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Wed 11th Nov 2015 - Propel Wednesday News Briefing

Story of the Day:

McDonald’s aims to become 95% franchised as it converts 4,000 restaurants to franchise: McDonald’s is to convert 4,000 directly managed restaurants to franchise before 2018, with a long-term goal to move from 81% franchised to 95% franchised, chief executive Steve Easterbrook has told investors. The accelerated franchise plan, an increase of 500 on earlier plans, will move McDonald’s to become a 91% franchised business. It also plans to optimise the company’s capital structure and increase the cash return to shareholders target to about $30 billion for the three-year period ending 2016. The vast majority of the incremental cash return of $10 billion will be funded by issuing additional debt. Easterbrook said: “The cornerstone of our system is our powerful and enduring brand. While we are still in the early stages of turning around our business, we are gaining momentum by focusing on our customers and what matters most to them – hot and fresh food, fast and friendly service, and a contemporary restaurant experience at the value of McDonald’s. My priorities for McDonald’s as a modern, progressive burger company are three-fold: driving operational growth, creating brand excitement and enhancing financial value. We are taking bold, urgent action to reset the business and prepare the company for the next chapter of its history. Our turnaround depends on this: we must run great restaurants each and every day. We’re leveraging our competitive strengths: iconic menu items that customers love, a unique franchise model that empowers local entrepreneurs, size and scale that makes operational investments efficient, and a global, well-diversified geographic footprint. Together, these brand attributes provide McDonald’s with the foundation and capabilities for continued success.” The company will spend $2bn in 2016, split between opening about 1,000 new restaurants and reinvesting in existing restaurants. Meanwhile the company has decided against converting to Real Estate Investment Trust (REIT) status. Chief administrative officer Pete Bensen said: “We have concluded that any potential value creation from a REIT is out-weighed by the significant financial and operational risks to our business and the continued progress of our turnaround, and we do not believe that pursuing a REIT would be in the best interest of McDonald’s at this time.”

Industry News:

Propel and Elliotts partner for Advanced Marketing Masterclass: Propel is partnering leading sector public relations and marketing firm Elliotts for the inaugural Advanced Marketing Masterclass. The event takes place on Thursday, 14 January at One Moorgate Place in London. It will provide an insight into all aspects of marketing across the sector including how to develop and deliver effective digital initiatives and the best ways to recognise and tell a brand’s story to maximise its PR or social media potential. There will also be the latest insight into consumers’ behaviour to help companies develop marketing strategies around their customers as well as how to brief and work with an agency effectively. The event will feature contributions from Novus Leisure and Brazilian barbecue restaurant Cabana about some of the marketing initiatives they have used to improve results for their business. Elliotts strategy and development director James Hacon will also lead a panel discussion with marketing directors from leading brands. Tickets are priced at £295 for Association of Licensed Multiple Retailers (ALMR) members and £345 for non-ALMR members and are available by emailing Adam Dickinson on

Punch Taverns set to launch new coffee-led concept Brewed and Baked this month: Punch Taverns will open its new bakery cafe concept Brewed and Baked on Monday, 30 November. The company, which operates more than 4,000 pubs across the United Kingdom, is to open its first venue at the former Burgh bar in Musselburgh, in East Lothian, Scotland. Divisional director David Wigham told Propel previously: “We think this is a site that’s passed its best as a pub and lends itself to taking advantage of emerging market dynamics around coffee – it will be a licensed coffee shop. Starbucks and others are starting to sell alcohol – this will be Costa meets Greggs meets a pub. This pub has a high street location and we’ve taken our cues from what we’ve seen emerging in the market.” Punch is making a £125,000 investment into creating the new franchise, which features the cafe-bistro decked out in an orange and black design. The site will be run by an individual licensee in line with Punch’s traditional business model.

