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Morning Briefing for pub, restaurant and food wervice operators

Wed 11th Dec 2013 - Propel Wednesday News Briefing

Story of the Day:

McMullen buys £8m London freehold – with Fuller’s as tenant: Hertfordshire brewer and retailer McMullen has spent circa £8m buying the freehold of the flagship Old Bank of England pub in London’s Fleet Street. The deal is an investment at this stage, with fellow family brewer Fuller’s and other occupants of the building paying a rent roll of circa £400,000. However, it is understood that Fuller’s has around five years left on its lease of the pub at which stage McMullen plans to operate the pub itself. Ironically, McMullen is thought to have placed second to Fuller’s in acquiring The Lamb & Flag in Covent Garden in 2011. McMullen managing director Peter Furness-Smith told Propel: “I can confirm that McMullen has bought the freehold interest in the whole of the building at 194 Fleet Street which includes 1 Bell Yard and The Old Bank of England which is subject to a lease in favour of Fuller’s”. The Bank of England site is the fifth freehold acquisition by McMullen since May. It bought the freehold of The Old Crown in New Oxford Street and The Kings Arms in Great Titchfield Street, both in London, from Punch Taverns in July. The company has also bought The Quays in Farnborough in May and The Old Crown in Royston. In July, Furness-Smith said: “We are delighted to have purchased the freehold interest in excellent pubs so far this year. Although finding good sites remains a challenge we are continuing to look for more well-located pubs in London and the Home Counties.”

Industry News:

Orderella app raises £550,000 of funding: Orderella, the new app which allows its customers to order and pay for food and drink with their smartphone, has closed its maiden funding round, raising £550,000, which is £50,000 above the funding target – the fund-raising was oversubscribed. The fund-raising will support Orderella’s development plan, with a target of 1,500 sites operating the app by the FIFA World Cup in 2014. Orderella has received media coverage in The Financial Times, ITV News, BBC Radio Two, Daily Express and Mail Online since its launch – and saw 1,400 downloads in the first days after launch. Talks have already begun with venture capitalists and private equity houses for Orderella’s Series A funding, which is taking place in Quarter One, 2014, with the aim of raising £10 million. Orderella will be available on Android from January 2014, broadening its customer reach. Orderella chief executive Dennis Collet said: “We were blown away by the success of our first funding round, achieving £50,000 more than our target, and becoming oversubscribed with investors. This funding will prove invaluable as we look to grow into many more venues in the UK and internationally, and further increase awareness of Orderella amongst customers and operators.” The app was launched at The Keyworth Tavern in Nottingham on the 23 October, followed by its first London site, The Parcel Yard, on the 6 November.

Trade recovers from tidal surge: A host of pubs and restaurant companies with sites in seaside towns are still counting the cost of last Friday’s tidal surge. New Brighton’s Marine Point development, which hosts seven major pub and restaurant businesses, saw four feet of water flow through the development, closing a number of sites, including Greene King’s first leasehold leisure park site, a Hungry Horse called The Seahorse. Alex Reilley, of Loungers, which has a site at Marine Point, said: “It was possibly the most surreal site of my business life watching the sea rise remotely on CCTV cameras from our office in Bristol. It was properly apocalyptic – all the outside furniture and planters were lifted up. But we were lucky – there is a slight incline to the premises and we ended up with half an inch of water in about half the premises.” The town of Boston in Lincolnshire saw the riverbank breached with Enterprise Inns’ Goodbarn’s Yard, Batemans’ Britannia and Bulldog Hotel Group’s White Hart sites flooded or partially flooded. JD Wetherspoon saw four pubs forced to close on the evening of the surge, with The Angel in Whitby, opened at Easter this year, still closed. Chief executive John Hutson said: “The Angel is on the harbour – and the harbour came to us. We’re having to redecorate the pub and hope to re-open on 20 December.” In Lowestoft, JD Wetherspoon’s the Joseph Conrad lost thousands of pounds worth of stock when the ground floor and cellar flooded. At least 500,000 litres of water were pumped out of the cellar by 11 tankers. Southwold-based brewer Adnams has stepped in to help by providing equipment and advice to enable the pub to sell a choice of 16 real ales from a stillage behind the bar. The Joseph Conrad will close for a week in January so water damaged woodwork and plasterboard to be replaced.

