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Morning Briefing for pub, restaurant and food wervice operators

Fri 12th May 2017 - Propel Friday News Briefing

Story of the Day:

Ed’s Easy Diner secured creditor NatWest receives a third so far of £21.9m owed, will suffer ‘significant shortfall’: Ed’s Easy Diner’s secured creditor, NatWest, has so far received a third of the £21.9m it was owed when the company went into administration, new documents have revealed. A progress report from joint administrators Robert Croxen and Blair Nimmo, of KPMG, covering the start of the administration on 12 October 2016 until 11 April 2017, showed NatWest had been distributed £7,728,287. Their report said NatWest would suffer a “significant shortfall in respect of the funding it provided to the company”. The administrators said they expected preferential creditors, owed an estimated total of £81,843.29, to be paid in full while there would be no distribution to unsecured creditors. As previously reported Giraffe, owned by Boparan Restaurants Holdings, paid £8.75m to buy 33 Ed’s Easy Diner sites out of administration. The progress report said Giraffe was granted a licence to occupy the restaurants until 24 December 2016, which was then extended by three months. Giraffe has since been granted another extension on 18 sites until 23 June to “conclude the assignment of certain properties where negotiations have yet to reach a conclusion”. The administrators said they did not envisage any further extensions. The report showed that during the period the administrators received £2,477,157 from Giraffe to cover the costs of its occupation of the transferred properties. They also received £352,258 of payments that were being processed at the time of their appointment, along with £34,950 held at sites that had been shut and £103,000 in business rates rebates in relation to the closed restaurants. Among payments made during the period were rent of £1,530,268 to landlords of the sites transferred to Giraffe under the licence to occupy, and £73,566 to surveyors Sanderson for help in closing sites and the disposure of fixtures and fittings along with perishable stock. The administrators received remuneration of £245,000 and disbursements of £2,530 during the period. They said trading the company while in administration would not have been possible because of the trading costs and supplier payments that could not be funded. A previous report revealed Ed’s Easy Diner needed an injection of £2m to £3m in working capital. The company had lost £6m between October 2015 and August 2016, according to management accounts.

Industry News:

Propel Multi-Club summer conference and party open for bookings, two free places for operators: The speaker schedule for the Propel Multi-Club summer conference on Thursday, 6 July has been confirmed and multi-site operators can claim two free places by emailing Jo Charity on The event will also involve the Propel summer party in the evening, featuring laser tag, human table football and the chance to tackle the podium jump made famous by BBC television show Total Wipeout. Cyril Lavenant, of NPD Group, will provide insights into the current state of the UK foodservice market, how the UK compares with the US and Europe, and outline ten key trends in the foodservice market while predicting future progress. Roger Perowne, chief executive of Morar Consulting, which launched a daily sector brand tracker in March, will set out the major learnings for the sector in Morar’s measurement of consumer perspectives on the major restaurant brands. David Bruce, co-founder of Firkin Pubs, The Capital Pub Company and The City Pub companies and currently chairman of The West Berkshire Brewery, has raised more than £100m through EIS schemes and crowdfunding in the past two decades. He will give his top tips on raising cash for growth businesses. Husband-and-wife team Ali Khan and Samrien Hussain, whose company Tick Tock Unlocked operates six escape rooms in four UK cities, will talk about how they have developed high-quality, differentiated escape rooms, their most recent opening at Trinity Leeds, their customer base and USPs, and how they see the market in experiential leisure developing. Colin Sadler, managing director of Marston’s Revere Pub Company, will set out how the company has developed a premium pub segment, its USPs, further plans and the benefits for the company’s wider managed division. Jonathan Arana-Morton, co-founder of The Breakfast Club, whose sites often attract large queues of customers, will talk about how the company has developed since being founded in 2005, its expansion in London and elsewhere, the strengths of its offer, and future plans. Nick Taplin, chief executive of Black and White Hospitality, will explain how the company is developing a 50-strong franchised restaurant estate in partnership with celebrity chef Marco Pierre White, its unique brands, its USPs, and future prospects. Simon Blackbourne, commercial director of Tahola, will share his insights into how operators can use Big Data to support business growth and the current trends in our data-driven economy. Nisha Katona, former barrister and now television chef, restaurateur and recipe book author, will explain the USPs of her three-strong Indian street food brand Mowgli, her perspectives on turning her passion for food into running restaurants, and her progress along the multi-site learning curve. James Baer, managing director of Amber Taverns, will set out the company’s progress in creating a 130-plus estate of community pubs, the strengths of its management model, its investment criteria, the development of its Hogarths Victorian-style gin palace brand, and future plans. Rupert Clevely, managing director of Ei Group’s managed expert joint venture Hippo Inns, will talk about the development of a ten-strong estate with the tenanted operator, how the company’s offer has developed, future prospects, and points of difference with his previous business Geronimo Inns.