Leicestershire chip shop named UK’s best takeaway: The inaugural British Takeaway Awards in association with Just Eat have crowned a humble village chippie as the best takeaway restaurant in the country. Chris’s Fish and Chips in Barwell, Leicestershire, came top after a public vote of more than 100,000 customers in the competition. The chip shop, run by Stratis Kyriacou and his wife, who pride themselves in offering “great fresh fast food with the local community at its core”, beat off competition from 25,000 other outlets including noodle bars, sushi restaurants and Indian outlets for the coveted award. Other regional winners included the North East Retro Sweet Shop in Darlington – the first UK takeaway service to deliver American candy and Oreo milkshakes to homes. Other regional winners included: Galos UK, Hertford – best takeaway in the east; Wiwo Noodle Bar, Cardiff – best takeaway in Wales; Brunch, Prescot – best takeaway in north west; Sakushi, Sheffield – best takeaway in Yorkshire and Humber; Eastern Cuisine, Crystal Palace – best takeaway in south London; The Golden Fish, Dagenham – best takeaway in north London. The winners were decided after topping a public vote of more than 100,000 customers regionally, a mystery shop and scrutiny from an independent panel of judges. The UK takeaway industry is worth £9bn to the UK economy. Total employment in the takeaway industry rose by 10% from 2012 to 2014 and by nearly 17% over the past five years.

Merlin Entertainments to axe nearly 200 jobs at Alton Towers: Merlin Entertainments is to axe nearly 200 jobs at Alton Towers after takings were hit following a serious rollercoaster crash where five people were seriously injured. The company warned in September the business had been impacted severely by the accident on The Smiler rollercoaster in June. Merlin said it had seen “significantly reduced visitation following the accident exacerbated by relatively poor weather in the UK in August resulting in like-for-like revenues in the Resort Theme Parks Operating Group declining by 11.4% year-on-year”. It is understood the job cuts at the Staffordshire theme park is part of a restructuring of its operation in time for next year’s summer season with the move meaning the loss of up to 190 employees. Alton Towers employs about 1,000 permanent staff although this can double during the summer months as a result of seasonal workers being taken on. It is thought savings may also be made as a result of the company, which also operates the national Sea Life centres and the Legoland theme park, not filling vacancies and redeploying staff elsewhere. The company told the BBC the decision to axe the jobs had been a difficult one but it had been made to ensure the long-term viability of the business.

Nuno Mendes launches crowdfunding campaign to raise £1.75m to reopen Michelin-starred restaurant:
Chef Nuno Mendes has launched a crowdfunding campaign to raise £1.75m towards the reopening of his Michelin-starred restaurant Viajante. Investors on crowdfunding platform Seedrs are being offered 33% of the restaurant’s equity for the money. The Portuguese chef, who currently runs Taberna do Mercado in Spitalfields and is executive chef at Marylebone’s celeb-filled Chiltern Firehouse, closed his original Bethnal Green site in February 2014. It ran for over four years, gaining a Michelin star just eight months after opening, which it maintained until the end. He said: “Viajante was a very special project for myself and the team, a project that we were all incredibly proud of and extremely sad to have to end. We all believed that the restaurant was going from strength to strength at the time of closing and ever since I have been committed to launching it one day. We have now secured an amazing location and we have decided to launch Viajante through an equity crowdfunding platform because we want to give our friends and supporters, the people of London, Portugal and from around the world, a chance to become part of making our dream a reality, while also sharing in the planned success.” The site he has found is in Metropolitan Wharf, a revitalised Victorian warehouse on the river in Wapping. The aim is to open the restaurant in autumn 2016.

Sourced Market makes strong start on Crowdcube: Sourced Market, which is led by Ben O’Brien and Dan O’Niell and serves 12,000 customers a week in St Pancras producing net annual revenue of £2.9m and Ebitda of £372,000, has made a strong start with a 8% interest bearing mini-bond offer on Crowdcube, raising £303,000 from 28 investors on its first day towards a minimum target of £750,000 and a maximum target of £1.5m. The pitch states: “We are seeking to raise £750,000 to open our second site at 12-15 Marylebone Lane, which is currently at the design stage and is scheduled to open on 1 March 2016. The lease for this site has been agreed and the completion date set for early November 2015. In the event we raise our maximum £1.5m target, we intend to use the proceeds to also open sites three and four. Site three is in the Nova Victoria development, the lease has been exchanged and the site opening date is September 2016. If we fall short raising the full £1.5m, we intend to raise additional equity and/or debt from alternative sources to open sites three and four and continue our expansion plans. The cost of opening each site is circa £400,000 and circa £100,000 is required for pre-opening costs and working capital for the first 12 months until the sites become profitable.” The Sourced Market business plan shows sales of £12,317,000 from four sites in 2020, producing site Ebitda of £1,860,000.

