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Thu 13th Feb 2014 - Propel Thursday News Briefing

Story of the Day:

Punch Taverns bondholders to table debt-for-equity swap: Punch Taverns’ bondholders are weeks away from presenting their own plan to restructure the company, involving a major debt-for-equity swap. A major bondholder group, which represents a number of investors, including Standard Life, M&G and Aviva, described the plans as “well-advanced”. A source close to the ABI Committee said: “An alternative restructuring plan is well-advanced among creditor groups and the next step is for the directors of Punch A and B boards to engage in discussions directly with their creditors to finalise it.” The source added: “The creditor plan can be implemented after a default if necessary but a default is entirely avoidable. Punch A and Punch B have about £200m of cash and have been offered lenders’ support. There is no reason for these companies to get into uncertainty.” Yesterday morning Punch Taverns withdrew its restructuring proposals “following feedback from a range of stakeholders”. The company looked to be on a collision course with bondholders over a vote on its restructuring proposals due to take place tomorrow (14 February). Punch required a 75% vote in favour of its proposals across 16 classes of bondholders, something that looked unlikely with a number of bondholders with blocking stakes threatening to vote against the plan. Bondholders argued that the restructuring plan, which would have reduced debt from £2.3bn to £1.8bn, favoured shareholders.

Industry News:

Luke Johnson to act as ‘special adviser’ to new crowd-funding platform: Sector investor Luke Johnson is to act as “special adviser” to a new crowd-funding platform to be launched by Sir Richard Branson’s entrepreneur’s network in partnership with the Welsh Innovation Centre for Enterprise (ICE). E2Exchange, which includes leading business figures such as Darryl Eales, chief executive of the private equity house LDC, and Dragon’s Den star Duncan Bannatyne, has created ICE Dragons to secure funding for its members. Entrepreneurs affiliated to the programme will be given access to the Welsh ICE business centre, which houses more than 200 firms, providing offices, meeting rooms and hotel accommodation. Shalini Khemka, chief executive of E2Exchange, said: “Despite the nascent recovery, many early stage businesses are still finding it difficult to raise funding. This initiative should provide them with a further route to access capital.”

Brian Wisdom steps down from People 1st: Brian Wisdom is to step down from his position as chief executive of the hospitality skills development body People 1st in the latter half of 2014 after a decade at the helm. Wisdom will remain active within People 1st as an ambassador for the business. His new role will provide continuity and an extended handover period for the organisation while allowing him his ambition to pursue other non-executive opportunities. Wisdom said: “The past ten years have seen huge changes in the skills landscape and I am extremely proud of everything the People 1st team has achieved. It now seems like the right time to move on and let the business look at what it wants to achieve in the next ten years.”

Burger King launches Big King burger, bigger than the Big Mac: Burger King in the United States has launched a bigger Big King burger, which is bigger than the Big Mac. The move comes three months after Burger King rolled out Big King. The enlarged Big King beef will weigh in (uncooked) at 4 ounces, versus 3.2 ounces for the beef on the Big Mac. In the past year, it has also rolled out a Rib Sandwich to compete with the McDonald’s McRib sandwich. The bigger Big King, made with two beef patties, lettuce, onions and sauce on a three-layer sesame seed bun, will still sell for $3.69 (£2.23). It is also currently part of a two-for-$5 promo. “At Burger King, we know that size matters,” said Alex Macedo, president of Burger King North America. “This allows us to give even more value.”

Company News:

Carluccio’s plans US operation: Carluccio’s is planning to follow in the footsteps of Wagamama and Pret A Manger by opening its own sites in the United States. The company has set up in Carluccio’s USA and has secured a first site near Washington. It has hired former Aramark executive Cory Waldron to lead the US operation. Meanwhile, Carluccio’s has signed a lease to open in the West Bridgford area of Nottingham, occupying the former Sleepers shop on Central Avenue. The company has submitted a planning application to Rushcliffe Borough Council. Planning permission to change the use from retail to restaurant is already in place following a Wagamama’s application that was not pursued.

