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Tue 3rd Jun 2014 - Propel Tuesday News Briefing

Story of the Day:

Downing launches second tranche of EIS pub investment fund: Investment fund Downing has launched a second tranche of its pub EIS investment fund. Downing invested a total of £18.8m in three pub businesses under the first tranche of the Downing Pub EIS. The funds were invested between April 2012 and May 2014 and these businesses currently own 13 pubs. Tranche One is due to provide exit opportunities for investors in spring 2017. The closing date of the second tranche is 1 April 2015 and the maximum expected to be raised is £20m. The prospectus states: “There was a fall of approximately 30% in the average price of public houses from the start of 2008 to the end of 2009. From 2009 until the end of 2012 the rate of fall reduced to approximately 5%. (Downing) considers that there are currently good opportunities to purchase pubs at prices significantly below the peak of the market.” Propel reported in March that Downing had launched its latest investment, The Craft Beer Pub Co, a new joint venture with Faucet Inn, having completed the purchase of The Pensioners in Southampton from Greene King. Steve Cox, founder of Faucet Inn, said at the time: “It is very exciting to be embarking on this new venture with Downing and is hopefully the first of many new openings to come.” Steve Kenee, of Downing, told Propel: “The success or failure of our funds is based on the quality of the operators we back and we are always keen to meet good quality operators with the ambition, energy and skill set to grow their business. I would ask anyone who thinks they fit this bill to get in touch.”
   

Industry News:

Financial Times – Eataly expected to open in London in 2015: Eataly founder Oscar Farinetti has confirmed to The Financial Times that he expects Eataly to open in London next year. There are 13 Eataly stores in Japan, two in the US, in New York and Chicago, one each in Dubai and Istanbul, and 11 in Italy. Farinetti plans to open in São Paulo and in Moscow, and expects Eataly to reach London in 2015 via a joint venture with Selfridges, the department store group. Farinetti told The FT: “We are the sons of Marco Polo and Christopher Columbus. We can appeal to consumers both in the west and in the east – we have a revolving door in two directions.”
   
Hundreds of French citizens protest over suspension of new McDonald’s site: Hundreds of French protestors have taken to the streets to demand the opening of a McDonald’s in their town. The residents of Saint-Pol-sur-Ternoise, near the northern city of Lille, marched to call on local authorities to back down on their decision to suspend the construction of the new outlet. The McDonald’s was nearing completion on a site on the edge of town when authorities suddenly decided that it did not comply with zoning regulations and ordered building work to stop.
   
New restaurant app seeks to publicise independent London restaurants: A new restaurant app has been launched that enables diners to instantly discover and book tables from a curated list of the best venues in London with a few taps of a smartphone. Founded by Aaron Ross, a serial entrepreneur with a track record in disruptive innovation and a self confessed IT geek, and experienced designer Laurence Carver, CityHawk was started after they thought about how many independent restaurants must lose out to larger chains because people don’t know where they are.
   

Company News:

Glendola Leisure to launch premium City of London bar next month: Glendola Leisure, led by Alex Salussolia, will launch Silk & Grain on the City’s Cornhill next month. Previously The Door, the 163 square metre, two-floor venue will specialise in ‘aged cocktails’ and steaks. A range of classic cocktails have been given new depth by ageing spirits in different materials including oak barrels, metal, leather and glass before mixing and muddling. The result is a selection of mature drinks with added complexity and flavour. Food-wise there will be a British grazing menu with highlights including Clonakilty black pudding ‘scotched’ quail’s eggs, crispy pig’s ears alongside British cheeses and charcuterie. The first floor restaurant, seating 56, will offer a selection of different dry-aged steak cuts, cooked in a Josper grill, alongside British-inspired mains such as lemon sole with garlic and caper butter; Suffolk cyder soaked, slow roasted pork belly and heritage tomato, mint and quinoa salad with whipped goat’s cheese and beetroot pickled eggs. A range of homemade sauces, infused butters and grain mustards will also be available. With starters from £6, mains will range from £12 to £20 and desserts will start at £5. Salussolia said: “We’re incredibly excited to be launching a premium City venue. It’s a key site for us and we think that our unique aged cocktails will excite both the consumer and industry.”
   
