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Morning Briefing for pub, restaurant and food wervice operators

Wed 18th Nov 2015 - Propel Wednesday News Briefing

Story of the Day:

Luke Johnson buys majority stake in Brighton-based Small Batch Coffee: Luke Johnson’s investment vehicle Risk Capital Partners has bought a majority stake in the Brighton and Hove coffee shop chain Small Batch Coffee. Small Batch began roasting in 2006 and has since developed its own retail concept, growing to five stores across Brighton and Hove, together with two railway kiosks. Its successful wholesale business provides branded and bespoke blends to an expanding list of leading restaurants, coffee shops and cafes throughout the country. Risk Capital Partners is supporting the existing management team, led by chief executive Nigel Lambe, who has worked alongside the exiting founder, Brad Jacobsen, for the past five years. Co-founder Alan Tomlins, runner up in the 2015 SCAE UK National Championship Roaster awards, will continue to head the coffee and roasting side of the business. Existing operations manager, Kris Katin, will head the retail business. Luke Johnson told Brighton and Hove News: “I am a huge fan of Small Batch Coffee, not just their delicious coffee but also their cool spaces, friendly staff and meticulous attention to detail. We are delighted to have the opportunity to partner with Nigel and his team to help bring Small Batch to a wider audience.” Nigel Lambe said: “I am delighted to be teaming up with Risk Capital Partners, who have unrivalled experience in retail and wholesale food and cafe businesses. We have great ambition for the Small Batch brand and sought out Luke and his team when the opportunity arose.” Luke Johnson and Risk Capital Partners’ sector investments include the Laine Pub Company, formerly InnBrighton, which is expanding into London and has almost 40 pubs Brighton and Hove. Small Batch Coffee has secured new debt funding from Santander to finance rollout of further ‘clusters of retail stores’ initially along the south coast.

Industry News:

Zeus Capital – we value D&D London at £130m to £140m: Analysts at Zeus Capital have valued restaurant operator D&D London at between £130m and £140m ahead of a possible flotation on the stock market. They stated: “D&D London represents a unique opportunity to invest in some of London’s most iconic restaurants including Coq d’Argent, Quaglino’s and Bluebird. The projected growth rates and Return on Investment (ROI) (Ebitda/capex less landlord contributions) delivered on mature and new ventures are strong and are being executed by a proven sector-leading management team. Our forecasts do not take account of the full growth potential. Current year UK like-for-like growth rate is 6% year-to-date (FY15 was 7.1%), but we have assumed only 3% going forward. The three-year Ebitda forecast Compound Annual Growth Rate of 20% is also highly attractive versus the sector average of 8%. D&D consists of 30 UK-based restaurants, one London hotel (South Place Hotel), a Paris based restaurant/bar/club (Alcazar) and a US events business (Guastavino’s). The unique portfolio offers a variety of price points and concepts for customers providing an attractive balance of offers across high growth segments. It has demonstrated long-term earnings robustness and is not reliant on a single brand lowering the risk profile in our view. The last five projects (remodelling of existing and new sites), together, have delivered ROI in excess of 50% versus a target of 30%, which again we regard as above average. In the two years to FY16E management will have invested nearly £20m of capex in the portfolio. We regard this as a well-invested estate and investors will see the benefit of this in terms of earnings uplift over the next 12-18 months. The group has a strong pipeline of new restaurants, with German Gymnasium opening on 12 November 2015. At present it has two restaurants contracted, Nova in Victoria and the other in Glasgow. In addition, four more are in legals, with another three in active, if early stage negotiations. The principal strategy is to drive growth through the opening of landmark restaurants. In addition, D&D also plans to roll-out one or two of its brands, increase its international portfolio and open more boutique luxury hotels. We have a high degree of confidence that this will emerge as a £25m+ Ebitda business over the next three to five years generating £10m+ of free cash flow. We believe we have taken a cautious approach to our forecasts. At the mid-point of our valuation range of £130-140m, D&D would trade on a price-to-earnings ratio of 24.7x (14.3x excluding pre-opening costs) to March 2016, or only three months post IPO. This falls to 15.6x to 17 March excluding pre-opening costs. On an EV/Ebitda basis, the EV/Ebitda at the mid-point valuation to March 2016 is 13.9x (9.7x excluding pre-opening costs) falling to 9.0x. On a mature Ebitda run rate basis, D&D would trade on a compelling EV/Ebitda of 8.5x and a price-to-earnings ratio of 13.3x, a significant discount to the sector.”

