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Mon 3rd Feb 2014 - Propel Monday News Briefing

Story of the Day:

Sector set for strong January results as companies report robust like-for-likes: The sector looks likely to have seen very strong January trading as smaller companies begin to report robust like-for-likes in the month, driven by the snow-hit comparables of a year ago and economic recovery. TLC Inns, the six-strong pub and restaurant operator led by Steve and Jo Haslam, has reported 20% like-for-like sales growth in the month, led by their Grand Central, Basildon US diner concept, which achieved 30% like-for-like growth. Meanwhile, seven-strong coaching inn company Bulldog Hotel Group, led by Kevin Charity, has reported a 22% increase in like-for-like sales during the month. He said: “January has been very strong with a 22% increase in like-for-like sales and 16% up on budget.” Last week, Deutsche Bank leisure analyst Geof Collyer reported that JD Wetherspoon had seen a ten-day period when like-for-like sales growth hit double digits last month. Morgan Stanley leisure analyst Jamie Rollo suggested that even Mitchells & Butlers, which has struggled to match its peers like-for-like sales growth in recent times, saw 4.2% like-for-like sales growth in the most recent nine weeks of Quarter One, excluding the three weeks of Christmas, boosted by comparisons with snowy weather in January 2013. He said: “Comps were easy in the rest of the period due to snow last year, with like-for-like sales -6.5% in the last three weeks of Quarter One 2013.” The benign effect on sales in the UK of wet but mild weather in January is a contrast to the US where, across much of the eastern half of the country, bitter cold and snowstorms in recent weeks have put a chill on sales at restaurants, bakeries and coffee shops – some businesses report sales cut in half.

Industry News:

NPD Group’s Cyril Lavenant to present at first Propel conference of 2014: Cyril Lavenant, director of foodservice UK at market research firm NPD Group, will explain the key UK foodservice trends – and how the market compares with Europe and the US – at the first Propel Multi Club Conference of 2014. The event will be held on Thursday 13 March at the Lancaster London Hotel, Lancaster Gate, central London. Multi site pub, restaurant and foodservice companies can claim up to two free places each. E-mail jo.charity@propelinfo.com to reserve places.

World Cup extra hours bid rejected by the government: The government has refused to give the nation’s pubs a general dispensation to stay open an extra four hours on the opening and closing weekends of the World Cup tournament in Brazil. England will kick off their World Cup campaign against Italy on 14 June at 11pm UK time – just as most pubs shut. The Home Office was asked to extend licensing times on a national basis from 11pm to 1am on June 13 and 14 and again on July 11 and 12 – in the same way pubs stayed open later for the Royal Wedding and Diamond Jubilee. The government can relax licensing hours for occasions of “exceptional international, national or local significance”. But Home Office minister Norman Baker says he does not consider the World Cup is a national celebration and turned down the request. Graham Brunskill, of the Football Supporters Federation, said: “With many England fans priced out of flying to Brazil by the huge cost, it’s a great shame that pubs don’t have more freedom to stay open for games.” Pubs can still apply individually for temporary licences, but at a cost of £21 per application the total cost of applying for these nationally is put at £738,000. Baker said: “Premises which wish to open longer during this time can do so by applying for a Temporary Event Notice extension. This gives local authorities and police an opportunity to feed into the decision-making process, allowing them to allocate resources if necessary.”

Heston Blumenthal closes Dinner after norovirus outbreak: Chef Heston Blumenthal has closed his Dinner restaurant in Knightsbridge for a week after an outbreak of the Norovirus vomiting bug. He said: “My goal has always been to pursue perfection and to amaze our guests with taste sensations beyond their imagination, rather than expose them to the risk of a really nasty couple of days of heaving.”

Pub landlord ordered to pay £65,000 legal costs after breaching Premier League copyright: A pub landlord has been ordered to pay £65,000 in legal costs for breaching the Premier League’s copyright by showing football matches using a foreign satellite card authorised only for private use. The Premier League took Anthony Luxton to court after various matches were shown at the Rhyddings pub in Swansea. Mrs Justice Rose ordered Luxton to pay £65,000 in legal costs, pending final assessment of the sum he owes. Luxton said that the League’s claim foundered on the rock of European Union free trade rules, but this was rejected. Luxton’s solicitor Paul Dixon said after the case: “We will be looking very closely at the possibility of an appeal.”