JD Wetherspoon lodges second Edinburgh application in a week: JD Wetherspoon has revealed plans to take over a fire-ravaged former church in the heart of Edinburgh’s Old Town – just a week after it lodged a proposal for a super-pub in the Capital. The company is keen to turn the former Khushi’s Indian restaurant in Victoria Street into a pub. The World Heritage Site property has lain empty since it was devastated in a blaze in December 2008, which also caused extensive damage to neighbouring properties Liquid Room and Finnegans Wake. The vast two-floor building and former St John’s church had been used as a bookmaker and housed the popular Byzantium market before being reincarnated as Khushi’s. Last week, Wetherspoon applied to convert the Empire bingo hall in Nicolson Street into a pub.
   
Stonegate Pub Company chairman Ian Payne’s pub earns local produce recognition: One of two pubs owned personally by Stonegate Pub Company chairman Ian Payne, The Jolly Waggoner, Ardeley, Hertfordshire, has been named by the Alistair Sawday’s guide as one of the top three pubs in the UK for “local, seasonal and organic” produce. The pub is tenanted by farmer Tim Waygood, who operates nearby Church Farm. The guide states: “An unspoilt village watering hole – don’t be surprised to find the vicar behind the bar! Great beers, and rare-breed meat from the pub farm. Not often is a pub is run by a farm and this isn’t the only unusual thing about The Jolly Waggoner. Church Farm also provides rare-breed meat and ‘heritage’ fruit and vegetables for the pub’s menu.” Payne told Propel: “We’re over the moon. Produce is literally walked over the road from the farm.”
   
Eight brands to open at Intu Lakeside: Intu Lakeside has signed eight new restaurants for its fast food and express casual dining offer following a £9 million investment that has seen a complete reconstruction of the upper level at Intu Lakeside. The operators have all signed leases ranging from ten to 15 years and will open this summer. The reconstruction follows demand for space from retail, leisure and catering operators, keen to take advantage of the 25 million annual footfall at Intu Lakeside. New arrivals are: The Italian chef and TV personality Gino D’Acampo’s My Pasta Bar, US burger chain Five Guys, Tortilla, Harpers British Classics, which specialises in good quality, hearty homemade British food and will be opening its first unit outside of its Midlands’ heartland, Wasabi, Patisserie Valerie, Thai Express and Nando’s.
   
Mitchells & Butlers launches updated Harvester offer: Mitchells & Butlers has launched an updated Harvester offer at selected restaurants. The offer includes a new menu, a new drinks range including freshly made smoothies and milkshakes, alongside a new Pepsi Touch Tower machine, and new children’s activities. Alison Fieldhouse, marketing manager for Harvester, said: “The new Harvester offering is designed to create a fun and wholesome dining experience for all the family. We’ve added a number of new dishes including the salsa chicken and pepper stack and the thick-cut pork spare rib which are going down really well, plus we’ve extended our salad bar offer to include new favourites such as Asian noodle salad, Moroccan cous cous and gherkins.”
   
Redcomb Pubs to open third Spirit leased site next month after £500,000 joint investment: Redcomb Pubs, led by Dan Shotton and Mark Draper, will open their third Sprit leased pub, The Bickley, Chislehurst, Kent, on 3 July. Shotton told Propel: “The Bickley is our third Spirit site, which we acquired at the end of last year. We’re transforming what was a very tired events venue back to a hugely prominent suburban local based on The Station in Hither Green (another of our Spirit sites and Spirit’s biggest taking leased site) with eight real ales, an interesting wine list and simple fresh food with a twist served all day. The pub is having a complete makeover, and we’re encompassing the roof garden into the main building to form a new restaurant area, and adding a raised decking area overlooking the gardens. The garden is also getting a new look, with an outside bar, zoning and level variations and a quality play area tucked away to keep the kids happy. There’s a function room that can hold up to 60 people which is also licensed to do weddings.”
   
