a view to updating the remaining UK estate. The Ping Pong Now takeaway concept continues to be re-evaluated. There are on-going discussions regarding a potential franchise agreement.” A bank loan of £1.11m was fully repaid during the year and an overdraft facility of £100,000 is in place.

Multiple operator Mid Life Crisis to open fourth gastro-pub – at Star Pubs & Bars site: Multiple operator Mid life Crisis is to open its fourth gastro-pub, The Stag and Hounds in Binfield near Bracknell where it is making a £360,000 co-investment with landlord Star Pubs & Bars. Mid Life Crisis run three successful village pubs with great reputations for food, The Walter Arms in Sindlesham, The Poacher Inn in Hook and The White Hart in Wood Street Village. Lessee Nathan Pass said: “My partners and myself grew up in the area and two of us still live in the Bracknell area. We knew The Stag and Hounds in the past when it was a great success. It’s well known in the area and is a landmark pub which has sadly not had much care and attention in recent years. Star Pubs & Bars is committed to making the pub a success and is refreshingly keen to invest and help do so. We’re both committed to retaining this iconic pub’s charm and character. As well as a financial investment in the building, the quality of the food and the service will be greatly improved.” The pub will re-open in early February.

London Coffee shop of the Year winner to open two sites before Christmas: Benugo, the company founded by Ben Warner and Guy Kellner that won the London Coffee Shop of the Year award in 2011 and 2013, is to open two more sites before Christmas. New openings will be in Hanover Street, off the affluent and historic Hanover Square in Mayfair and within the new 62 Buckingham Gate development, a stone’s throw from London Victoria station. First opening in 1998 on St John Street in Clerkenwell, Benugo now operates 11 high street delis. Warner said: “It has never been an ambition to have a Benugo on every corner but to have it where it feels special.”

Stonegate Pub Company to re-open Mayfair pub with 13 beers on tap: Stonegate Pub Company will re-open its Bonds in Mayfair site next Wednesday (4 December) with 13 beers on tap, after a £170,000 refurbishment. Dejan Nikolic, general manager of Bonds, said: “We are in a unique location in the heart of London but what we find is that our customers see us as a haven from the buzz of life outside. They love the fact that our dishes are great quality but are still pub food and also that they can get a really varied choice of beers at any time, as we have thirteen on tap. We’ve six big screens dotted around the pub so customers can pop in from work or take a break from shopping to catch live sporting action too.”

Brunning & Price takes leasehold site: Brunning & Price, the Restaurant Group’s gastro-pub arm, is to re-open The Aspinall Arms, Mitton, in the Ribble Valley, Lancashire as a high-quality food-led country pub after acquiring the leasehold interest in the pub, which is expected to re-open in March 2014. Ian Taylor, from agent Fleurets, said: “The Aspinall Arms has been owned by the Aspinall family for generations. The sale attracted strong interest from a number of great companies, but I’m delighted for our client that a new lease was agreed with Brunning and Price.” Earlier this week, Propel reported that Mary Willcock, managing director of Slug & Lettuce, will take over from Brunning & Price’s founder and managing director, Graham Price, in February next year.

‘Upmarket’ KFC Select to open: The world’s first KFC Select, a more up-market version of the franchise, is due to open in Toronto in mid-December. The menu at the “fast casual” version of KFC includes Mexican-themed items such as soft flour tortilla burritos filled with grilled chicken, coriander and rice, and a crispy chicken burger topped with coriander mayo, mild cheddar and lettuce. The restaurant also features a new open-plan kitchen. David Vivenes, chief marketing officer at KFC Canada, said: “We’re very excited about this new concept. It’s all of the great things about KFC that Canadians already love with a fresh, contemporary twist.” Vivenes said there were some menu items that are common to both KFC and KFC Select, like crispy strips, but the new menu was geared toward a “more urban customer base.” Shehzad Janmohamed of the local KFC franchise partner Soul Foods said: “From an economic perspective, we expect these stores to do very well in the marketplace. It’s high quality food at a very reasonable price.” The new open-kitchen plan was “welcoming” and “the ambiance will be both contemporary and warm,” he said. Janmohamed said the design would pay homage to Colonel Sanders, whom Vivenes called the “original celebrity chef”. There are plans for a second KFC Select Toronto location to open some time in the spring.