Company News:

The Chapman Group reports dip in profits: Pub and hotel operator The Chapman Group, led by Chris and Delia Chapman, has reported a dip in profits in the year to 31 March 2013. Turnover rose 3% to £8,042,533, but pre-tax profit dropped to £302,505 from £721,292 the year before. The company operating profit dipped to £1,083,158 from £1,524,183 the year before. It stated: “As the gross profit percentage has remained consistent at about 78% the decrease is attributable to an increase in administrative expenses. Return on capital employed has decreased to 4.78% from 6.60% (and) the company continues to work hard to reduce costs.” The company said Colliers International had valued its freehold property and fixtures and fittings at £23,820,000 in May 2012. The company stated: “However, when looking at each income-generating unit separately, in our opinion, some of these assets appear to be impaired. This would result in an impairment write-down of £1,574,881 and an equivalent reduction in retained earnings.”

Tiger Bills signs master London franchisee and agrees heads of terms with Indian hotel: Lifestyle Hospitality Group, owner of Tiger Bills, has signed a contract with a new master franchisee for the London area – and also agreeded heads of terms with a major hotel in India on the same day. The new master franchisee for the London area, whose name is yet to be revealed, has extensive experience in running multiple franchises. He plans to open nine Tiger Bills restaurants in the London area over the next three years and is actively seeking both sub-franchisees and suitable property. The news follows the successful launch of Tiger Bills in Birmingham – the first place in the Midlands to welcome the bar/wok/grill neighbourhood dining concept – and also follows openings in Whitley Bay and Consett in the north east in 2013. Meanwhile, Tiger Bills is set to open another site in Worcester. Lifestyle Group chief executive James Eyre said: “This is a major deal for the Tiger Bills franchise team. We are really excited about bringing the East-meets-West brand to the capital. Recent launches elsewhere in the UK have proved the popularity of the cuisine and overall dining experience offered by the Tiger Bills brand, with over 200 people at Consett’s launch – it was also fully booked at weekends immediately after.”

Planners back £2m Hungry Horse in Scotland: Planners have backed a Greene King proposal to build a £2m Hungry Horse on empty land at Victoria and East India harbours in Greenock. A final decision will be made by councillors when they meet this week. The 4,100 square metre ‘L’ shaped pub will feature a restaurant, bar area, children’s play park and 80 car parking spaces. Greene King proposes to use decor tailored to the local area – there are plans for a special shipbuilding mural and waterfront themes throughout the premises, commemorating the town’s heritage. The project was backed by the public during a consultation event last April.

Starbucks plans first drive-thru in Milton Keynes: Starbucks is planning the first drive-thru in Milton Keynes. Starbucks wants to build a 2,000 sq ft drive-thru at The Place retail park opposite Network Rail HQ and near Milton Keynes Central Station. The company is waiting for planning approval from Milton Keynes Council. James Goodliffe, head of real estate at Starbucks UK, said: “We are committed to opening more drive-thru sites across the UK, giving our customers the choice for great coffee on the go through the drive-thru lane, or a welcoming store environment to drink in.”

TGI Friday’s paid seven-figure premium for Liverpool site: TGI Friday’s paid a seven-figure premium to acquire the Pesto site on the restaurant terrace at Grosvenor’s Liverpool scheme. The precise seven-figure premium remains undisclosed but it is believed to be the highest paid in the north west of England and possibly for any restaurant unit outside London. The offer effectively acted as a ‘site securing payment’, with agreement to close the business down and strip it out upon completion. The 5,785 sq ft restaurant, which was trading successfully for Pesto, will be completely refurbished and is expected to be one of eight new TGI units this year. The unit extends to 2,949 sq ft at ground floor with a mezzanine of 2,836 sq ft. TGI has re-geared the lease with Grosvenor – Pesto signed a 25-year lease in 2009. Jeremy Collins, director of Jenics, which acted for Pesto, said: “The offer was so substantial that it was difficult to reject and the proceeds will enable Pesto to reinvest in the roll-out of their Pesto in the Pub concept, which is going from strength-to-strength across the north west and Midlands.” Last year, Jenics advised on the disposal of Pesto’s Manchester Deansgate site following an unsolicited approach by Byron. CBRE acted for TGI Friday’s, which has over 60 restaurants across the UK.

Dating website partners PizzaExpress for Valentine’s Day ‘pizza parties’: Dating website mysinglefriend.com has teamed up with restaurant chain PizzaExpress to host two Valentine’s Day ‘pizza parties’ on 14 February. The partnership sees the website, founded by TV presenter Sarah Beeny in 2004, offer its members an evening of pizza making, Prosseco and the chance to meet other single people. The events, which are exclusively for mysinglefriend.com members, will take place on Valentine’s Day in Birmingham’s Brindley Place and London’s Bruton Place restaurants. Beeny said: “We wanted to offer our members a unique Valentine’s Day event, so joining forces with PizzaExpress gave us the perfect platform to do that. All that kneading dough and decorating pizzas is the perfect conversation starter and who knows where all that heat in the kitchen could lead!”

