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Morning Briefing for pub, restaurant and food wervice operators

Wed 4th Dec 2013 - Propel Wednesday News Briefing

Story of the Day:

Premier Inn plans new hotel every ten days: Whitbread’s Premier Inn subsidiary plans to open a new hotel every ten days, creating more than 8,000 new jobs over the next five years. The announcement was made at the official opening of Premier Inn’s latest hotel, London City (Monument), by Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, and the minister for employment, Esther McVey. Of the 8,000 new jobs by 2018, the equivalent of four jobs a day, Premier Inn has targeted 50% of them at long-term unemployed people aged 16 to 24. Premier Inn has also promised an additional 2,000 apprenticeships and 4,500 work placements for young people in the UK by 2018. The chain is targeting 20,000 rooms within the M25 by 2018 and will be creating around 2,500 new jobs in the region over the next five years. Premier Inn has already created 1,100 jobs in the past year. The 184-bedroom Premier Inn at Monument has brought into existence 20 new jobs, all of which have gone to the long term unemployed. In the past three years, Premier Inn and Whitbread’s restaurants have helped team members achieve more than 6,500 qualifications through its apprenticeships. A total of 415 apprenticeships were successfully completed by Whitbread workers in 2012, a number which is set to increase considerably. Dempsey said: “We’re committed to doing what we can to offer opportunities to unemployed people to get their first job or to get back into work. We have a target of recruiting half of our new team members from the long-term unemployed, and we offer a robust and structured qualification pathway.”

Industry News:

Allegra names Costa as best UK coffee chain: Costa Coffee has been presented with Best Coffee Chain in the UK and Ireland at this year’s Allegra European Coffee awards. Costa achieved three Best Coffee Chain awards: Best Coffee Chain – Southern Europe, Best Coffee Chain – UK & Ireland and Best Coffee Chain – Europe. In the UK & Ireland category, Harris & Hoole was given second place, while Pret A Manger took third and was “highly commended”. Jason Cotta, managing director of Costa UK Retail, said: “These awards are a testament to our passion for coffee, our people and our continuous work to bring an unbeatable coffee experience to customers across the world. This fantastic achievement wouldn’t have been possible without the support and dedication we receive from our partners and baristas, and it means a great deal, having been voted for by our industry peers.”

Rice giving way to fast food in Japan: Annual rice consumption in Japan has fallen 17% over the last 15 years to 7.81 million tonnes – around 62 kilograms a head – from 9.44 million tonnes, according to government data. Fast-food chains’ reasonable prices and fast service are attracting the stomachs of the workaholic “salaryman” and OL, short for “office lady” – and younger Japanese people. As Washoku, the traditional cuisine of Japan, dims in popularity, fears are growing that the community ties it historically stood for may also be withering, such as cooking together for New Year celebrations and other festivals. Meanwhile, Washoku is being considered by the UN this week for designation as part of the world’s priceless cultural heritage.

US fast-food workers to strike in minimum wage protests: US fast-food workers in about 100 cities will walk off the job tomorrow (Thursday) in an escalation of efforts to force a higher minimum wage. The actions are intended to build on a campaign that began about a year ago to call attention to the difficulties of living on the federal minimum wage of $7.25 an hour, or about $15,000 a year. The protests are part of a movement by labour unions, Democrats and other worker advocacy groups to raise pay in low-wage sectors. Last month, President Barack Obama said he would back a Senate measure to raise the federal minimum wage to $10.10. Protesters are calling for $15 an hour.

Company News:

Design firm ‘working on a coffee concept for Fuller’s’: The design firm Simple Simon Design has reported that it is currently working on ‘pub refurbishments and a coffee concept for Fuller’s’. The firm provided no other details in a HTML sent to customers, but Propel has reported that Fuller Smith & Turner expects to launch a stand-alone coffee shop, bearing its Brewer Street coffee offer branding, in 2014. The company has identified an empty property next to its Plough pub in Ealing, West London that will be converted to the offer. On Monday, at the Arena Christmas lunch, Fuller’s chief executive Simon Emeny was keen to play down the coffee shop launch: “I was asked by a journalist about our plans for coffee and we have rolled our own brand Brewer Street into about 80 of our managed houses. I said we have some unlicensed property next to one of our pubs in Ealing, which we will use as a training and development centre for Brewer Street coffee. My chairman called the next day and said, ‘What’s this about us opening a chain of coffee shops?’ We don’t have any plans for a chain of stand-alone coffee shops.”