D&D London targets 50 London restaurants and 20 in the regions: Zeus Capital has reported D&D London is targeting 50 restaurants in London versus 30 currently. Restaurant guide Zagat estimates there are 1,500 premium restaurants operating in London, suggesting a 3% market share for D&D when it operates 50 sites. Zeus Capital said: “Management anticipate expanding openings in eight different cities outside of London over time through 20 additional sites.” The company’s opening in Leeds Trinity saw a landlord contribution of £2.5m towards opening costs of £3m – first year Ebitda was £800,000, implying a 172% Return on Investment (ROI). Quaglino’s has generated a ROI of 33% after its £2m refurbishment in October 2014 with Ebitda running at £1.2m. The acquisition of Madison in May 2014 has also delivered strong returns, delivering an Ebitda run rate over £2m, which compared to a pre-D&D historic run rate of £1m. This level of profitability implies a 44% ROI based on the full consideration of £4.5m and just over a two-year payback. Zeus Capital argued regional openings have “the potential to enhance group returns with landlord incentives and therefore ROI likely to be more compelling versus the competitive London market”. 

Zeus Capital – D&D London has branded roll-out potential: Zeus Capital has argued the D&D London portfolio has “a couple of candidates for branded roll-out opportunities, creating national chains”. It added: “Bluebird Cafe is one such opportunity, with clear gap in the market for a high-end cafe in our view. There is also potential for a takeaway bakery opportunity, which could also enhance the offering and profitability of this operation. The Chop House could also quite easily become a national concept over time, with its third site expected to open in 2016. Again, this could create a new niche in the branded casual dining market at an average spend-per-head of £35. This would be at a premium to Cote Brasserie but at a discount to Gaucho Grill.”

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

Waitrose to open first of 50 sushi bars called Sushi Daily tomorrow: Waitrose is to launch sushi bars in its stores as sales rocket. The bars will be manned by skilled chefs and offer customers a full menu of freshly made sushi for customers to eat while they shop. A dedicated phone line will also be set up so people can place larger orders or arrange catering for parties or meetings. Waitrose executives chose to install the sushi bars after seeing demand for the Japanese cuisine – currently sold pre-packed – rocket by 11.5% last year. It will be the first UK supermarket to sell freshly made sushi in store. The bars will be called Sushi Daily. Waitrose will initially install the bars in 50 stores, before rolling the scheme out nationwide. The first sushi will open in London’s Battersea branch tomorrow (Thursday, 19 November), followed by stores in Bath, Somerset, and Godalming, Surrey. Anthony Wysome, head of store development at Waitrose, said: “Our customers’ lifestyles are changing with the growth of eating on the move – and we are responding to this shift with our continuously developing food-to-go offering, including the new sushi feature. Customers are increasingly attracted by products that can deliver for them on quality, convenience and health and sushi does this brilliantly. Having seen great growth in our excellent pre-packed sushi offer, we are excited to be able to now add in-store prepared sushi to our rapidly increasing range of hospitality offers. Whether for lunch or for later, we hope that customers enjoy both the outstanding quality of this new offer and the convenience, colour and interest it will bring to our shops.” The sushi bars will be run in conjunction with KellyDeli, the company of London foodie Kelly Choi and French businessman Jerome Castaing. The company runs 365 Sushi Daily outlets in six European countries.