M&B re-opens former Crown Carvery as Toby after £400,000 makeover: Mitchells & Butlers (M&B) has invested £400,000 to convert a former Crown Carvery in Congleton Road, Talke, Stoke on Trent into a Toby Carvery. M&B reported last year that its 116-strong Crown Carveries estate lost 20% of its volumes last year after pushing prices above £4 for its cheapest main meal. Toby Carvery, by contrast, has performed very strongly in the past 12 months. On the first day, more than 500 people sampled the restaurant’s new menu. General manager Liam Nee said the refurbishment had made a former local boozer more family-friendly. He said: “The place has undergone a complete makeover. The old carvery had a pool table and it very much catered for drinkers, whereas the Toby Carvery is a much more family-friendly environment. We’ve increased the number of seats for diners and we’ve got a lovely brand new carvery station and brilliant kitchen equipment. It’s a slightly higher price point than before but people are seeing the difference in the quality of food and the service.”

M&B Premium Country Dining Group site to close for three months: Mitchells & Butlers will lose a Premium Country Dining Group outlet, the Bathampton Mill, near Bath, for three months – a month longer than originally thought. It was flooded on Christmas Eve and will remain closed until Friday 21 March. Heavy rain left the Bathampton Mill surrounded by several feet of water, filling the cellar and damaging equipment in the kitchens. A spokesman said: “There’s a massive investment needed to get the pub up and running after the place was torn to pieces by the floods – water was six feet deep in the bar area.”

Drake & Morgan opens seventh site: Drake & Morgan, led by Jillian MacLean and backed by Bowmark Capital, has opened its seventh site, The Fable, in Farringdon, London. The 436-seater, 10,000 sq ft Fable will open from 7.30am and serve breakfast, brunch, lunch, afternoon tea and dinner. It will also have space for more than 1,000 people standing across three floors, and an 80-seater outside space with plants, umbrellas and heaters. There is a deli selling fresh Borough Market bread, cured hams, cheese and condiments, while a “masterclass” area will focus on skills such as butchery, flambéing and cocktail mixology.

Douglas Jack – our key share tips are Domino’s and Spirit amid strong sector trading: Numis Securities’ leisure analyst, Douglas Jack, has issued buy recommendation on Domino’s and Spirit shares in the wake of yesterday’s Coffee Peach Tracker results for January, which showed 7.2% like-for-like sales growth He said: “Wet weather in January 2014 had a less adverse impact than the snow had in January 2013, when like-for-like sales fell 2.4%. Operators outside London benefited most from the weather, with LFL sales up 7.5% versus 6.6% inside the M25. Eating out was stronger than drinking out, with pub restaurant and casual dining chains together enjoying an 8.4% LFL sales uplift. One should not read too much into January’s numbers, due to the weather factor and January typically being one of the quieter months. Nevertheless, the LFL sales growth was material and, being weighted to the middle two weeks of the month, is yet to be reflected in the updates from Domino’s Pizza, The Restaurant Group, Spirit Pub Company and Greene King. Operators now face tough comps in February (up 3.3%), easy snow-affected comps in March (down 3.0%) and then moderate comps (averaging a rise of 1.4%) through to December. With wholesale food price inflation down to 2% and customer cashflow/confidence showing signs of improvement, we believe 2014E should be a good year for food-led pubs and restaurants. Our key picks for 2014 are: Domino’s Pizza (BUY; TP 710p) due to LFL sales growth potential; and Spirit Pub Company (BUY; TP 110p) due to growth and valuation.” Meanwhile, Panmure Gordon’s leisure analyst, Simon French, said: “Flooding remains the most pressing issue but this remains fairly localised. We reiterate our ‘Buy’ recommendations on Domino’s Pizza, Spirit Pub Company, The Restaurant Group and Wetherspoon.”

