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Morning Briefing for pub, restaurant and food wervice operators

Fri 6th Dec 2013 - Propel Friday News Briefing

Story of the Day:

BrewDog hails Chinese fake as a sign of a ‘tectonic shift in tastes’: Brewer and bar owner BrewDog has hailed the opening of a fake BrewDog bar in Changzhou, a city of 4.6 million people in the affluent Yangtze Delta region of China, as a sign of a tectonic shift in consumer tastes. In an open letter to the (unknown) entrepreneur behind the bar, BrewDog’s co-founder, James Watt, said: “Thank you. It’s not every day someone pays you the compliment of copying what you do. I mean, I’ll admit we were surprised when we saw a picture of the bar you’ve constructed in our image in Changzhou, and maybe a little terrified, but mainly we were peculiarly proud. There’s something that says ‘you’ve made it’ when a weird replica of your craft beer brand is peddling beers through counterfeit taps somewhere in the world’s biggest country. I honestly cannot wait to visit (fake) BrewDog China. I know that most organisations might reprimand you, condemn you and maybe even sue you for faking their logo and their bar concept, but speaking as the people normally being slapped on the wrists for rocking the apple cart in this industry, that would smack of hypocrisy. BrewDog exists to make everyone as passionate about beer as we are, and frankly your choice to build a fake BrewDog bar in Changzhou – rather than a fake McDonald’s, a fake Starbucks or a fake Nike Town – suggests to me that we are getting there. The fact that it is no longer the global mega brands alone that are being copied in China, but also the small craft beer producers, proves to me that there is not just a slight change in the world’s food and drink tastes, but a tectonic shift.” (See company news for BrewDog’s Tokyo opening.)

Industry News:

Propel Friday Opinion: Today’s later Propel Friday Opinion e-mail features Luke Johnson on investing in the sector, Professor Chris Muller on the influence of Tony Hughes, Ann Elliott on indifferent service and Professor Chris Edger on turning customers into ravers.

Independent coffee shop numbers rise by 15%: The number of new independent coffee shops opening has risen by 15% over the past two years – equating to another 350 outlets in Britain. According to new figures released by technology company, CloudZync, 14% more consumers choose to visit independent coffee shops than they did 12 months ago. One in five consumers prefer coffee served by a barista in the “individual” environment of an independent coffee shop than the generic surroundings of a large chain. The poll, which surveyed 2,000 consumers, found that consumers avoid the likes of coffee empire Starbucks because they want to support their local community. The research also revealed that people felt independent stores treated them like “individuals”, while 12% believe small stores “pay their tax”. The top cities ranked according to the number of independent coffee shops are London, Glasgow, Liverpool, Manchester and Edinburgh.

Hall & Woodhouse wins CAMRA award for best new-build pub: Dorset brewer and retailer Hall & Woodhouse has won a CAMRA award for best new-build pub for its eponymous new site on the waterfront at Portishead in Somerset, incorporating recycled sea freight containers. The award for the best new-build pub was last presented in 2006. The Hall & Woodhouse also serves as the marina clubhouse. It was praised by the judges as “visually striking”, and looking “entirely at home on the quayside”.

Propel’s Cornell wins beer writing award: Propel Info managing editor Martyn Cornell was one of the winners at last night’s British Guild of Beer Writers annual awards dinner in London. The top prize, the Michael Jackson gold tankard for beer writer of the year, went to Will Hawkes, for his work writing about beer in national media, particularly for The Guardian newspaper. Other prizes at the dinner, held at The Jumeirah Carlton Tower hotel in Knightsbridge, included the Fuller’s ESB award for writing in trade media, which went to the veteran journalist Roger Protz; the award for corporate communications, sponsored by Thwaites, which went to the BBPA’s film on the beer duty escalator, presented by the Midlands-based TV journalist Marverine Cole; and the Shepherd Neame 1698 award for writing on food and beer, which went to the author Mark Dredge; while Cornell won the Greene King IPA travel bursary for his writing on beer and travel. The Brewer of the Year award went to Derek Prentice, who is leaving Fuller Smith and Turner after a career in brewing that began in the 1960s at the original Truman’s brewery in Brick Lane, London.