Tragus to open La Salle at Heathrow Terminal Two: Tragus Group, operator of Café Rouge and Strada, is to open a new 168-seat restaurant and bar concept, La Salle, at Heathrow’s brand new Terminal 2 in June 2014. La Salle is based on a modern Parisian brasserie. Built around a high-performance grill, the entire menu and kitchen specification has been designed to deliver every dish, from order to table, within 15 minutes. The £1.2m new venue has a circular feature bar, incorporating sports and news screens. La Salle is Tragus Group’s third unique concept created especially for Heathrow. It previously developed Huxleys for Terminal 5 and Oriel for Terminal 3. Peter Blake, managing director of Café Rouge, Belgo and concessions at Tragus, said: “We are delighted to be working with Heathrow once again to create La Salle and be a part of Terminal 2. We believe that we have something very special to offer here, which meets the needs of the modern traveller: a high level of service, in a great- looking restaurant with fantastic food and drinks.”

Greggs adds non-executive to board in pursuit of ‘food-on-the-go’ strategy: Greggs has added Helena Ganczakowski as an independent non-executive director with effect from 2 January. She worked for Unilever for 23 years and held senior positions in brand management and marketing including UK marketing director and, ultimately, head of global agencies. Ganczakowski is currently running her own consulting business working with companies ranging from start-up businesses to FTSE 100 constituents, helping them to develop and implement strategies. She has a PhD in engineering from the University of Cambridge. Ian Durant, chairman of Greggs, said: “We are delighted to welcome Helena to the board. Her extensive consumer marketing experience will be of great value as Greggs implements a range of initiatives in support of our ‘food on the go’ strategy.”

Benito’s Hat opens fifth site: The Mexican kitchen and bar group Benito’s Hat has opened its fifth site, this time on St John Street in Farringdon, central London. The new branch is the first venture into the City and signals the beginning of a brand roll out prompted by a £1.4m investment from Calculus Capital earlier this year. Co-owner Ben Fordham, a former City lawyer, plans to double the Benito’s Hat estate within 12 months, including further City sites and hopes for the first branch outside of the capital. The new Farringdon site exhibits some new features that are planned to be incorporated into all Benito’s Hat restaurants. These include an in-store electronic ordering screen allowing customers to avoid queuing. Local businesses and residents within a mile can also get food delivered to their door or desk. The Benito’s Hat mobile app, coming soon, will feature click and collect ordering, special offers, and exclusive news and event invitations.

Simon French reiterates “Hold” recommendation on Enterprise: Panmure Gordon’s leisure analyst, Simon French, has reiterated his “Hold” recommendation on Enterprise Inns shares. He said: “We have updated our Enterprise Inns model following last week’s FY 2013A results, leading to minor downgrades this year and next. Comparatives are relatively easy for FY 2014E, particularly in H1, whilst H2 performance should be boosted by the FIFA World Cup. The appointment of Simon Townsend as CEO from 6 February should ensure a seamless transition from the Tuppen era. Government intervention in the sector through the form of a statutory code remains an unwelcome but unlikely prospect. Our target price edges up to 133p based on a CY 2014E adjusted EV/Ebitdar of 10.0x (equivalent to a P/E of 7.2x) and we reiterate our “Hold” recommendation.”

Douglas Jack says Marston’s is accelerating its repositioning: Numis Securities analyst Douglas Jack has argued that Marston’s is accelerating its repositioning from tail-end wet-led pubs to higher-return, new builds. He said: “The repositioning of its pub estate should put Marston’s in a position to generate double-digit earnings growth over the long-term. Thus, our PBT expectations are unchanged for 2016E, by which point earning quality should be much higher, net debt/ebitda should be 0.6x lower and dividend cover should be above 2x on the basis of dividends continuing to increase by 5% pa.”

Keswick councillors oppose Wetherspoon opening – and late hours: Town councillors in Keswick has voted seven to two to oppose a Wetherspoon plan to open in the former police station and magistrates court in Bank Street, Keswick. They cited a range of problems that the pub would bring – Wetherspoon wants to alter both the inside and outside of the building as well as create an outdoor drinking area. It is also seeking a licence to open every day from 7am and close at 1.30am on weekends. Councillors argued that if the application was pushed they wanted the opening hours to be restricted to 10am to midnight between Monday and Sunday. The town council’s comments will now go to Lake District National Park planning officials, who will use them to help make a final decision on the application. Wetherspoon bought the site from its joint owners, Cumbria County Council and Cumbria’s Office of the Police and Crime Commissioner, in July.

Las Iguanas in Christmas bookings toy charity drive: Las Iguanas has announced it will be donating £5 to buy toys for charities chosen by staff at its restaurants for each party booking of ten or more over the festive period. The teams at each of the 30 Las Iguanas branches have chosen a charity in their own community which will benefit from their local Community Christmas Present fund. The chosen charities range from children’s hospices and hospitals to women’s refuges. Las Iguanas has linked up with the toy retailer The Entertainer to supply the toys, with The Entertainer, which has 85 toy stores across Britain, promising to match the restaurant chain’s fundraising pound-for-pound itself.

