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Morning Briefing for pub, restaurant and food wervice operators

Fri 13th Dec 2013 - Propel Friday News Briefing

Story of the Day:

Whitbread reveals Costa Coffee store economics: Whitbread has revealed the store economics of its UK Costa Coffee sites. The company told City analysts that its managed sites takes an average of £499,000 per annum, cost an average of £226,000 in capital expenditure to open and produce £94,000 per site profit each before central overheads. The company spends £75,000 every three to five years on each site in refurbishments. Franchised sites take an average of £420,000 per annum, producing a £32,000 contribution per annum to Costa, a 10% increase this year compared to the year before. Its Costa Express machines take an average of £28,000 per annum each, making a £6,000 annual profit contribution each. Overall, Whitbread is currently seeing a 35% return on capital in its Costa business, up from 28% in 2010-2011. Internationally, Whitbread told an investor’s day that it expects to have 100 stores in France in five years if the current trial involving six managed sites proves successful. City analysts were told the company “doesn’t always get it right” internationally. In Poland, the company has “expanded too far, and too fast outside of Warsaw” and created brand confusion by running two brands, Coffee Heaven and Costa Coffee. “Our action plan is to close unprofitable stores and move to a single brand,” Costa managing director Chris Rogers said. The company plans to add 500 UK locations in the next five years to take its UK estate from 1,711 sites to around 2,200 in 2018 – and is in negotiations on 180 of these sites. Rogers forecast that the coffee market in the UK would continue to grow. Consumers in Finland get through of 12.2 kilograms of coffee per capita each year compared to 2.8 in the UK.

Industry News:

Bramwell Pub Company set to leave debts of £23m: A report on Bramwell Pubs and Bars by administrator Zolfo Cooper has shown that creditors are likely to be left £23.2m out of pocket after the company’s collapse. Secured creditors are likely to be left being owed £10.4m and unsecured creditors £12.7m. Trade creditors are owed a total of £9.1m. Among the biggest creditors are Matthew Clark Wholesale, which is owed £926,000; Carlsberg UK, owed £496,000; Heineken, owed £443,000; Sky, owed £153,000; Brake Brothers, owed £132,000; and Bibendum Wine, owed £126,000.

Burgers show growth on UK menus: The research and insights firm Technomic has reported that the number of burgers on offer at UK concepts on its MenuMonitor database rose 9.7% from the third quarter of 2012 to the third quarter of 2013. In addition, more restaurants and pubs are serving burgers – 138 UK operators tracked by MenuMonitor offered burgers in the third quarter of this year, up 3% from last year. Technomic’s Christine Lefav Grace said: “What stands out amid the latest crop of burgers on UK menus? For one, more experimentation with spicy flavours.” Mexican, spicy and jalapeno flavours were among the fastest-growing flavours for burgers year-on-year, according to MenuMonitor. With the proliferation of burger joints in Britain, and of burgers themselves on menus across restaurant segments, UK operators will be increasingly challenged to serve burgers that stand out from the crowd and meet diners’ rising burger expectations.

Luminar chief executive rebuts decline report: Luminar chief executive Peter Marks has rebutted a survey that claimed nightclub admissions are at the lowest level for six years. He told Propel: “Our admissions are up by 0.7% year-to-date on both Friday and Saturday evenings. We are very pleased with the way things are going generally – we’re not suffering devastation. Our market is 18 to 24 year-olds and they are very loyal.”

“Unbalanced” beer-dominated pubs worst hit by closures; home socialising over-indexing for under-30s: Pubs that are closing in the UK have a sales mix far more skewed towards beer and cider sales than the survivors do, research has discovered. Pubs that shut between September 2012 and March 2013 had a wet sales mix that was almost 59% beer and cider, 15% spirits. 12% wine and 14% soft drinks, according to the CGA Strategy Outlet Survey. The survivors, in contrast, had wet sales that broke down into just over 40% beer, 18% spirits, 22% wine and just under 20% soft drinks, a reflection of their successful positioning as food-led and family oriented outlets, according to Scott Elliott, director at the research and analysis company CGA Peach. Meanwhile 95% of pubs, CGA found, are now actively trying to drive footfall with events and promotions, up from 66% three years ago. The figures were given by Elliott at a presentation for Walkabout’s suppliers held in Derby this week. The licensed trade is under pressure and competition is fierce, Elliott said, with licensed trade visits under threat from other socialising options. For under-30s in particular, even though their leisure visits per week were greater across all sectors – out for a drink, our for a meal, nightclubs, coffee shops and friends’ homes – than people at large, home socialising was the most popular option, at 1.44 visits a week, compared to 1.00 visits a week for the overall population.