McDonald’s blocks Costa Coffee drive-thru in Edinburgh: McDonald’s has blocked a plan to build a new Costa Coffee drive-thru. Insurance firm Aviva wanted to earn an extra £85,000 a year by renting out part of Corstorphine Retail Park in Edinburgh to Costa. But McDonald’s said taking away parking places to build the new coffee outlet, and at the same time increasing traffic, would not work. Aviva Investors Pensions Ltd raised an action at the Court of Session in Edinburgh against McDonald’s Restaurants Ltd. The court heard that McDonald’s’ lease included a clause that Aviva could only go ahead with the Costa coffee shop plan if McDonald’s consented. But the lease also said: “Such consent not to be unreasonably withheld or delayed.” Aviva said McDonald’s was being unreasonable and put up its own expert evidence about the car parking situation, but judge Lord Malcolm rejected their claim. A McDonald’s spokeswoman said: “We are pleased that the judge agreed with the facts our expert presented and found in our favour.”

Nando’s and Wagamama confirm Aylesbury opening dates at The Exchange: Wagamama will be opening at the former home of The Slug & Lettuce by the Odeon cinema on 12 February. It will neighbour chicken eatery Nando’s, which is taking up part of the old La Tasca unit and will open on February 19. A third unit has been created between Wagamama and Nando’s and, although nothing has been confirmed yet, it is strongly believed that Italian restaurant Zizzi’s will open there. Cushman & Wakefield acted for the landlord on “The Exchange” scheme, which a redevelopment of two old restaurant units which the landlord took back from La Tasca and Slug & Lettuce and were then comprehensively redeveloped creating three new restaurants units to create a new restaurant quarter for the town.

First new distillery in Dublin for 125 years planned: The first new whiskey distillery in Dublin for 125 years is being planned, at a cost of £8.2m. The Teeling Whiskey Company is due to open in The Liberties in Dublin at the end of this year. It is expected to have a capacity of 500,000 litres a year. Jack Teeling, founder and managing director of the Teeling Whiskey Company, said: “Dublin whiskey was at the forefront of the last golden age of Irish whiskey. We aim to revive the Spirit of Dublin by putting Dublin and Teeling Whiskey firmly back on the map again. It is unquestionable that there has been significant growth in the Irish whiskey market worldwide, particularly in the US, and we want to be the leaders in creating a bright new future for Irish and Dublin whiskey.”

St Austell pub wins best Cornwall pub award for the second year in succession: The Pandora Inn at Restronguet Creek, a St Austell Brewery pub, has won Gold at the 2013/14 South West Tourism Awards for the second year running. It is the second time the Pandora has won Gold at both the Cornwall and South West regional awards having also triumphed in 2012/13. Since being completely gutted by a fire in 2011 and reopening in 2012, The Pandora Inn has cemented its position as one of the finest gastro pubs in the region. Head chef Tom Milby has worked with managers Catherine and Lester Croft and landlords John Milan and Steve Bellman to develop the pub’s reputation for excellent food, which makes the most of the fresh local produce available on its doorstep.

Thatchers in deal with Coopers to export draught cider to Australia: The Somerset cider maker Thatchers has signed a deal with the Australian family brewer Coopers to export draught cider to Australia. Thatchers Gold draught cider will be shipped in tankers from Somerset to Coopers’ brewery in Adelaide. Coopers will then put the cider into kegs and distribute it to bars across Australia. Thatchers Gold will also be packaged and sold to the on-trade and off-trade through Coopers’ distribution company. Both Thatchers and Coopers are family-run firms. Martin Thatcher, managing director of Thatchers Cider, said: “Cider is experiencing strong growth in Australia, and is being adopted particularly by a new generation of drinkers.” Dr Tim Cooper, managing director of Coopers, said: “We expect Thatchers Gold will have a major impact on the market in Australia. It is highly regarded as one of the world’s best ciders and is a neat fit within our portfolio of quality beers.”

Ta Bouche owner looks to open cocktail bar and restaurant in Ely: The company behind the La Raza and Ta Bouche cocktail bars in Cambridge is looking to open a cocktail bar and restaurant in the former Maltings restaurant in Ely. The Maltings restaurant and bar, in Ship Lane, is owned by the local council and was previously operated by Compass Group, but was criticised by locals for its limited opening hours, which saw it closed throughout the winter. Compass gave up the tenancy in the autumn of 2012, since when it has been empty. Now La Raza Ltd, which runs an events company, as well as the two Cambridge bars, La Raza in Rose Crescent and Ta Bouche in Market Place, has applied to East Cambridgeshire Council for planning permission to turn the 120-seat Maltings premises into a restaurant and cocktail bar under the Ta Bouche name with a 2am licence. In its application, the company said: “A demand has been identified for a successful food and drink venue along the river walk through the day and evening. The area is used by many tourists and families during the day. Ely does not have many late night venues and so a cocktail bar until 2am is proposed. The outdoor seating area to the back of the building will be identified as a children’s area during the day and a play zone will be provided.”

