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Morning Briefing for pub, restaurant and food wervice operators

Mon 9th Dec 2013 - Propel Monday News Briefing

Story of the Day:

Stonegate opens premium Missoula, lines up 12-strong Slug & Lettuce pipeline: Stonegate Pub Company, the largest privately owned managed pub operator in the UK, has opened a premium version of its Missoula bar brand, converting a former Living Room site located within Milton Keynes Hub. The company has built on trial work undertaken at the Solihull Missoula site to create a premiumised version of the brand, which carries the sub-head of ‘Montana Bar & Grill’. It is expected to provide the template for a further six conversions. The new upscale version of Missoula features hand-crafted burgers, six salad options and high-quality steak options, including USDA-certified steaks. The food mix is expected to rise to around 35% of turnover at the evolved Missoula, compared to 15 to 20% within the remaining 13-strong Missoula estate. Breakfast is served until midday with bottomless filter coffee refills. The menu is supplemented by a broad premium drinks offer. It includes a choice of 11 signature cocktails, 14 classic cocktails, seven world beers on draught, including Anchor Steam and Shipyard American pale ale, plus a choice of 13 US whiskies, nine Scotch whiskies, eight gins and nine vodkas. The Milton Keynes site has opened with a ‘Two for One’ cocktail offer until 7pm every day and until close on Thursdays. Meanwhile, it is understood that Stonegate has also identified a dozen new Slug & Lettuce sites within its current estate, which has grown with the addition of 78 Bramwell Pub Company sites. Slug & Lettuce has enjoyed three consecutive years of double digit sales growth and Stonegate would like to double the size of the estate in the medium term. The Bramwell acquisition will provide around six new Slug & Lettuce sites while the Living Room estate, acquired in August, set to offer another half dozen conversions. (See yesterday’s Breaking News for plans by Inventive Leisure founders Roy Ellis and Neil Macleod to launch a new pub and casual dining concept.)

Industry News:

Six sector companies appear in Sunday Times Fast Track 100: Six sector companies have appeared in The Sunday Times Fast Track 100 of the privately held companies with the fastest sales growth in the past three years. The companies are: BrewDog (81.53% growth to sales of £10.655m), Caffe Concerto (sales growth of 77.39% to £10.404m), Drake & Morgan (73.7% to £17.635m), Jamie’s Italian (69.09% to £93.870m), Ed’s Easy Diner (62.021% to £17.502m) and Pearmain Pubs (50.53% to £30.840). Loungers was listed as a ‘One to Watch’ with current annual sales of £22.143m.

Allegra Strategies – independent coffee shop market is growing by 3.2%: Allegra Strategies, the research firm that has particular expertise in the UK coffee market, has reported that the independent coffee shop market has produced a Compound Annual Growth Rate (CAGR) of 3.2% since 2011. The figures rebut the higher annual growth rate of 15% in the independent coffee market that was claimed by another survey last week. A spokesman for Allegra stated: “This growth is smaller than the branded coffee shop sector which has grown by 5.6% CAGR since 2011, in outlet numbers, and is growing by a far greater 9.4% CAGR in value terms.” Allegra Strategies launches the definitive 2013 Project Cafe report on the coffee market this Thursday (12 December). The report has been produced annually since 1999.

Eataly opens in Chicago: Eataly, the super-sized Italian food market concept from Mario Batali, Joe Bastianich and Lidia Bastianich, has opened on Chicago’s East Ohio Avenue. There are eight restaurants, retail counters for meat, fish, pasta, cheese, pastry and cured meat, two coffee bars, a Nutella counter, a microbrewery, a bookstore and gelateria. The 63,000 square feet opening is 13,000 square feet bigger than the New York version and includes a meat-focused casual restaurant where you can get a steak, sausages and grilled chicken. (See this week’s Winter edition of Propel Quarterly magazine for a feature on Eataly.)

Fleurets – average sale price of £217,000 for bottom-end freeholds: A survey of pub transactions by agent Fleurets has found a 38% increase in the total number of pub sold in the year to September 2013 with total transaction value up 61% to £148m. The average value of freehold pubs sold was £217,403, in line with the year before but with the multiple of FMT down in both the north and south. A total of 54% of pubs were sold for less than £200,000 with 50% of sales for non pub use. In the leasehold market there was a 3.7% increase in average sale price nationally. There was, however, a doubling in the number of £100,000 plus leasehold deals. The freehold freehouse market saw a 12% decline in average sale price nationally with a 138% increase in number of freehouse sales. 74% of freehouses sold for continued pub use. Director and head of pubs Simon Hall said: “Last year the public house property sector involved many of the same dominant market forces as the previous four years. At the bottom end a continued strong supply of sales from the big six tenanted pub operators was supplemented by an increase in administration sales. Finance continued to be restricted and economic uncertainty was the underlying trend. However, as the rationalisation of the pubco estates entered its fifth year, residential values were increasing in some areas and with improved like-for-like sales figures being published by several multiple operators, there were signs that things could be starting to change.”