BrewDog mulls ground-breaking US crowdfunding launch: BrewDog is mulling a ground-breaking US crowdfunding launch. The US Securities and Exchange Commission (SEC) changed its rules this year to allow companies to crowdfund up to $50m using securities under the new Regulation A Plus provided they meet certain regulations. BrewDog said it is studying those rules to see how it can structure a US version of Equity for Punks although getting SEC approval could be a lengthy process and to date no company has been through it. The rules came into effect in June. Co-founder James Watt said its brewery in Canal Winchester Ohio is moving forward with or without a US version of Equity for Punks. “But we can do it faster and get a greater impact with it,” he said.

EatFirst secures $8m investment: EatFirst, one of the world’s first quality online restaurants, has just secured an $8m investment despite being only 15 months old. Carving out a new area in the UK restaurant sector, EatFirst has already achieved 30% month-on-month sales growth and has delivered over 100,000 meals to date. Already established in London and Berlin, EatFirst is on track to become the largest online restaurant across the globe by 2018. Delivering fresh meals produced by Michelin trained chefs directly to people’s homes, EatFirst is aiming to change consumers’ mind-sets, providing sophisticated, nutritious meals as a convenient way to dine-in. Creating a new delicious quality option, EatFirst is blurring the lines within the sector and reaping the benefits. “The future of the restaurant category is online, and we are at the forefront of this shift”, said co-founder/chief executive Rahul Parekh. “We want to grow the UK restaurant sector and offer an additional option that is high in quality and healthy. Consumer lifestyles are continually evolving, and we noticed an opportunity to explore further. We’ve seen huge demand over the last nine months and this investment will enable us to reach new heights, as well as develop and grow within the restaurant sector.”

Alcohol main driver behind another fall in consumer inflation: Alcohol is the main driver behind another fall in consumer inflation, according to the Wilson Drinks Report (WDR). Beers, wines and spirits (BWS) all contributed to the decline announced by the Office for National Statistics yesterday (Tuesday, 17 November). The biggest fall in inflation within BWS came in wine, where prices fell 5.0% compared to October 2014. Spirits were just behind with a fall of 4.6% while beer prices fell 3.1%. Meanwhile, restaurants and cafes saw a rise of 1.3%. Overall annual inflation, as measured by the Consumer Prices Index, was down 0.1% for the month of October 2015, well below the Bank of England 2% target and also below the rise in average pay (2.5% for July-September 2015). WDR managing director Tim Wilson said: “The pressure exerted by the discounters is being felt across all categories within beers, wines and spirits. Perhaps British drinkers can look forward to some good celebrations at Christmas with average incomes rising significantly faster than consumer inflation.”

Company News:

Enterprise Inns outlines plans to grow managed estate to 100 sites next year: Enterprise Inns has outlined plans to grow its managed estate to more than 100 sites across all three of its operating models next year. The company, which currently has 35 managed pubs, said it plans to expand its wet-led Craft Union Pub Company brand from its current 14 sites to between 60-80 by the end of September next year with the potential for 100-125 per annum thereafter. Chief executive Simon Townsend told analysts the majority of the estate is in the north of England but there are plans to expand the portfolio southwards. Average weekly turnover per site is about £7,000 but the company said it was “early days” and expected this figure to grow to nearer £12,000 following further investment in venues. Townsend added: “Conversion to this trading format is relatively straightforward and we are pleased with the performance of these outlets to date.” Enterprise also plans to double its 14-strong Bermondsey Pub Company estate in 2016 with the capability of converting 30-50 sites a year thereafter. The average weekly takings at Bermondsey sites are £11,000. Townsend said: “This model allows us to attract the entrepreneurial flair of great managers, who seek the opportunity to enjoy the support and protection of our managed business, whilst retaining some freedom to co-evolve our retail offer in order to best meet the needs of their local communities.” He added its managed expert model, launched in partnership with Rupert Cleverly in Forest Hill, south London, has the objective of eight to 12 sites by the end of next September and a pipeline of 15-25 sites in 2017 and was targeting three new partners. Townsend said: “The experience we have gained in working with Rupert in the design and execution of the model gives us confidence that this approach provides us with the optimum means with which to operate sites with exceptional profit potential.” Enterprise also anticipates growing its commercial property estate from 213 sites to 300-350 by the end of September next year. The average rent in the estate has increased from £53,000 in May this year to £56,000. Townsend also reported the number of unplanned failures across its 5,000 pubs in the year was 87 – less than 2% of the estate. It disposed of 260 pubs during the course of the year – 17 of which was not considered to be “underperforming”. There are plans to dispose of 200 pubs in 2016, which is expected to generate £65m. Townsend added: “We are building great momentum in our business and this strategy will deliver a more valuable Enterprise for our shareholders.”

