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Morning Briefing for pub, restaurant and food wervice operators

Thu 12th Dec 2013 - Propel Thursday News Briefing

Story of the Day:

UK nightclub visits drop to new low: Britain may be falling out of love with nightclubs, a new survey suggests. A national survey of 2,000 UK consumers has shown that while visits to pubs, bars and restaurants have remained broadly static in 2013, visits to nightclubs fell to their lowest level since the research began. In the sixth edition of the study, which interrogates consumer spending habits in the leisure sector, respondents indicated they were visiting nightclubs on average 1.7 times per month – down from 2.5 times in 2012 – equating to 20 visits per year. Among the key age group of 18-34 years, visits fell from 2.7 times per month to 1.7 times, the first time that the number of visits has dipped below two per month for this category. Paul Hemming, head of corporate finance at Zolfo Cooper, the advisory and restructuring group that undertook the survey, said: “Whilst young people will always want to go dancing, our research continues to suggest that the younger generation are rejecting the formal ‘big box’ nightclub experience. If you only have the funds to go clubbing once or at most twice a month then you will only go to the “best” venues, which are typically run by specialist operators catering to their local market. Nightclubs have to offer a better experience to attract the younger generation who have grown up dancing in a good late-night bar. The good nightclub operators continue to deliver strong results, but running multiple nightclub venues successfully is becoming the pursuit of the chosen few, who are genuine experts. Despite the tough market the recent flotation of Eclectic Bar Group shows there is still investor interest in this market.” Women were even less likely to visit traditional late-night venues than men, visiting just 1.5 times per month – again, a new low. Average spend at nightclubs was broadly static at £26.65 per ‘night out’ versus £26.70 in 2012. The trend for consumers to visit clubs later was consistent with 2012: 28% of clubbers do not enter a venue before midnight; 30% of visitors went to clubs at 11pm while 29% were in at 10pm or earlier. Eating out at restaurants showed the strongest results in the report, with spend per visit increasing by 8%, compared to 2.5% in pubs and bars (December 2011 to October 2013). Men have been responsible for the highest increases in spending – 13% more on eating out, compared to women who were actually spending marginally less over the same period.

Industry News:

Families have cut back on going out to eat: The average family household has cut back on eating out as spending per week dropped last year to £489, down by 3.6% to the £507.40 spent in 2010, according to the Office of National Statistics Family Spending report. The biggest pressure on family income has come from rising energy bills, forcing families to cut back on driving and going out to restaurants. The average family spent £40.50 per week on restaurants and hotels in 2012 compared to £42.30 in 2010. Spending on tobacco and alcoholic drink dropped to £12.60 last year compared to £13.60 in 2010. TUC general secretary Frances O’Grady said: “British households have had to tighten their belts in response to the tightest squeeze on living standards in a generation, with spending on food, transport and leisure activities all falling.”

Luke Johnson – I worry that my companies are not tech savvy: Sector investor Luke Johnson has suggested that companies that are not tech-savvy nowadays risk failure. In his Financial Times column, he wrote: “I am worried that most of my companies are not tech-savvy enough. Despite our bias towards sectors such as hospitality, technology needs to be front and centre in our thinking. From mobile meal ordering to digital menus to social media wizardry, the eating experience is being reinvented by technology. In the years ahead, any business that fails in its IT strategy will surely go broke. A few years ago I backed an ailing retail chain with the hope of turning it round. After I invested, I discovered the core reason it was in decline: Its technology strategy was deeply flawed and it suffered from a huge under-investment in systems. It had not built its own ecommerce platform. It totally lacked any form of digital marketing presence. Its electronic point of sale systems were useless; its stock-keeping and logistics software and hardware were redundant; its management accounting was in disarray. Unsurprisingly my investment was a write-off.”

Gordon Ramsay secures top place in Toptable survey: The Restaurant Gordon Ramsay in Chelsea, with three Michelin stars, has claimed number one spot in a poll of diners by booking website Toptable. His French restaurant Pétrus, in Knightsbridge came third. Heston Blumenthal secured two top ten positions with The Fat Duck in Bray in second place – the only restaurant outside London in the top five – and Dinner at the Mandarin Oriental Hotel near Hyde Park ranking fifth. The rankings were generated from 340,000 reviews submitted in the last year for around 4,000 restaurants across the country. Toptable’s Lucy Taylor said: “The restaurants on the top 100 list take every opportunity to deliver a superb dining experience and represent a collection of wonderfully diverse restaurants across the UK. These restaurants are consistently getting it right on every level, from first-rate ambience and service to wine lists and dishes that rarely fail to impress.”