Harris + Hoole upgrades mobile app: Coffee chain Harris + Hoole has upgraded its mobile app to allow customers to pay without having to touch, tap or scan at the counter. Harris + Hoole’s mobile app, which was first launched in October, has been enhanced with a payments facility allowing customers to load pre-paid amounts upfront. After checking in on their phone as they enter the shop with just one tap, prepaid customers can then put their phone away, and simply confirm their choice of drink with the barista. The app allows customers to select their usual drink, which then comes up on the barista’s till along with the customer’s name and photo, after the customer has checked in. Danielle Anderson, director of digital experience at Harris + Hoole, said: “The mobile payment removes the cold formality of an anonymous transaction and better reflects the kind of friendly exchange you’d expect from your local coffee shop. For the first time anywhere in the UK, a customer can walk into any H+H shop, order their usual from a barista who knows their name and how they like their coffee, and pay – all from just one tap on their mobile. We don’t do tech for tech’s sake – we are always working towards making the experience of drinking coffee magical and anything we can do to enhance that is good for our customers.” The roll out of the new app will be across all 36 stores by 1 July.
   
Freehold of site tenanted by Wagamama in Lincoln put up for sale: The freehold of a site tenanted by Wagamama in Lincoln has been put up for sale. The unit is built on stilts in the water on the site of the old harbour master’s office in Brayford Wharf. It is being marketed at £945,000 with a guide rental value of £62,500 per year. Wagamama opened in Lincoln in November 2012. Local agent Banks Long & Co, is handling the sale – Wagamama will continue to let the building.
   
World food brand Cosmo to open 16th site in York: World food brand Cosmo will create 50 new jobs and invest £1 million opening a new site in York. The buffet restaurant, which will seat 220 diners, is opening next month on the site of the former Argos store in Bridge Street. It will be Cosmo’s 16th UK restaurant. The York restaurant will feature eight live cooking stations, serving food inspired by cuisine from India, China, Japan, Vietnam, Brazil, Italy and Thailand. James Brion, creative director at Cosmo, praised regeneration schemes in York, which he says attracted the brand to the city. Cosmo follows in the footsteps of Star Inn the City, Byron and Banyan which have all opened in the city centre recently, and Carluccio’s which is due to open in Fenwick next month.
   
Stonegate to open new-look student pub, The Mailbox, in Lincoln: Stonegate Pub Company is to re-open the former Varsity in Lincoln as The Mailbox after a £230,000 refurbishment, which has created 12 jobs. The venue will offer a choice of the latest in craft beers, super-fast broadband, interactive digital entertainment and a host of student friendly offers. The Mailbox, will reopen on Thursday, 12 June, just in time for the first England game in the World Cup on Saturday, 14 June, which will see England take on Italy. The Mailbox will have five regularly rotating craft beers on tap while three cask beers will also be available. Customers can try three at once with third of a pint beer flights or alternatively share a two or three pint flagon. The cocktail menu, like the beers, will be available by the glass or as jugs for sharing. The Mailbox will offer a coffee shop style grab and go counter serving tea, coffee and snacks from 8am to eat in or take-away every day following reopening on 12 June. A complimentary Wi-Fi-linked printer will be on hand for printing off last minute assignments. Plugs and USB ports are available for easy phone and computer charging. The new refurbishment will mean the pub will be set up with large trestle-style tables for lots of group dining and socialising as well as comfortable armchairs for lounging.
   
Rufus Hall – Center Parcs and Orchid Pub Company not dissimilar: Orchid Pub Company chief executive Rufus Hall has compared his company to Center Parcs after an invitation to attend the opening of company’s new Woburn holiday site. In his blog, he states: “In my years at Scottish & Newcastle, I worked with both Martin Dalby (an accountant then and chief executive of Center Parcs now) and Martin Robinson (a marketer then and chairman now). Center Parcs is a great business that has stood the test of time and has operated in Europe since 1968 and the UK since 1987. I think we can learn (and indeed take comfort from) what they do: first and foremost they have built a business around people (like Orchid they have Investors In People status); Center Parcs doesn’t stand still – if you do you go backwards in business – and they are always looking to improve what they offer (‘challenge the status quo’ maybe?). They are unique and don’t really have a direct competition. That sounds good! At Orchid we have plenty of competitors but we do try (and should continue) to be unique in what we do for our people and our customers. Successful, modern businesses have to focus on making profit and being part of their community. Center Parcs is totally focussed on working with local businesses and communities and nurturing their natural forest environment. Center Parcs really is the blueprint for a successful business. However, seeing what they are doing confirms to me that Orchid is following their blueprint and that we also have the right ingredients for long-term success.”
   