Ibérica wins Leeds go-ahead: Spanish restaurant group Ibérica has won planning consent to convert a grade II-listed property in the heart of Leeds, which was purpose-built as an auction house, into a restaurant. The company agreed a lease for Hepper House on East Parade earlier this year and sought approval to use the historic building as a restaurant. Currently the brand has five restaurants in London and one in Manchester and each venue has been individually designed by Spanish architect and interior designer, Lázaro Rosa Violán, from Contemporain Studio in Barcelona. The two-storey sandstone, granite and marble building where Ibérica will occupy 5,700 square foot of space was originally designed by Leeds architect George Corson in a Gothic Revival style. Approval has now been granted by Leeds City Council for Ibérica’s plans in Leeds and bringing a building of “high architectural merit” back into use is cited as one of the main reasons behind the planning permission being granted.

Searcys opens new restaurant in Shoreditch: High quality caterer and champagne bar operator Searcys has opened a new restaurant in Shoreditch, east London. The company has collaborated with Anthony Demetre to launch Urban Coterie on the 17th floor of the M by Montcalm hotel in City Road. Led by head chef Martin Zahumensky, formerly of Texture and Hibiscus, the menus at Urban Coterie will change each month, with a focus on British produce and seasonality. The bar uses the best of British ingredients for signature cocktails such as Hays & Plums – a recipe inspired by the rural Dales using fresh lemon, plum puree and hay syrup, mixed with Sacred gin and Peychaud’s bitters. A private dining room seats 12 and Urban Coterie Private Members Club will be opening on the 16th floor in the new year. Demetre said: “I love east London for its infectious energy and I’m excited to be opening Urban Coterie here with Searcys. Today, cooking can be unnecessarily over-complicated and our approach lets seasonal ingredients do the talking. I’m fortunate to have the talented Martin Zahumensky as head chef as his cooking ethos is very much in line with mine.”

Restaurant and gastro-pub company Northcote moves towards profit: Northcote Leisure Group posted a turnover of £9.1m in the year ending 31 March 2015. This compares to a turnover of £6.4m in the period between 14 May 2013 and 31 March 2014. Pre-tax losses also narrowed to £1.9m in 2014/15 compared to £4.7m in 2013/14. Northcote Leisure Group operates Northcote Hotel, a 26-bedroom luxury hotel and Michelin star-winning restaurant in Langho near Blackburn, run by celebrity chef Nigel Haworth and wine expert Craig Bancroft. It also owns Northcote at the Rovers, a hospitality, conferencing and banqueting business at Blackburn Rovers’ home Ewood Park; and Ribble Valley Inns, a food-led pub group with sites in Lancashire, Cumbria, Cheshire and North Yorkshire. The group is owned by former Blackburn Rovers vice-chairman Richard Matthewman, his wife Lynda, wine expert Craig Bancroft and Haworth. Matthewman is the group’s chairman while Bancroft and Haworth are joint managing directors. The facilities at Northcote Hotel have been undergoing a dramatic transformation in recent years. Building work started in May 2013 and finished almost 20 months later on 19 December 2014. Bancroft told Business Insider: “It’s very good news. Everything’s moving in the right direction. To have increased revenues in this way with JCBs and builders onsite has been a remarkable result. This financial year we’re already trading 28.8% up in terms of revenue and our best trading months are generally December and January. I think we could end the year in the region of 31% up. Then from April 2017 onwards we’ll have reached full maturity as a business.” A report by the directors noted Northcote Hotel has undergone a string of changes over the last two years with further dining facilities, new kitchens, improved leisure space, a cocktail bar, and extra bedrooms added. Northcote Hotel contributed £4.6m turnover and £1.1m pre-tax losses to the wider group.