ALMR National Restaurant Association study tour to Chicago now full: The Propel and Association of Licensed Multiple Retailers (ALMR) 2014 Chicago study tour is now full, with all 40 places booked. The trip, sponsored by CPL Training, takes place between Thursday 15 May and Monday 19 May. If you would like to get on the waiting list, please e-mail

Food price inflation to rise faster than CPI: Prestige Purchasing is predicting that food inflation will reduce to 3.8% next year, although this means that food prices will still rise faster than the Consumer Price Index (CPI) rate of inflation of 2.3%. Compared to 2013, this rate represents a stabilisation of food inflation, but this figure is expected to rise again in 2015. The 2014 inflation prediction sees food inflation fall from 4.4% to 3.8%, soft drinks inflation rise from 1.4% to 3.2% and alcohol inflation rise from 3.1% to 4.2%. These predictions are based on rising food prices in the first half of 2013 as a result of supply issues after the unpredictable and horrendous weather experienced across the world in winter 2012. The weather, in particular, affected grain and grape harvests, which push up prices of alcoholic beverages. David Read, chief executive of Prestige Purchasing, said: “Unpredictable weather patterns caused by climate change, an ever-increasing global population, rising production costs, commodity futures trading and water scarcity is putting a lot of pressure on food prices around the world. And this isn’t going to stop any time soon. It’s imperative that the food service industry takes steps to ensure that these costs are not simply passed on to consumers, but it finds ways to safeguard a quality dining experience.”

Major US beer brands in decline: Beer sales in the United States fell by 2.3%, or 4.8 million barrels, between 2007 and 2012. According to data provided by Beer Marketer’s Insights, American sales of nine major brands, including the once top-selling Budweiser, fell by more than 25% over the past five years. Michelob Light’s US sales dropped by nearly 70%.

Company News:

Punch noteholders “oppose restructure plan”: The Association of British Insurers Senior Noteholder Committee has called for changes in the revised Punch Taverns restructuring proposals. It said the proposals “while moving in the right direction, still need further work to gain approval and would be voted against if published in the form announced”. Among the changes requested is a limit of £15,000 in capital expenditure per core pub per year and placing “board observers” in the Punch corporate structure. Punch plans to launch its final proposal by 15 January.

Lovely Pubs installs ice-skating rink at site: Lovely Pubs, the seven-strong gastro-pub operator led by Paul Salisbury and Paul Hales, has installed a synthetic ice-skating rink at its Farm site in Solihull in the West Midlands. The rink opens on 16 December and closes on 7 January. Salisbury told Propel: “It’s the first time, and we’re selling mulled wine, roast chestnuts and hot dogs – the rink is bookable for 40-minute sessions. We’ve had massive interest in it.” Salisbury reported that the corporate Christmas market had strengthened this year, with businesses increasing their budgets. Lovely Pubs opened its seventh site, the Queen’s Head, at Bromsgrove, this year. “It’s traded really well with average taking in the mid-£40,000s,” Salisbury said. On expansion plans, he said: “We’re looking at a number of things, although we’ve been spoilt that the last two acquisitions have been reasonably priced freeholds.”