Greene King IPA sales soar in China: Sales of Greene King IPA, a pint of which China president Xi Jinping was pictured sipping during his recent visit to The Plough at Cadsden pub in Buckinghamshire, have soared in China following last month’s state visit to Britain. “It has just gone berserk,” said Peter Bloxham, a Beijing-based British businessman who imports Greene King beers into China. “It’s unbelievable. Within two days of the great bar scene, people from all over China were ringing: agents, restaurants, bars, hotels. They wanted this beer. You couldn’t pay for the promotion. It would cost you a fortune. We are now completely out of stock in our warehouse in Beijing of everything to do with Greene King.”

US fast-food workers stage $15-an-hour protest: Fast-food workers in nearly 300 US cities staged a walkout at 6am yesterday (Tuesday, 10 November) in a bid to leverage their crusade for a $15-an-hour wage and sway the 2016 presidential election. The group representing the workers, Fight for $15, planned protests at restaurants in 270 cities, the most since it began organising the demonstrations three years ago.

Company News:

Walkabout operator Intertain reports like-for-likes up 10.1% in 11 weeks since early July: Companies House documents show Walkabout operator Intertain, owned by Jon Moulton’s Better Capital and led by John Leslie, is seeing the benefits of its investment of £2,433,000 in five major sites with like-for-like sales up 10.1% in the 11 weeks since early July. The recent sales uptick contrasts with the overall 35 weeks to the end of September 2015 when sales were 6% lower that the previous year due to the “distraction and uncertainties surrounding (our) CVA at the beginning of 2015, the magnitude of additional sales during June and early July when the FIFA World Cup took place last year, closure periods for five major refurbishments (typically four weeks each) and significant underperformance at two venues due to new competition and operating challenges respectively prior to their recent refurbishments”. The company reported its February 2015 CVA, which involved exiting nine leases and reducing rents to market levels at a further five, cost £1,689,000 with 76% of creditors voting in favour. The majority of the cost comprised compensation payments to landlords and indemnities for general rates up to 12 February 2026. Payback of one year is expected as a result of the removal of loss-making sites and rent reductions. The company turned over £48,264,000 in the 52 weeks ended 31 January 2015 (2014: £50,560,00) and made operating profit before exceptional items of £1,841,000 (2014: £664,000). In September, Better Capital increased its long-term loan facility to the company by £3.1m.

Novus Leisure – we’re evolving Balls Brothers from its wine focus into a ‘drinks emporium’: Novus Leisure chief executive Toby Smith has reported the company has evolved the offer at its Ball Brothers business, its seven-strong premium wine bars business in the City of London, taking £7.5m per annum. The brand has become a “drinks emporium”, broadening its wine focus. He told the Propel Multi Club Conference: “We wanted to make a real statement about quality. We wanted to be a drinks emporium so we ripped up the existing drinks range and started again. The icing on the cake was making sure the team was very knowledgeable as well – so they could back up our new drinks range. We took our drinks range and extended it, particularly around champagne and wine, where the list is now 73 bins long. That’s actually a slight reduction from the previous wine list. But we’ve kept all the old favourites but introduced some of the new emerging wines – and we’re a big supporter of English wine as well. We added the Meantime range alongside our core products. There’s also now an opportunity to have a more exciting soft drinks range so there are so big changes around that. The biggest change is taking a business renowned for its wine and making it the same for spirits. We tackled gin, whisky and fortified wine. We flavour-mapped our gin, whisky and fortified wine range and mixed with recommendations. As a customer you can see whether your preferred gin, is spicy, citrus or floral, and then you can flavour-map that with an accompanying tonic or mixer that actually fits your flavour profile. We have two completed and they are going great guns.”
Hall & Woodhouse renegotiates loan facility, £60m now in place: Companies House documents show Hall & Woodhouse renegotiated its loan facilities after its year-end on 31 January 2015 with a £60m facility now in place. The company’s total borrowing rose by £2.2m to £47.3m in the financial year, which saw the third consecutive year of 10% growth in profits. Turnover increased by 9% to £109.5m and profit before tax was up 11% to £7.8m. Capital investment in the year rose to £16.9m (2014: £10.4m).