Pub, bar and casual dining businesses welcome scrapping of NI contributions for under 21s: Pub, bar and casual dining businesses have today welcomed the news that employer National Insurance Contributions for under 21 year-olds will be scrapped in April 2015. ALMR research shows that nearly a fifth of all employees in licensed hospitality are under 21 and that the sector created one in six of all new jobs for that age group in the past year alone. Strategic affairs director Kate Nicholls said: “The removal of the jobs tax for under 21s will be a boon to youth employment, investment in training and sustainable job creation in the licensed hospitality trade. This is a sector which offers jobs in all regions and at all skill levels – from entry level to graduate recruitment – and rapid career progression. It gives so many young people their first job and equips them with the transferable skills they need to succeed.”

Another nightclub fined over counterfeit vodka: Another nightclub has been fined for stocking counterfeit vodka. Trading Standards officers found 236 bottles of bootleg vodka at Candy Club in Barrack Square, Chelmsford, following a raid on October 25. Despite having Smirnoff labels the drink was not the same brand and had an alcoholic content lower than 37.5%, the minimum standard for vodka. On Tuesday, Geoffrey Livesey, director of the venue’s parent company Mohito Limited, pleaded guilty at Chelmsford Magistrates’ Court to breaking food trading regulations. He was sentenced to 250 hours unpaid work and his company was also fined £10,000 and told to pay £6,358.66 towards legal costs.

Yum! Brands reveals priorities for Pizza Hut around the world: Yum! Brands chief executive Scott Bergren has explained the priorities around the world for its Pizza Hut brand. The company’s plan focuses on three business models for growth. Delivery and carryout is Pizza Hut’s fastest growing model. “There is a race to expand this footprint around the world. Others want to win the Delco race, so we have to move faster and turbocharge our growth,” Bergren said. The “Delco” model, he said, is a “high return asset that fuels fast growth”. It is the reason Pizza Hut US began growing its footprint again after many years of losing assets. The second growth area is Express units, found in locations where customers visit for reasons other than eating, such as travel centres and malls. Bergren said the company hasn’t pursued this opportunity around the world as much as it can, and that the strategy is to build out this channel with focus. At “Dine in”, which is a large component of the Pizza Hut brand outside of the US, the focus will be on emerging markets, and a “pizza and more” initiative will be carried into those new openings. For example, beverages are 27% of the Pizza Hut casual dining business in Indonesia.

Company News:

Antic London opens Farr’s School of Dancing: Antic London, the London pub operator led by Anthony Thomas and backed by Downing, opened Farr’s School of Dancing, its latest site, on Dalston Lane, north east London yesterday. The venue is the 19th Downing-backed Antic London freehold site – and there is an additional six under development. The company re-opened the former Blythe Spirit pub in Balham as Hagen & Hyde last week.

Jones Bar Group secures ninth site – Leeds Arena bar: Jones Bar Group has signed a 20-year lease with Town Centre Securities to open what will be the closest bar to the Leeds First Direct Arena. LAB (Leeds Arena Bar) will occupy 2,691 sq ft and is due to open its doors in March 2014. Jones Bar Group, which currently runs eight other bars around Leeds, including Bar Sixty Two and the Shed Bar, is investing £200,000 into the opening. Matthew Jones, managing director of Jones Bar Group, said: “We can’t thank TCS enough for the time and effort they’ve put into working with us to create an outstanding bespoke unit. LAB will be split over two levels and will feature a balcony, making Leeds First Direct Arena a focal point for our customers.” The opening of LAB will create 21 new jobs. Jones Bar Group, which has a preview opening for its latest venue in Leeds, the Roxy Ballroom in Boar Lane, tonight (Friday), is looking to create another 44 jobs in the next six months.