Three new names for Captive Media advisers as firm secures £300,000 in new funding: Captive Media, which supplies “interactive washroom media systems” for on-trade venues, has announced the names of three new members of its Board of Advisors. At the same time the company has announced £300,000 in new funding. The three new advisors are Peter Jackson, formerly of Fosters and Anheuser-Busch; Clive Consterdine, director of sales and marketing at Zonal, and formerly a director at Vianet Group plc and Regent Inns; and Adam Shoefield of Smithfield Agency, the media planning and buying agency. Mark Melford, co-founder of Captive Media, which fits interactive screens above men’s urinals, welcomed the three and said it was “hugely exciting” to have secured substantial new investment to fund the company’s roll-out strategy.

Carlsberg boss – 2013 has provided a lot to celebrate: There has been much to celebrate in 2013, but further opportunities lie ahead for the sector, BBPA board member Benet Slay told MPs and guests at the All-Party Parliamentary Beer Group and BBPA Christmas reception at the Houses of Parliament. Slay, chief executive of Carlsberg UK, said the ending of the beer duty escalator and the cut in beer duty had boosted industry confidence. He also highlighted other major milestones for the industry, such as Pubs are Great and the Let There Be Beer campaign, thanked MPs for their support for industry campaigns, and urged the government to repeat the beer duty freeze in 2014. Slay said: “We persuaded you to persuade the then Economic Secretary, Sajid Javid, to convince the Chancellor of the economic case for ending the damaging beer duty escalator. And end it he did. In fact, as we all know, the Chancellor went further than that and announced the first cut in beer duty in this country since 1959. That’s 54 years ago. Some of us were still in shorts, some in vitro and some, looking around me, maybe not even a twinkle in someone else’s eye.”

Budvar wins Portugal round in Budweiser trademark battle: Czech brewer Budejovicky Budvar has reported that a Portuguese court has refused Anheuser-Busch InBev’s trademark for “Budweiser”, the latest decision in a century-long global battle over the beer name. Budvar and Anheuser-Busch have been fighting over beer trademarks since the 19th century, when both companies started brewing beers called Budweiser, after the Czech town of Ceske Budejovice, or Budweis in German. Budvar said in a statement that the Commercial Court of Lisbon had affirmed a decision by the country’s trademark office to reject Anheuser-Busch’s four applications because of several registrations for the “Budweiser” name that Budvar already owned in the country.

Company News:

Future of Jamie Oliver’s Union Jacks brand in doubt: The future of Jamie Oliver’s Union Jacks is in doubt, according to The Daily Mail. The four-strong brand, which serves flatbread pizzas and was created in partnership with Chris Bianco, has not performed in line with expectations. Asked by The Daily Mail about their impending closure, a spokesman for Jamie Oliver told the newspaper: “We are exploring various options with regard to Union Jacks.”

Moleface Pub Company owner re-opens Nottingham restaurant: Entrepreneur Simon Patterson, who founded Fat Cat Cafe Bars and co-founded Moleface Pub Company, has re-opened the Sinatra bar and restaurant in Chapel Bar, Nottingham. The bar closed in October, with its former owner blaming car parking charges in the city for a loss of trade. Patterson said: “I knew Sinatra very well from my time at Fat Cat. I used to be very envious of its frontage and outside space, especially in the summer. I’ve been looking for something else to do for myself for the last five or six months. I was approached to say Sinatra was up for grabs, and made an offer. Our head chef used to work for me at Fat Cat, so I know the food is good. But we are also trying to do what Sinatra didn’t before, which was have more of an area where people can come for a coffee and a drink. Another thing that’s massively different is, we now allow children. Before, they weren’t allowed either inside or out, but we now have a children’s menu and also do Sunday roasts.”

