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Sun 10th May 2015 - Sunday update: Enterprise, Wetherspoon, YO! Sushi, Keuken, Punch
Jamie Rollo – Enterprise Inns strategy review could lead to higher quality, smaller estate: Morgan Stanley leisure analyst Jamie Rollo has forecast Enterprise’s Tuesday strategy review announcement, updating on how it will maximise long-term value from the estate, could lead to a smaller but higher quality estate. He said: “We think (the new strategy) will involve more investment in building up Enterprise’s fledgling managed pub business, offering more flexible and franchised contracts (extending project Beacon), offering more attractive terms to some pubs, shifting capex back to shorter-term projects, reducing some support for some pubs, and accelerating the disposals of non-core pubs. This will likely mean higher operating costs, which could impact shorter-term profit forecasts, and EPS dilution from selling assets and paying down debt. It could also mean exceptional charges if a restructuring or accelerated disposal programme are required. While this means more uncertainty for investors over the next couple of years, ultimately this should lead to a higher quality, more viable, and faster growing (if smaller) pub estate, a part of which we think could even be spun off as a REIT, although the company has not discussed this.” Meanwhile, Canaccord Genuity has removed Enterprise Inns from its list of stocks to avoid and moved to a more moderate ‘Hold’ investment rating from ‘Sell’, stating that the prospect of a new Conservative government should result in the regulatory threat to the company receding. Punch Taverns was also upgraded to a ‘Hold’ rating in a report released on Friday. Canaccord analyst Nigel Parson said: “A new Tory minister at the Department for Business, Innovation and Skills should be much less interested in tightening the dreaded MRO [Market Rent Option] clauses that so worry the owners and managers of the tenanted pub industry. A hung parliament or a Labour/SNP victory would have made this problematic but, fortunately, now management can present against what should be a more benign political outlook.” 

JD Wetherspoon to open ‘one of UK’s biggest pubs’ on Tuesday: JD Wetherspoon will open one of the biggest pubs in the UK on Tuesday, when it unveils its new 9,000 square foot Velvet Coaster pub in Blackpool, located in the former Lucky Star amusement arcade on New South Promenade. The pub, which has seen a £3.86m investment, will feature three bars over three floors, with a ground floor beer garden, a balcony terrace on the first floor and roof garden and bar. It will employ 160 people, jut ten fewer than the company’s new 7,500 square foot Standsted airport air-side site which is understood to turn over £200,000 a week and opens much earlier at 4am in the morning. The new Blackpool pub, which adds to Wetherspoon’s existing Blackpool estate of three pubs, offers funfair-themed decor with carpets and a fireplace area having ‘waltzer’ style designs. The pub will be open from 8am until midnight seven days a week.

The cost of “delivery” McDonald’s is absurd: A magazine columnist who tested McDonald’s new delivery service in New York, launched in partnership with delivery app Postmates, has argued the cost makes it a non-starter for smaller orders. In Entrepreneur magazine, Kate Taylor stated: “McDonald’s arrived still warm and with plenty of condiments. Even the fries, which have the greatest potential for disaster as they go from uniquely tasty when hot to soggy and disgusting when cold, remained warm. Drive-thru service has prepared the company well for providing food on the go. However, cost proves to be McDonald’s delivery downfall. Paying $5.25 for a meal that only cost $3.48 is simply absurd. McDonald’s is too inexpensive for most customers to consider delivery to be worthwhile as a $5 fee can easily double the cost of a meal. While it may make sense for larger orders, such as families or special occasions, it seems unlikely that delivery will ever become essential to the chain in the way the drive-thru is.”