Oakman Inns and Restaurants gives chefs total control over 35% of the menu: Award-winning Oakman Inns and Restaurants has moved to resolve the tension between central control of menus and chef creativity by giving chefs control of 35% of the menu. Founder and chief executive Peter Borg-Neal said: “Ultimately it is all about good food and there are only two things you need to deliver that. You have to put great ingredients in the hands of great chefs. We are brilliant at the first of those, as we only use high quality suppliers – but attracting and retaining great chefs is a trickier proposition. We are tremendously lucky with the kitchen teams across all eight of our units. However, if we are to retain our highly skilled personnel we have to ensure that they are getting job satisfaction. A big part of that is the need to feel that they are respected, that they are creative; and that they have the power to solve problems. That is a normal expectation for a human being and is particularly important to creative, skilled workers such as chefs. Our head chefs have always had a free hand with their ‘Specials’ but now they are able to create a large chunk of the printed menu. This, of course, means that each of our Oakman Inns now has a unique menu that their individual kitchen teams feel passionate about.”

100th Costa Coffee opens in United Arab Emirates: Emirates Leisure Retail, the International franchise partner of Costa Coffee, has opened its 100th store at the World Trade Centre Mall in Abu Dhabi. The franchisee opened the first international store outside of the UK in Dubai in 1999 at The Aviation Club, Dubai. The company also won the Barista of the Year Global Finals in 2007, opened the first international Costa Express self-serve coffee machine in 2013 – and became the first international coffee chain to introduce camel milk.

I@G Events takes second Star Pubs & Bars site: Multiple freehold operator, I@G Events, has taken on a second site with Star Pubs & Bars. The company has taken over Edinburgh pub The Spiders Web, which like the first taken on in May, The William McEwans Alehouse, also in Edinburgh, will be subject to a major jointly-funded refurbishment. The William McEwans Alehouse in Clerk Street re-opens next week as McSorleys following a £155,000 refurbishment. A traditional male-dominated drinking pub, it has been repositioned to turn it into a live music venue with quality ale and food. The Spider’s Web, located in the West End of Edinburgh, will see a £400,000 investment in 2014 transforming the wet-led pub into a top-end food and drink establishment. Iain Pert, of I@G, Events said: “We were attracted to both sites because of their location, their potential and because of the joint investment offered by Star Pubs & Bars. The benefit to us is more than a financial investment. This is a joint effort. We’ve been involved from the very start in focus meetings and input on names, style and marketing in the same way we would if it was a freehouse. We liked the fact that Star Pubs & Bars were willing to work together with us to turn these sites around and make them a great success.”

Inventive Leisure launches new menu to build on double digit food sales growth: Revolution vodka bar operator Inventive Leisure is capitalising on year-on-year double digit food sales growth, with a new menu that taps into the consumer trend for casualisation. The new menu is supported by the appointment of a new executive chef, Mark Rush, who joins the business from Bramwell Pub Company and prior to this, PizzaExpress. The menu has been created following extensive customer research and feedback. For example, research unveiled that the brand’s female customers love small plates, so a selection has been included featuring such dishes as ‘crispy goat’s cheese bonbons’, ‘panko fried chicken strips’ and ‘katsu king prawns’. The menu has a strong US cuisine element, with sliders, pulled pork, a wide variety of burgers and ‘The Dirty Dog’ hot dog which features a premium bockwurst sausage in a ten inch brioche roll. A dedicated micro-site with a quirky ‘food trucks’ theme, entices customers to view the individual dishes under their relevant categories: ‘Kitchen Revolution’, ‘Burgers & Dogs’, ‘Healthy’ and ‘Small Plates & Sharing’. To launch the site, customers have been given the opportunity to enter a competition to win one of 7,000 prizes, plus free meals for a month. In the four days since the micro-site was launched, 15,000 customers have signed up for the initiative.

Nonna’s Kitchen opens in Leicester Square: Sicilian restaurant concept Nonna’s Kitchen has opened a second site, this time in Leicester Square in London. Owner Joe Ricotta said: “We use all the best ingredients from producers in Sicily and it’s all as fresh as possible. 80% of the ingredients we use are from Sicily. Most of the chefs are from Sicily and they’re not used to pre-cooking like a lot of other restaurants. I wanted to do something different. There are too many Italian restaurants and no Sicilian restaurants.” The first Nonna’s Kitchen is in Hoddesdon, Hertfordshire.