Gatecrasher expands to Ibiza: Nightclub company Gatecrasher, which went through a restructuring last year and is headed by Simon Raine, is expanding to Ibiza. The brand is taking over the former Eden nightclub, which has a 3,000-capacity. Music blog Dancing Astronaut said: “Historically, Eden had suffered from poor numbers and unsuccessful residencies compared to that of its higher-end competition south of the island. Given the strength of the Gatecrasher brand overseas, this could be one of the first serious contenders to join the market since Ushuaia opened its doors back in 2011.”

Wetherspoon unveils name of Hitchin pub: The name of the JD Wetherspoon opening in Hitchin, Hertfordshire has been revealed. The company will be opening in Hitchin Conservative Club on Sun Street, with a spokesman confirming that the new pub will be called Angel Vaults. He added that the company was in negotiations with the planning authority, North Hertfordshire Council, and could not confirm a date for the opening. The name refers to the medieval inn, the Angel Vaults, from which Angel Street was named – now known as Sun Street. It was decided after a shortlist of suggestions were put forward by the Hitchin Historical Society.

Wagamama signs up to Visa’s digital wallet for online food purchases: Wagamama has signed up to allow its customers to use Visa’s digital wallet system to purchase takeaway food online., launched in November last year, is designed to increase consumers’ confidence in shopping online by enabling them to make purchases without sharing their card details with the retailer. Once a shopper’s card details are uploaded to their digital wallet, only a username and password need to be entered to complete a transaction, simplifying the payments process. It allows consumers to complete online transactions through an internet browser on a PC, laptop, tablet, or smartphone without using their credit or debit card details. Wagamama has more than 100 restaurants in the UK, which also allow customers to make purchases for take-away food via the internet. Richard Tallboy, Wagamama’s director of business development, said: “The launch of by Visa marks an important development to our e-commerce platform. Our customers are increasingly ordering their Wagamama take-out online, and we are confident that by Visa offers complete reassurance that payments are handled safely and securely. As consumers become ever-reliant on their ‘digital wallets’, we feel it is important to be partnering with an established and trusted brand like Visa. It is essential to us that our loyal customers enjoy a hassle-free and seamless take-out experience.”

Fernandez & Wells redesigns website to capture chain’s look and feel: The central London cafe chain Fernandez & Wells has had its website redesigned to be more mobile-friendly and to better reflect the aesthetic of its outlets. Fernandez & Wells hired the digital agency Somewhat to create the new website to reflect its “stripped back” look, “merging the brand story with design and functionality”. The fully responsive site has been designed to feel like a mobile app, to be both functional and useful for customers on the move, with Google Maps placed at the front end of the site for users to easily find store locations and share them with friends. Fernandez & Wells’ co-founder, Rick Wells, said: “It’s exciting to have a site that genuinely feels like a part of us – that captures the look and feel of F&W, that arouses curiosity and whets the appetite, while also being a useful and practical tool for our existing or potential customers.”

Antic to close Colliers Wood site: Antic London, the company led by Anthony Thomas and backed by investment fund Downing, is closing The Provenance pub in Colliers Wood, South London less than a year after it opened. Antic took over the High Street pub last May However, it said, the pub’s owner, Punch Taverns, is selling the property after asbestos, broken glass, fencing and detergents were found in the garden. Antic declined to give a precise date for the closure of the pub.

M&B pub installs parking meters: An Ember Inns pub in Sussex has made its car park pay-and-display to try to deter commuters and ramblers who fill up spaces without using the bar. Annie Johns, manager of the Mitchells & Butlers-owned Fox and Hounds in Fox Hill, outside Haywards Heath, said the situation had got so bad that even before the pub had opened at 11am on a Saturday or Sunday, there would already be up to ten cars parked in the car park. The car park was being used by visitors to the town centre and commuters even though the pub is two miles away from Haywards Heath railway station, she told the Argus newspaper. Motorists were parking at the Fox and Hounds and then jumping on the bus service that runs outside the pub. In addition, ramblers were parking for free in the pub car park to visit the surrounding countryside but then not popping in for a pint or a meal afterwards. Under the new system, genuine customers will get a refund once they have made a purchase at the bar. Johns said the parkers “were making the place really busy even if we didn’t have many people in, and we were losing business, because people would look in and think, ‘We will give it a miss because it’s full.’ I have been here a year and it has always been a problem, and we have been losing a lot of business because of it.” The pay-and-display machine was installed by Local Parking Security.