Deliveroo launches in Birmingham: Deliveroo, the food delivery service that aims to bring high-quality local restaurant meals to customers’ doorsteps, has now launched in Birmingham, with more than 40 restaurants in the city centre, Edgbaston and Moseley signed up to the service and outlets in Solihull expected to join next month. The two-year-old company, which raised more than £16m earlier this year to support its European expansion, is already live in London, Brighton, Manchester and Reading. The service enables customers to select dishes from a variety of local restaurants, pay for them online and have them delivered to their home or office. It has recruited a team of eight full-time staff to its new office in Broad Street, Birmingham, and 15 part-time drivers. Deliveroo has also teamed up with Digbeth Dining Club, the award-winning West Midlands street food event, to offer users the opportunity to order food for delivery from a different street trader each week for the next four weeks. Jacob Lourie, regional manager at Deliveroo, told The Birmingham Mail: “Birmingham has such a vibrant culinary scene and is full of fantastic eateries and restaurants which, until now, you’d have to visit to experience. Deliveroo provides restaurants that don’t normally offer a delivery service with the means to reach new audiences, as well as helping to raise the profile of Birmingham’s fantastic independent venues.”

Four private equity firms through to second round of YO! Sushi auction: Four private equity firms have made it through to the second round of the £120m YO! Sushi auction, The Sunday Times has reported. The private equity firms include Morgan Stanley’s private equity arm, 3i and Mistral Equity Partners, a New York-based investment firm. YO! Sushi, which has opened its first two directly-managed sites in the US in the past fortnight, is owned by Quilvest.

Punch Taverns may sell Matthew Clark stake: Punch Taverns could sell its 50% stake in wholesaler Matthew Clark after Rothschild was hired to work on a sale process for the business, The Sunday Telegraph has reported. Punch invested £35m in cash to acquire the 50% stake in 2007 when Giles Thorley ran Punch Taverns – and the stake may be worth as much as £100m now. Matthew Clark turned over £800m last year and produced profit of £25m – the company has benefited from the collapse of fellow wholesaler Waverley TBS in 2012. When Punch bought its stake in Matthew Clark in 2007, sales were £500m and Ebitda stood at £15m. Australian private equity firm Champ owns the other half of Matthew Clark.

City Pub Company looks to raise £15m: City Pub Company, led by Clive Watson, is looking to raise £15m to buy more pubs ahead of a possible flotation, The Sunday Telegraph has reported. The company is planning to issue preference shares paying a 6% coupon to wealth management groups and individual investors to raise cash to buy more pubs. It plans to add a further 35 pubs over the next three year before a potential listing on the AIM market. Stockbroker Panmure Gordon is handling the fundraising, which should be complete by the end of May.

Keuken launches on Crowdcube: Keuken, offering a convenient way for Londoners to buy healthy, nutritious meals via a wall of self-service machines, has launched on Crowdcube, seeking to raise £100,000 in return for 17% of its equity. The pitch states: “It is our plan to build a strong and recognisable brand and to set up four shops over the first five years, resulting in a projected valuation of £7.2m at the end of year five. In addition, we will explore options to franchise Keuken across the UK. Due to our low forecasted running costs and high profit margin, Keuken should be able to compete against the major players in the industry, our Ebitda is planned to reach £1,031,371 on the exit year. We believe Londoners are becoming increasingly frustrated with lunch break queues cutting into their dwindling free time. Tapping into a £31 billion eating out market (2012 figure), Keuken is all about saving Londoners time while offering healthy, nutritious take away meals to bring back to their offices, take to meetings or to enjoy in the park during lunch time. Our wall of machines installed directly in front of our kitchen means customers can grab a quick meal by simply tapping their card or mobile device on the machine and taking their food with them on-the-go. To the best to our knowledge and based on our research of UK and European markets, we will have a first mover advantage which we believe will allow us to generate sales of nearly £200,000 by the end of the first year, reaching £300,000 by the end of the third year. A similar concept has reached market penetration of 35 stores in the Netherlands. The funds raised from Crowdcube should allow us to set up a store near Old Street station in Shoreditch, London.”

Upham Brewery reports 60% rise in like-for-like sales: Upham Brewery, founded by farmer John MacMillan six years ago, has reported a 60% rise in like-for-like sale in the past year, The Sunday Telegraph has reported. A deal with Enterprise Inns has increased the number of stockists from 250 to 240. The company, which operates 12 pubs in the Home Counties, is seeking to raise £30m through the Enterprise Investment Scheme, to grow its pub estate to 40 sites. It raised £11m two years ago. It is currently looking to relocate its brewery to a larger site.

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