SA Brain opens 38th Coffee #1: The Cardiff-based brewer and pub owner SA Brain will open its latest coffee shop in Swansea today, the 38th since the first Coffee #1 opened in Wood Street in 2001. The company said: “For those of you already familiar with our stores, you can expect the usual cosy decor and comfy seating with unique artwork and the welcoming ‘living room’ feel. At Coffee #1 we’re all about excellently prepared, gourmet coffee made exactly how you like it.” The site is at Unit 4a, 26-36, Princess Way, SA1 5HE.

Abokado targets another five sites by March 2014: The healthy food chain Abokado is to target another five sites by March, taking its estate size to 24. The company opened its eighth site this year on Cutler Street, in the City of London, which brought the total to 19. One of the new sites will be in premises near Aldgate, in the City, which will be open in February. Founder Mark Lilley said: “We’re still on track to achieving 24 stores by March 2014. Cutler Street is a cracking site that helps to strengthen our presence in the City. It used to be a Pret and, although in a secondary location, has great office density. This is the type of site that we understand well and have historically made very good returns on. We have a number of other sites in advanced legals or under offer, so we’re well placed for 2014. Our breakfast and coffee sales continue to grow and overall our trading remains strong.”

Artisan coffee shop chain open fifth site: Rubens, the north west of England family-owned artisan coffee shop chain has opened its fifth site, in Albert Docks, Liverpool. The company also has sites in Heswall, Mold, West Kirby and Bromborough.

Wagamama founder rumoured to be opening Turkish flatbread concept: Wagamama founder Alan Yau is rumoured to be adding to his restaurant portfolio with a Turkish flatbread concept on Shaftesbury Avenue in Central London, according to restaurant consultant Adam Hyman. Yau is due to open his Chinese gastro-pub concept, Duck & Rice, at the Endurance pub in Soho, London in the new year. 

Waffle or Wine concept opens in Bedford: A new concept, Waffle or Wine, has opened on Bedford High Street. The venue serves flavoured waffles made from dough rather than the usual liquid batter. Tristan Haynes, who came up with the business idea, said he took his influences from many years of living and travelling in continental Europe going to places such as Belgium, Paris, Sicily and Germany. He said: “I have spent a lot of my life in Europe and have been very affected culturally by that and wanted to bring a bit of that to Bedford.”

JD Wetherspoon secures second Republic of Ireland site: JD Wetherspoon has exchanged contracts to purchase its second pub in the Republic of Ireland. The company has purchased the former Newport Cafe in Paul Street Plaza, Cork. Wetherspoon is to invest more than €1.5m (£1.26m) developing the building. The site, which is currently shut, will require both planning and licensing permission. At present there are no on-site or opening dates. However, Wetherspoon aims to have the new-look pub open by April 2014. Wetherspoon’s founder and chairman, Tim Martin, said: “I am delighted that we have secured our first pub in Cork and our second in the Republic of Ireland. We are looking at other sites throughout the Republic of Ireland and hopefully they will come to fruition in the near future.”

Todiwala opens third restaurant: Chef Cyrus Todiwala is to open his third restaurant next year. The new site, to be called Assado, at 157 Waterloo Road in Lambeth, South London, will focus on Portuguese cuisine. Todiwala already owns and runs Café Spice Namaste, near Tower Bridge, London, and Mr Todiwala’s Kitchen, at Heathrow Airport. He also has a range of condiments and sauces called Mr Todiwala’s. Meanwhile his sons run a café in Victoria Park, Hackney, East London on his behalf.

Wagamama signs 20-year lease for Whiteley site: Wagamama has signed a 20-year lease for a 3,500 sq ft restaurant in the first phase of the Whiteley retail and leisure destination in Hampshire, which opened in May. The restaurant joins a line-up that includes Caffe Nero, Chimichanga, Costa Coffee, Frankie & Benny’s and Subway among others. In early 2014, work will start on Whiteley’s second phase, which comprises 30,000 sq ft of additional restaurants and leisure as well as a 30,000 sq ft nine-screen cinema which has been pre-let to Cineworld. Claire Barber, head of shopping centre asset management for British Land, said: “Whiteley is continuing to establish itself as a leisure destination in its own right and it is fantastic to have another quality brand on board.”