Casino in Bath set to get green light: A recommendation from planning officers to pass a £14m development in the centre of Bath that will see the arrival of a 148-bed hotel, two restaurants and a casino will go before city councillors next week. The new “entertainment quarter” would mean several buildings would have to be demolished, including a significant section of the Grade II listed Gala bingo hall. Changes are also proposed to the Grade II listed market building, and the public and private car parks on the site would have to go. However, despite the site sitting within the Bath City Conservation Area and World Heritage Site, there has been general support for the scheme. Bath Preservation Trust said the development would tidy a neglected part of the city. The casino, which has already been granted a provisional licence, would be operated by the French company Groupe Partouche in partnership with Global Gaming Ventures (Bath). The hotel would be run by Z Hotels. If approved by Bath and North East Somerset Council’s development control committee next Wednesday, the application, made by the developer Deely Freed, would then have to be referred to the Secretary of State.

Music venue set to open in Exeter: A new 550-capacity live music venue and restaurant will be opening its doors in Exeter this weekend. The Tobacco House, which was formerly known as Havana and more recently Thirst, is situated in Commercial Road on the city’s quayside. It has been taken on by Yiannis Solomou who previously owned a club and restaurant in Plymouth. He is keen to establish a major live music and entertainment venue for the city. Bradley Smith, promoter and new entertainments manager at the Tobacco House, said: “We felt that Exeter needed a really decent large capacity live music venue that attracts bigger name acts to the city, but is also committed to promoting the cream of local talent.”

Hotel operator sought for Harrogate site: In conjunction with the Yorkshire Agricultural Society (YAS), the specialist hotel developer Frontier Estates has appointed Christie + Co to find an operator for a new hotel development proposed at the society’s Harrogate headquarters site. It is envisaged that the ideal hotel format could be budget or mid-market oriented and that the building would occupy a high profile location fronting the A661 Wetherby Road immediately adjacent to the Pavilions of Harrogate, the Yorkshire Event Centre and Sainsbury’s superstore. The Yorkshire Showground and Yorkshire Agricultural Society Headquarters see more than 422,000 visitors as well as 41,000 exhibitors each year, with more than 200,000 bed nights generated from on-site events and functions, producing some £47m for the local economy.

Whitbread lines up Brewers Fayre and Premier Inn for Spalding site: Whitbread has lined up a Premier Inn and Brewers Fayre for a proposed business park on the edge of Spalding in Lincolnshire. The Lincs Gateway Business Park includes a 400-seat conference centre, a 52-bed Premier Inn hotel, a Brewer’s Fayre pub/restaurant, a restaurant/cafe and a petrol station.

Jamaica Patty Company opens in Covent Garden: The former Spud unit on New Row in Covent Garden, is now home to Jamaica Patty Company after DCL completed an assignment of the lease. The 510 sq ft unit is the first outlet for new meat patty concept and will open this spring. Spud continues to operate from its outlet in Leadenhall Market in the City. Emma Flathers, of DCL, said: “Shaftesbury works hard to curate an exciting and vibrant tenant mix across all its London Villages. As its sole leisure adviser, we were appointed by Spud to find a new operator that complemented and enhanced the existing offer. Jamaica Patty Company is an extremely exciting new operation and, we believe, will be the perfect addition to the catering offer in this part of Covent Garden.” Jamaican Patty Company is the brainchild of Andrew Roberts a former partner at the law firm Travers Smith.