Jamie’s Italian in Harrogate to miss Tour de France: Jamie Oliver’s Italian restaurant chain will open its doors in Harrogate one week after the world’s biggest cycle event, The Tour de France, races past the new building. A spokesperson for Jamie’s Italian confirmed that the large restaurant will open on Sunday, 13 July. The restaurant will be set over two floors in the new Lateral Property development, Harrogate House on Parliament Street, just metres from the finish line on West Park.
   
Restaurateur opens second concept in Birmingham’s Cube: A new French-inspired coffee house, Madelaine, has opened at The Cube in Birmingham by restaurateur Mike Nayla, his second in the complex. Madeleine will sit on level seven alongside Shogun Teppan-yaki and Bun & Bowl. The brand serves a range of traditionally French pastries and loaves along with artisan coffees and a lunch menu including a range of fresh salads. Nayla said Madeleine is committed to serving only the freshest of ingredients to visitors. He said: “Madeleine is a continuation of my investment into Birmingham. Since opening my first Birmingham restaurant Rodizio Rico in the city two years ago, it has continued to go from strength to strength and now sits comfortably on a par with my London restaurants. Birmingham is home to some of the most celebrated culinary names in the country and it is really exciting to be able to play a part in its delicious diversity. I am thrilled to have been given the opportunity to take on a second unit in The Cube.”
   
Wokingham residents call for Wagamama opening as Cote gets ready to open: Cote will open in Wokingham next month. Cote has taken over the former Lloyds TSB bank in Broad Street. Meanwhile, diners have launched a campaign calling for Wagamama to open in the town centre. The ‘Wokingham Needs a Wagamama’ Facebook page was launched on Sunday, 18 May, attracting 150 likes within the first 48 hours. The page now has 429 likes. It states: “Wokingham needs a Wagamama. We have too many of the same old restaurants, we need Japanese noodles! With enough people we can petition Wagamama to open one.” People power was credited with bringing popular chicken chain Nando’s to the town, after more than 1,400 fans joined a Facebook campaign calling for a branch in Wokingham.
   
Hilton looks to develop boutique hotels: Hilton Worldwide is launching a new brand aimed at upscale travellers as the recently-relisted US hotel group seeks to catch up with rivals that have pushed ahead in the boutique hotels sector. The US-based hotel operator will build a collection of four and five-star independently operated urban and resort hotels under the Curio brand, which it expects to make “material” contributions to earnings in years to come. Hilton is targeting upscale boutique hotels in mature markets, the majority in the US and Europe, said chief executive Chris Nassetta ahead of the launch of the brand. “These are rare, statement hotels that have their own following. There has been a huge demand for these types of properties,” he added.
   
Caffè Nero launches new responsive US website: Following the opening of its first US coffee house in Boston last month, Caffè Nero has launched a new website to create brand awareness and engagement, specifically for the US market. The coffee retailer said it wanted to present to the US market how the Caffè Nero brand resonates “continental, premium, and a strong independent feel”, alongside “coffee authority and expertise”. “We were looking for a simple but impactful approach that felt elegant, premium and focused,” said Karen Kidd, head of brand, Caffè Nero.
   