Greene King plans 35 new managed pubs in the next six months: Greene King plans to add 35 sites to its managed estate in the second half of its current financial year. The company will open 25 new-build sites, including two leaseholds, and will add ten single sites. Greene King has reported Ebitda of £460,000 from new-build pubs, producing a return on investment of 18%. Its single-site acquisitions produce ebitda of £330,000, a 15% return on investment. The company added 22 sites to its managed division in its first half, consisting of 11 acquired sites, including four new-builds, and 11 sites transferred from its Pub Partners tenanted division. It reported that sales were increasingly “event driven” and voucher culture is “here to stay”. Greene King said that customisation, convenience and health were the key consumer trends driving growth. Eating Inn now offers 560 burger combinations via “Burger Your Way”, and weekend breakfasts had launched at Hungry Horse. Numis Securities’ leisure analyst, Douglas Jack, issued an “Add” recommendation on Greene King shares with a target price of 925p in the wake of yesterday’s half-year results. Jack said expansion was picking up: “2015 guidance has been raised from 49 to 63 new sites (next 18 months = 90 new sites). We are holding our 2014 forecast, although we believe forecast risk is on the upside. However, managed trading is ahead and weather comps are easy, especially in Q4 ,due to around three weeks of snow in that period last year. We view the 10.4x EV/EBITDA valuation as fair, believing Greene King is capable of generating c.10% earnings growth in 2014E.”

Alistair Darby – ‘we have a few hygiene ratings laggards’: The Mitchells & Butlers chief executive, Alistair Darby, has told City analysts that the company has a few hygiene ratings laggards – but has made progress this year in improving scores. He said: “I think if I am correct, there is only one restaurant business in the UK that across its estate achieves clean 5s in every single outlet and that is TGI Fridays, who have 60 restaurants in the UK. So well done to them, but that is obviously only 60. So they stand a better chance than 1,600. We are in a position at the moment where the vast, vast majority of our estate is 4 or 5 rated. There are a few laggards that are 3s and we need to get them up. The challenge now is for us to move the cohort of pubs that are on 4s into 5s. I mean our ultimate ambition would be, and this would be pretty unbelievable if we could do it, would be to get 1,600 pubs at 5. We are not there yet, we have made a lot of progress, but that would be a very significant step forward. But we are pleased with the progress we have made this year.”

Krispy Kreme launches doughnut wedding cakes: Krispy Kreme has launched a range of eight-tier wedding towers to let fans mark the big day with their favourite treats. Prices of the wedding towers start at £280, considerably cheaper than customers would expect to pay for a three-tier iced fruit cake version. Judith Denby, chief marketing officer at Krispy Kreme UK, said: “Our Krispy Kreme Occasions service is a fantastic way to add some extra sparkle to weddings, corporate events and Christmas parties, enabling customers to create and share magic moments. We’ve been overwhelmed so far with the positive response from customers who have said that our doughnut towers made a real difference to the success of their event.”

Papa John’s launches ‘biggest and best’ franchise incentive package: Pizza franchise Papa John’s has unveiled its franchise incentive scheme for new UK stores opening in specific areas in 2014. In what it labelled its “biggest and best” franchise deal, the pizza company is offering new franchisees access to a free oven and refrigerator equipment, royalty holiday and £10,000 of marketing spend. The scheme, which runs for a limited time, will apply to franchisees opening new sites in Wales, the Midlands, North East, the North West and Scotland with 12-month royalty breaks available to those that open stores before July 2014 and a nine month royalty break for stores opened before the end of 2014. The announcement forms part of the pizza chain’s plan to expand its UK franchise network, which currently stands at 250 outlets, to over 600 stores within the next ten years. Anthony Round, Papa John’s business development manager, said: “To help prospective franchisees bring our pizza to even more UK customers, we are now excited to announce our ‘biggest and best’ incentive scheme to-date for 2014. The whole package could result in savings of £50,000 for your first Papa John’s store.”

Wetherspoon wins permission for second Preston pub: JD Wetherspoon has been granted planning permission to convert the old TSB bank in Church Street, Preston, Lancashire into a pub. The company’s plans include enclosing part of the existing rear car park with a new brick wall to form a new beer garden, repairing the original banking hall ceiling and installing a new bar, toilets and back of house areas. The proposed hours of use would be from 7am to 12.30am Sunday to Wednesday and 7am to 1.30am Thursday to Saturday. The building is being bought by Wetherspoon from Lancashire County Council’s economic development department, Lancashire County Developments.