Douglas Jack – ‘we believe restaurant sector margins are in decline’, expects total supply to fall again in next year: Peel Hunt leisure analyst Douglas Jack has said he believes managed restaurant sector margins are in decline and he expects total supply to fall again in the next year. Issuing a note after the Coffer Peach Tracker revealed managed pub and restaurant like-for-likes rose 4.4% in April, Jack said: “During the month, managed pub like-for-like sales rose by 6.1%, whereas restaurants were up just 1.5%. Over the past two months, London like-for-like sales for the managed sector have averaged 2.9%, versus 1.6% outside the M25. Over the past 12 months, managed pub like-for-like sales have averaged 1.4% versus flat (0.0%) for restaurants despite the latter benefiting from rapid growth in food delivery, which is increasingly cannibalising in-house sales. With no like-for-like sales growth, 3% to 4% cost inflation, and delivery sales typically bringing a 25% plus VAT delivery charge as well as a lower ratio of drinks sales, managed restaurant sector margins must be in decline, in our view. We believe there is a large variance in the like-for-like sales performance between the different restaurant chains, which partly explains why managed restaurant supply rose by 6.0% in the 12 months to March (source: CGA). Including independents, total restaurant supply fell by 0.5% in the 12 months to March, with the number of Chinese restaurants down 8.0% and Indian restaurants down 3.6%. We expect managed restaurant expansion to slow and total restaurant supply to fall again over the next year, a year in which a weaker consumer should favour the versatility of pubs over restaurants. We continue to prefer pubs to restaurants. Pub trading tends to be more resilient than that of restaurants and retail (the pubs constituent of the Coffer Peach Business Tracker has outperformed the British Retail Consortium index in each of the past six months), aided by a more benign supply backdrop. In addition to being a low-ticket ‘way of life’, pubs offer a wide range of products and activities to attract customers out of their homes to where their sales are most profitable. With a largely fixed cost base, this is a superior outcome than sending the product to the customers’ homes. Our preferred pub stocks are Revolution Bars Group (‘Buy’; target price 260p) and Ei Group (‘Add’; target price 165p).”

UberEats launches late-night service in London: UberEats has launched a late-night service in London that allows customers to order food from a range of restaurants until 2am. UberEats’ cut-off for deliveries was previously 11pm but more than 150 restaurants, including Papa John’s and Roosters Piri Piri, will continue serving until the early hours. There is no minimum order size. Toussaint Wattinne, general manager of UberEats in London, told The Mirror: “Since we arrived in London last summer our ambition has been to help people get the best food in the city at the tap of a button – anytime and anywhere. With the launch of late-night hours and our recent expansion into outer London, we’re excited to be making this a reality.” UberEats launched a breakfast service earlier this year, meaning Londoners can now order food from 7am to 2am. The extended hours could give it an edge over its main rival, Deliveroo, whose core operating hours are 11.30am to 11.30pm. However, Deliveroo operates longer hours (from 8am to 12.30am) in some UK cities.

SIBA signs up four more members: The Society of Independent Brewers (SIBA) has added four new full-brewing members – Four Pillars Brewery in London, Old Spot Brewery in Bradford, Speyside Craft Brewery in Forres, and Hubsters Brewery in Lancashire. Four Pillars is a craft beer brewery and taproom in Walthamstow, whose flagship beer is Untraditional Lager, while Old Spot was founded in 2005 and produces “consistent, drinkable beers”. Speyside Craft is based near Inverness, with brews including Bow Fiddle Blonde, Findhorn Killer and Dark Sky. Hubsters Brewery’sbeers include Hop Scotch and Tribute. SIBA also signed up three brewers for its “not yet brewing” category last month, as well as four new suppliers – Gill Jennings & Every, Gravity Systems, Jarballs, and Dixon Group Europe.

