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Tue 29th Apr 2014 - Propel Tuesday News Briefing

Story of the Day:

Geof Collyer – operators should follow SA Brain and Whitbread on coffee: Deutsche Bank leisure analyst Geof Collyer has argued that coffee shops are not dissimilar to pubs, and coffee remains a big opportunity for pubs. In a sector note, Collyer said: “Coffee shops are more like pubs than some seem to understand. Sociable drinking, meeting friends for a chat, comfy chairs, free Wi-Fi, low-level food, busy during empty day parts – sounds ideal for pubs and restaurants. Coffee shops have filled a void that pubs should have grasped. Maybe it took a few years for the coffee revolution to take hold, for it to be seen as acceptable to go out for a coffee, or maybe for pubs to believe that this was a sensible growth area, that maybe training staff to serve proper coffee professionally in relaxed surroundings was good for business. The likes of Costa and Caffe Nero have probably put a lot of pressure on pubs. Maybe not quite so belatedly as we imagine, pubs and restaurants have bought into these new ideas for improving like-for-likes to drive additional trade – though with varying degrees of enthusiasm. We do not see the need for a third place, as the North Americans would have it, no need for Starbucks to seek to license their properties in the evening as they are now seeking in the US. We are not sure they would get the licence anyway. In the US, there is no family-based or all-inclusive pub culture like the UK. But why don't all pubs have free Wi-Fi, a better quality range of soft drinks and top quality coffee (and tea) and more interesting snacks as a basic minimum? Some are ahead of the curve. SA Brain acquired a small coffee shop chain, Coffee#1, in autumn 2011 to roll out. There is no reason why it should be a one-off in the industry. Whitbread, Costa’s owner, is an obvious and probably one of the best examples of taking a small idea and making it big, though it took a decade of persuading before the CEO instructed the group’s various business divisions to take the group’s own product. Ten years ago, Costa lost money. This year, it will make more ebita in its UK shop business than Spirit or Marston’s or Restaurant Group.”
 

Industry News:

Propel 3 July Multi Club Conference and summer party opens for bookings: The Propel Multi Club Conference on Thursday 3 July at the Oxford Belfry, which will be followed by the Propel summer party in the evening, is now open for bookings – operators can claim two free places each. A full-day conference will be followed by the summer party, to include go-karting, a BBQ, the top live covers band the All Stars (which includes Simply Red's guitarist and Rod Stewart's bass player) and Lucky Voice karaoke. To secure places or get more information, email Jo Charity on jo.charity@propelinfo.com.
   
Brewers on track to deliver billion-unit reduction pledge: Britain's brewers are making good progress in delivering the reduction in units of alcohol achieved to 2012, under the Government’s billion-unit pledge, it has been revealed. The pledge, to which several brewers are signed up under the government’s "public health responsibility deal", aims to remove one billion units of alcohol from UK consumption through reducing the strength of products across all drinks categories. To the end of 2012, beer delivered a contribution of 252 million in unit reduction, cider 51 million and RTDs 8 million. With three years left to report, overall the alcohol sector is on target to deliver the pledge by the end of 2015. Several members of the British Beer and Pub Association  (BBPA), including the five largest brewers, are actively working to deliver the pledge. Brigid Simmonds, chief executive of the BBPA, said: "Our brewers are making great progress in delivering the pledge in two ways. They have adjusted the strengths of certain products, and are also being hugely innovative in bringing new, lower-strength products to market and giving consumers greater choice.”
   
Starbucks to launch Fizzio to build dayparts: Starbucks plans to roll out its new Fizzio "handcrafted" soft drinks range to 3,000 outlets across the United States and in Asia this summer, Nation’s Restaurant News has reported. The new beverage is part of a strategy to build traffic during "non-morning" hours. The company's chief executive, Howard Schultz, described the drinks as “all natural, preservative-free alternatives to sugar-filled sodas with a theatre of a custom handcrafted beverage that I am convinced will be a big hit with consumers and drive traffic incrementally during the key afternoon daypart.” After testing Fizzio last year, the company will launch the cold carbonated drinks in three flavours, ginger ale, spiced root beer and lemon ale, with more to come.
   