Superdry’s Julian Dunkerton adds to Cotswolds portfolio: Julian Dunkerton, mastermind behind High Street giant Superdry, has bought another Cotswolds pub. Dunkerton Properties has bought the Wild Duck at Ewen, near Cirencester, with the vendors being advised by Colliers International. It will trade in the same stable as 131 The Promenade in Cheltenham, The Wheatsheaf at Northleach, The Chequers at Churchill and No 38 The Park in Cheltenham (formerly Hotel on the Park). Rooms will be shut until further notice while the new owners refurbish the bedrooms. Peter Brunt, of Colliers, said: “The Wild Duck is a top drawer Cotswolds’ classic, with all the trimmings and royal credentials to boot. I am looking forward to seeing what Dunkerton Properties bring to this well-established business.”

Wyn Ellis – Which? survey shows Travelodge catching up with Premier Inn: Numis Securities leisure analyst Wyn Elis has noted that a Which? survey of consumers indicates Travelodge is gaining ground on Whitbread-owned brand Premier Inn. He said: “Which? magazine has published the results of its annual member survey of experiences of staying in UK hotel chains. Whitbread’s Premier Inn did very well, scoring 83% (versus 82% in 2014 and 76% in 2013) and moving from second place to first. The results highlight the continuing gulf in customer satisfaction between Premier Inn and its major budget competitors, Travelodge and Britannia, in our view. However, an improvement in Travelodge’s showing is apparent: it moved out of the bottom five and scored 65% versus 60% in 2014 and 50% in 2013. The survey was undertaken between June and August 2015 and was based on 5,991 responses (1,685 for Premier Inn and 691 for Travelodge). Holiday Inn and Holiday Inn Express scored 68% and 72% respectively. Our cautious stance on Whitbread is based on three key concerns: UK hotel revpar growth is slowing; Travelodge has been rejuvenated and is likely to provide tougher competition, and; that the impact of the sharing economy (Airbnb etc) will become increasingly disruptive.”

Pret A Manger unveils Christmas menu:
Pret A Manger has launched its Christmas menu. Last year, the sandwich chain sold 625,000 of its Christmas lunch sandwiches (a choice of turkey with sausage and sage stuffing or roasted butternut squash with a chunky nut pesto) in just two months. They have returned along with the brie and cranberry baguette and the Christmas ham hock soup. They’re joined on the menu by a beef wellington baguette – slices of rare roast beef on a bed of rich mushroom duxelles and fresh watercress, inside a freshly-baked baguette. New hot drinks have been added including mint hot chocolate, topped with whipped cream. The Pret foundation trust will donate 50p from every Christmas sandwich and baguette sold this year to charities supporting the homeless around the UK.
D&D London to open German Gymnasium tomorrow: Quaglino’s operator D&D London will open its German Gymnasium site at King’s Cross tomorrow (Thursday, 12 November). It occupies the newly renovated grade II-listed former gymnasium between King’s Cross station and St Pancras International. Designed by architect Edward Gruning in 1864-65, this was the first purpose built gym in England and home to the first indoor Olympic Games in 1866. 150 years later the venue is reopening with a brand new complex, comprising one of King’s Cross’ largest al-fresco terraces, a patisserie counter, an all-day Grand Café serving breakfast through to dinner, a restaurant and the Meister Bar. German-born executive chef Bjoern Wassmuth has created menus featuring some classic Mittel-European dishes as a nod to the site’s German heritage. The new interiors, designed by Conran & Partners, feature a triple height ceiling and contain a blend of restored original features and modern interpretations, such as the gold mesh screens inspired by Victorian detailing and fencing masks.