Company News:

M&B partners with Flypay: Mitchells & Butlers (M&B) has partnered with mobile technology company Flypay and its Flyt platform. Responding to customer demand, M&B will include “frictionless” payments across its estate of 1,700 pubs, bars and restaurants, with the aim of “revolutionising the customer journey”. The partnership will enable M&B to access a range of different solutions, each offering an individual experience for customers and tailored to each brand’s bespoke requirements. The services include Flypay’s pay at table and bar tabs technologies. In several M&B brands, guests will be able to redeem Eagle Eye vouchers directly from their phones without going to the bar. M&B commercial and marketing director Chris Hopkins said: “Digital innovation opens up many possibilities to enhance customer experience and improve the efficiency of our operations. We’re delighted to have Flypay as a partner. The Flyt platform offers a breadth of services and crucially provides real flexibility for each of our brands across our estate.” Flypay chief executive Tom Weaver added: “Our integrations through the Flyt platform will dramatically streamline M&B’s operations, increasing efficiencies while, most importantly, responding to customer needs. We are really excited to be playing such a crucial role in this journey with M&B, which will be the largest operator in the UK based on number of sites to adopt next-generation mobile payment technology.”

Star Pubs & Bars to invest £3m in improving outdoor areas: Heineken-owned Star Pubs & Bars will spend £3m to develop outdoor areas at about 100 of its sites this year. Two-thirds of the £3m will be spent on redecoration and signage to attract passing trade, with the rest used for garden makeovers to meet growing demand for alfresco eating and drinking. The projects will increase covers and trading space and create gardens that can be enjoyed all year round. Internal work will focus on “bringing the garden into the pub” through features such as bi-fold doors. Where possible, gardens will be made multi-functional and zoned to cater for different groups of customers. Play areas will be installed at more than one-third of major projects. Star Pubs & Bars managing director Lawson Mountstevens said: “Outdoor space is a valuable asset. It should be treated like another room and carefully planned to best meet the needs of target customers.”

Liberation Group to reorganise pub business into managed and tenanted divisions: Channel Islands brewer and retailer Liberation Group is to reorganise its pub business from its geographical alignment into managed and tenanted divisions. Chief executive Mark Crowther told Propel the move would allow the company to create better synergies as it continued to grow. The change will see Jayson Perfect, who joined the company in November as pubs division managing director, take up the role of managed pubs managing director with responsibility for amost 40 managed pubs in Jersey, Guernsey and the West Country. Meanwhile, Tim Cullum will join as interim tenanted pubs managing director for the next few months with responsibility for nearly 65 tenanted pubs across the same regions. Crowther said: “The drinks business is unaffected with Tim Hubert (Victor Hugo and Liberation Brewery Jersey), Dave Robilliard (Bucktrouts Guernsey) and Geraint Williams (Butcombe UK) continuing to report to me alongside Jayson, Tim and (finance director) Declan Hearne. Regrettably this means Kenrick Brooks (pub operations director) will no longer be involved in the business. Kenrick has been a driving force for many of our initiatives and has made a significant impact over the past 19 years across many areas of our pub operations. He leaves with our best wishes for the future. I am excited about the upcoming developments for the group and this more focused approach will support delivering these. We have a strong pipeline of acquisitions and developments across our pub estate and this structure will enable us to better perform against this plan.”

Three Cheers Pub Co acquires eighth south London site: Three Cheers Pub Co, formerly known as Renaissance Pubs, has acquired the lease of The Bedford in Balham from hospitality entrepreneurs Karl Harrison and Scott Illman. The pub in Bedford Hill is the eighth south London site for the company, which is owned by Tom Peake, Mark Reynolds and Nick Fox. The pub will remain open for a “number of months” before closing for a multimillion-pound refurbishment, with comedy and live music at the heart of the venue. Peake told Propel: “It’s such an iconic London venue, which we have known all our lives. This represents a huge milestone for Three Cheers Pub Co and it will be a fabulous addition to our collection of pubs.” Harrison, who had owned The Bedford since 2004, added: “We wanted the new owners to be people who understood pubs, had a connection to Balham and really grasped what The Bedford is about. Tom, Mark and Nick are the perfect fit.” Three Cheers Pub Co’s other sites are The Abbeville, The Avalon and The Stonhouse in Clapham, The Bolingbroke and The Latchmere in Battersea, The Tommyfield in Kennington, and The Rosendale in Dulwich.