Coffee #1 opens first Swansea outlet: Coffee #1, the coffee shop chain owned by the Cardiff brewer and pub operator SA Brain, is opening its first outlet in Swansea. The chain is moving into one of the eight units in a three-storey retail complex on Princess Way. Swansea Council owns the building, on the site of the former David Evans department store, and leases it to property developer Quantum. Coffee #1 has started fitting out the unit and is now seeking planning permission to place customer tables and chairs outside. The chain now has 38 outlets in Wales and the South West of England, including six in Cardiff. It was acquired by Brains in October 2011, at which time it had just 15 outlets. Brains has so far resisted putting Coffee #1 into its pubs, on the grounds that doing so might undermine the brand. However, it has recently replaced Costa coffee in 95 outlets with a new in-house brand, Great Little Coffee, which retail director Philip Lay said earlier this month drew on “the skills, knowledge and the supply chain” of Coffee #1.

400 sign petition opposing Costa arrival in Rochester: Hundreds of people have signed a petition opposing plans for coffee giant Costa to open in Rochester, Kent. In less than 24 hours, more than 400 people had signed the document calling on Medway Council to refuse planning permission. The chain submitted an application to the council to move into the current premises of Slinders Florist, close to the castle and cathedral, last month. Tony Scudder, who started the petition, said: “The effect Costa Coffee will have on the community and the unique nature of Rochester High Street will be disastrous for the unique and character-full coffee shops and tea rooms already run by and serving local people and the seasonal tourist trade. Rochester High Street already has a great coffee cafe culture that is independent and well-supported by the local community and the tourist trade, and allowing a multi-million chain like Costa onto the High Street will disastrously affect local business and livelihoods.”

New board appointment at Kornicis: Kornicis, the City of London, wine bar specialist, has appointed Michelle Hall to the board as director of operations. She joined the company four years ago as area manager. Chief executive Nick Tamblyn said: “I am delighted Michelle has joined the Board at this very exciting time for the company as we develop our roll-out strategy for the coming years. Her detailed knowledge of the City and our various brands will be a great asset at board level. Michelle has been a key driver in our 9% increase in like-for-like sales over the last three months in our core City and Canary Wharf sites, with November like-for-likes currently showing a 10% increase.”

Fuller’s producers collaborative beer – for Mitchells & Butlers: The London brewer Fuller, Smith & Turner has launched a limited edition blonde ale, Steel, made in collaboration with Steel City Brewing, the nomadic Sheffield craft brewers that guest brew across the UK and Europe. Steel City Brewing duo Dave Szwejkowski and Gazza Prescott teamed up with Fuller’s head brewer, John Keeling, with the aim to deliver a distinctive, unique beer to be distributed across a selection of Mitchells & Butlers pubs and restaurants, including Nicholson’s, Vintage Inns and Ember Inns. The limited-edition blonde ale will be available from December 2013 to February 2014 and combines the hoppy ethos of Steel City with the drinkability and know-how of Fuller’s. Mike Atkinson, cask ale procurement manager at Mitchells & Butlers, said: “Steel Blonde’s taste profile means we can offer our guests something a little different, and we’re pleased to have this exclusively on offer in around 400 of our businesses.”

Loungers, Wagamama, Las Iguanas, Prezzo await seat decision: Restaurants at one of Plymouth’s premier visitor destinations will find out tomorrow whether they are to lose their outdoor seating. Urban Splash, the operator of Royal William Yard, has applied for retrospective permission to keep outdoor seating at five venues after complaints from neighbours. A total of 401 seats outside Prezzo, Seco Lounge, River Cottage, Wagamama and Las Iguanas are affected. Neighbours complained that the use of some of these areas harm their living conditions, and have queried whether the style and layout of these facilities are compatible with the historic character of the site. Members of Plymouth City Council planning committee will consider the application at their meeting this Thursday (5 December). They have been recommended by planning officers to approve the application after Urban Splash amended its plans, which originally added 146 seats to the existing 401.

Prezzo opens two more Cleavers with Oxford next: Prezzo has opened Cleaver sites in Leatherhead and Wokingham to add to is original site in Cobham, Surrey. The company plans to open a Cleaver in Oxford next. Prezzo’s chief executive, Jonathan Kaye, told Propel in September that Cleaver is “going well”. He said: “With a new concept there is no such things as target [for sales].” Takings at the first Cleaver site in Cobham, Surrey are higher than the average for the company’s Prezzo and Chimichanga brands, but Kaye said that was to be expected given that the rent on the Cobham site is higher than average for the other two brands. Asked about whether new Cleaver openings would replicate Cobham, Kaye said: “We never do template design and they will look slightly different, but the starting point will recreating Cobham.”