Wyn Ellis – Whitbread results ahead of our forecasts, target price raised: Numis Securities’ leisure analyst, Wyn Ellis, has increased his target price for Whitbread shares to 3,600p from 3,400p after yesterday’s third quarter results beat forecasts. He said: “The Whitbread 3Q14 trading update is encouraging, with strong LFL sales growth at both Premier Inn (up 5.4%) and Costa (up 4.9%) and a better performance from Restaurants (up 1.8%). This is ahead of our forecasts and consensus. Whitbread says that this keeps the company ‘on track to deliver full year results in line with expectations’. We suspect that there may be some modest upgrades today and the update is sufficiently positive to help maintain momentum for the shares. Costa, we estimate, has now had 46 consecutive quarters of LFL revenue growth in the UK, with Third Quarter 2014 like-for-like sales up circa 4.9%. System sales in the first 39 weeks are up 19.4% and in Quarter Three there was good progress in overseas markets with a slight improvement noted in China. Costa has an investor day planned for Thursday, 12 December. We expect the tone at the investor day to be positive, with a focus on the developing International business, the UK roll-out and Costa Express.

Former Gatecrasher nightclub venue set to become home to restaurants or bars: A venue in Leeds currently used as a nightclub will be used instead by restaurants or bars if the city’s council passes a planning application from its owner. The property, which has two main floors and fronts Lower Merrion Street on one side and New Briggate on the other, was occupied until the summer by the nightclub brand Gatecrasher. Now the Leeds property investment company ATC Properties plans to split the venue, with the lower ground floor fronting Lower Merrion Street already let, and the 8,500 sq ft upper ground floor marketed to restaurant and bar owners. Planning permission is being sought for change of use to accommodate two restaurants or bars and a small retail unit accessed from within the Grand Arcade. In September, Gatecrasher announced it was looking for a new 3,000-capacity venue in Leeds after shutting its Grand Arcade operation as part of a restructure and refinancing. The core business and assets of the Gatecrasher brand, including the sites in Nottingham, Birmingham and Watford, were sold as a going concern to a new trading group as part of the restructuring. The Leeds venue was said to no longer fit with the brand’s plans because of its location, size and limitations in terms of development.

China Craft Brewers’ Association responds to BrewDog letter: The China Craft Brewers’ Association has responded to a letter from BrewDog relating to the opening of a fake BrewDog site in the country. Carl Setzer, brewmaster at the Great Leap Brewing Company, based in Beijing, wrote: “We are thrilled to see that you are planning to come to China and visit the Changzhou beer bar that has paid homage to your brand. We are also happy to see that you are planning on rolling out a brand manager for China/Japan in the near future. But in the meantime, might I extend a challenge that is a bit more urgent, but also a bit higher in value. You [should] come to China to market and educate the drinkers here about your brand. BrewDog has been available for long enough in China to warrant a little bit of representation from the motherload of punks that created and currently represent the brand. I personally, and as a representative of the CCBA, would be honoured if you carved out some time and actually came to our back-to-back Shanghai and Beijing Craft Beer Weeks next year, 23 May to 7 June.”

Agent sells Enterprise Inns pub in Highgate: The Victoria in Highgate, North London, which boasts an original Victorian facade dating back to 1837, has been sold by agent Davis Coffer Lyons (DCL), on behalf of Enterprise Inns to the Beechwood Group. Charlotte Wild, of DCL, said: “This is a stunning pub in a fantastic location with an extremely affluent catchment. We were originally appointed to sell the lease on the pub. However, when we were marketing it we receive so much interest from parties looking to buy the freehold that Enterprise decided to sell it instead. Given this demand it was, therefore, little surprise that we had competitive bidding and secured a price well in excess of asking.”