Jamie Oliver’s Drinks Tube picks up 20,000 subscribers: Jamie Oliver’s Drink Tube, a drinks-themed spin-off of his YouTube channel Food Tube, has picked up 20,000 subscribers since it launched earlier this month. Drinks Tube, sponsored by Bacardi, is divided into three sub-channels spanning craft beers, wine and cocktail recipes. Videos cover a range of topics including buying guides, product reviews and recipes. Introducing the channel, Oliver said it was designed to “celebrate all things wet”. “We are going to tell you about the best beer, wine and cocktails using the very best people from around the globe,” he said. Mixologists Simone Caporale and Giuseppe Gallo, wine enthusiast Amelia Singer and beer bloggers the Craft Beer Boys are among the initial contributors, along with Oliver himself. The chef also urged visitors to share news of the most interesting drinks they had come across for the team to investigate.
   
Community pub plan in Tottenham running short of time: The organisers of a plan to buy a pub and turn it into the first community pub in Tottenham, North London, are appealing for more backers. Investors have until Friday, 23 May to buy shares in the Antwerp Arms and raise the £250,000 needed to save the Church Road venue. A private developer bought the site from Enterprise Inns in October. A community group, the Antwerp Arms Association, managed to get the pub listed as an asset of community value in September. So far, a total of £32,370 has been pledged, which is £220,000 short of the target with 29 days to go.
      

Company News:

BrewDog dismisses Portman finding over Dead Pony Club: BrewDog has dismissed a Portman Group finding that the packaging of its Dead Pony Club ale has broken alcohol marketing rules for encouraging both anti-social behaviour and rapid drinking. Dead Pony Club’s packaging was identified as being in potential breach of the code for its association with bravado and immoderate consumption, and for placing undue emphasis on the strength and intoxicating effect of the alcohol in the product. Whilst acknowledging that the beer was of a lower-than-average strength and that one bottle was well within the recommended daily unit guidelines, the ICP concluded the line on the label, ‘rip it up down empty streets’, associated the product with anti-social behaviour. James Watt, co-founder of BrewDog, said: “On behalf of BrewDog PLC and its 14,691 individual shareholders, I would like to issue a formal apology to the Portman Group for not giving a s*** about today’s ruling. Indeed, we are sorry for never giving a s*** about anything the Portman Group has to say, and treating all of its statements with callous indifference and nonchalance. Unfortunately, the Portman Group is a gloomy gaggle of killjoy jobsworths, funded by navel-gazing international drinks giants. Their raison d’être is to provide a diversion for the true evils of this industry, perpetrated by the gigantic faceless brands that pay their wages. Blinkered by this soulless mission, they treat beer drinkers like brain dead zombies and vilify creativity and competition. Therefore, we have never given a second thought to any of the grubby newspeak they disseminate periodically. While the Portman Group lives out its days deliberating whether a joke on a bottle of beer is responsible or irresponsible use of humour, at BrewDog we will just get on with brewing awesome beer and treating our customers like adults. I’m sure that makes Henry Ashworth cry a salty tear into his shatterproof tankard of Directors as he tries to enforce his futile and toothless little marketing code, but we couldn’t give a s*** about that, either. We sincerely hope that the sarcasm of this message fits the Portman Group criteria of responsible use of humour.”
   