Danieli Holdings starts expansion of Yolo concept with £1m Newcastle city centre site: North east-based Danieli Holdings has started expansion of its bar restaurant concept Yolo (You Only Live Once) with a second site, this time in Newcastle city centre. The £1m Yolo Townhouse is spread over three floors in the former Capology retail unit in High Bridge Street, with the opening creating almost 100 jobs. The 2,556 square foot, all-day venue consists of a ground-floor drinking and dining space, a first-floor function area, and a second-floor terrace bar, with the third floor used for catering. Yolo dishes are homemade using fresh ingredients and paired with wine and cocktails. Danieli Holdings chief executive Neill Winch said: “As a brand, Yolo is one we’re keen to continue to roll-out but for now we are incredibly excited for the concept to have a presence in Newcastle city centre.” Danieli Holdings is known for its security, nursing home and property divisions. The company opened its debut Yolo site in Ponteland, Northumberland, in 2015 and also operates Bar B, formerly Bannatyne, in The Gate, Newcastle.

Wolf, Claw and Yolk open at new City of London street food space: Italian restaurant Wolf, eggs-centred diner Yolk and crab burger concept Claw are the first operators to open at British Land’s new street food space at Broadgate in the City of London. The independent operators have launched sites in shipping containers at the space in Finsbury Avenue Square. The move begins expansion for Wolf, which has a site in Stoke Newington. Wolf II’s menu features takeaway breakfast options, while the venue turns into a pasta bar at lunchtime and from 5pm transforms again into an after-work aperitivo spot. Claw, which operates at festivals and pop-ups around the south, sources traceable, sustainable and fresh crab meat from Devon. It is a first permanent site for the concept, which won Virgin’s “foodpreneur of the year” award in 2015. Finsbury Avenue Square is also the first bricks and mortar site for Yolk, which offers breakfast and lunch, including its renowned poached egg pots, alongside speciality Black Box Coffee. The line-up will be in place until late 2018 while British Land refurbishes a new office and retail scheme at 1 Finsbury Avenue. Two remaining operators are also under offer. British Land food and beverage asset manager Alice Keown said: “We are really excited to have the opportunity to work with these young, energetic, creative operators at a relatively early stage in their development.” British Land was represented by Davis Coffer Lyons, while the operators represented themselves.

Santa Maria owners acquire Fuller’s site for first pub, in Ealing: London-based restaurateurs Pasquale Chionchio and Angelo Ambrosio have taken over The Red Lion pub next door to the Ealing branch of their Neapolitan pizza concept Santa Maria. The Fuller’s pub in St Mary’s Road is thought to be one of Ealing’s oldest and is closely linked to the historic Ealing Studios over the road, with pictures of Ealing comedy stars on its walls. The operators have joined the two kitchens and created an Italian-themed pub menu. Bread is made fresh every morning, while dishes include chuck burger with melted provola, and a mortadella and provola sandwich made with pistachio pesto, alongside Santa Maria’s signature Neapolitan pizzas. Chionchio and Ambrosio said: “We always wanted to make Santa Maria bigger. When the opportunity came to take over the pub next door it was a dream come true. The owners had become great friends of ours and we were always sending our customers there to have a drink while they waited for their table. It’s opened up new business for us and cements us at the heart of traditional Ealing life. The pair launched Santa Maria in 2010, opening a second site in Chelsea last year. They also own Sacro Cuore pizzeria in Kensal Rise, north London.

Be At One appoints first head of training: Be At One, the specialist cocktail bar group, has appointed Kimberley King as its first head of training. She will find the best training solutions to support the growing business and ensure each one of the 410 staff employed at the company’s 32 bars has a development plan. Be At One has invested more than £6,000 in each of its trainee bartenders, taking them through an intensive nine-week programme. King joined Be At One as a trainee bartender herself in 2010, moving through various roles to become central learning and development manager, where she worked primarily on site openings, classroom training, inductions and e-learning. She said: “Through my various roles at Be At One, I have been fortunate to meet everyone who has joined the business, taking them through the induction process. Watching them grow has been a source of great pride and I cannot wait to continue to train and inspire people in my new role.”