James Eye – Tiger Bills could challenge TGI Friday’s and Frankie & Benny’s: Lifestyle Hospital Group founder James Eyre has argued that his Tiger Bills brand could challenge TGI Friday’s and Frankie & Benny’s in terms of national prominence. The assertion comes after a deal to open a Tiger Bills on Blackpool Pleasure Beach – Lifestyle was approached by the Lancashire resort’s operator just over a month ago. The deal for the American/Thai fusion restaurant business was sealed last week by Tiger Bills franchise director Craig Brittain. Eyre said: “With expansion as rapid as it is, I see no reason why Tiger Bills won’t become the next best-known neighbourhood dining chain along with TGI Friday’s and Frankie & Benny’s.” The Tiger Bills franchise arm is on track to achieve a turnover increase of 150% this financial year.
   
Thai restaurant chains opens fourth site: Thai restaurant brand Lemongrass has opened its fourth site, this time on the edge of Horsham town centre. It had opened in the Bishopric in the premises previously owned by Little Buddha. Due to complications with the electricity supply, the opening was postponed by a week or so.
   
Peer-to-peer lending platform enables cider producer to expand: A £72,000 loan from Leeds-based peer-to-business lending platform Rebuilding Society will allow a cider producer to relocate to bigger premises. The loan will enable Mr Whitehead’s Cider, based in Hampshire, to expand the £1m turnover business, which produces a range of ciders, vinegars and juices for major supermarkets and national pub chains, including Tesco and JD Wetherspoon. The Rebuilding Society loan involved 150 people lending an average of £480 each, with the smallest contribution being just £10. The cider producer makes monthly capital and interest repayments, with rebuildingsociety.com acting as administrator to distribute the funds to lenders.
   
Spirit pledges support for prostate cancer charity this summer: Spirit Pub Company has announced it is to support Prostate Cancer UK’s Men United campaign this summer. Spirit, which has raised over £145,000 in the last four years through fundraising initiatives for the charity, has committed to support its latest campaign, Men United v Prostate Cancer, during the key summer months when pubs are expected to be packed with guests watching the all-important summer football games. The partnership, which kicks off today until 31 July, aims to raise over £30,000 for Prostate Cancer UK and will see more than 750 pubs take part across Spirit’s Flaming Grill, John Barras, Taylor Walker, Fayre & Square and Chef & Brewer brands. Mike Tye, Spirit Pub Company chief executive, said: “The pub is the perfect place to meet with friends to enjoy the “beautiful game” this summer. This gives us an ideal opportunity to help Prostate Cancer UK improve awareness among our guests and drive those all essential donations that help towards fighting the disease.”
   
Peach Pub Company names Lynx a Super Supplier: Buying specialist Lynx Purchasing has been named a Super Supplier 2014 by Peach Pubs. The award was announced at the annual Peach supplier party, held at The James Figg pub in Thame, and marks the second year in a row that Lynx has won a Peach award. Peach has built its reputation on offering high quality fresh, seasonal food with a strong focus on British sourcing. Lynx Purchasing has worked with Peach since its first pub opening 12 years ago, sourcing products based on Peach’s specifications as well as negotiating prices with a range of specialist suppliers.
   
Admiral Taverns increases food support for licensees: Admiral Taverns has announced further support for licensees wishing to develop a food offer in their pubs, giving hundreds of publicans the opportunity to boost their dry sales. The new ‘Build a Menu’ initiative is a bespoke service that allows licensees to choose from over 160 dishes in a central food bank, with easy-to-understand instructions on how to prepare, cook and store, how to control portion sizes, as well as where to buy the products from. Admiral’s catering development team has also increased in size, with experienced former chef Wayne Child having joined the three-strong team in advising Admiral licensees across the country on food preparation, cooking tips, choosing the right suppliers and food trends. Nina Walker, catering executive at Admiral Taverns, said: “Food is becoming an increasingly important profit opportunity for many pubs, and this new initiative will help support any publicans wanting to introduce food, or build their existing offering. As part of engaging with our licensees in every aspect of their business, we want to ensure that they are given the best information and advice on how to improve their food offer, should they wish to.”
   