Greene King loses tax reduction appeal: Greene King has lost an appeal over a tax avoidance scheme. The company appealed to overturn HMRC's rejection of the scheme, which relates to a £300m internal loan. The scheme was devised under the name "Project Sussex" by Ernst & Young, which also acts as Greene King's auditor. It was thrown out on appeal last week by Mr Justice Mann. The Guardian has reported that there are thought to be about ten other firms who bought into Project Sussex, agreeing to pay a 10% cut of the avoided tax to the accountancy firm. The newspaper said: “It has now backfired spectacularly for Greene King. Not only did it fail to enable the brewer to avoid tax on £21.3m of interest, it also left it unintentionally taxed twice on some gains. On appeal, Greene King lawyers argued that the First Tier tax tribunal's decision in 2012 not to allow the scheme had been wrong, in part because it unfairly resulted in this double taxation. But HRMC told the upper tribunal this was "merely the risk of 'burnt fingers' faced by those who play with the fire of tax avoidance". David Milne QC, for HMRC, told the upper tribunal that Greene King had entered into a "contrived transaction". He said: "It is blindingly obvious that the primary purpose of the scheme was the avoidance of tax." Ernst & Young had told potential clients that Project Sussex "provides a borrowing company within the group an interest deduction on its finance without the lender being taxed on its interest." Milne said this amounted to making "taxable income vanish into thin air".
   
Wagamama wins Winchester planning consent: Wagamama has been given the go ahead to open a restaurant by Winchester planners. The chain was rumoured to be coming to Jewry Street in October but developers said planning disputes delayed the project. Versant Development had applied for permission for a change of use of Century House, a Winchester Family Church on Jewry Street, to turn the site into a restaurant across the lower and ground floors, along with four apartments. Now the firm has been granted planning permission to develop the site. Wagamama's head of property development, Emily Hyder-Smith, said: “We're really excited to be coming to Winchester. We have a strong fan base in Hampshire and have been looking for premises in Winchester in which to continue our expansion in the south.”
   
Cairn Group to open £1m Jesmond restaurant: The Newcastle upon Tyne-based hospitality firm Cairn Group is set to open a new restaurant in Jesmond, Newcastle  this week, after an investment of £1m. The company’s 85-cover Sohe restaurant at 97-103 Osborne Road will serve contemporary Asian cuisine and includes open plan kitchens, allowing diners a view of head chef Martin Moore and his team at work. It is due to open on 1 May and includes a private dining space for up to 12 people. Cairn Group operates eight bars and restaurants as well as a group of hotels
    
Geof Collyer – Propel Blue Book data shows only 16 of the Top 200 UK sector companies are quoted and licensed: Deutsche Bank analyst Geof Collyer has used the Propel Blue Book of sector turnover and profit, which tracks the top 200 companies, to show the decline in pub number among the largest sector companies – and the largely unquoted nature of the sector. He said: “Since 1989, the number of pubs has fallen by 20% to circa 50,000-55,000, but the number of full on-licences – the traditional definition of a pub licence – has risen by 10%. The number of on-trade licences has remained flat at 148,000. The top 10 pub-owning companies accounted for 38,000 pubs. Today the top 10 companies account for just over 20,000, a drop of 45% on a pub market down by 20%. And six of these didn’t exist 25 years ago. The 103 identifiable pub-owning companies in the Propel Top 200 account for 16% fewer sites in aggregate than the Top 10 25 years ago. Based on 2013 data, the biggest player both in terms of outlets and sales is Mitchells & Butlers with less than 3% of revenue share (of the £70bn market). Even the Top 30 largest players account for less than 30% of market share. The pub and restaurant sector dominates the overall space, with JD Wetherspoon, Whitbread’s Costa and restaurants combined and Greene King taking four of the top six spots. If one looks at the overall (Propel) data, there are only 16 groups that are UK quoted and licensed, of which half are also brewers – the forgotten profit centre in the sector; five of these are still family companies. In our analysis of the top 200 groups, there are 86 groups with sales of less than £20m – 54 are pub, bar or T&L groups and 32 are restaurants groups; 51 groups are single brand companies.” The Propel Blue Book, which charts turnover, profit, profit conversion and directors’ salaries among the 200 largest sector operators is available to buy – e-mail jo.charity@propelinfo.com for more information.
        