Food prices could rise by 6% next year: Food prices could rise by as much as 6% next year and look certain to rise by at least 3.8%, according to a report by Prestige Purchasing. Restaurant chains are already switching to cheaper cuts of meat, such as pork shoulder, and serving up smaller portions to keep a lid on costs. Prestige Purchasing chief executive David Read said the UK was in a new era when food prices would continue to soar because of growing consumer demand, the effects of climate change on harvests and higher commodity costs. He said: “Food prices will be above inflation for the foreseeable future. Restaurants and caterers are going to have to be innovative with food and ingredients and the way they deliver value on a plate. There will be more pork, more lamb instead of beef, more clams and mussels instead of prawns.”

Company News:

Town & Country Inns reports operating profit: The operator of Apres, which has sites in five West Midlands towns, and owns Fleet Street Kitchen in Birmingham city centre, Town & Country Inns has reported a swing into operating profit of £345,731 for the year to 31 May this year, compared to a operating loss of £176,421 the year before. Turnover rose 6.8% to £7,491,290 compared to £7,014,037 the year before. Pre-tax losses reduced to £115,486 from £681,887 the year before. The company opened Fleet Street Kitchen in February this year, incurring “significant development costs”. Gross margin was 72% and operating margin excluding expenses was 4.6% compared to 9.5% the year before. In a Companies House filing, the company added: “There is currently a dispute over historic interest charged and the directors are confident that a reimbursement of these will occur in the foreseeable future.”

ETM Group reports £4.21m extra turnover: Gastro-pub operator ETM group, headed by Tom and Ed Martin, has reported turnover rose to £16,497,599 in the year to 28 February, up from £12,332,808 the year before. Profit before tax rose to £850,331 compared to £387,536 in the year prior. The company opened The Jugged Hare on Chiswell Street during the year, which has “performed extremely well, driven by the exciting and innovative offer which contributed strongly to both turnover and profit”. Canada Square Restaurant opened in Canary Wharf last month. Interim dividends of £359,300 were paid during the year.

Montpeliers reports £1.3m pre-tax profit: Montpeliers, which operates seven high-profile venues in Edinburgh, including Tigerlily and Indigo Yard, has reported turnover of £11,496,788 for the 39-week period to 28 April, with pre-tax profit of £1,306,000. The company reported its flagship Tigerlily continued to trade extremely strongly. At the end of January this year, two term loans from the Bank of Scotland were consolidated into a new five-year £8,664,000 facility. The company stated: “We appreciate and value the strength of our relationship with the bank and thank the staff for their unwavering understanding and support of our business.” A loan of £500,000 from Greene King was repaid in full.

Second Rum Kitchen opens with ‘25% off’ offer: The second in a planned chain of bars under the Rum Kitchen label opens today (Monday) just off Carnaby Street in Central London with a special offer of 25% off lunch until 31 January. The Rum Kitchen Carnaby, in Kingly Court, follows on from the original Rum Kitchen Caribbean restaurant concept in Notting Hill. It is run by Jonny Boud, Stevie Thomas, son of veteran nightclub entrepreneur Stephen Thomas, Alex Potter and Frazer Sipsides, the team behind Ping, the 420-cover restaurant in Earls Court, West London, Love Brunch, the pop-up party organisers, and Bungalow 8, the Covent Garden nightclub. In September, Boud said the partners were looking to roll out the Rum Kitchen format, with a possible site lined up in Shoreditch, East London. Ping combines table tennis and a bar with a restaurant: Boud said: “The Ping concept requires 7,000 sq ft for another site – with that comes relatively high investment. The Rum Kitchen is definitely more malleable – we can work down to a site of circa 1,200 sq ft.” The menu at the Rum Kitchen includes Caribbean staples such as jerk chicken, along with ackee and salt fish bruschetta, seafood gumbo, spiced squid and soft-shell crab burger.

