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Morning Briefing for pub, restaurant and food wervice operators

Wed 17th Feb 2016 - Douglas Jack – UK restaurants have made a strong start to 2016
Douglas Jack – UK restaurants have made a strong start to 2016: Numis Securities leisure analyst Douglas Jack has argued UK restaurants have made a strong start to 2016. In a note published this morning, he wrote: “We firmly believe that the seven-week dip into slightly negative like-for-like sales in late 2015 was a blip for The Restaurant Group, and today’s Coffer Peach Business Tracker (CPBT) points to strong start in 2016E. The restaurant supply explosion of the First Half of 2015 is now over. Collective like-for-like sales for 31 of the largest pub, bar and restaurant groups grew by 1.9% in January. This represents an under-performance against the BRC retail like-for-like sales, which rose 2.6%. A disproportionate amount of discretionary household income growth (up 7.2% in the year to December, according to the ASDA Income Tracker), continues to be on non-food online purchases (up 14.9% in January 2016), big ticket items, such as new car sales (up 6.1% in the year to January 2016) and overseas holidays (up 8.6% year- on-year in Q1-3 2015). In comparison, licensed retail like-for-like sales, per the CPBT, have averaged between 1.2% and 2.5% in each of the last four years. In January, per the CPBT, like-for-like sales were best outside London with like-for-like sales up 2.4%, whereas London like-for-like sales were up just 0.4%. Casual dining brands out- performed pubs and bars, with January like-for-like sales up 3.6% nationally and 4.7% outside of London. This has a clear, positive read-through to The Restaurant Group; we believe its like-for-like sales in Q4 2015 can partially be explained by the company’s negative correlation to weather (figure 12). Total sales for these CPBT companies were up 5.4%, implying a 3.5% boost from new openings, particularly among restaurant groups outside of London. This 3.5% figure compares to a 5.0% year-on-year increase in managed restaurant supply in Q4 2015, versus 1.7% growth for independents. More importantly, the latest CGA data shows a slowing supply trend for managed restaurants (51 net openings in Q415 vs 96 in Q414) and a decline in independent restaurant supply (38 net closures in Q415 vs 540 openings in Q414). We continue to expect restaurant supply to fall over the next two years as higher labour and rate costs have a disproportionately large affect on independent operators through price increases and closures. As a result, we expect the National Living Wage to prove to be a net positive on The Restaurant Group in 2016E and 2017E, given that it is already largely compliant and has also made the necessary cost savings/price changes.”

Research reveals 96% of diners would spend more money if staff had effective training: New research by guest experience management expert HospitalityGEM, has revealed an opportunity for hospitality operators to increase potential sales through better training, as a staggering 96% of respondents indicated that effective staff training has an impact on their spending when dining out. Over 50% of people said that they would have increased their spend on about a quarter of visits if the staff had been more effectively trained, with a further 30% saying they would have spent more on half of their visits. Those aged between 46 and 55 are most influenced by effective training in relation to their spend, although this figure dropped in those aged over 65. After breaking training down into individual sectors, 35% of respondents felt independent restaurants had the best trained staff, 27% favoured chain restaurants and 22% hotel restaurants. Only 6% of diners feel bars and wet-led pubs have the best trained staff. When asked which area of service needed the most improvement for each sector, the ‘communication style’ was cited as the most important reason, with 39% of respondents feeling this needed the most improvement in chain restaurants, 25% in hotel restaurants, 36% in wet-led pubs and 40% in fast food restaurants. Whereas in coffee shops (31%), bars (29 %) and independent restaurants (29%) it was felt overall ‘speed of service’ required the most improvement. Diners said ‘efficiency of service’, ‘knowledge of the menu’ and ‘communication style’ were the most important factors when identifying the top signs that a member of staff is well trained. Other respondents answered that a well-trained team member should have ‘knowledge of allergens’, ‘personalisation of service’ and ‘overall confidence and ability to gauge the kind of experience for individuals’. Steven Pike, managing director of HospitalityGEM, said: “Effective training represents a potential untapped source of competitive advantage in hospitality. By analysing the guest experience, we can identify plenty of opportunities to sell more as a direct result of better training. The really interesting finding from this research is that such a high proportion of people felt they would happily spend more.”

Fuller’s open new-build pub at Greenwich Reach: Fuller’s, the London brewer and premium pub company, has opened its latest new build, The Sail Loft on Greenwich Reach. The Sail Loft is located on the banks of the River Thames, part of the new Greenwich Reach development by St George. With glass windows on three sides of this site and a large, river-facing terrace, customers can enjoy views of The City, Canary Wharf, Cutty Sark and the O2 arena. The pub is on two levels with room for 300 customers. It is designed with the river in mind, using nautical touches in the bric-a-brac and interiors. The open kitchen allows customers to watch the team of professional chefs freshly prepare their food and the menu, designed by Head Chef Jacek Zywa, includes delicious, premium dishes including a Fish Pie with smoked haddock, prawns, salmon, quail’s egg, spinach and peas. Customers will also be able to enjoy brunch every weekend and a mouth-watering roast dinner every Sunday lunch time. The bar is stocked with an exciting array of beers, including Fuller’s new red ale, Montana Red, alongside Frontier craft lager and London Pride. The extensive wine list, vast array of spirits and soft drinks, means there is a beverage for everyone. Jonathon Swaine, managing director of Fuller’s Inns, added: “The Sail Loft is a fantastic addition to our portfolio. It is set to be one of our flagship sites and I am looking forward to seeing this pub gain in popularity.” Madeleine Flower, director of marketing at Galliard Homes said: “We are delighted that such a venerable brand has taken advantage of the waterside ambience of New Capital Quay for The Sail Loft pub. New Capital Quay is very much a riverside village and so giving the opportunity to congregate over a glass of London Pride is a real boon for the residents. Both New Capital Quay and The Sail Loft are inspired by Greenwich’s maritime history, and both give fantastic panoramic views across the Thames. We hope that both our residents at New Capital Quay and visitors to Greenwich will love this addition to the local area.”

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