St Austell Brewery adds Fowey restaurant to managed pub estate: St Austell Brewery has acquired the Food for Thought restaurant in Fowey, Cornwall. The company plans to transform the Town Quay site into an “exciting new dining venue” that will be part of its 26-strong managed pub estate. Following the purchase, the site has been closed and will undergo a full refurbishment before reopening in time for the busy summer season. St Austell Brewery estate director Adam Luck told the Cornish Guardian: “The brewery is delighted to take on this wonderful building which dates back to the 14th century. It is in an unrivalled location within Fowey with some of the best views around and we believe this is a wonderful opportunity to create an exciting new venue which champions the very best local produce for the benefit of both the local community and visitors to the town.” The restaurant was previously owned by Martin Billingsley, who was jailed earlier this month at Truro Crown Court for two-and-a-half years for stealing more than £150,000 worth of gas over 20 years at his two restaurants and from his home. The purchase of Food for Thought takes the total number of pubs and inns owned by St Austell Brewery to 169 across the south west.

Fine Thai dining group Patara to open fifth restaurant next Wednesday: The Patara Restaurant Group will open its fifth site in Berners Street, London, next Wednesday (25 November). Patara, which this year celebrates its 25th anniversary, currently operates four restaurants in London (and casual dining restaurant SUDA in Covent Garden) and a further five worldwide, in Singapore, Vienna, Geneva, Beijing and Bangkok. The menu at the new restaurant has been developed by two of Thailand’s leading chefs, Chumpol Jangprai and Noom Thaninthom. Chumpol, who has been working with Patara for ten years, is a leading celebrity chef in his native Thailand and was recently awarded “The Best New Generation Ironchef in Thai Cooking”. Noom (otherwise known as Nelson) has joined Patara as global executive chef and has 14 years experience working in leading Michelin-starred kitchens including Gordon Ramsay and Heston Blumenthal.

Rick Stein to open new seafood restaurant in Sandbanks next Saturday: Celebrity chef Rick Stein will open a new seafood restaurant in Sandbanks, Dorset, next Saturday (28 November). Stein is launching the 200-seater venue on the site of Cafe Shore, which went into liquidation in early February. The self-titled “Rick Stein” restaurant will offer seafood dishes such as Dover sole meunière, turbot hollandaise and fruits de mer, alongside a more casual lunch time menu with dishes including a crab salad and moules frites. He told the Daily Echo: “Sandbanks is the perfect place for a good fish restaurant. I’ve had my eye on it ever since I passed through about 15 years ago when I travelled the coast of Britain to make the Seafood Lovers’ Guide. Somewhere to drop in for local lemon sole, oysters or crab I thought, and now my dream has come true. It’ll be a place for some informal, inexpensive seafood. I’m very excited.” Stein, who opened his first seafood restaurant in Padstow, Cornwall, in 1975, also has sites in Newquay and Winchester.

The Real Eating Company opens sixth site: The Real Eating Company has opened its sixth site in Silver Street, in the centre of Salisbury, having taken a ten-year lease. This is the fifth “Cafe & Kitchen” concept that the Real Eating Company has opened. The Real Eating Company has sites in Bournemouth, Chichester, Horsham and Lewes, offering locally roasted coffee, a seasonal selection of hot and cold food, sandwiches and toasties prepared daily on-site as well as freshly prepared breakfast dishes served throughout the day. Helena Hudson set up the Real Eating Company in 2004 with the move into the ‘Cafe & Kitchen’ concept accelerating in the past year. She said: “We have a simple formula that we focus on. Good food with provenance at competitive prices, the best coffee and tea, friendly staff and an informal, welcoming environment. Customers are also keen to support well-run independent businesses. I have wanted to open in Salisbury for a long time and am delighted to have found such a well-located site.”