Liquid/Envy Nightclub in Newcastle to be demolished for student flats: Luminar’s Liquid/Envy site in Newcastle could be demolished to make way for 305 student flats on New Bridge Street. Plans to build three new blocks for 305 students at New Bridge Street have been submitted to Newcastle City Council. Developers want to knock down the Liquid/Envy Nightclub, which at one point was home to the Oxford Galleries ballroom and later hosted clubs Tiffany’s, Ritzy, Ikon, Envy, Studio 49, Central Park and Diva and create seven, nine and 11-storey towers in its place. 

Artisan Burger Co will offer guests Premium beer brewed by West: Better burger concept Artisan Burger Co, currently seeking investment on Crowdcube, has entered into an exclusive deal with West Brewery in Glasgow for beer supply. West is the only UK brewery to produce all of its lagers and wheat beers in accordance with the Reinheitsgebot, the German Purity Law of 1516, merging centuries of traditional practice with state of the art equipment. Artisan co-founder Rav Singh said: “We are extremely excited to be working with Petra and her team. We are passionate about food and drink combinations and given the range of beers West offer, we believe we have selected one the best breweries in the UK.” Meanwhile, Artisan Burger Co has hired Roche Communications to handle the public relations for the launch of its first site in April 2014.

Simon French – we’re expecting around 2% like-for-like net income growth at Enterprise: Panmure Gordon leisure analyst Simon French has forecast 2% like-for-like next income growth at Enterprise Inns when it reports results on Thursday (6 February). He said: “We expect the group to report circa 2% like-for-like net income growth for the four months to the end of January, reflecting an easy comparative of -4.4% influenced by cold weather and the collapse of Waverley TBS. We expect no change to consensus forecasts of circa £120m PBT – we are modestly below consensus, at £118m PBT. The stock trades on a CY 2014E adjusted EV/EBITDAR of 10.4x and offers no yield. We think this fully captures the risk/reward ratio and therefore reiterate our ‘Hold’ recommendation and 133p Target Price. Simon Townsend takes over the reins as chief executive on 6 February and will have a tough act to follow in current chief executive and founder Ted Tuppen. H2 performance is against a tougher comparative but should be boosted by the FIFA World Cup. Government intervention in the sector through the form of a statutory code remains an unwelcome but unlikely prospect.”

Sommerin to finally open long-awaited new restaurant: The Michelin-starred chef James Sommerin has announced he will finally open his new fine-dining venue on the Esplanade in Penarth, South Wales on 25 April, more than six months later than first planned. However, the 70-cover, 3,500 square foot restaurant, at Beachcliff, a luxury conversion of a historic Edwardian building overlooking the Bristol Channel, already has 350 bookings. Sommerin, former head chef of the Michelin-starred Crown at Whitebrook, Monmouthshire, which closed last March, was initially hoping to open up last autumn, a plan that was then put back to January. He told Wales Online: “To say it’s a relief that we’ve got an opening date is an under-statement.” Sommerin said he had designed all of the inside detail from scratch. “It’s going to be really beautiful,” he said. “We are going to have lots of bespoke pieces for the restaurant and we have used locally-sourced materials. It is such an iconic building that to make it any different would be sacrilege.”

Manchester brewery increases capacity six-fold: The Brightside Brewing Company in Radcliffe, Manchester has increased its potential output six-fold after installing new brewing kit with a capacity of 15 barrels at a time. The brewery, which started in 2010 in the back room of a bakery in nearby Walshaw, intends using the new kit for its best-selling beers, which include session ales called Odin and The Beast, and continue with its original 2.5-barrel brewery for the rest of the range. The brewery, run by Neil and Maxine Friedrich and their children Lance and Carley, moved to Radcliffe last year. 

Restaurateur’s son reopens village pub: The son of a long-established restaurateur on Teesside has put £250,000 into reopening a village pub shut for nine months. Ross Serino opened The Tuns, formerly The Three Tuns, in the village of Sadberge, near Darlington, with his mother and partner after a refurbishment project. Serino’s father Vincenze has run the Santoros restaurant in Yarm, near Stockton, since the 1970s. Serino said: “For years I’ve wanted to run my own place. The Tuns at Sadberge was an ideal opportunity – in the past it has been a really popular village pub but, like so many, had been forced to shut and fallen into disrepair. From the moment we started work on the pub, the support and enthusiasm from people living in the village has been just fantastic.”