Company News:

InnBrighton opens third brewpub: InnBrighton, the 45-strong operator led by Gavin George and backed by Graphite Capital, will open its third brewpub today, on the site of a former Firkin brewpub. The company will re-open The Britannia in Victoria Park, Hackney, operated on a free-of-tie commercial lease, as The People’s Park Tavern after a £250,000 refurbishment. InnBrighton already operates the North Laine brewpub in Brighton and began brewing at its Aeronaut pub in Acton, an Enterprise free-of-tie site, last week. George told Propel: “It will be nice to be brewing in East London as well as West London. Everything we brew in our pubs we sell in the pubs. We’ve been trading The People’s Park Tavern for two years but we like our pubs to have a real connection with the area in which they trade – the pub has been known as The People’s Park Tavern locally.” InnBrighton operates five pubs in London now after expanding from its Brighton heartland. Asked about other possible openings, George said: “We have a few irons in the fire.”

City Pub Company fund-raising set to hit £10m this week: City Pub Company’s fourth round of fund-raising, seeking to raise a total of £10m for its two subsidiary companies, should close this week having hit the target. Chief executive Clive Watson told Propel: “It’s very pleasing – I’ve only done two presentations. We have a lot of underlying support and the offer should close this week. It means we will have raised a total of £28m in 21 months.”

BrewDog closes in on £4.25m crowd-funding target: Scottish brewer and retailer BrewDog is close to raising its £4.25m target through its crowd-funding scheme. Yesterday, the company reported that only 2% of the current round of shares are still available. Shareholders get 5% off in BrewDog bars, as well as either 10%, 15% or 20% off purchases made at its online shop, depending on their level of investment.

Richard Caring opens Jackson + Rye: Investor Richard Caring, who owns Bill’s and recently sold Cote, has opened the second site within his Grillshack vehicle. The company, led Mark Askew and Hannah Bass, has opened Jackson + Rye in Soho’s Wardour Street. The all-day restaurant serves a menu inspired by America’s East Coast, as well as cocktails, hard shakes and wines from Europe and North America. Dishes include buttermilk chicken two ways and veal, beef and ricotta meatballs.

Punch Taverns sells two London pubs for £3.7m: Punch Taverns has sold two London pubs for £3.7m, The London Evening Standard has reported having searched the Land Registry. The Old White Bear in Hampstead, which is more than 300 years old, and The Star in St John’s Wood face being turned into homes after being sold. Punch Taverns sold the freehold of The Star to West End Investments in July for £2.1 million. West End Investments, run by property entrepreneur Marcus Cooper, has submitted plans to Westminster council for a “single family dwelling”, including a games room, cinema room and a “gym with wet and steam room”. In Hampstead, The Old White Bear will close in February after being a licensed premises since the early 18th century. Punch Taverns sold The Old White Bear in July for £1.575 million to Isle of Man-based Braaid Ventures. The company has submitted plans to Camden council to turn it into a six-bedroom family home.

Prezzo lines up St Austell opening: Jonathan Kaye’s Italian restaurant chain Prezzo has signed to open in the White River Place shopping centre in St Austell, Cornwall. Work to fit out the new 3,200 sq ft restaurant is expected to start in the New Year, with an opening in the spring. Prezzo will be competing against Costa Coffee, Eden Cafe and Frankie & Benny’s. Mike Wimble of Ellandi said: “This exciting new letting brings another major national chain into St Austell and is a vote of confidence in White River Place shopping centre and in the town centre itself. It is a direct result of the strategy set out by Ellandi when we purchased White River Place, which was to help drive the development of a broader food and leisure offer in the town centre. Another aim is to encourage a more vibrant evening economy in St Austell, which we have supported by reducing unlimited parking after 4pm to only £1.” The new restaurant will be only the second Prezzo in Cornwall.