Locals Club secures first London site: A new company, Locals Club, has secured its first London site, taking a 15-year lease on the Gun pub in Hackney with a private landlord through the property agent AG&G. Locals Club, which is looking to develop a portfolio of quality locals over the coming years, is led by Nick Stephens who has more than 15 years of experience in the pub industry, and Oliver Dixon who has worked for 580 Ltd/Lock Tavern Group for six years as marketing manager before setting up Margaret Ltd, a creative agency based in London Fields, Hackney. Michael Penfold of AG&G said: “They plan to create a great local with a wide selection of local and artisan beers, quality spirits and a simple but well-thought-out wine list.”
   
Adam Hyman – Toto’s to re-open next month: Restaurant consultant Adam Hyman has reported that the Knightsbridge, London restaurant Toto’s will re-open next month He said: “Knightsbridge Italian Toto’s will reopen next month following a £3m, two-year refurbishment. The decades-old venue, which is named after the Italian comic actor who died in 1967, now sees Stefano Stecca, formerly of Novikov’s Italian Room, as executive chef. Le Gavroche maitre d’ Silvano Giraldin consulted on the relaunch.”
   
Whitbread has raised £2m of £7m pledged towards Premier Inn Clinical Building: Whitbread has raised £2m of the £7.5m it has pledged towards the Premier Inn Clinical Building, a new, state-of-the-art centre due to open at Great Ormond Street Hospital in London in 2017. The new facilities will form part of the new Mittal Children’s Medical Centre, replacing outdated wards in some of the hospital’s oldest buildings and providing more privacy and comfort for families, including space for a parent to sleep by their child’s bedside. Antonia Dalmahoy, director of corporate partnerships at Great Ormond Street Hospital Children’s Charity, said: “Since the partnership began with Premier Inn, I have been really moved by the enthusiasm of the company’s employees and their desire to get involved and make a real difference to the hospital. I’d like to thank them all for their efforts.”
  
Greene King’s Metropolitan Pub Company to re-open flagship riverside pub: Greene King’s Metropolitan Pub Company is to re-open the flagship riverside City Barge, in Chiswick, West London after a five-month refurbishment. The 280-cover pub features a bar, dining room, a 20-cover private upstairs area, open kitchen, and outside space. The Metropolitan Pub Company aims to operate London-based, “non-branded” pubs, often with strong historical links, in a bid to create "your home away from home”.
   
Scottish leisure entrepreneur buys Beanscene chain: The Scottish leisure entrepreneur Stuart McKenzie has bought the ten-strong Beanscene coffee chain and the Fifi and Aly cafe businesses from Fiona Hamilton. Hamilton said the value of the deal was confidential and that McKenzie, from Newton Mearns, was one of a number of bidders. A successful surveyor, Hamilton launched the Fifi and Ally venture with her cousin Alison Fielding in 2005 to try to tempt consumers with a mix of designer fashions and homewares sold alongside a smart cafe. She bought the then 12-strong Beanscene chain out of administration in 2008.
   
Wetherspoon lines up Beverley pub application: JD Wetherspoon is expected to submit plans for a £1m refurbishment of one of the most popular pubs in Beverley, East Yorkshire, the Cross Keys in Lairgate. The company is to apply for planning permission to East Riding Council in order to completely refurbish the pub. Wetherspoon confirmed it had leased the Cross Keys in December after months of speculation. It has been search for a site in the town (population: 29,110) for some time. The company previously submitted a planning application to convert the disused Agriculture House in New Walkergate, Beverley, into one of its pubs. However, the plans were rejected by East Riding Council, which said the development would be detrimental and out of character.
   
Multi-siter plans accommodation investment at second Arkell’s pub: Kevin Grieve is to refurbish the 12 hotel bedrooms at the Quaich pub in Cheltenham, his second Arkell’s site. The pub  was formerly the St James’s Hotel. Grieve and Arkell’s are embarking on a joint investment to refurbish the bedrooms. In the past eight months, turnover at his first Arkell’s pub, the Adam and Eve, also in Cheltenham, has trebled. Grieve said: “I’m thrilled that the Adam and Eve has taken off again, and now we’re doing the same with the Quaich – but here we’ve got the opportunity to do something even more special. There’s not only the refurbishment of the bedrooms, but the old skittle alley is also a great venue for small gatherings, especially during the Cheltenham festivals.” Brewery director George Arkell said: “Kevin knows what he’s doing. He’s already done a fabulous job at the Adam and Eve and now he’s making his mark at the Quaich.”
   