Midlands firm wins £110m contract to build Abu Dhabi Hard Rock Hotel: The Wolverhampton-based builder Carillion has won a £110m contract to build a five-star Hard Rock Hotel in Abu Dhabi, capital of the United Arab Emirates. The construction support services group’ joint venture business in the UAE, Al Futtaim Carillion, was awarded the contract by Aabar Properties. The Hard Rock Hotel, which is set to be the first of its kind in the Middle East, will have 378 rooms. It will also feature an assortment of restaurants and entertainment and meeting facilities, including a Hard Rock Cafe. Other attractions will include a “sky lobby” on the fifth-floor podium, a lobby bar with outdoor entertainment deck and hookah lounge, as well as a 37th floor “sky bar” with swimming pool. Construction is scheduled to begin this month, with a finish date in the first quarter of 2017.

Two-year-old brewery opens new pub: A two-year-old brewery in Doncaster, Yorkshire has opened its own pub in the town. The Doncaster Brewery Tap on Young Street, which is based in converted shop premises, is initially open for three days a week, Wednesdays, Fridays and Saturdays, with plans to extend opening hours in the future. The 15-barrel micro-brewery, currently based at Coopers Mill Business Park, is due to move into the same building as the new bar. Brewery owner Ian Blaylock told The Sheffield Star newspaper: “It has not been especially difficult to start up a bar, but I don’t have to worry about the issues that face landlords running tied pubs.”

Individual Inns to boost pub’s letting rooms by 50%: Individual Inns, which runs seven outlets in the north west of England, has applied for planning permission to increase the number of letting rooms at the Spread Eagle Hotel in Sawley, Lancashire from seven to 13. The Grade II-listed building was taken over by Individual Inns in 2007. The proposed bedroom extension would be added to the part of the building that was constructed in the 1960s. The application is to be discussed by Ribble Valley Council. The hotel’s manager, Natalie Barnes, said: “We are full almost every night and there certainly is the demand out there. There are some days that we could be full two times over. At the moment when we have big groups staying, half sometimes have to stay somewhere else and we bus them over for meals which is far from ideal.”

Cinnamon Club boss launches Google Glass video: Vivek Singh, executive chef and chief executive of the modern Indian restaurants Cinnamon Club, Cinnamon Kitchen and Cinnamon Soho, has teamed up with the video tech company VistaBee to create the world’s first Google Glass food video. Singh, who often appears on Saturday Kitchen and Masterchef, has embraced Google’s controversial wearable technology and given budding cooks a chef’s-eye-view of one of his signature dishes, tandoori sea bream. Google Glass allows Singh to share how he prepares his dish from his perspective, showing the step-by-step processes up close. He said: “We are delighted to work with VistaBee to bring this unique type of Google Glass video to market, and share some of the tips of the trade with those who love great food. Truly this is great technology. After a few minutes it becomes so natural to show the detail in the preparation of creative Indian cuisine.”

El Mexicana opens in Swindon: The Mexican franchised concept El Mexicana has opened its tenth site, at Swindon Designer Outlet. The brand opened its first site in Meadowhall, Sheffield in December 2011 and has sites at Extra Services service stations in Baldock, Beaconsfield, Cobham and Cambridge. Franchisees require around £100,000, with half of this sum required as liquid capital.

Contract for £7.8m Spitalfields Hub by Premier Inn awarded: The £7.8m contract to build a 189-bedroom Hub by Premier Inn on Brick Lane in Spitalfields, East London has been awarded by the developer Endurance Land to McAleer & Rushe. It is the second of Whitbread’s new Hub by Premier Inn hotels that McAleer & Rushe has been awarded, after it saw off competition from four other building firms to win the first at St Martin’s Lane, central London, last year. The work will involve the demolition of an existing supermarket and the construction of a new hotel with ground floor retail space in the Fournier Street and Brick Lane conservation area. Hub by Premier Inn is a new hotel concept in which rooms are almost 50% smaller than a standard Premier Inn bedroom and around 30% cheaper for guests. Whitbread plans to build 3,000 Hub rooms in London and other major cities, including Birmingham and Manchester, by 2018. McAleer & Rushe is currently building a 17-storey, 291-bed Motel One hotel for Endurance Land at 24-26 Minories, in the City of London.