Young’s launches The Chef Academy: London pub retailer Young’s has launched The Chef Academy. The new academy in Wandsworth offers structured training for in-house talent to achieve higher kitchen positions whilst gaining either an NVQ Level 2 professional cookery or NVQ Level 3 in hospitality management. Trainees are also given the skills to manage the back-of-house in a supervisory capability. Prospective candidates go through a rigorous interview and cook-off to earn their spot in the academy and train under the guidance of Chris Knights (executive chef, Young’s) and Jono Jenkins (director of food, Geronimo). Patrick Dardis, Young’s retail director, said: “We are committed to reinvesting in our chefs at a time of skilled shortages in the industry. The academy gives our chefs the support and knowledge to allow them to showcase their creativity and innovation back in their respective kitchens, ensuring our menus are as individual as our pubs and they continue to evolve.” 20 candidates are currently taking part in the level two (intermediate) and 24 are undertaking the level three (advanced). A third tier will be introduced in 2016.

The Craft Beer Co debuts in The City with seventh site: The Craft Beer Co has opened its latest site on London’s Mitre Lane in the shadow of the landmark Gherkin building. The Craft Beer Co founder Martin Hayes secured the leasehold of the former Trident Bar and Restaurant, after agreeing terms with a private landlord. This represents the group’s seventh site, and sees The Craft Beer Co move into London’s Insurance district, an area Hayes believes is “hugely under-provided for in terms of craft beer”. Hayes added: “I believe that we’ve created a stunning venue with an attention to detail that our discerning customers will appreciate. We’ve retained the industrial feel of the building but added our own luxurious finish, which we hope people will enjoy. The site offers the typical Craft Beer Co traits – world class cask and keg beer, backed up with an amazing selection of bottled beers from around the globe.”

Hakkasan to open Jewel in Las Vegas next spring: UK-based restaurant and nightclub company Hakkasan is to open a new nightclub, Jewel, in Las Vegas at Aria Resort & Casino next spring. It will replace Haze, the former nightclub that occupied Aria’s lower level. “The addition of Jewel to Aria’s entertainment and nightlife portfolio will provide our guests with a new and exclusive nightclub destination,” said Aria president Bobby Baldwin. “Nightlife is an integral part of the Las Vegas scene and in partnering with Hakkasan Group, the preeminent operator in the industry, we will offer a distinct experience unique to our resort.” The new venue will be designed by the Rockwell Group and will stretch across more than 24,000 square feet over multiple levels. The DJ booth will include a “production wall” with LED screens and effects lighting, and above the main floor, the mezzanine will feature five private suites, each with their own entry for customers who want to pop bottles discretely. Jewel joins a Hakkasan portfolio that includes venues like Omnia, the Bank, 1 OAK and Wet Republic on the nightlife side and restaurants like Yellowtail, Kumi, Citizens and Hakkasan.

Red Squirrel Brewery opening fourth craft beer and bottle shop tomorrow: Red Squirrel Brewery will open its fourth craft beer and bottle shop in Amersham, Buckinghamshire, tomorrow (Thursday, 19 November). The company has signed a ten-year contract with Sorbon Estates to open the site in Sycamore Road. The shop will have both a retail and a bar offering, stocking 150 varieties of bottled and canned craft beers and 14 draught beers on tap. It will also stock an exclusive range of wine and prosecco selected by a leading wine importer. All products will be available to take away or drink in. Peter Wright, from Red Squirrel, told Get Bucks: “The craft beer market has really taken off in the UK in the last decade and it’s a market that we feel very passionate about. We pride ourselves in producing a wide range of high quality, small batch beers at our brewery in Potten End, Hertfordshire. We believe our customers want choice, so to achieve this we source beers from many of the leading independent UK microbreweries.” Red Squirrel Brewery has three other bottle shops and bars in Berkhamsted, Chesham and Potten End.