Exmoor Ales set to triple production after £700,000 investment: West Country brewery Exmoor Ales is set to triple its production, thanks to a £700,000 investment. The new funding has been secured from HSBC’s Bristol and Bath Commercial team and a grant of up to £50,000 from the Regional Growth Fund (RGF). It was arranged by the brewery’s long-term partners – accountant Bishop Fleming. James Finnegan, head of Bishop Fleming’s corporate finance team, said: “Having operated from a small property in Wiveliscombe, Exmoor Ales’ rapid sales growth has demanded investment in bigger premises and more plant. Their cask ales are now increasingly stocked by JD Wetherspoon, Punch, and Enterprise Inns, with sales also growing among independent West Country pubs, while their bottled ales are now being listed by major supermarkets. The £700,000 investment enables Exmoor Ales to move into larger premises next door to their current brewery, install new equipment, and employ more people. It will also enable them to triple weekly production from 55,000 to more than 165,000 pints per week.”
   
Purity Brewing Co launches its first craft lager: Purity Brewing Co has launched its first hopped craft lager beer ‘Lawless’ which brings together the 500 year old techniques of the German Purity Law with a meticulously crafted 4.5 ABV brew. Lawless is made using four pure ingredients and is matured for 40 days to produce a flavoursome craft lager beer. Florent Vialan, head brewer at Purity Brewing Co. led the team behind the beer’s development: “We wanted to brew a craft lager that was different to what’s already on offer but that was also very drinkable, a premium lager with a Purity twist. Thanks to the Braukon system, designed to brew Bavarian beers, we’ve been able to create a refreshing, fruity and hoppy lager just in time for summer.”
   
Reynolds targets sales of £300m: Reynolds Catering Supplies is targeting sales of £300m as part of a growth strategy that has seen the expansion of its depot in Waltham Cross. The foodservice suppliers, whose customers include PizzaExpress and Pret A Manger, reported “record” sales of £178m for the year to 31 December 2013. Managing director Tony Reynolds said: “This year we will break the £200m mark. The next major milestone within our five year plan will be annual sales of £300m, which we fully expect to reach within a few years’ time.”
   
OLIM buys £28m portfolio of Stonegate pubs: Agent Coffer Corporate Leisure, on behalf of vendor PFA Acquisitions, has completed the sale of a portfolio of 15 freehold pubs let to Stonegate Pub Company Limited or subsidiaries benefiting from a guarantee by the full Stonegate covenant. The portfolio has been acquired by the investment managers OLIM Property Limited, chaired by Matthew Oakeshott, on behalf of discretionary pension fund and investment trust clients in an off market transaction totalling £28.27 million, which reflects a 6.31% net initial yield. The portfolio contains six Slug & Lettuce’s, four Yates’s and five unbranded pubs located throughout England and Scotland with a total rent of £1,887,882 p.a. The leases also benefit from indexed uplifts throughout their 25 year term. Stonegate Pub Company is one of the largest managed pub companies in the UK with an estate of over 620 pubs including over 260 freehold and long leasehold pubs. Mark Sheehan, managing director of Coffer Corporate Leisure said: “OLIM Property moved fast to acquire this package of high quality town centre pubs. With their wealth of experience acquiring leisure properties they were attracted by both the substantial covenant and quality assets in major towns and cities. They completed the purchase ten working days after we first offered it to them. Leisure is an attractive sector for property investors. Taking long leases, at reasonable rents, from a best-in-class operator in the pub sector is a very attractive proposition. We believe we will see many more such transactions over the coming months”. Matthew Oakeshott, Chairman of OLIM Property, said: “This is our kind of deal. We were offered it direct with the full facts at a realistic price by a committed seller for an immediate decision. We said yes in a day, and got our skates on from London to Cheltenham and Poole to Perth with our team of advisers to get it done in ten”. The locations are: Islington, Romford, South Woodford, Sutton, Cheltenham, Poole, Lincoln, Newcastle-under-Lyme, Sale, Blackpool, Leeds (Lower Briggate), Leeds (Woodhouse Lane), York, Newcastle-upon-Tyne and Perth. Kitchen La Frenais Morgan, Fleurets and Shepherd and Wedderburn acted for the purchasers, with CCL and Speechly Bircham for the vendors.

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