Revolution Bath to reopen next week: The Revolution bar in George Street, Bath reopens on Saturday February 22 after a “six-figure” facelift as part of owner Inventive Leisure’s Evolution programme. The bar now has a new entrance which allows the upper floor to become a secluded space for private parties, and a new drinks menu. The food menu, which covers stone-baked pizzas, “internationally inspired” main dishes, snacks and smaller plates, will now be available from 12noon until 10pm, seven days a week.

Harry Ramsden’s offers customers product voucher: To celebrate National Chip Week (17-23 February), Harry Ramsden’s has joined forces with Birds Eye for a consumer promotion. During Chip Week at participating Harry Ramsden’s outlets, and while stocks last, customers will be given a voucher which entitles them to 75p off Birds Eye Harry Ramsden’s Cod and Haddock fillet four-packs. The promotion launches nationwide on Monday February 17 and vouchers will be available for redemption until March 31, in retail outlets selling Birds Eye Harry Ramsden’s Cod or Haddock products. Harry Ramsden’s is one of the only a handful of restaurant chains in the UK to serve chips made exclusively from fresh potatoes, grown and picked in Britain. Joe Teixeira, chief executive of Harry Ramsden’s said: “The team at Harry Ramsden’s is proud to be long-standing supporters of British potato farmers, so we are delighted to be celebrating Chip Week with our customers, whereby they can enjoy their favourite meal in their local outlet and receive a money-off voucher which will allow them to take home a taste of Harry’s.”

Mother plans to expand Hungry Caterpillar Play Cafe concept: A new mother is looking to expand after starting a “toddler-friendly” venue called the Hungry Caterpillar Play Cafe in frustration at the lack of venues where she could take her baby. The cafe opened in Cannon Street, Bedminster, Bristol in November and has been so successful that founder Melody Beard wants to open another. Beard, 31, said that after speaking to other mothers, she realised that there was demand for a space which allowed children to play safely while also accommodating their parents, without the constraints of a playgroup. Beard opened the cafe with the help of the start-up group BRAVE Enterprise and with financial backing assisted by the South West Investment Group.

Liberis reveals quick-fire funding for start-up: The finance house Liberis, which specialises in unsecured lending, has revealed its quick action in funding Parity Bars, which acquired 18 former Bramwell Pub Company sites out of administration before Christmas. Parity had 60% of the funding required to purchase 18 bars in university towns, but needed to go to the open market to raise the remaining 40%, some £720,000. The consortium was under considerable time pressure, with just four weeks to Christmas, and the need to complete a deal in time to secure the Christmas and new year trade. It could not get secured lending, because it did not yet own the bars, and a traditional property loan would have taken eight weeks, meaning Parity would miss out on the busiest trading period of the year. It approached Liberis through one of its brokers to help fill the funding gap. A Liberis spokesman said: “From the initial approach to Liberis to money in the bank took just three weeks, even though the circumstances of the consortium were very different to [our] normal customer. Usually Liberis assess the history of a business, till receipts and speak to suppliers to inform their decision to provide unsecured cash advances. This was a completely new undertaking, so this information was not available, and the Liberis team worked day and night with the consortium and lawyers to put together a lending solution, from scratch, which would suit both parties.” A workable solution was created and, as with Liberis’s normal funding model, the money is paid back only as the bars earn, based on an agreed percentage of their daily credit and debit card receipts. The payback time is linked to cash flow. In slow months, Parity Bars will pay less and in busy months it will pay back more. Paul Mildenstein, chief executive of Liberis, said: “The hard work put in by both sides was worth it. It wasn’t a straight-forward situation, but we’re business-friendly and we were determined to find a deal that would work for Parity Bars and to their time scale. As a result, 18 bars stayed open and operating during one of the busiest times of the year and over 360 jobs were secured. That’s a good feeling.” Parity Bars had a very successful trading period over the festive season and now has plans to grow its portfolio to 40 plus bars. Nick Dark, director of Parity Bars, said: “The ‘can-do’ attitude of the Liberis team to find a funding solution for us and the speed with which they did so was outstanding. Given the complexity of the situation and time scales involved, most other lenders would have walked away.”

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