Jimmy’s joins line-up at Swindon’s Regent Circus: Jimmy’s Restaurants’ Pan Asian Kitchen chain will be joining Nando’s, Prezzo, Ask and Coal Grill & Bar in the new £50m Regent Circus leisure destination being built in Swindon. Jimmy’s has signed a 25-year lease and will be combining two units to create a restaurant totalling more than 7,000 sq ft, said Andrew Fisher, managing director of the developer Ashfield Land. Only two of the eight restaurant units now remain available and the company is in advanced negotiations on one of those, he said. “It is very satisfying to see the jigsaw almost complete and the transformation of this part of Swindon town centre making very positive progress,” Fisher said. Jimmy’s Restaurants’ property director, Jeremy Smith, said: “Regent Circus has all the right ingredients for a fantastic leisure destination. We are very excited at the prospect of introducing our unique blend of food and fun to the people of Swindon.” Regent Circus will include a Cineworld six-screen all digital multiplex cinema, a Morrisons superstore and a 450-space car park. Pan Asian Kitchen offers diners more than 100 different dishes of Indian, Italian, Mexican and Chinese cuisine.

JRC Global Buffet opens 500-seat site in Ilford: JRC Global Buffet has opened its fifth site in Ilford, Essex, a 50-cover restaurant on the first floor of Pioneer Point on Winston Way. Its buffet features more than 300 dishes, including Japanese, Vietnamese, Spanish, Italian, Mexican and Mongolian. There are also 12 live cooking stations. Children under 150cm eat for half price while children under 90cm eat for free. The UK restaurant chain plans to open a site in Watford in 2014.

Vapiano flushed with success after scooping top toilets award: The Italian fresh casual dining restaurant Vapiano has the best restaurant toilets in England. Its restaurant in Great Portland Street in the West End of London was awarded the title of national category winner (restaurants) in England in the Loo of the Year Awards 2013. Both of its London restaurants (Bankside and Great Portland Street) were awarded a platinum rating by inspectors, the highest award possible. The managing director of the Loo of the Year Awards 2013, Mike Bone, said: “The toilet facilities at Vapiano’s restaurant in Great Portland Street set the standard for other restaurants to emulate.” Vapiano’s UK managing director, Phil Sermon, said: “This is the first year that we have entered the restaurants for the awards and we are delighted to have won the restaurant title for England as well as achieving the highest ratings for both restaurants.”

Wetherspoon wins best pubs toilets award in four countries: JD Wetherspoon has won the national pub category awards for England, Scotland, Wales and Northern Ireland in the Loo of the Year Awards 2013. The winning pubs were: the Bear in Melksham (England), the Castle Hotel in Ruthin (Wales), the David Macbeth Muir in Musselburgh (Scotland) and the Bridge House in Belfast (Northern Ireland). Additionally, Wetherspoon won the hospitality market sector award, awarded to the entrant with the best entries in each of a number of sectors. It was also named the UK trophy winner in the individual categories sector, winner of the individual category entry in Scotland and winner of the babychange facilities in Wales. The company also had the highest number of platinum and gold star entries (individual toilets are judged from zero to the highest rating of platinum by independent assessors). Loo of the Year Awards chief Mike Bone said: “Wetherspoon’s exciting and wonderfully equipped toilets not only exceed our expectations, but also meet the needs of adult users, babies and children and people who need an accessible toilet facility.”

Carluccio’s set for Bracknell: The Italian restaurant chain Carluccio’s is to open in Bracknell town centre in Berkshire. The deli and café chain has signed up for a 3,606 square foot unit on a 20-year lease opposite what will be the new Marks & Spencer store in the north of the town centre. The news follows the recent announcement that Zizzi will be taking a 3,300 sq ft building in the town on a 15-year lease, while Nando’s is taking a 6,000 sq ft unit on a 20-year lease.

Aylesbury coffee shop expands with in-house gelato parlour: A coffee shop is set to expand in Aylesbury, Buckinghamshire, allowing two entrepreneurial brothers the chance to realise a dream. The One4Six coffee shop, run by brothers Nick and Giuseppe Iannelli, has expanded at the Hale Leys shopping centre, with a £200,000 refurbishment. The brothers have been running the shop in Hale Leys for four years and when 1,200 square metres of additional retail space became available next door they saw it as a great opportunity for expansion. One4Six will also operate a traditional ice cream parlour within the cafe complete with a full range of artisan gelato all made on the premises.