Starbucks launches more exclusive metal card in the US: Starbucks is making is ‘Limited Edition Metal Card’ even more exclusive in the US this year by cutting the numbers available from 5,000 to 1,000. Last year the cards sold out in about six minutes. The $450 metal gift card is pre-loaded with $400 of credit. The offer is available only on the luxury goods website 

Wetherspoon confirms Stortford branch: JD Wetherspoon has confirmed that it will finally open its first site in Bishop’s Stortford (population: 38,202), with an opening date set for April 2014. Initial work started at the Riverside Wharf last week and a planning application has been submitted to East Herts Council seeking permission for a new aluminium and glass shop front to be installed. The two units at Riverside Wharf have been empty since they were completed more than five years ago. A change of use to A3 restaurant/A4 public house was granted for the site in May 2011, and East Herts Council granted a licence to sell alcohol at the premises back in October 2012. Wetherspoon’s chief executive, John Hutson, said: “We have been keen to open a pub in the town for many years and are delighted that this is now coming to fruition.” Wetherspoon had previously eyed the former George pub in North Street, Bishop’s Stortford, which was then taken over by the Italian restaurant chain Prezzo in 2010.

Adnams set to sell out debut whisky: Suffolk-based Adnams is set to sell out its debut whisky production this week, The Mail on Sunday has reported. The firm produced 5,000 bottles of Adnams No. 1, a single malt matured in French oak barrels, and Adnams No. 2, made from East Anglian barley, wheat and oaks matured in American oak. A fifth of production was acquired with 24 hours of going on sale. Chairman Jonathan Adnams said: “With the benefit of hindsight, we should have perhaps made five times as much, but three years ago it felt like a huge gamble to be going into making spirits at all.” 

Ribble Valley Inns re-opens The Clog and Billycock: Ribble Valley Inns has re-opened The Clog and Billycock in Pleasington, Blackburn after a £250,000 refurbishment – it is the second Ribble Valley Inn to go through such a transformation in the past six months. The Clog and Billycock is now managed by Carolyn Richards with Matthew Castelli as head chef. Castelli has also worked at The Marco Pierre White Steakhouse Bar & Grill, Newcastle and The Marco Pierre White at The Swan, Aughton. Ribble Valley Inns chief executive Wayne Chapman said: “We are making sure that each Ribble Valley Inn site is sympathetically unique to their region and specific locality, not only in the menu but also from a design perspective as well. We have refined the look at The Clog and Billycock to ensure we bring it back to being the iconic pub of the region.”

CEO’s resignation hits Domino’s Pizza shares: Shares in Domino’s Pizza fell by 9.2% on Friday after the announcement that the company’s chief executive, Lance Batchelor, would be leaving next year. The departure of Batchelor, who led Domino’s expansion into Switzerland and Germany, comes after the company’s chief financial officer, Lee Ginsberg, announced in July that he would be leaving. It was revealed over the weekend that Batchelor will join Saga as chief executive – the company is expected to float in the medium market. Of Domino’s, analysts at N+1 Singer said: “Further senior management change so shortly after news of the finance director leaving is not good news for market sentiment. Given some valid question marks over the pace of UK expansion possibly slowing down, and what that effect may have on operational gearing going forward, coupled with Germany related issues, (the) news just creates further uncertainty.” In October Domino’s also slowed expansion plans for Britain for its current financial year from 60 to 50 new openings, with some analysts suggesting that the figure could fall further to 45 for future years, hurting growth forecasts. Another analyst, Wayne Brown at Canaccord Genuity, said a clue to Batchelor’s departure might lie in the terms of Domino’s long-term incentive plans. For the plans to pay out 100%, Brown said, Domino’s needs to achieve 15% earnings per share growth. “Are management giving us a clear signal that 15% growth is no longer achievable?”, he said. Brown said Nigel Wray, a non-executive director and long-standing investor in Domino’s, had recently sold his last tranche of shares in the company for £28m, taking the amount he has raised from selling off a once 27.5% stake in the company to about £144m. Domino’s shares rallied to close at 480p, down 9.2%, or 49p, on the day.

Abokado to open City of London site this week: Abokado, the healthy eating chain led by Mark Lilley and backed by private equity firm Kings Park Capital, will open a site on Cutler Street in the City of London this week. Situated just off Houndsditch, the venue will be giving away 400 free lunches from 12.30 tomorrow (Tuesday) before its official opening at 7am on Wednesday.

TV presenter Yvette Fielding opens Manchester tea shop: Television presenter Yvette Fielding has opened a tea shop called Proper Tea at Manchester Cathedral. The tea shop is a joint venture between Fielding and her long-term friend and Manchester entrepreneur Gary McClarnan, the owner of the Teacup restaurant in Manchester’s Northern Quarter, the Bonbon Chocolate Boutique and other ventures. McClarnan describes himself on his LinkedIn page as a “Proper Tea developer”, and Proper Tea at Manchester Cathedral is intended to become the flagship store for The Proper Tea Company, a loose-leaf tea brand due to launch in the spring of next year. Proper Tea at Manchester Cathedral, based in the cathedral visitors’ centre, serves cakes, afternoon teas, stews, soups and sandwiches, provided by local suppliers including herbs and honey grown and harvested in the cathedral grounds. Fielding said: “I have been a tea fanatic for some time and wanted to give my hometown a unique offering.”