HMSHost to open first Norway Wagamama at Oslo Airport: Contract caterer HMSHost is to open the first Wagamama in Norway at Oslo Airport. The company has won a contract to open ten food retail units at the airport. The first of HMSHost’s ten sites are expected to open in November 2016, with the remainder in the first quarter of 2017, and will consist of a mix of international and local concepts. Wagamama, Two Tigers and Burger King are among the international brands to feature. Local concepts include: Bølgen & Moi Food Garage, created by Norwegian chef Trond Moi; Fiskeriet, a label known for its quality fish and original preparation techniques and service, and Oslo Sausage Co, which specialises in the culinary tradition and culture of the Norwegian sausage.

Fuller’s reopens Whitton pub: Fuller’s has reopened The Admiral Nelson in Whitton, south west London, after an extensive refurbishment. The revamp has seen the pub retain its traditional pub feel with a few modern touches, creating a light and airy space. The new menu, which boasts fresh, home-made food, includes sharing plates and seasonal dishes.

Douglas Jack – we recommend buying Enterprise inns share but we prefer Punch: Numis Securities leisure analyst Douglas Jack has issued a ‘Buy’ recommendation on Enterprise Inns shares after yesterday’s (Tuesday, 17 November) full-year result, but added he has a preference for Punch shares. He said: “Full year profit before tax rose by 1% to £122m (we forecast £122.1m; consensus was £122.8m) with the impact of a 2.0% decline in Ebitda being fully offset by a 3.5% reduction in net debt. Like-for-like net income rose by 0.8%, having increased by 1.0% in quarter four. Overall, the results are as expected, with the total estate revaluation resulting in a 2.7% (£163m) write-down. We are holding our forecasts. Enterprise has achieved nine consecutive quarters of like-for-like net income growth. In 2015, the quarterly performance breaks down as 0.3% versus 0.5% comparable in quarter one, 0.9% versus 1.5% comparable in quarter two, 0.6% versus 2.1% comparable in quarter three, and 1.0% versus 0.5% comparable in quarter four. Within this, the top 90% (4,532 pubs) generated like-for-like net income growth of 2.6% in 2015, implying that the bottom 10% was down by at least 15%. Like-for-like net income is being supported by: increased growth capex; enhanced operational support (40 versus 55 pubs per regional manager); and a further 18% reduction in the number of business failures (to circa 8% of the estate per annum). Licensees are also benefiting from discounts on Wi-Fi, sports TV packages, food offerings (with menu advice and support), training and marketing (at a 2015 cost of £6m to Enterprise). Enterprise is ahead on implementing its new strategy, with: 35 pubs converted to managed (14 Bermondsey; 21 Craft Union) as at 30 September versus our forecast of 30; and 213 commercial leases (also ahead). By 30 September 2016, the company targets having eight-12 managed expert sites, 25-35 Bermondsey sites, 60-80 Craft Union sites, and 300-350 sites under commercial lease. 260 pubs were sold for £75m, for the equivalent of £288,000 per pub, in 2015. The company spent £69m on capex, of which 44% was growth-orientated (achieving an average Return on Investment of 19%). The estate has been revalued, resulting in a net write-down of £163m, and the net asset value reducing to 269p/share, which is the equivalent of 12.3x EV/ Ebitda. Net debt/Ebitda has fallen to 7.8x, only slightly down on 2014’s 8.0x. Nevertheless, we believe the company’s strategy is appropriate in order to reduce MRO risk and stabilise Ebitda. Our recommendation remains ‘Buy’, but we prefer Punch.”