Burger King targets 200 new sites within five years: Burger King UK is looking to add 200 new sites within five years. The company has recently opened five new sites: in Haymarket, Leicester, Trinity Walk, Wakefield, Eagles Meadow Shopping Centre, Wrexham, Airedale Shopping Centre, Keighley and The Arndale Centre, Accrington. Burger King is undertaking a programme of refurbishment works across their estate with the installation of the new “2020” corporate image which has seen sales increase in re-fitted stores. Thomas Rose, of property adviser Cushman & Wakefield which is exclusively retained by Burger King UK, said: “The Burger King brand continues to expand aggressively across the UK under all its formats – high streets, shopping centres and drive-thrus. We are looking for more sites in 2014 and look forward to reaching our goal of 200 new sites over five years.”

Stonegate chairman Ian Payne ensures authenticity at new generation Missoula by hiring Montana service expert: Stonegate Pub Company has introduced a premium customer service training programme at its new generation Missoula bar, which Propel has reported opening in Milton Keynes. The bar, which carries the tagline Montana Bar & Grill, is a premium version of the brand. Stonegate chairman Ian Payne has made a personal contribution to ensuring service has an authentic Montana feel by hiring Montana born and bred Molly Smith to oversee service training – Payne met Smith during on of his regular holidays in Montana. Caroline Linden, manager at Missoula, said: “The new Missoula sees a dramatic change from our existing offer and aims to enthral and delight our guests. The exceptional hospitality by our lively, enthusiastic team will enhance the overall experience and will set us apart from the rest of the high street.”

PizzaExpress launches 12-month undergraduate placement scheme: PizzaExpress has launched a new undergraduate placement scheme to help recruit future leaders for the hospitality industry. The move builds on the company’s commitment to creating opportunities for young people, and follows the news earlier this year that is has launched the UK’s first Pizzaiolo Apprenticeship. The company is offering four undergraduates the opportunity to join the company in September 2014 as full-time paid employees, as part of a year in industry before returning to university to complete their studies. There are plans to increase the number of placements in future years. The 12-month scheme will provide students with all-round management training, giving practical insight into a career in hospitality, as well as invaluable on-the-job experience. Students will receive a wide range of training and support, including mentoring from experienced leaders in the business, development courses, shadowing senior managers and the opportunity to lead their own projects. In order to allow the undergraduates to gain experience of working in different cities, they will spend half their placement year in Edinburgh and the other half in Manchester.

Substantial premium paid for closed bar in Farringdon: A substantial premium has been secured by agent Davis Coffer Lyons on behalf of Baragain Ltd for The Plum Tree in Farringdon, which was sold as a closed site to Establishment HM Limited. The pub is in a prominent position on Farringdon Street, surrounded by a host of multinational businesses. There is considerable construction activity in the area including the new Farringdon Crossrail station, which is under construction and Goldman Sachs is shortly due to redevelop a nearby site for its European headquarters. Establishment HM Limited have purchased a 25 year free-of-tie lease with 17 years unexpired. Charlotte Wild, at DCL, said: “We have said for some time that the London market has been extremely buoyant and this deal highlights how strong it really is. It is traditionally incredibly difficult to find buyers for vacant pubs and bars. However, The Plum Tree shows this is – in certain areas – no longer the case and even though it has been closed for some time we still managed to achieve a great premium.”

Jamie’s Italian to open fifth site in Australia: Jamie’s Italian is to open its fifth franchised site in Adelaide next year. The brand will open in the historic Westpac bank site at No 2 King William St in the Central Business District. The Adelaide opening will follow openings in Sydney, Perth, Canberra and, most recently, Brisbane.

Former Red Hot World Buffet operations manager opens concept in former Red Hot World Buffet site: Prashant Jaiswal, former operations manager of Red Hot World Buffet, has opened a new concept, Rakonto Bar and Grill, in Red Hot World Buffet’s original site in Nottingham. The premises in Goose Gate have been vacant since Red Hot World Buffet opened its own new £2.7m restaurant in the Cornerhouse in January. He said: “The whole Red Hot World Buffet group started from this restaurant and it’s grown from there. It was a shame for this unit to be closed because of its prime location.” The menu offers grilled world cuisine favourites, including piri piri chicken, Thai and Indian style dishes, and even French and American-inspired recipes.

Downing Pub EIS deadline approaches: The deadline for investing in the Downing Pub Enterprise Investment Scheme is eight days away – 20 December. A total of £10.9m has been raised so far. Downing, a London-based investment company that manages around £400m in funds including 16 VCTs, 15 EISs and 1 OEIC, stated: “There was a fall of approximately 30% in the average price of public houses from the start of 2008 to the end of 2009. From 2009 until the end of 2012, the rate of fall reduced to approximately 5%. [Downing] considers that there are currently good opportunities to purchase pubs at prices significantly below the peak of the market.”