Marston’s applies for Whitby pub-restaurant and hotel: Marston’s Inns and Taverns has submitted a planning application for a pub-restaurant and a 24-bedroom lodge/hotel on land at Whitby Business Park in Yorkshire. The application includes permission for access off Cholmley Way, Whitby, parking and associated works. As part of the application, Marston’s told Scarborough Council that each of its pubs typically employs between 50 and 60 staff, with 20 of those in full-time positions. A consultation will now take place until 19 February, with a decision due to be made on 29 April.

Nicholson’s pubs to sell beer from rock band Elbow: A second beer created by the rock band Elbow, this time brewed by Marston’s, will be going on sale in Nicholson’s pubs from 4 February. The band’s first beer, Build a Rocket Boys!, named after their 2011 album, was brewed by Robinson’s of Manchester, and sold around 2,500 barrels in two years. The second beer is called Charge, after a track on the band’s sixth album, “The Take Off And Landing Of Everything”, due to be released in March. Band member Guy Garvey said: “With the help of the good people at Marston’s, we’ve created a beer with a spicy American feel that still retains the class of a traditional British real ale. It’s the perfect accompaniment to the album.” Charge is described as a “refreshing golden pale ale, with a session-friendly abv of 4.2%”. The band is said to be planning a series of exclusive pub gigs for fans to listen to the new album and taste the beer, which will be available in Marston’s own pubs from March.

Developer puts plans for £7m Leamington food quarter before council: Plans to turn the Regent Court development in Leamington Spa into a specialist food quarter by transforming all the retail units there into eateries are due to go before Warwick Council tomorrow (Tuesday). The move was prompted by the arrival last July of a Nando’s outlet, which joined the centre’s existing restaurants, including Wagamama, Strada and Starbucks. New River, owner of Regent Court, is said to have had “a string of strong enquiries” from other major operators wanting to open in the development. Bill Wareing, of the Leamington-based property agents Wareing & Company, who is acting for New River, said: “Regent Court lends itself very well to a food offer. It has the right environment and suitable units, and the success of Nando’s has illustrated that perfectly. We have Turtle Bay signed up and very strong interest from at least three other operators who like not only the concept of a restaurant quarter, but also see this as the perfect way to move into the Leamington market. It would require considerable investment and the owners are prepared to make it because they see that is where the future best lies for the development and the town.” The Caribbean restaurant chain Turtle Bay is currently fitting out a unit in the development, and expects to open in March. 

Prestbury sells 32 Punch pubs to Cerberus: Property firm Prestbury Holdings has sold 32 Punch Taverns pubs to US-based private equity firm Cerberus Capital Management. The value of the deal is thought to be around £30m. The second acquisition of a batch of Prestbury pubs by Cerberus – it acquired 102 Spirit pubs owned by Prestbury last week for £170m – means the US private equity firm has invested around £200m in the past week. The £200m spend follow the acquisition of the Lloyds Bank stake in Admiral Taverns at the start of 2013, bringing the total Cerberus investment in the pub sector to around £400m. The acquisition takes the total number of pubs owned by Cerberus to above 1,300, including the 1,200-strong Admiral Taverns estate. Property Week has reported that Blackstone and Patron Capital were among those that showed an interest in the Prestbury portfolio. The group of Spirit and Punch pubs were originally sold on a sale-and-leaseback in 2004. According to Property Week, Cerberus will earn a yield of around 9% on the investment. CBRE advised Prestbury Holdings and Sapient Corporate Finance advised Cerberus.

Eataly looks at London opening in 2016: The foodservice phenomenon Eataly is in discussions with the family behind Selfridges about bringing the concept to the capital, according to The London Evening Standard. Eataly has 26 branches globally, including a Manhattan site described by The New York Times as a “retail love letter to Italy”. Eataly, whose US version is overseen by Mario Batali, Joe Bastianich and Lidia Bastianich, most recently opened on Chicago’s East Ohio Avenue in December. 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 in Chicago 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. Chicago Eataly attracted 80,000 visitors in the first week and the New York version is supposed to be the fourth most-visited tourist attraction in the city. An Eataly spokeswoman said it is “looking at a possible opening in London in the 2016 time frame”, but would not comment further. Selfridges’ Canadian owner Galen Weston and daughter Alannah, who is creative director at the retailer, have been working up plans with property developer Stanhope to expand the department store. The group would not comment on Eataly.

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