Chinawhite entrepreneurs open new nightclub: The entrepreneurs behind Chinawhite, Aura and Modiva have opened Mason House in the vaults underneath the London Palladium in Argyll Street, London. Entry to the 5,000 sq ft multi-room club – previously Movida – is through a crypt. As well as the main room, there is Room 33, which has a secret door and operates on an invitation-only basis. Owners Marc Merran, Eamonn Mulholland and Jean Philippe Kley said some of the club’s features date back to 1737, when many of the residents in Argyll Street were Masons. Movida closed this year.

Hotel with Marco Pierre White restaurant planned for Manchester centre: Plans have been submitted for a £25m four-star hotel with a Marco Pierre White restaurant attached in central Manchester. The site for the proposed 187-bedroom Indigo Hotel, which would include a restaurant called Marco’s New York Italian, is on Corporation Street, close to Victoria Station. It would be run by InterContintental Hotels Group. The hotel development company Sanguine Hospitality, whose portfolio includes hotels with IHG and Hilton, is working in association with Investment Fund Managers Tritax and Bespoke Capital Management to find sufficient numbers of investors for the scheme. Nick Taplin, managing director at Sanguine Hospitality, said: “Outside of London, Manchester is the most buoyant hotel market in the UK, with both a strong business and leisure market. This is a fantastic opportunity to invest in a soon-to-be iconic hotel and restaurant in the heart of Manchester. The two brands, Hotel Indigo and Marco Pierre White, are perfect for a location of this prestige and will be an invaluable addition to the Manchester hotel market. Investors will also benefit from the backing of IHG; Hotel Indigo will have access to IHG’s booking system which drives over 157 million room nights into its hotels annually, supporting owners in generating revenue and we expect 60% of the hotel bookings to be generated through IHG and IHG Rewards Club. This will be a very successful hotel in a prime central location. Investment opportunities of this kind are few and far between in Manchester.” Work on the hotel and restaurant project is expected to start by March 2014, for a completion date in 2015.

SSP wins €80m French airport contract: Travel hub foodservice specialist SSP has won a ten-year contract to operate eight outlets at Bordeaux Mérignac Airport, France’s fifth busiest airport. The company, which valued the contract at €80 million, will open two cafes and a bar created specifically for the airport, alongside five national and international brands. Hall A will house a Starbucks coffee shop and French brasserie Le Grand Comptoir, as well as the centre-piece Le Café des Grands Hommes – named after the Place des Grand Hommes district in Bordeaux and featuring a selection of regional wines and specialities. In Hall B two bespoke concepts – the Arcachon-inspired bar Ostréa and contemporary café Barista (in partnership with Nespresso) – will be complemented by two Brioche Dorée bakeries, as well as a Selecta vending unit in the business lounge.

Prezzo’s £700,000 Bicester outlet set to open for Christmas: The new Prezzo restaurant in Bicester town centre is due to open its doors next Saturday (14 December). The company has spent £700,000 on the outlet, in Pioneer Square, part of a £70m redevelopment. It will seat a total of 142 people, 90 on the ground floor and a further 52 on a mezzanine level. It will be competing against two other new restaurant outlets, the American-themed Dean’s Diner, and Nando’s, which both recently opened in Pioneer Square, alongside the clothing chain Peacocks. Prezzo’s chief executive Jonathan Kaye said: “We are delighted to be opening our new restaurant within this wonderful development.” The development currently has five empty units.

Restaurant sisters win £6m export deal with China for sauces: Sisters Helen and Lisa Tse, who run the Sweet Mandarin restaurant in Manchester’s Northern Quarter, have signed a deal to sell their barbecue, sweet chilli and sweet and sour sauces in Chinese supermarkets. The deal, worth £6m over five years, will lead to the creation of around 15 jobs. Helen Tse told The Manchester Evening News: “This is a bit like selling coals to Newcastle and ice to Eskimos but we are the only brand of Chinese dipping sauces that are gluten-free and contain no monosodium glutamate. The Chinese consumers are concerned about their health too and we estimate that of the population of 1.2 billion, between 600 million and 700 million can be considered part of a middle class with the purchasing power to buy our sauces, which is massive.” The Chinese contract was announced while Lisa Tse joined Prime Minister David Cameron and a host of other firms on the largest ever UK trade trip to the Far East. Helen Tse said: “Securing the deal has been a lot of hard work and has taken several months but the Prime Minister has been a huge help in terms of opening doors for us and raising out profile. But we also want to thank the people of Manchester, because without their support we wouldn’t be where we are and the jobs we will create as a result of this deal will go to local people.”