Six brands to open in Loughborough after leisure scheme go-ahead: Plans for a multi-million pound cinema and leisure complex on a former hospital site in Loughborough have been given the go-ahead. Developer Citygrove has gained approval from Charnwood Borough Council for the proposals in Baxter Gate in Loughborough, which include an eight-screen multiplex cinema and up to seven restaurants, which will create about 180 jobs. Brands set to open include Nando’s, PizzaExpress, Loungers Café Bars, Starbucks, Dean’s Diner and Mimosa. Work is due to start next year.

Canadians give thumbs-down to McDonald’s version of national dish: Canadians have been vociferous in their dislike of McDonald’s newly introduced version of poutine, the country’s fast-food classic, consisting of french fries, melted curd cheese and gravy. The dish has been available for some time at McDonald’s restaurants in Quebec, where it originated, but from the start of this month, McDonald’s announced poutine will be offered at every one of its locations across the country, for C$3.99 a portion. However, the response has been underwhelming. Comments on the net include: “Tried them and won’t buy it again. I was very disappointed when I opened the box and it was half empty. Certainly not the food per dollar value I expected”; “It is nothing like real poutine … their gravy is horrible, their cheese curds are never melted like they should be … just plain nasty”; “McDonald’s fries are way too skinny to be used in a poutine”; and “It sucks. The curds and gravy are cold. I’m never buying that again.”

Ice-cream parlour owner predicts outlet in every town: The owner of an ice-cream parlour that has just opened its second outlet in Southampton, with a third one on the way, is aiming for an outlet in every town in the country. Sharif Ahmed has opened a second Sprinkles Gelato in Above Bar Street in Southampton with the support of a £320,00 business loan from Lloyds Bank Commercial Banking. He already has one store in Portswood Road in the city, and a third opening is planned for later this year. Ahmed said: “We have received a phenomenal response from the local community since opening our shop, because of this we decided to open another parlour to enable further growth and to fulfil customer demand. We manufacture our own ice-cream, which gives us flexibility in flavourings and ingredients. The commercial loans have helped us to acquire the premises we need to trade. We now have plans to open a new store at the end of the year and continue to expand. One day there may be a Sprinkles Gelato in each town of the UK.” The Portswood store is set to feature in the Channel 4 TV show Come Dine with Me.

New owner to return £1m Crewe hotel ‘to former glory’: The new owner of the 19th century Crewe Arms hotel in Crewe has promised to restore it to its former glory. The three-star freehold hotel, opposite Crewe railway station, has 61 en-suite bedrooms, a restaurant, lounge and bar, seven meeting and conference rooms and a contract car park with 120 spaces. It was sold by Harpreet Singh, who has owned the hotel since 2008, to the property investor Silverton Global for around £1m. The hotel was built in the first half of the 19th century and extended in the second half, and is one of the few surviving buildings from that time in Crewe’s so-called new town. Silverton, which is based in the Isle of Man, plans to continue to operate the venue as a hotel and has promised to carry out a major refurbishment programme. Neil Thomson, an associate director in the hotels team at Colliers in Manchester who handled the sale, said: “Interest was expressed by a number of hotel operators and potential buyers proposing alternative usage. The hotel was finally acquired by the expanding property development company Silverton Global, which intends to refurbish the building to return to its former glory.”

Pret tops cafe customer satisfaction list: Pret A Manger has take the top cafe position for customer satisfaction in the Nationwide High Street Happiness Survey. Published by the Activate Solutions Group, the survey looks into the levels of customer satisfaction being provided by the UK’s top high street brands. It saw Pret claiming first place for cafes, and fourth overall, followed by Caffè Nero which took second, and was placed sixth overall. West Cornwall Pasty Company was placed seventh, Greggs ninth, Costa Coffee came in 33rd place and Starbucks 40th.