Eclectic to open 20th site tomorrow: Eclectic Bar Group, the newly-floated operator of premium bars, is set to open its 20th venue tomorrow (Friday 13 December) in Manchester. The newest of Eclectic’s Polynesian Tiki-themed venues, Lola Lo, is located in the city’s Deansgate Lock arches. The venue will boast a raft of firsts for the Lola Lo brand, including a casual-dining operation, the Island Grill, with table service throughout. The 560-capacity bar will open seven days a week from 11.30am until the early hours. Live performance will also be a key feature as well as the more traditional Lola Lo music mix of credible club classics and contemporary beats. The venue is on three levels – lower ground, ground and mezzanine across two of the Lock’s arches – and features three bars, two DJ booths, a spacious dance floor and even a dress-up box in the lower ground floor Voodoo bar. “The Lola Lo brand continues to evolve,” said Lee Nicolson, Eclectic’s operations director. “The Manchester venue is our most ambitious to date and perfectly complements our nearby Sakura Japanese-themed operation. We will carry on enhancing the brand and identifying target towns and cities where we feel that Lola Lo is capable of making a significant contribution to the area’s premium bar offer.”

Luminar launches Give a Kid this Christmas: All of Luminar’s 55 nightclubs have launched a campaign to Give a Kid a Quid this Christmas. Clubbers nationwide are asked to donate a pound to The Echo Trust, a charity originally established by Luminar in 2002 to grant awards to local children’s charities. Over the past 11 years, the Echo Trust has raised more than £2.5 million and supported a huge range of causes ranging from children’s hospitals to charity groups.

JD Wetherspoon linked to fourth Irish pub: JD Wetherspoon has held talks in recent weeks to buy the landmark Slaughtered Lamb pub in Swords, north Dublin. Industry sources estimated the premises, one of the largest in the city’s suburbs, could be worth up to €2 million. According to multiple sources, Wetherspoon approached the pub’s owner, Brian Taylor, last month. Wetherspoon’s UK-based spokesman said he “could not comment on individual sites” in Ireland. Local media sources indicate a deal has yet to be agreed.

KFC set to build 1,800-site digital menu board network: KFC in South Africa is building what will be one of the largest digital menu board networks in the world. The network, which includes up to nine screens in each KFC store, has already been installed in 586 KFCs around the country and an additional 1,200 installations are planned over the next year. Each screen serves as a menu board, and each screen or group of screens can be changed easily and cheaply from a central point within minutes. The installations are by One Digital Media (ODM), the largest digital signage company in South Africa, which works closely with the advertising agency Ogilvy to create and animate content that brings life to the digital menu boards. Andrew Ridl, chief executive of ODM said: “It has been an amazing experience working with a company like YUM! and a brand as well-known as KFC. As the network has grown, we continue to learn more and more from each other. We are particularly proud about how stable our solution has proven to be in an environment where 24-hour service is required.”

Cider maker plans investment: H Weston & Sons is investing in new equipment following an increase in demand for its cider, backed by a £1.3m bank finance package from Santander Corporate & Commercial. It now has capacity to produce up to 20,000 bottles of cider per hour and the new equipment will allow it to store up to 50 million litres of cider – the equivalent to 20 Olympic swimming pools. Increased demand has also seen the company grow by 40% in recent years, buoyed by contracts with major customers such as Waitrose, Tesco and pub operators Mitchell & Butlers and Fuller Smith & Turner. Its products are also available in more than 10,000 pubs throughout the UK.

Starbucks marketing chief to quit: Danielle Crook, the Starbucks vice-president of marketing, category and brand integration, EMEA, is leaving the company to relocate to the US. Crook is joining her partner, Simon Davies, Microsoft’s UK sales director, who has been promoted to the US-based role of general manager, West Coast, Microsoft advertising and online. Davies will begin his new role in Santa Monica in January 2014. Crook will vacate her role at the end of February 2014. Her role will be covered by Starbucks vice-president marketing and category UK Ian Cranna, on an interim basis. Crook joined Starbucks in October 2012 from Vodafone.