Lap-dance plan rejected at Enterprise pub: Plans for a lap-dancing club at a pub in Doncaster town centre have been rejected after concerns about the effect it would have on the work carried out at a neighbouring women’s centre. Enterprise Inns had applied to change the Loaded pub at 54 Printing Office Street into a lap-dancing club, but Doncaster Council members agreed the site was “wholly inappropriate”. The move was backed by South Yorkshire Police’s Superintendent Peter Norman and the Director of Public Health, Dr Tony Baxter, who both said the venue would have a detrimental impact on the women’s centre’s services and alter the perception of vulnerable women, significantly harming the service the centre provides.

Di Maggio plans eighth opening in Aberdeen: Di Maggio, which operates seven restaurants in Scotland, has won licensing consent to open in Union Square, Aberdeen. The tapas restaurant Cafe Andaluz saw its application to sell alcohol from a currently vacant upstairs unit in Union Square shopping centre approved by Aberdeen City Council’s licensing board. A spokesperson for the business said: “We look forward to bringing Cafe Andaluz to Aberdeen in the middle of next year.” Licensing board convener Marie Boulton said: “We are delighted – any restaurant is welcome in Aberdeen and a restaurant culture is something the licensing board likes to see develop in Aberdeen.”

Jonathan Neame – premiumisation is the key for us: Shepherd Neame’s chief executive, Jonathan Neame, has identified “premiumisation of the pub experience” as the key for the company as it faces the structural challenge of declining beer sales. He told Kentonline: “We have the strategic challenge of being in a market where our core activity of beer consumption is declining quite fast. So we are constantly evolving our strategy to find the right way to develop our business. It is about a traditional premium offer in great buildings and great surroundings, hopefully with a more personalised experience. It is not all about hotels. It is about investing to raise the quality of experience for our customers – it is the premiumisation of going to the pub. Overall the market is in decline and we have been developing our portfolio in growth areas such as craft beer, exports, food and premiumisation. Over the last five years we have been investing at a higher rate than any other period. Many of our major competitors have also been selling off high-quality pubs. We have been able to buy high-quality outlets individually and cherry-pick them. In the previous years, people may have been selling 30 pubs and you had to buy them all, even if you only liked three. In the last five years we have bought 26 pubs and every one has been individually selected. That has given us the chance to get rid of the weaker 51. Now we are entering a new phase, to bring our existing pubs up to a premium standard.”

Coffee shop and movie retail concept opens: A new concept, Kuni’s Coffee and Comics, opened in Daventry, Northamptonshire yesterday. The comic book and coffee shop celebrated its opening day with costumed characters in the store. Owner Bryan Cooney said: “We hope that this will be a vibrant and bright space for people to come and relax and enjoy a coffee. This is a cafe which will be very different to anything else in the town. There will be a coffee shop, and a retail side which will be selling merchandise from comic books, the latest movies, Manga and Anime. This is going to be something that will interest the younger people in the town but we don’t want it to be something just for youngsters. I hope it will appeal to everyone.” The outlet will stock a wide range of drinks, food and American candies.

Ricky Gervais joins campaign to save Hampstead pub: Comedian Ricky Gervais has joined campaigners backing a petition to save The Old White Bear pub in Hampstead, North London from being turned into a six-bedroom house. The group, formed by local residents, has launched a written and online petition, started Twitter and Facebook accounts, and is planning a “flashmob” protest in Hampstead High Street on Saturday, with people dressed in white bear costumes to raise awareness of plans to close the pub, which has been trading on the site since 1704. The present 19th-century building was sold by Punch Taverns in the summer for £1.575m to Braaid Ventures, an Isle of Man-based property developer. Braaid submitted a planning application for the conversion to Camden Council last Monday after drooping beer sales left the business unprofitable, said the developer’s managing agent, Simon Grainger