JD Wetherspoon to open in Sowerby Bridge: JD Wetherspoon is to open a pub in Sowerby Bridge, West Yorkshire (population: 9,948) on Tuesday 17 December, with the creation of 55 new jobs. The company has spent £1.4m re-developing the outlet on the site of an existing pub, The Wharf, in Wharf Street. The Wetherspoon pub will be called The Commercial Inn – for most of its lengthy history the pub, previously The Wharf and also Lock Keepers public house, has been called The Commercial Inn.

Greene King chairman exercises options: Greene King non-executive chairman Tim Bridge exercised options over 99,669 shares and sold 72,431 at a price of 8.524p per share on Tuesday, raising £616,634. Following this transaction, Bridge holds 1.4 million shares, which represents a 0.64% stake in the firm.

PizzaExpress begins digital rethink: Restaurant chain PizzaExpress has begun a digital marketing review. The review will focus on a rebuild of PizzaExpress’ website but also covers other work. The incumbent, DBG, has been invited to participate in the process. An agency will be appointed in January. A spokeswoman for PizzaExpress said: “Like most companies of our size, we review our agencies every couple of years. This process allows us to ensure we are taking the right approach.” Agency Adam & Eve/DDB, which previously worked with PizzaExpress on its advertising, resigned the account several months ago and PizzaExpress has taken its creative work in-house.

Caffè Nero targets 50 sites in the Republic of Ireland: Caffè Nero is targeting 50 stores in Ireland – a new one opens at Merrion Row in Dublin 2 with two more to follow shortly. Aidan McDonnell, of Colliers International, who is advising Caffè Nero, said the company would like to have 12 stores in the Dublin region alone. The company is understood to have agreed a rent of €65,000 per year for the Merrion Row premises.

BrewDog to open bar in Tokyo: Scottish brewer and retailer BrewDog will open BrewDog Tokyo, located in the Roppongi district of the city, in March 2014. The brewery launched its twelfth UK bar last week in London’s Shepherd’s Bush, and plans to open at least five more bars in the next six months, both at home and abroad. BrewDog Tokyo is the second international bar to be officially announced, following the launch of BrewDog Stockholm this summer. The company has also begun development on a new site in the Pinherios area of Sao Paulo, in Brazil, which is due to launch early 2014.

Stonegate re-opens Chatham pub with more cask and US food day: Stonegate Pub Company re-opens The Prince of Wales in Chatham today after a £165,000 refurbishment. The pub re-launches with double the number of cask ale pumps than before – now eight – and one dedicated hand pull cider pump, too. The pub has three giant screens and 14 smaller plasma TVs. An addition to the pub’s weekly menu will be an‘American’ themed Wednesday with nacho Grande burger, the chilli hotdog and a smoky BBQ hotdog on the menu.

Third boutique Pig to open in March next year: The third site in the shabby chic Pig hotel chain, led by Robin Hutson, will open near Bath in March 2014. The 29-bedroom hotel was bought by Home Grown Hotels in May from Andrew Davis, the founder of the Von Essen Hotels. The third Pig, seven miles from Bath in the Mendip Hills stands in 77 acres of grounds. It is housed in a Georgian property, previously known as Hunstrete House. The Pig on the Beach in Studland Bay, Dorset, is currently being refurbished and is expected to launch in spring 2014.

Itsu opens 41st shop: Itsu, the healthy eating chain headed by Pret A Manger founder Julian Metcalfe, has opened its 41st London site, in St Peter’s Street. The branch marked its opening by giving away 50 lunches. The company opened its first site outside of London, in Oxford, in October and has two flagship restaurants. In September, Itsu reported turnover rose 22% to £45.25m in the year to 3 January 2013. The turnover growth was underpinned by “impressive like-for-like maturing store sales growth of 8.3%”. An additional eight sites were opened in the year to bring the estate to 40 units. The company said: “Itsu’s margins were impacted by a decision to invest in menu improvements and by the costs of a number of new openings in the final quarter of the year.”