Diageo launches Guinness Export House concept at Dublin airport: Diageo has launched a Guinness Export House concept at Dublin airport in partnership with retail business ARI, which operates The Loop complex in Terminal 2. The concept allows consumers to “immerse themselves in the Guinness culture” while sampling the brand’s beers. The partnership aims to transport elements of the Guinness St James’s Gate experience in Dublin to the airport. An ARI spokesman said there was potential for a future roll-out of the concept across the company’s growing portfolio, which spans nine countries. Guinness global content creation and innovation director Gavin Krenski said: “Guinness Export House represents a unique opportunity to tell the Guinness story through taste and experience. With the potential to roll-out globally in partnership with ARI, it’s a big bold concept for a pioneering, ambitious brewer.” ARI chief executive Jack MacGowan added: “Diageo understands today’s savvy consumers are not content with just grabbing a bottle off a shelf, they want to learn more about a brand and experience it first-hand before buying it.” 

Bistrot Pierre to open Middlesbrough site in September, first in north east: Private equity-backed restaurant group Bistrot Pierre will open its first north east site, in Middlesbrough, in September. The company, which currently operates 18 outlets, will open the restaurant in Albert Road, creating 50 jobs. It is investing £1m into the venue, which will seat more than 200 diners inside and on a Parisian-styled outdoor terrace. Co-owner Rob Beacham said: “Middlesbrough is an ideal location for us to open a new bistrot.” Bistrot Pierre recently launched its loyalty app, Mon Pierre Rewards, where customers earn points for every pound spent. The company, founded by Beacham and John Whitehead in 1994, received £9.8m from private equity firm Livingbridge in 2015 to support its expansion plans.

Copenhagen-based pizza restaurant Mother to make UK debut in July, at new Battersea Power Station development: Copenhagen-based pizza restaurant Mother is to make its UK debut in July, at the new Battersea Power Station development in south London. Located in the first railway arch at Circus West Village, it will be the company’s first restaurant outside Denmark. The 500 square metre venue will include an outdoor area and offer Neapolitan sourdough pizza made using sea water and baked in a wood-fired oven. Other Italian dishes will include carbonara and lasagne. A weekend brunch menu will include rustic Italian dishes varying from fruit and salad to homemade bread and pastry. Owners Nick Pound and David Biffani launched Mother in Copenhagen in 2010. 

Hollywood Bowl relaunches Bristol next-generation site: Hollywood Bowl Group, the UK’s largest ten-pin bowling operator, has reopened its centre in Cribbs Causeway, Bristol, following a £325,000 refurbishment. The centre has been redesigned as a “new generation” venue, with 26 computerised lanes and four VIP digital lanes. A Hollywood Diner offering burgers, hotdogs and shakes has also been installed, alongside a new American-style bar serving house speciality cocktails. Chief executive Steve Burns said: “We’ve evolved the brand considerably over the past couple of years and Cribbs Causeway is a great example of a next-generation Hollywood Bowl. Our centre refurbishments have received fantastic customer reaction and are exceeding our commercial expectations.” Hemel Hempstead-headquartered Hollywood Bowl Group operates 55 centres in the UK under the Hollywood Bowl, AMF Bowling and Bowlplex brands.

Punch free pint promotion returns: Punch has teamed up with Carling, Stella and Rekorderlig Cider for its latest free drink promotion, with more than 900 pubs taking part and 80,000 pints available to give away. Running until Monday, 29 May, all Punch publicans who sell Carling, Stella or Rekorderlig can register for the promotion, devised to increase footfall during the bank holiday weekend. Customers redeem their free pint by visiting and downloading a voucher to redeem a free drink at any participating pub. Punch category manager Stephen Martin said: “This promotion is a hugely useful tool for publicans to reach out to their customers, surrounding communities and attract new business. Last year, 99% of Punch publicans surveyed said they would definitely take part in a similar activity again, so we’re hoping this year will prove more popular than ever. The end of the promotion coincides with the bank holiday – so we can see customers visiting their local to have one last drink of the long weekend!”