Gordon’s Wine Bar family to add site in June: The family that runs Gordon's Wine Bar on Villiers Street in Central London is to open Villiers on the same street in June. It is billed as an all-day dining room to be operated by the younger generation of the Gordon family. Sophie Gordon will be in charge of the menus and the kitchen while sister Rose will look after the wine list and front-of-house. Dad Tom Gordon will be designing the menus and decor. Villers will be open all day, offering coffee and breakfast in the morning and from mid-day there will be an informal, all-day menu of seasonal dishes. Villers opens at 31a Villiers Street, London on 9 June.
   
Festival organiser and magazine publisher to open Bristol pub: Tom Frost and Jake Applebee, who own Crack magazine and its website and organise the Simple Things Festival, have taken over the old Three Sugarloaves pub in Bristol, which will be re-named the Christmas Steps. A spokesman said: "I think the secret to a brand’s success is moving into different areas of operation that all tie with each other. The magazine and the festival have obvious overlaps, and having a venue that projects the design style and musical themes we already offer people seemed like a solid idea. You can expect a pub that does all the basics very well, something that we think is distinctly lacking in many pubs in Bristol. There will be DJs on weekends, a music quiz, an updated jukebox and the odd musical surprise, but on the whole it’ll be an incredibly solid boozer you’ll hopefully want to return to time and time again. Food is a major part of what we are doing. There will be a full lunch and dinner menu based on principles of seasonal produce and pub classics done that bit better than the standard fare.”
   
Chelsea’s Market Place acquires a sister Italian restaurant In South Kensington: The owners of the comfort food Market Place Restaurant, established in 1984 in the heart of Chelsea Farmers’ Market, have acquired a sister Italian restaurant in South Kensington. The Market Place (Chelsea) Limited has taken an assignment of the existing 20-year lease expiring in October 2031 of Da Spago at 6 Glendower Place at a rent of £42,500 per year. The 45-cover restaurant has been re-christened Papa Roma and will serve authentic Italian cuisine and wood-oven cooked pizzas made from traditional Italian dough that is freshly made each day. Sally French, of Restaurant Property, who brokered the deal, said: “This will please regulars of Da Spago, its traditional Italian cuisine has been reinvigorated. And given its convenience to the nearby museum quarter this pizza restaurant and bar is sure to garner lots of tourist diners too.”
   
Baskin-Robbins wins Cineworld deal: Baskin-Robbins has won a franchise deal to replace Ben & Jerry’s at 45 Cineworld cinemas across the UK. Brand owner Dunkin Brands, which also own Dunkin’ Donuts, already has sites in 16 Cineworld locations among its 125 UK outlets and the new deal will also include any future Cineworld sites.
   
Paul May – the spirit of Patisserie Valerie is intact:
Patisserie Valerie's chief executive, Paul May, has rebutted a suggestion by a previous owner that the spirit of the brand has been "battered" in the chain's roll-out. May, whose company supplies sites from seven central bakeries, told the Independent: “We’re very aware of the need to retain the spirit of the original Patisserie Valerie. We studied the business very carefully after taking it over. We don’t want to spoil its feel. We kept the ingredients and the size of the products the same. Every cake is handmade.” Enzo Scalzo, one of the three brothers who acquired Patisserie Valerie in 1987 and sold it in 2006, told the Independent: “The business has gone where it should because it is such a wonderful brand. But I think it has also taken a little bit of a battering – it is not the business it was in terms of being family-run. When you have so many shops, of course a bit of that charisma is gone.”
   
Caffe Nero bags Blockbuster site: Caffe Nero is to open in a former Blockbuster store in the Magnolia Centre in Exmouth, Devon. A recent recruitment open day was held by the company at Exmouth’s Imperial Hotel. Interviewees were told that the chain’s Exmouth store will probably open at the end of May, “depending on planning applications”, and its opening hours will be 7am to 7pm.
   