Bake & Take opens first UK site in Manchester: The master franchisees behind Bake & Take, the UK incarnation of the Continental Backwerke cafe and takeaway operation, have announced the opening of their flagship store, in Piccadilly Approach, Manchester. Backwerke, which sells snacks, sandwiches, rolls, coffee and cakes to take away or eat in, has grown to 300 stores in Germany, Switzerland, Austria, Romania and the Netherlands since it began in 2003 with the aim of supplying “middle and lower socio-economic groupings”. The UK master franchisees, Robin Page and Steve Mahon, have announced a goal of opening up to 30 new stores each year, targeting ten locations in the first 12 months, and reaching 100 within five years. They project a turnover of £2m in the first year. Two more sites are set to open in the Ashton-under-Lyne and Bury, while a fourth site is under negotiation with Daniel Harris & Co, which has been retained to manage all future site acquisitions. Page and Mahon, who have worked between them at Argos, Littlewoods and Wine Cellar, are privately funding the new venture. Page said: “We have spent the last ten months putting the infrastructure in place and following a significant investment of more than £1m, we are now ready to launch Bake & Take in the UK, with the North West as the company’s heartland. The next step is to commence the franchise recruitment campaign, which is already off to a great start, with the receipt of 50 franchise enquiries from our new website, highlighting the appetite for Bake & Take in the UK.” Bake & Take is appealing for sites of between 1,000 sq ft and 1,350 sq ft, with A1 planning permission, and in close proximity to rail or bus stations, main shopping areas and students. On the continent, Backwerke’s sites range from boxes on railway station platforms to 3,000 sq ft cafes.

Prezzo and Pret A Manger already lined up for £200m Edinburgh scheme: Prezzo and Pret A Manger are already signed up for a £200m development plugging one of Edinburgh’s last major gap sites, which has lain empty for more than 45 years. A new business district in the West End will include shops, offices, cafes, bars and restaurants, 165 serviced apartments and a 320-space underground car park. Completion of the first building phase is set for 2016.

Bispham Greene Brewery reports tough year: Bispham Green Brewery, which operates pubs and hotels in Liverpool and the Lake District and is owned by the Ainscough family, has reported turnover of £3.61m in the year to 28 February, up from £3.58 the year before. The company swung to a loss of £49,000 from a profit of £42,000 the year before. It said: “Much depends on Christmas trade and the potential impact of severe weather which has affected trade over the last three years. We are cautiously optimistic.”

New nightclub in Leicester aiming for diversity: A new nightclub called Venom is opening in Leicester this weekend after a substantial investment. The club opens on Saturday in the former Quebec bar, in Belgrave Gate. The club will have 25 staff. Businessman Dale Walton said he hoped it would be on a par with clubs in locations such as Marbella or Ibiza. Walton and his business partners have invested more than £500,000 in the building, gutting and redesigning the interior and installing a new lighting rig and sound system. He said: “We are aiming to reflect the diversity of the city, with a number of themed nights that appeal to different groups within Leicester. In addition to a gay night and an indie/alternative night for students, we will also be introducing nights for specific backgrounds, for example Russian and Eastern European.”

Analysts issue buy notes on Mitchells & Butlers: Mitchells & Butlers stock had its “Buy” rating restated by equities researchers at Jefferies Group in a research report issued on Wednesday. They currently have a 500p target price on the stock. Jefferies Group’s price target indicates a potential upside of 23.55% from the company’s current price. Meanwhile, analysts at Barclays reiterated an “overweight” rating on shares of M&B in a research note to investors on Tuesday. They now have a 500p price target on the stock. Separately, analysts at Prime Markets reiterated a “Buy” rating on shares of Mitchells & Butlers in their research note to investors on Tuesday. They now have a 428p price target on the stock.

Bank loan helps coffee shop open second outlet: A £65,000 loan from Santander Corporate and Commercial has helped a couple in Cardiff open their second coffee shop. Stephen and Charlotte Barker already ran the Coffee Barker coffee shop in the Castle Arcade in Cardiff, which they had expanded from 12 seats to 130 seats. The investment has enabled them to open a new venue in the nearby High Street Arcade. Stephen Barker said: “We had been looking for the right location in Cardiff for our next venture for a while. When the premises became available in the High Street Arcade we recognised it was perfect for what we had in mind.”