Sticks ‘n’ Sushi and Chopstix line up Cambridge openings: Sticks ‘n’ Sushi has put in a planning application to open in the Old Library, part of the Guildhall, next door to Jamie’s Italian in Cambridge. Meanwhile, Chopstix has applied for a change of use for the Fones 4 Ever store in Market Street. Councillor Lewis Herbert, leader of the city council, welcomed the rise in restaurants and says it gives more choice to residents. He said: “City council planning policies help us ensure that the all important retail offer and range is protected along with the vitality of the city centre, but is also important that we also help a diversity of restaurants and food outlets develop in the centre to meet all tastes and budgets. Many of these new smaller restaurants are replacing the formerly excess number of mobile phone shops, so for me personally, and I believe for many others too, the new choice of eateries is a net gain for Cambridge.”

Well-known seafood restaurant slips into administration: A well-known seafood restaurant in St Ives, which featured in The Good Food Guide 2015, has entered administration after experiencing “severe financial difficulties” following disappointing summer trading. Administrators said all staff at Seagrass St Ives were made redundant prior to the restaurant’s closure but that discussion were ongoing to potentially reopen. The restaurant, which operated seasonally, had been due to shut for the winter at the start of November but a high level of rent and disappointing summer trading forced it to close. Lisa Alford and Chris Parkman of Purnells were appointed as administrators of Seagrass St Ives on 27 October 2015. Parkman said: “The company ran a seasonal restaurant in St Ives Cornwall and had run into severe financial difficulties due to the high level of rent being charged and also a below average summer trading. The restaurant was due to close for the winter on 1 November 2015 in any event. However, the director took the decision to close the restaurant on Saturday, 24 October 2015 and the staff were made redundant. The director then decided to place the company into administration on 27 October 2015.” Parkman added negotiations were currently ongoing with the landlord to reopen the restaurant and re-employ the company’s former staff.

Entrepreneur launches first Wrapchic site: A businessman has set up his first Wrapchic franchise business at the Westfield development in Bradford, thanks to loan facilities provided by new banking partner Royal Bank of Scotland. Aravind Venkana has ten years’ experience in the fast-food sector and plans to establish Wrapchic as the only fast-food outlet to serve Indian and Mexican cuisine at Westfield. “I was looking for an interesting blend of Indian and Mexican flavours in the food-to-go sector and Wrapchic certainly delivers on this,” said Venkana. “I have spent several months modifying the premises at Westfield to provide a modern and welcoming environment for our customers to enjoy and I am pleased with the overall look and feel.”

Easyhotel signs franchise deal for Middle East: Easyhotel has signed a master development partnership with Man Investments to develop Easyhotels in the Middle East. Man Investments will focus its new developments in the UAE and Oman, and the new Easyhotels are expected to comprise new purpose-built assets and conversions of existing hotel and/or office buildings. Man Investments’ development program targets an initial opening of 600 rooms by 2017. Following these openings, Man Investments is targeting at least 1,600 rooms by the end of 2020. Man Investments has already secured land or properties that will accommodate the 2017 openings. For example, the first hotel will be a 300-room Easyhotel built in the Bur Dubai area of Dubai. Bur Dubai is recognised as being the trading hub of Dubai and the UAE. This flagship project will mark the start of intensive development under the new master development partnership across these regions. Easyhotel will enter into a franchise agreement for each hotel that will be developed.

Work to start early next year on restaurant scheme extension at Leeds shopping centre: Work will start early next year to extend an out-of-town shopping centre in Leeds and build six new restaurants anchored by an 11-screen Cineworld cinema. Owner Land Securities is adding 65,000 square foot to its White Rose complex having received planning permission for the development two years ago. It said deals with four of the six restaurants are now with lawyers with the scheme due to be completed in 2017, the 20th anniversary of the retail park opening. Chief executive Robert Noel told The Business Desk: “Land Securities continues to deliver the right space at the right time, and it’s paying off. Our retail portfolio is performing well and leasing levels in our London developments remain strong. In retail, our portfolio is focused around our core themes of dominance, experience and convenience. Operationally we are strong, with retailer sales and footfall up in our shopping centres and voids down. Our strategy is working and we are well positioned for the future. We have better assets, with higher quality income, and our balance sheet is stronger than ever.”