Duo plan big expansion after initial Michelin success: Two entrepreneurs whose first restaurant is a roaring success after opening just 18 months ago are looking to increase their empire to five outlets, and move into retailing their own sauces. David Evans and Robin Hodgson, who have known each other since growing up in Yorkshire, went into business together for the first time in June 2012 when they opened Dylan’s restaurant in Menai Bridge, North Wales. The seafront restaurant, which specialises in local seafood, has been a big hit, winning Michelin Guide recognition, and employs around 40 people in the high season. The pair now want to roll out their restaurant template across the region and have targeted four others sites, including Conwy where, they want to open a restaurant on the quayside. Evans said: “Our ambition is to spread across the North Wales coast.” The pair developed their sauces at the restaurant and at the Coleg Menai Food Technology Centre in Llangefni.

Giraffe to open in York: Giraffe, the Tesco-owned “world food” restaurant chain, is to open an outlet in the £90m new Monks Cross development in York. With the exception of one outlet in Aberdeen, the new outlet will be the furthest north the chain has gone. It is now up to 49 outlets in total, with the opening of a Giraffe at the Twickenham Tesco Express in Middlesex today (Friday). In York it will be competing against Prezzo, Costa and Frankie & Bennys in the list of high street restaurants that have signed up to the Monks Cross development. Richard France, managing director of Oakgate Group, the Monks Cross developer, said: “We have been working on attracting various good operators and creating a restaurant offering for some time. I’m confident we have got one of the best retail line-ups in the UK. Giraffe will add to that, and bring a new restaurant to the city. Then we have got two more to announce, hopefully before Christmas. After that we only have one, 1,000 sq ft unit left, which we have already got a lot of people looking at.” Monks Cross will also be home to one of the first Hotel Chocolat outlets inside a John Lewis store when the branch opens next year. The cafe in the store will feature a cocoa-inspired menu and have a mixer, known as a conch, on site to process cocoa from bean to chocolate. 

Prime Bexleyheath building on the market: A prominent building in the heart of Bexleyheath town centre is on the market after agent Davis Coffer Lyons was appointed to find a new owner. The 11,000 sq ft building is in a prime location opposite the 60-store Broadway Shopping Centre, which boasts approximately 200,000 shoppers a week. The property also benefits from a large car park opposite the property, which is held on a 111-years lease at a peppercorn rent. The freehold building benefits greatly from being suitable for a variety of uses; A1, A2, A3 and A4. Offers are sought in excess of £850,000. Paul Tallentyre, director at Davis Coffer Lyons, said: “We expect interest from a wide range of operators from restaurants, bars and gyms to retailers and medical facilities.”

Restaurant group sees profits up, turnover down: The six-outlet Ramore Restaurant chain, based in Portrush, Northern Ireland, saw per-tax profits for the year to the end of March 2013 rise 55% compared to the previous 12 months, to £370,000 from £239,000. However, turnover fell from £7.3m a year earlier to £6.7m. Its Harbour Bar, which claims to be the oldest pub in Ireland, was awarded “Pub of the Year” by The Belfast Telegraph in November.

Restaurants, cafes and pub proposed for Rhyl development: A planning application for the Ocean Plaza site in Rhyl, North Wales that includes a food store, a hotel, cafes, restaurants, a pub, non-food retail outlets and a petrol station has been made to Denbighshire Council. The proposed development, from Scarborough Development Group, is smaller than the one submitted for approval in 2007 by the property developer Modus before it fell into administration. Plans to include offices and residential accommodation have been dropped, and the proposed food shop would be substantially smaller.