Welsh brewer plans to double production: The Celt Experience brewery in Caerphilly, South Wales is planning a £250,000 investment to double production by 2015 to 1m bottles a year. The Welsh government’s Economic Growth Fund is putting up £90,000 towards the overall investment. Tom Newman, the brewery’s managing director said: “The focus is on increasing efficiency, investing in innovative equipment to increase capacity and creating a strong management structure. At the moment I’m head brewer, engineer, managing director, marketing director and controller of operations.” Around a third of current turnover is made overseas, with the brewery exporting to 20 countries. Its beers include Iron Age, Native Storm and Bleddyn.

EM Inns acquires sixth pub: EM Inns has acquired the Bay Horse Inn at Oxenhope, Yorkshire. EM Inns boss Matthew Evans said the company specialises in turning round struggling pubs by making them the heart of their communities. The company, founded six years ago, has five other pubs across the north-west. Evans said: “This will be our only pub in Yorkshire, even though we are based in Huddersfield. What we do is take ailing pubs and build them back up again.”

Brewpub set to be demolished after failure to find new brewer: A brewpub that closed after its brewer left to join another brewery is likely to be demolished after Enterprise Inns failed to find a new brewer. The brewery was added when the Junction pub in York pub underwent a major refurbishment in 2010. It initially ran as the Junction Brewhouse, later being rebranded as Urban Brewhouse under the management of brewer David Kerr. However, Kerr later joined a brewery in Dorset and the pub shut in February, with then manager Paul Grant saying the brewery had been crucial to its business and it could not afford to continue trading during what was expected to be a lengthy search for a new brewer. Now Enterprise Inns has sold the site, saying it was no longer viable as a pub and new tenants could not be found to run it, and an application has been made to City of York Council to demolish it and erect a terrace of six houses on the site. The pub’s brewery was moved to the Tap and Spile on Monkgate in York.

McDonald’s opens flagship site in Canada with stand-alone McCafe: McDonald’s has opened a 9,000 sq ft site with a stand-alone McCafe in Ontario. The two-storey, 260-seat outlet located in a former sporting goods store and pool hall.

Marston’s to run 500 fewer pubs by 2016: Marston’s plans to evolve its pub estate so it’s operating 500 fewer pubs by 2016, with estate size shrinking from 2,050 sites to 1,550, finance director Andrew Andrea has told Propel. The company will operate just 20% of its estate within the traditional leased and tenanted model by 2016. Andrea said the company planned 430 destination and premium pubs (349 now), 800 managed pubs or pubs operated or franchised (1,316 now) and just 320 pubs operating as leased pubs by 2016 (385 now). Andrea said yesterday’s disposal of 202 pubs to NewRiver Retail had allowed the company to achieve a much better multiple than a straight-forward disposal would have allowed. He said: “It was quite innovative in that it is difficult to achieve the appropriate multiple with a straight disposal – it’s very much a property play and in the realms of the income yield for a Real Estate Investment Trust.” The company expects to have a further 90 new-build pubs within the estate by 2016 but is guiding on a return on investment of 16.5%, down from the current level of 17%. Andrea told Propel: “Going forward, a third of the (new-build) sites will be in the south of England and we are seeing a slight stretch in the range of returns. Our Wales estate (of new-builds) is performing very strongly and we are seeing very similar returns in Scotland. We plan 25 pubs in Scotland within the next five years.” The two most recent new-build openings, in Maidenbower, Crawley, West Sussex and Lichfield, Staffordshire, have both opened strongly with takings of more than £30,000 a week, net of VAT. Andrea said the company’s Revere Pub Company premium sites (a seventh opened recently at the White Lion, Tenterden, Kent) had been performing well, with another eight sites planned to open this financial year Andrea also reported that Pitcher & Piano, with average weekly sales of £26,000 per site, had achieved 2.5% like-for-like sales growth in the most recent financial year. The first new opening in five years, in Hitchin, Hertfordshire, had opened strongly, he said. New sites are being sought with a view to opening one or two a year from 2015-2016 onwards. “It’s about finding iconic, high footfall sites,” Andrea said. 90% of the company’s capital allocation is going to its Destination and Premium pubs, which are producing average operating profit of £207,000 per pub. A total of £170m will be spent on opening 60 new-build pubs in 2014 and 2015. It is targeting the growth of Two for One to 200 sites – it currently has 138, producing average ebitda of £250,000 per pub; and Milestone to 200 pubs. It currently has 82 of these, producing an average of £290,000 Ebitda per pub. The company sees lodges as an “incremental opportunity”: It operates three at the moment and has 15 sites with lodge capability. Marston’s also told City analysts it is considering opening a new-build Revere premium pub at some point in the future.

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