Double Olympic gold winner victorious in cafe bid: The double gold Olympic medalist Dame Kelly Holmes has won a fight to open a cafe in the village of Hildenborough in Kent. Holmes, whom won gold medals at the Athens Olympics in 2004 in the 800m and 1500m, had her first application turned down by the planning committee of Tonbridge and Malling Council two months ago after neighbours living next door to the proposed cafe raised concerns over noise, lack of parking, loss of privacy and the size of the development. Holmes reduced the opening hours from 10pm to 6pm and cut the number of covers to 100, while plans for an upstairs bridal area and children’s play area were removed. The revised plans were approved by councillors last week (Thursday) after the planning committee was told by one resident: “The village is a fine place to live but still lacks a permanent daily venue for residents to meet socially, see old and new friends. The application shows a really heartfelt desire to bring a valuable asset to Hildenborough.”

Agent sells seven North East pubs – 20 in the pipeline: Agent Christie + Co has sold seven North East pubs in recent weeks – sites in Newcastle, Gateshead, Sunderland, Chester-le-Street, Bedlington, Ferryhill and Shildon. Associate director Mark Worley said: “Only one of the seven pubs has been sold for change of use – The Torrens in Sunderland has been bought to convert to retail use. Of the remainder, The Attic in Newcastle, The Barrington Arms in Bedlington, The Black Bull in Ferryhill and The Queens Head in Shildon have all been bought by experienced pub and bar operators and investment is planned in each site. The Borough Arms in Gateshead and Studio nightclub in Chester-le-Street have also been bought by existing operators but are to be operated as food-led licensed outlets. We are currently negotiating the sales of a further 20 sites which will hopefully complete either before the year-end or in the early part of the New Year and the overwhelming majority of these are being purchased with a view to on-going pub use.”

Four new eating/drinking outlets proposed for White Rose centre: Four new restaurant, cafe or bar outlets have been proposed as part of an 185,000 sq ft extension of the White Rose Shopping Centre in south Leeds. The proposed expansion of the centre, owned by Trinity Leeds developer Land Securities, includes extensions to the existing Primark and Debenhams stores, together with a new 12-screen cinema. The scheme, which could create about 1,000 jobs have been recommended for outline approval. The outline plans, which have received support from local MP and shadow chancellor Ed Balls, will be scrutinised by councillors next week but have been recommended for approval by planners despite some concerns about the adequacy of transport to the locale. The suggested approval is subject to infrastructure contributions including £672,510 for public transport. Further approval will have to be obtained from communities minister Eric Pickles because the development encroaches onto the green belt. In total, Land Securities is seeking permission for an additional 120,000 sq ft of retail space and 65,000 sq ft of leisure space at the 76-acre site. A report by planners said that the levels of support for the development, its retail impact and the creation of jobs outweighs the potential adverse transport impacts and is accordingly recommended for approval.

Cattle Grid muses sports bar concept: Cattle Grid, the five-strong steak restaurant chain, is contemplating a Cattle Grid sports bar. The company, founded in 2008 by Steve Novak and Shaun Gray, put out a tweet on Friday saying: “Looking at a site in Wimbledon today for a new Cattle Grid sports bar idea.” In response to a follower who tweeted: “Ribs and beer, rugby and football and Yank sports – seems a brilliant idea!”, the company tweeted: “That’s what we’re thinking”. Novak and Gray’s most recent venture was the opening of Poulet Rouge, a chicken-focused restaurant, in Balham, South London in August.

Rocca restaurant expands to Edinburgh: The owners of the Rocca Bar at the St Andrew’s MacDonald Hotel, which has received three AA rosettes, are rolling out their concept to another hotel in the same chain, the MacDonald Holyrood Hotel in Edinburgh. The new Rocca Restaurant will serve up Scottish food with an Italian twist, reflecting co-owners Susan and Adrian Pieraccini’s roots. The menu will include; hand-rolled pasta with a beef and Barolo ragu and mushrooms on toast served with poached egg and hollandaise sauce. Susan Pieraccini said: “We are really excited about bringing our award-winning concept to Edinburgh. Rocca at Holyrood will offer simple dishes that burst with flavour and use the finest freshest produce. We’ll offer great value all-day dining from breakfast to brunch and through to evening dining.”

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