Theakston’s appoints third head brewer in 40 years: The Yorkshire-based family brewer T&R Theakston has appointed only its third new head brewer since 1973. Mark Slater, currently at St Peter’s Brewery in Suffolk, takes over at the end of the year from Bill Wilson, who is retiring after 21 years as head brewer at Masham. Simon Theakston, executive director at the company, said: “We are all absolutely delighted that Mark is joining us. At a time when traditional cask and bottled beers in Britain has never been so popular and demand for innovation and variety so high, Mark brings with him an unrivalled brewing reputation perfectly placed to take Theakston’s forward in the next chapter of our brewing history. Mark has a hard act to follow. Bill Wilson has done an outstanding job, being at the brewing helm through probably some of the most dramatic times in our company’s recent history. After we bought the company back from S&N ten years ago, Bill oversaw the biggest expansion project we’ve ever completed, effectively tripling our capacity to cope with growing demand.” Slater said: “I am thrilled at the prospect of becoming head brewer at Theakston’s, a company which has an enviable reputation in the UK ale market. It is rare that an opportunity such as this comes along and I very much look forward to getting started.”

Wetherspoon wins hours appeal in Stamford: JD Wetherspoon’s appeal to extend the opening hours of the £1.2m pub development planned for the former Mercury newspaper office in Sheep Market, Stamford, Lincolnshire was approved by South Kesteven District Council on Tuesday. The district council’s development control committee granted the pub chain’s appeal for it to be allowed to open from 8am to midnight Sunday to Thursday and 8am to 1am Fridays and Saturdays. Wetherspoon’s had originally been granted planning permission in June to develop the venue and create 50 jobs on the condition that the it would only open from 8am to 11.30pm Monday to Saturday and 8am to 11pm on Sundays. The original opening times were suggested by council planning officers to prevent disturbance to residents in the neighbouring buildings. But district council planning officers changed their minds and recommended the extension of the opening hours be approved. They said extending the hours would “not give rise to sufficiently increased levels of noise and disturbance in this town centre location.” Wetherspoon’s successfully argued that it should be allowed to have the same opening hours as the nearby London Inn, which opens until 1am at weekends, and other pubs and bars in the town centre.

Third bar for Leeds pub entrepreneur: Geoff Thornton, who runs the Pour House on Canal Wharf in Leeds and the Epernay champagne bar in Leeds city centre, has opened a third venue, the Atlas pub, in the grade two listed Atlas House in King Street, Leeds. Thornton said: “I’ve seen how successful Pour House is and thought this was an opportunity for me. We’ve got the key Leeds business people in this area.” About £130,000 has been spend on the refurbishment of the building, Thornton said: “It is a beautiful building so that’s 75% of the work done! It lends itself beautifully to what I wanted to do here,” he said. Thornton said he was also looking at the First Direct Arena area as a “viable business option” for further investment in Leeds. “It’s such an opportunity,” he said. “There is a huge amount of trade to be had there.” Thornton said the opening of Trinity Leeds this year has hurt the independents in the city and his champagne bar, Epernay, saw a huge chunk of trade disappear. However, he said, the Pour House venture, within the old Granary building, overlooking the canal of Granary Wharf, has been trading well and “things are picking up again.” The Atlas House deal was completed by Fox Lloyd Jones.

Administrators in ‘advanced talks’ over sale of Newquay bar after owner’s collapse: Administrators brought in after the collapse of the Cornish bar and nightclub operator SGP Leisure (SW) say they are in “an advanced stage of negotiations” over the sale of one of its outlets, Bar Help in Newquay. SGP Leisure (SW) entered administration on 13 November 2013 when Andrew Sheridan and Gareth Morris, partners at the restructuring and recovery firm FRP Advisory, were appointed joint administrators. Its principal trading sites, which both closed before it went into administration, were Bar Help and the Salt Nightclub, both in Newquay. Morris, said: “We are now looking to sell its assets and are at an advanced stage of negotiations in relation to transferring Bar Help to new ownership. Bar Help and Salt are well known Newquay leisure venues which have, over the years, enjoyed a loyal following for locals, clubbers and holidaymakers alike.”