Former bar boss banned from being director: Sam Bell, a former bar operator in Manchester’s Northern Quarter, has been disqualified from being a director of a company for five years. Samuel William Bell, 60, was banned for failing to pay taxes or keep property accounting records after the liquidation of four companies in August 2010 that owed a total of £185,000 to creditors. Two of the companies ran The Northern bar in the Northern Quarter between May 2009 and May 2010 and the Barcelona Bar in the Northern Quarter between December 2009 and May 2010 respectively. Bell gave an undertaking that he would not act as a director, manage, or in any way control a company until 18 December 2018. The liquidators of the companies were unable to verify, among other things, the total income of the companies, the recipients of and reasons for all expenditures and the assets of the companies when they went into administration. Bell also did not dispute that one of the companies at which he was a director traded to the detriment of HM Revenue & Customs when it failed to make payments for PAYE and NIC due from April 2009 onwards. Robert Clarke, head of insolvent investigations north at the Insolvency Service, said: “Failure to pay tax deprives the taxpayer of the funds needed to operate public services, and is unfair to other businesses which pay their taxes. Mr Bell has paid the price for failing in his duties as a company director as he cannot now carry on in business other than at his own risk.”

All-day cafe chain Brew takes third site: The emerging all-day cafe chain, Brew has taken the assignment of a new lease on the unit on Old York Road, Wandsworth, South London, formerly occupied by The Pantry, in a deal brokered by agent Davis Coffer Lyons (DCL). This letting is part of an expansion plan, which Brew is undertaking, building on its successful operations in Wimbledon Village and Northcote Road, Clapham. The Pantry is planning to reopen with a larger format outlet in due course. Rob Meadows of DCL said: “Old York Road is an incredibly desirable area for leisure operators at the moment and Brew is the ideal addition to an already strong offer. By providing an al-day offer we have no doubt it will be an instant hit with the local families and young professionals alike.”

First Frango’s finally opens: The first of what is intended to be a chain of Portuguese restaurants is due to finally open its doors on Thursday, December 12. Frango’s, in Corporation Street, Coventry, was originally slated to open at the back end of November. The 180-seater restaurant, which is named after the Portuguese word for chicken, has created around 30 jobs. As well as Portuguese chicken, it will serve fish and steak, and the venue also includes a cocktail lounge. A spokesman said: “We’re excited to be opening our doors to the city for the first time and can’t wait to showcase our modern restaurant which features ground-breaking technology and provides a thoroughly unique dining and social experience.” Coventry was chosen for the launch of the concept because Frango’s director Steve King is from the city.

Villagers raise £90,000 to buy pub from receivers: Villagers in Clawddnewydd, near Ruthin in North Wales, have raised £90,000 since August to buy their local, the Glan Llyn Inn, from the receivers and keep it open. Residents worked alongside Denbighshire Enterprise Agency to formalise a business plan after the pub went into receivership. In the meantime it has been run by the previous manager. A local councillor, Eryl Williams, said villagers had been in discussions with receivers to buy it as “a pub 100% owned by the community, run by the community, for the community.” Sharon Wyn Williams said: “The task force are pleased to announce we have successfully concluded negotiations with the receivers and have funds to complete the purchase. Obviously we have normal legal formalities to finalise the purchase, but we do not anticipate this will create any difficulty. We are making plans to enable us to take over the running of the pub short and long-term, which will include advertising for full-time staff. As part of the negotiations with the receiver, we have both agreed the community needs to be assured that the pub will continue to open during the handover period. This is the culmination of a huge amount of effort from everybody involved. We would like to thank the whole community for their tremendous support.” The villagers’ plans for the pub include realigning the bar “to create the atmosphere of a cosy village pub”, turning it into a “quality eating establishment” using locally sourced produce, converting one room to provide facilities for children, providing a room for watching televised sporting events, adding a patio at the rear of the pub, combining the pub with a village shop, with separate entrances, and possibly adding a cafe next to the shop, “thus increasing the footfall, especially from passing traffic”.

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