Little Chef celebrates 55 years by throwing open sites to communities: Little Chef is celebrating 55 years of roadside dining in December by inviting local organisations and charities to make a pitch to be included in a celebratory indoor street festival. Every Little Chef around the country will be throwing open their doors to fund-raising and community activities, which will organised by the local groups themselves. Applications needed to be with site managers by November 25 for consideration, and they can include anything from a choral recital, a home-made cake sale, a record-breaking attempt, or even a charity car wash service. If successful, the organisation will be able to participate in the Little Chef Indoor Street Festival, which is being held this weekend, 7 and 8 December.

Camra criticises Marston’s community pub sale: The consumer group Camra has criticised plans by Marston’s Inns to sell off more than 200 of its pubs, claiming the move will deprive communities of much-needed facilities. Marston’s is selling the pubs to a property REIT, NewRiver Retail, in a deal worth £90m, with many likely to be converted into convenience stores. Camra’s chief executive, Mike Benner, said NewRiver had underestimated the challenges the deal posed and should focus instead on re-using empty shops. He said: “This pub sell-off is bad news for communities which may lose their pubs as a result. NewRiver Retail have seriously underestimated the challenges and opposition that they will face in trying to sell profitable community pubs and convert them into convenience stores and other uses.”

Bill’s re-opens Pizza Hut site in Leamington: Bill’s has opened in a former Pizza Hut site in the Parade in Leamington Spa, Warwickshire. The restaurant opened on Monday (2 December). Meanwhile, Bill’s has extended its retail range with three new hampers (Classic, Bumper and Giant) and three new retail boxes (Christmas, Chocolate and Breakfast) in time for Christmas. The prices for the hampers range from £55.95 to £110 and the boxes range from £19.95 to £24.95. All contain Bill’s own label products including Bill’s beer, Bill’s coffee, Bill’s Christmas pudding and Bill’s fudge. In the New Year, Bill’s will be extending its retail range further. The launch will include new truffle ranges, pink marc de champagne, red velvet cup cake and black forest gateaux. In addition, a range of sweets is being developed with some of the signature Bill’s desserts – Bill’s lemon meringue, cinnamon donuts and cream tea. Bill’s tea and coffee will also be available in store and on line.

SSP rolls out feedback programme after success in the UK: The travel hub foodservice expert SSP is to rollout a customer feedback programme to an extra 13 countries after success in the UK. The programme is done in partnership with eDigitalResearch. Using a QR code or web address printed at the bottom of every receipt, customers will be able to complete a brief online questionnaire about their experience at one of SSP’s bars, restaurants and cafes at airports, rail stations and motorway service areas. The programme is planned to be up and running by January next year. Andy Bull, VP marketing intelligence for SSP, said: “Our launch in the UK showed that there is a huge willingness by customers to give feedback, ideas and suggestions. As feedback is gathered continually, rather than just taking a snapshot, a better understanding of both the customer experience and operational delivery is acquired.”

Former Liquid Envy site in Crawley reports success after Moka re-branding: The former Liquid Envy site in Crawley which was re-opened as Moka a year ago by Luminar in a £1m investment, has reported success, after a difficult first eight months. General manager Adam Foxley said: “It has been a tough year of trading but in the last four months or so we have established ourselves and our numbers have picked up. Liquid Envy had a bad reputation and when we first re-branded as Moka people still had the idea that we had been closed down for good by the police. The company is a very different animal now. On most Saturdays we are now very close to capacity and a Friday night is generally 75% full. In this industry you are lucky to reach 50% capacity on a Friday so we are exceeding the business model.”

Liverpool plans boost to gay quarter: A “community interest company” to promote the Stanley Street area, Liverpool’s gay quarter, is being planned by the city council. Nick Small, the council’s cabinet member for employment, enterprise and skills, said: “The Stanley Street Quarter has been a success story. It is a vibrant area which not only has a great night-time economy but also has a number of highly successful independent traders. But the vision for the quarter needs to be driven forward and it should be the local stakeholders who are directly involved in their area who need to be at the forefront of that vision. Community interest companies are operating successfully in other areas such as Ropewalks and the Baltic Triangle and this is the best way forward for Stanley Street.” The plan is for the company to give a voice to local traders and generate income from grant funding and other sources which the council said would not be otherwise possible. The proposal will be considered by the city cabinet on Friday.

Everards pub re-opens with coffee shop and its own ale: The Swan, an Everards pub in Newbold Verdon, Leicestershire, previously known as The Old White Swan, has re-opened after a refurbishment with a coffee shop in the snug area, and its own ale. New licensees are Steve and Bernadette Brewer. Alongside a new food offer is a quality range of cask ales and ciders, including Steve and Bernadette’s own house ale, Newbold Gold. 