Skeens joins TLT from Jeffrey Green Russell: Licensing expert Julian Skeens has joined TLT as a partner in the firm’s specialist licensing team. Skeens will work alongside TLT partners Matthew Phipps and Stephen McGowan delivering licensing services to clients across England, Wales and Scotland. He will be based out of the firm’s London office. He was previously head of the licensing law group at Jeffrey Green Russell, where he led on a number of high profile cases, advising a range of clients including pubs, nightclubs, galleries, theatres, venues and hotels. Skeens has been involved in a number of industry firsts including licensing the first UK multi-activity centre, the first UK 24-hour public entertainment licence and the UK’s largest licensed premises. TLT’s Julia Lucas, partner and head of leisure, said: “Julian has a fantastic reputation and unrivalled experience in the sector. He brings with him a wealth of expertise that compliments and bolsters the firm’s UK licensing offering to our growing client base. I’m delighted to welcome him to TLT.”

Franco’s receives £675,000 funding package: Franco’s fish and chip shop on Aberavon seafront is to be transformed into a 100-seat restaurant thanks to a six-figure funding package. The investment comprises a £400,000 loan from Finance Wales and a loan of £275,000 from Lloyds Bank as well as personal investment from the business. When the restaurant opens this year it is expected to employ 20 extra staff. Franco’s has operated for more than 30 years and serves about 75,000 visitors and locals 250,000 portions of chips a year. The owners are hoping the new restaurant will become popular with visitors and match the success of its other seafront business, Café Remos. Ray Di Francesco, co-owner with wife Monya, said: “With the new investment being pumped into the area these are exciting times for Aberavon. We expect our footfall to grow significantly in the future so this funding package has come at the right time for us, providing us with the backing we need to capitalise on this opportunity.”

Fuller’s adds to keg ale portfolio: Fuller’s has added Montana Red to its keg ale portfolio. The beer is available through Westside Drinks and the company’s traditional free trade channels and will be in selected Fuller’s managed houses. Montana Red follows the style of American red ales in its hop-driven flavour profile. Fuller’s brewing director John Keeling said: “We always want to brew exciting beers full of flavour. Today’s popular beers are packed with flavour and I am very happy with the depth of flavour our keg portfolio offers, Montana Red is a perfect addition that combines styles and ingredients from all over the world.”

Brewlab partners Wimbledon Brewery to educate new generation of brewers: Brewlab, the Sunderland-based provider of training and analysis services for the international brewing industry, has teamed up with the Wimbledon Brewery with the aim of educating a new generation of brewers. The first two courses – Craft Brew Quality and International Start-up Brewing – are being held at Wimbledon Brewery’s training centre this week. Wimbledon Brewery started production of cask beer in July of this year, with master brewer Derek Prentice at the helm. Its 30-barrel brewhouse has been built using modern materials and state-of-the-art engineering, but is built for traditional brewing methods. As such it provides the ideal training environment for brewers. Dr Keith Thomas, founder of Brewlab, said: “Brewlab looks forward to providing opportunities for high quality training at the Wimbledon Brewery, using the extensive facilities on site as examples of what can be achieved in today’s vibrant brewing industry.” Mark Gordon, founder of The Wimbledon Brewery, added: “Since its inception in 1986, Brewlab has provided exceptional training to brewers and brewery founders from around the world, myself included. We are proud to be associated with their expansion.”

ALMR National Restaurant Association Study Tour to Chicago opens for bookings: The Propel and Association of Licensed Multiple Retailers (ALMR) 2016 Chicago Study Tour is now open for bookings. The trip, sponsored by CPL Training and Sky, takes place between Thursday, 19 May and Monday, 23 May 2016. The National Restaurant Association (NRA) draws 58,000-plus industry professionals from all 50 states and 100 countries, seeking the newest innovations and up-to-the-minute information about trends and issues. The ALMR trip provides: insights from industry experts on the rise in fast-casual dining, social media, new and emerging brands, menu development, staff management and a host of other issues – with 70 free education sessions at the NRA show. It also involves two tours of Chicago’s hottest concepts and a market overview briefing sessions from US experts. Paul Charity, managing director of Propel Info, said: “The NRA show combined with our tour of Chicago is a fantastic opportunity to find fresh inspiration and understand the emerging trends shaping the fast-changing US market.” To get more information or to book, email

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