McDonald’s in second attempt for new York drive-thru: McDonald’s is making another attempt to open a new drive-through restaurant on the edge of York, after it withdrew an initial application earlier this year. The new outlet, on Monks Cross Drive, would have space for 96 customers and would replace McDonald’s existing restaurant at Monks Cross Shopping Park, which its agent, Planware said was not big enough. Planware said the initial scheme for a restaurant on Monks Cross Drive had been put on hold because of the requirement for landscaping and newt fencing. The restaurant is expected to employ at least 65 full and part-time staff, which could increase if trading is successful. A decision on the application is expected from City of York Council next month.

Honest gives away free burgers at new opening: Honest Burgers is giving away free burgers to the first 500 customers through the door at its latest opening tomorrow (Saturday) in King’s Cross, London. The opening will take the company up to five outlets, all in London, with others in Brixton, Soho, Camden and Portobello Road in Notting Hill. The offer is a step up from the opening of the fourth branch, the Portobello Road store, in October, when the chain gave away 400 burgers. Honest Burgers was founded in 2011 by the former operations director of Bill’s, Dorian Waite. Earlier this month it was revealed that Honest had secured £1m in funding from Santander to help power its expansion plans. The funding consists of traditional lending plus £500,000 of growth capital finance from the bank’s Breakthrough programme, which provides finance at a low rate to British businesses with less than £25m turnover Waite told The London Evening Standard: “Accessing finance without giving up a slice of your business is quite difficult for businesses of our size.” A sixth site has been lined up for the chain near Oxford Circus in London.

Obika opens in Soho with pre-Christmas pop-up: Obika, the Italian “mozzarella bar” restaurant chain, has opened its fourth outlet in London, in Poland Street, Soho, with a special pre-Christmas pop-up in the basement offering free snacks to Christmas shoppers. The pop up panettone lounge is in the restaurant’s wine cellar, and Obika is giving away free panettone from Piedmont with either custard, whipped cream or chestnut marmellata, as well as free hot chocolate, Vin Brule or a glass of prosecco. The lounge will be open every day until Christmas Eve from 3pm to 7pm. The restaurant itself serves Mozzarella di Bufala from artisan producers in Campania with grilled aubergine parmigiana, rosemary-scented beef tagliata or stone-ground flour pizzas. The chain’s other restaurants in London are in South Kensington, Charlotte Street and Canary Wharf. It also has ten restaurants in Italy, three in the United States and others in Japan and Dubai.

Starbucks lines up Witney opening: Starbucks looks set to finally open in Witney, Oxfordshire after years of uncertainty over whether the coffee chain would come to the town. The multinational has applied to move into the unit currently occupied by Evans in the Woolgate Centre in April. The application comes five years after the move was first mooted for the yet-to-open Marriots Walk, Welch Way. Hoarding bearing the firm’s brand went up but the unit never opened at the £50m development. The unit is still empty. A planning application has gone to West Oxfordshire Council for the Starbucks outlet, opposite an existing Costa coffee shop.

Franchise developer forms investment company: Fransmart, the American franchise development company that launched franchise programmes for 5 Guys Burgers and other up-and-coming US restaurant chains, has formed a company to make early-stage investments in emerging restaurant concepts. Dan Rowe, the founder and chief executive of Fransmart, said the new company, FranInvest, will serve as an investment vehicle for unique, emerging restaurant brands that have the clear potential to become segment leaders in the restaurant industry. Rowe said: “I’ve had great exposure to incredible concepts whose growth was held back by capital limitations. Young brands who have the right combination of unique branding, strong positioning and exceptional food get distracted when they are cash-strapped, and operations inevitably suffer. I can only imagine how much faster even our most successful brands could have grown if they had easier access to growth capital in the very early days.” FranInvest plans to provide equity funding ranging from $250,000 up to $2.5m. It will actively seek brands in target segments that have the potential to grow into sizeable chains. Rowe said: “Our combination of experience in the restaurant franchise industry and private equity will prove extremely valuable to our chosen restaurant concepts in the early growth stage. The benefits will go beyond just a monetary investment; these young brands will be exposed to a wealth of knowledge and growth tools to expand their concept on a national, or even international level.”

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