New bar and restaurant for Northern Quarter: A new bar and restaurant is due to open next month in a listed former pub in Dale Street, Manchester that spent time as a fashion showroom. The conversion comes after planning permission for the change was won by the Bluestocking Pension Scheme, advised by Indigo Planning. The bar and restaurant, which will be called Allotment, will be in the currently vacant ground floor and basement of the building, and will serve “seasonal British food and drink in a fresh environment”. It will be run by a new company called Expansive Horizons, set up in October by Gavin Williams, 26, and James Kennedy, 27, and will provide jobs for around 15 people. The building was originally known as The Haunch of Venison pub before changing its name to Nicklebys in 1974. Planning permission to change it into a showroom was granted in 1998. 

Former McDonald’s executive opens second franchised site: Former McDonald’s executive Claude Abi Gerge has opened his second franchised site, at Caxton Gibbet, Cambridgeshire. Abi Gerge, who is Lebanese, began his McDonald’s career two decades ago as a trainee manager, and became director of franchising, with 250 restaurants in his group. He acquired the McDonald’s in Whittlesford, Cambridgeshire earlier this year, that was not performing too well. The number of employees has gone from 60 to over 100 since. He said: “It’s about going back to basics, looking after people. If you look after your people they will look after the customers.” The average McDonald’s with 75 staff turns over £2.1m a year.

French restaurant chain expands into Belgium: French restaurant chain La Pataterie has opened its first foreign store, in Tournai, Belgium. La Pataterie has 173 French stores, serving 4.7 million customers in the first half of 2013. The newest store will be focusing on the qualities that made La Pataterie successful in France: generous portions and affordable prices (seven dishes costing no more than €7, or £5.80) cosiness and quality food with the potato as main ingredient. Chief executive Alexandre Maizoué said: “Opening a store in Belgium is a new symbolic milestone in the international expansion of the chain, even though we are cautious and humble in the approach.”

Oakman Inns completes £5.5m fund-raising: Oakman Inns and Restaurants, led by Peter Borg-Neal, has completed a £5.5m fund raising. Borg-Neal said: “Fund-raising is always terribly difficult and never more so than during a recession. Our task was made even more difficult by the fact that we had an unsupportive bank in RBS, whose behaviour towards ourselves and others, will almost certainly result in further future news. We started looking for funds in April of 2012 and received a number of offers from various private equity sources. However, none of the offers reflected the fundamental value of our business and, despite the pressure, I was determined not to sell out too cheaply. The decision by the government in the 2012 Autumn Statement to extend the Enterprise Investment Scheme provided the opportunity we needed. In February this year we launched a new EIS fund-raising round. Our initial target was £4.5 million, but due to impending acquisitions we upped the target to £5.5 million. The entire sum was finally realised on 29 November. All the funds taken in are either straight-forward equity or shareholder loan notes. In addition, all existing loan note holders agreed to novate their agreements for another three years. This leaves the business with a very strong balance sheet with circa £7m of equity, £3.9m of shareholder loans and only £1.2m of bank debt (all of it secured via EFG and freehold property). We believe the value of the business, net of debt is around £15m and our freehold property alone is worth over £7m. Going forward, we will look to gradually leverage the value of that freehold property whilst maintaining a cautious approach to debt.” In addition, Joseph Evans, currently financial controller of Whitbread’s hotel and restaurant division, will be joining Oakman Inns as a board director in February. Borg-Neal said: “In his thirteen years at Whitbread [Evans] has gathered a huge range of experience and has been instrumental in the success of that business. He currently leads a team of 110 people in the division which has an annual turnover of around £1.4bn, profits of £320m, net assets of £3bn across 1,500 locations, circa 25,000 employees, is growing by 10% new space every year and is making payments of around £1bn a year. The fact that he is leaving such a major post to join us for the next part of his career is testament to the esteem with which Oakman Inns is held across our industry and the very exciting future we are building towards. Joseph shares my vision of building a ‘best in class’ business that can deliver a tremendous outcome for investors, employees, suppliers and customers alike. Earlier this year we opened the sixth Oakman Inn, the Beech House in Beaconsfield, which has proven an instant success and has smashed its targets. The £800,000 investment there was rather dwarfed by the £3.5m costs associated with the acquisition and development of The Crown and Thistle in Abingdon-on-Thames. At times this has looked like an acquisition too far, given our funding challenges and the very intricate (and expensive) nature of the development project. However, due to the amazing support of our investors, we have fought our way through and the end result is stunning. It is very early days from a financial perspective but the initial numbers look very exciting.”

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