Hotel owner buys Admiral Taverns pub to create fish and steak house: A hotelier in Maldon, Essex, John Wilsden, and his wife Sue, who run the Blue Boar in Silver Street, have bought the Welcome Sailor in Fullbridge, Maldon, a former Admiral Taverns pub. The pub, which opened for the first time in two months on Friday, is destined to become a summer fish and steak house under the new ownership. Wilsden said the pub will become the Sunny Sailor and a “summer pavilion” to the Blue Boar.
   
Amber Taverns signs to stock London Velvet: Amber Taverns has signed to stock London Velvet, the crafted blend of porter ale and fine cider. It will be sold in 28 Amber Tavern pubs across the North East and North West of England including York, Newcastle and Blackpool. London Velvet, manufactured in the UK,  uses traditional recipes, processes and ingredients for both the porter ale and fine cider, producing what its makers describe as an "exciting new taste experience", which can be enjoyed over ice or on its own.
   
New Forest freehold on the market for £1.59m: The freehold of the Penny Farthing, currently rated number one hotel in Lyndhurst, Hampshire on Tripadvisor, is on the market for the first time in 21 years. The current owner, Mike Saqui, is selling through the property agent Fleurets, which is marketing the hotel with a guide price of £1.59m. Will Thomas of Fleurets said: “The property is situated in the heart of the New Forest National Park and is a profitable, well established venue with a turnover of £380,000 per annum. The hotel enjoys a good mix of both corporate and leisure trade all year round.” The hotel has two three-bedroom apartments, 21 en-suite guestrooms, a 40-cover restaurant, lounge, reception, office and facilities including a laundry.
    
New smokehouse concept acquires first site: Smokes and Grills, a new gastro-pub concept serving an American-inspired barbecue menu, has secured its first site after the property agent Davis Coffer Lyons completed the off-market sale of the Duke of Wellington in East Horsley, Surrey on behalf of a private individual for an undisclosed sum. The aspiring chain plans to open another five Smokes and Grills pubs over the next three years in similar rural locations with plans to subsequently move into London. Smokes and Grills is the brainchild of Lee Bradshaw, formerly the founding director of Large Bars, and his new business partner, Glyn Roberts. The pub will undergo an extensive renovation to create the first of six Smokes and Grills pubs and will be renamed The Duke of Wellington Pub, Smokehouse and Rooms. The décor will be "an eclectic mix of the old, new with a few eccentricities". Reclaimed and up-cycled finishes and touches will be included as well as fixtures and fittings sourced from antiques markets and curiosity shops. The pub will serve a menu centred on smoked and barbecued dishes including briskets, shoulder of pork, burnt ends and top-end burgers accompanied by some more traditionally British dishes. In order to create an authentic smoky taste two American smoking ovens have been imported from the United States, and all food will be prepared using only fresh ingredients. There will also be an extensive wine list, available by the glass or carafe, a "comprehensive" premium spirit range and a "considered" cocktail list. The pub is in a prominent position in the Surrey Hills within an affluent catchment area. As well as the new restaurant on the ground floor there will be nine en-suite rooms arranged around a courtyard in the former stables, which will offer bed and breakfast. Bradshaw said: “Smokes and Grills will bring strong London values to the Home Counties, with a cutting-edge menu, a high quality and innovative drinks offer and some real standards when it comes to service. We are extremely happy that the Duke of Wellington will be our first operating venue and will be working tirelessly to create the best pub experience for the people of East Horsley.” Chris Bickle, associate director at DCL, said: “Knowing Lee and Glyn’s operation and their plans to set up a group of pubs, we felt the Duke of Wellington would be the perfect location for the first Smokes and Grills. The pub is a very distinctive and well-known landmark building, benefiting greatly from a wide and affluent catchment. The smokehouse offering is very popular at the moment and will be a fresh approach to compliment the area's established dining pubs."

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