Shepherd Neame apologises for tenant’s bad taste: Shepherd Neame has distanced itself from a tenant who mocked the Glasgow air crash by advertising itself as “100% helicopter proof”. The message was written on a blackboard outside The Red Lion pub in Wadhurst, East Sussex. In a statement, Shepherd Neame property and tenant trade director George Barnes said: “The sign at The Red Lion was deplorable and in no way sanctioned by the brewery. The tenant is self-employed and the operator of the business. We were neither notified of his action in advance, nor authorised it. We have made it clear to the tenant responsible that it was utterly unacceptable, which he has wholly accepted. He has apologised for the offence caused and will be making a donation towards the fund set up to help those affected by this tragedy.”

Young’s re-opens Bull’s Head, Barnes today: London pub retailer Young’s re-opens The Bull’s Head pub in Barnes, south west London, a famous jazz venue, as a Geronimo Inns site today after a £1m refurbishment. The site has been transferred from the company’s tenanted division. The company promises the work at The Bull’s Head will create a beautiful pub “and a music venue that will ensure the next 50 years of live jazz in Barnes”.

Old Dairy Brewery plans to move to Tenterden site: The Old Dairy Brewery, currently situated in Rolvenden, has announced plans to move to a new site near the Kent and East Sussex Railway in nearby Tenterden – it is six times bigger than the existing site and has a shop. A spokesman said: “We will be able to do brewery tours and there are also plans for a loyalty card, offering special events and discounts. The location is great because it is close to the High Street so customers will be able to just pop in and buy their beer. It will also bring tourists and new jobs will be created. In moving to Tenterden, brewing will return to the town. Edwards Brewery used to be at what is now the coach park in Station Road.”

Leeds cracks down on lap-dancing clubs: Half of the six strip venues in Leeds have had applications to renew their sexual entertainment venue (SEV) licences rejected by the city council. Deep Blue, opposite Leeds railway station on Wellington Street, and Red Leopard and Wildcats, both on The Headrow, have been ordered to shut. Liberte and Purple Door, both located on York Place, had their licences approved. Silks, on Sovereign Place, has been given a licence until next June. The decision by the licensing sub-committee was taken after the council introduced a new policy on SEVs in September. Drawn up following a public consultation, the policy states there should be a maximum of four SEVs in Leeds. The council said the decision to refuse three licences was taken “due to the number of buildings with sensitive uses nearby to the location of the premises”.

Avan Projects buys majority stake in Papa John’s, India: Avan Projects has acquired a majority interest in Papa John’s India franchisee, Om Pizza and Eats India. Avan will take over management of the 20 restaurants of Papa John’s in India and has development rights for some regions. It will hold an over 80% stake. Financial details of the transaction were not disclosed. Papa John’s is the world’s third largest pizza delivery company. At the end of the third quarter it had 4,296 restaurants open in 35 countries and territories.

Industry leaders reveal their best business decision: Ten senior industry figures have revealed their best business decision in the current edition of Propel Quarterly magazine. Tim Martin, founder and chairman of JD Wetherspoon, said: “In 1979 I was studying law and struggling to keep up. I decided to try and start a squash club, but didn’t know how to go about finding a site. One night I was having a pint at the bar of the North London Squash Club in Muswell Hill, and I got chatting to a chap who said I should “pop down for a drink” at a recently-opened bar in the area, which had been converted from a bookies. I followed the advice and became a regular at the new bar, never thinking of becoming a publican. A few months later, the guvnor said he was moving on and asked me if I wanted to buy his lease. I scraped together the money and a new career beckoned.” Andrew Guy, chief executive of Ed’s Easy Diner, said: “The best business decision I ever made was accepting an invitation to work in the casual dining restaurant business in the USA when I was in my early 30s. Ultimately as director of operations for a small restaurant group, I lived and worked for six years in Houston and San Antonio, Texas. The opportunity was a great challenge I couldn’t miss out on, and a lot more exciting than the position that I had at the time. The decision influenced the rest of my working life. On my return, I joined Bob Payton as ops director at My Kinda Town, and he wouldn’t have considered me without the US experience. That led to meeting Phillip Kaye and City Centre Restaurants and, via other changes and jobs, finally to Ed’s Easy Diner. One way or another, I’ve sold hamburgers for most of my career, and I’ve never had a concept with a tablecloth.” (See the Winter edition of Propel Quarterly magazine for the full article – a digital version will be sent out later today.)

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