Organic beer brewer wins backing from Startup Direct: Tunbridge Wells-based Van Bulck Beers, which produces a range of organic craft brews, has secured finance from Startup Direct. The company was set up in 2013 by Denis Renty, who uses family recipes handed down from his mother. The beer is brewed in Belgium before being exported to the UK, Italy and Hong Kong. Van Bulck borrowed £7,500 from Startup Direct to support marketing and the development of its website. As it is also the 1,000th business to be supported by Startup Direct, a service backed by the government’s Start Up Loans programme, it will also receive a package of services worth £6,000. Renty said: “Organic craft beer is a very fast growing niche market, which is riding on the wider foodie revolution we are currently witnessing in Europe, particularly in the UK. I’m seeking double-digit growth over the next year in the UK and international markets.”

Faucet Inn reveals further details about second Neighbourhood site: Faucet Inn has revealed further details of its second Neighbourhood site that is due to open at the Cultural Quarter in Southampton this month. The company is expanding the “beer shop” and food concept following the recent success of its inaugural site in London’s East Village. Neighbourhood specialises in all-day dining with focus on meats cooked on the rotisserie and the robata grill, as well as artisan beers. The new site, located in the Arts Complex, will feature Czech’s oldest beer Krušovice displayed in two large exposed silver tanks on the bar, while an ever-changing selection of cask ales will also be available. There will be 13 lagers on tap including Belle Vue Briek from Belgium and Birra Moretti from Italy and 16 bottle brews such as Fat Yak and Ted Pale Ale. The 180-capacity venue has a warehouse-feel with an open plan bar and restaurant. Faucet Inn managing director Steve Cox said: “We are delighted to be bringing our popular Neighbourhood concept to the bustling and cosmopolitan city of Southampton. Like East Village in London, it will offer a relaxed urban space perfect for locals to enjoy a drink or fuss free dining any time of the day.”

Street food pop-up Claw takes residency at Dalston pub: Claw, the street food pop-up by Virgin Foodpreneur 2015 winner Fabian Clark, has opened a residency at The Three Compasses in Dalston, London. The residency, which has a menu that predominantly specialises in a range of bespoke crab dishes as well as a selection of seafood options, made fresh to order, will run until the end of January. In a first for Claw, a seafood-focused brunch menu has been created, which will be available from 11am-4pm on Saturday and Sunday. Claw has also teamed up with the East London Liquor Company to create cocktails to be paired with the menu. Clark first launched the street food business in January this year in an effort to bring crab back to British plates. He said: “The Three Compasses is a fantastic pub to showcase our dishes as they are renowned for hosting fun and innovative street food pop-ups which are popular with the Dalston neighbourhood.” The Three Compasses accommodates up to 70 covers and operates a residency-only kitchen to give its customer base a variety of rotating menus, featuring different street food businesses for set periods of time.

Entrepreneur opens new wine bar and restaurant concept in Marlborough:
Entrepreneur Iain Wilkie has opened a new wine bar and restaurant concept in Marlborough, Wiltshire. Wilkie, who also runs The Swan in Great Shefford, Berkshire, has spent a six-figure sum transforming The Crown Hotel into The Piano Lounge. He has renovated the pub into a wine bar that is serving tapas until the restaurant is ready to open in February. The ceiling has been covered with vinyl’s, inspired by a pub he visited in Luxembourg, the bar area has moved, brickwork and wooden beams have been exposed to enhance the building’s period features and a piano takes pride of place in the corner. Wilkie, who has previously owned gastro-pubs and a restaurant in London, told the Wiltshire Gazette & Herald: “It is a wine bar that sells ales and lagers. There is still more to be done and I will be even happier when my restaurant is open. Marlborough is a non-brainer, it has got lots and lots of pubs but it does not have this.”

BrewDog to open new site in Stirling on Friday: Scottish brewer and retailer BrewDog will open its new site in Stirling on Friday (20 November). The company has converted the old Drouthy Neebors site in Baker Street into its latest craft beer bar. BrewDog Stirling will be a single-level bar with a dozen taps. It will serve a range of classic bar food, including award-winning pies from Pieminister and a range of coffee from Dear Green roastery in Glasgow.

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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