Luke Johnson – we never discuss exit strategies when we invest in a business: Sector investor Luke Johnson, of Risk Capital Partners, has argued that it is bad manners to discuss exit strategies when an investment in a business has just been made. He told the Propel Multi Club Conference: “I don’t believe you need to annoy and alienate a founder, who has probably built this business up over many years, put their heart and soul into it – and remind them, at the very first meeting, that all you are interested in is the money; that you don’t care very much, if anything, about customers, staff, suppliers. I genuinely believe, that Return on Investment isn’t our only priority. We want to be involved in businesses we can be proud of, businesses that create jobs, businesses that deliver good experiences and great service for the price-point they are offering – and are active, positive members of the business community. We’ve been fortunate in that the hospitality sector, and the casual dining segment, has been a growth market – so I think it’s much easier to deliver on those measures in an expanding sector. We’ve also been fortunate in having sound partners who are empathetic to those sorts of objectives because if you talk to entrepreneurs, money actually comes three or four on the list. What matters to them are things like autonomy and building a business of which they can be proud.” (See the Propel Friday Opinion e-mail for the full story.)

Wimpy UK declines as network shrinks to 110 sites: The franchised Wimpy Restaurant chain, owned by Famous Brands, has reported 13 site closures in the most recent year to 28 February, with just two new sites opened. Overall, site numbers reduced to 110 from 121 in 2012. The company saw a 6.8% decline in franchised income to £6,240,341. The company saw a 17% revenue decline the year before. As a franchised business, though, with its owner collecting royalty income, it is still profitable with pre-tax profit of £606,660 compared to £817,574 the year before. The company stated: “Strategically, the brand is undergoing a process of consolidation with a short term view to renovating and modernising the network. Other marginal sites are being considered for conversion as in the case of Clapham Junction where the iconic South African burger brand Steers successful announced its arrival in July. It has performed remarkably well despite trading in an intensely competitive category which has traditionally been dominated by the global burger giants.” The company said that despite the year’s volume shortfall, total expenses as a percentage of revenue increased by only 2.6% to 90.7% against 88.1% in the previous year, a result of vigilant operational and expense controls.

Chancellor offers £1,000 discount on business rates for small pubs and restaurants: Chancellor George Osborne has promised a £1,000 discount for pubs and restaurants with a rateable value up to £50,000. Osborne also promised a 50% re-occupation discount for businesses opening in empty high street sites. The 3.2% business rates increase due next April will be capped at 2% – and businesses will be allowed to pay in 12 monthly instalments. Small Business Rate Relief will be extended for another year. The British Beer & Pub Association (BBPA) welcomed the decision to extend Small Business Rate Relief to April 2015, which will avoid a £27 million bill for thousands of pubs across the country. It is estimated that 38,000 – three in four – pubs will get the £1,000 reduction in their rates bill, as they have a rateable valuation of less than £50,000. The decision to cap increases in Business Rates to 2% will help pubs to avoid £7.8 million on the previously proposed increases. The joint industry Better Rates for Pubs campaign had been backed by 61 MPs who have signed EDM 599 from Charlotte Leslie MP, which supports the campaign’s aims. Chief executive Brigid Simmonds said: “These are very positive steps on Business Rates, and the Chancellor was right to champion pubs in his speech. We welcome the Chancellor’s decision to extend Small Business Rate Relief which was one of the first objectives of the Better Rates for Pubs campaign. It shows real support from the government for pubs.” It is also very good news for rural pubs that the proposed increase in fuel duty has been scrapped, she added.

Restaurant delivery website sees surge in investment:, the business that delivers food from London restaurants to people’s homes, has raised an additional £125,000 in a week towards its target on crowd-funding website Crowdcube to raise £300,000 for 23.08% of its equity – a total of £225,290 from 35 investors has been raised so far. Founder Evan Graj, a former equity trade at Cantor Fitzgerald, said: “Our website and delivery service launched in the summer of 2011 with 15 restaurants while I still had a day job. Now, we are the second largest delivering for over 100 of London’s best restaurants including one Michelin star, 27 different cuisines servicing thousands of registered users, a few corporates, and have just recently started adding accredited chefs who cook in their own homes. Our business model is simple. We charge restaurants and chefs a percentage of the total order plus a small delivery charge to the customer based on distance.”

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