Made In Italy to open eighth site this month, new pizza concept: Italian restaurant group Made In Italy, owned by the Corsaro family, is to open its eighth site this month with a new pizza concept. The company is launching Made In Italy 3.0 on Friday, 26 May in Northcote Road, Battersea. It will be the first of a new generation of pizza concept sites, featuring a menu allowing customers to choose from four different dough bases, each made from a specific Italian flour. The 60-cover restaurant will also have an 18-cover outdoor space. The interiors will feature an updated version of Made In Italy’s classic rustic style. The cocktail list will focus on Amari (Italian bitters), with the restaurant’s homemade amaro served alongside imported varieties to make a selection of classic and signature drinks. Red and white wine will also be available on tap. Made In Italy 3.0 will also offer regular live entertainment. Giuseppe Corsaro said: “We’ve been working at this project really hard and having lots of fun on the way. We’re looking forward to the continued growth of Made In Italy.” Made In Italy launched in King’s Road, Chelsea, in 1992.

Redchurch Brewery reports record revenue: Redchurch Brewery, which is undertaking a £400,000 fund-raise on Crowdcube to accelerate expansion plans, has reported record revenue in April. The company posted record sales in March and said it exceeded the figure in April by 10%. Redchurch Brewery added that quarterly figures to April 2017 were up 51% on the quarter to January 2017. The company, which began life six years ago in a railway arch in Bethnal Green, east London, stated: “This has been clearly aided by the new supermarket listings in Waitrose and Marks & Spencer but the growth has been across all sectors – in direct, wholesale and export – and is forecast to continue steadily rising to December 2018.” Redchurch Brewery, founded by lawyer turned brewer Gary Ward and television producer Tracey Cleland, is offering a 7.41% equity in return for the £400,000 investment. So far, it has raised £110,770 from 275 investors with 17 days remaining. The funds will be used to add further fermentation vessels to increase production capacity to more than 1.3 million litres annually at its new brewery in Harlow, Essex. It also plans to invest in its packaging line to improve speed and efficiency; employ more brewers, delivery drivers and expand its sales and logistics team; transform its warehouse space by adding a racking system; and add to its fleet of delivery vehicles.

Tony Conigliaro starts expansion of Bar Termini brand with Marylebone opening, fourth London site in total: London-based bar operator Tony Conigliaro has started expansion of his Bar Termini brand by opening a second site in the capital, this time in Marylebone. Bar Termini Centrale has opened in Duke Street and is larger than its Soho sister site, with extended food and cocktail menus and a sizeable outdoor terrace. The venue will also take reservations and offer an all-day dining menu, ranging from breakfast pastries to dishes such as fried panzerotti a la noma with tomato, aubergine and ricotta, smoked octopus carpaccio, and a range of aperitivi. Additions to the drinks list include an olive bellini and a bottle-aged bergamot negroni, Hot Dinners reports. Non-alcoholic drinks include the Al Penguino, made with lemon and mint syrup and topped with fizzy Italian galeffi. In February, Conigliaro launched cocktail bar Untitled in Hackney with business partner Zoe Burgess, inspired by Andy Warhol’s Silver Factory. He opened his first bar – 69 Colebrooke Row – in Islington in 2009 and the debut Bar Termini in 2015. He is also head of drinks consultancy Drink Factory, founded in Pink Floyd’s former recording studio and now based in London Fields.

Stonegate Pub Company to reopen former Wetherspoon pub in Finchley next month: Stonegate Pub Company is to reopen former JD Wetherspoon pub the Tally Ho in Finchley, north London, on Thursday, 1 June. The pub in North Finchley High Road has undergone an £800,000 refurbishment to offer cask ales, a new menu, and live entertainment, with the opening creating 20 jobs. The Tally Ho was one of 33 pubs JD Wetherspoon put on the market in May last year. 

Charles Wells launches new-look trade show for UK licensees: Bedford-based brewer and retailer Charles Wells has launched a new-look trade show for its UK licensees. The Summer Business Building Trade Show gave licensees a chance to meet a range of food, drink, coffee, music, sports, gaming and training suppliers in one room to explore ways of maximising their pub’s business opportunities. The day also acted as a forum allowing licensees to share experiences, ideas and best practice. Representatives of 60 Charles Wells pubs attended the event at the Bedford Blues Rugby Ground. Tom Foddy, senior retails sales and marketing manager for Charles Wells’ UK pubs, organised the event. He said: “We are here to offer support and advice to the pubs we work with, and what better way to achieve this than a fun event that brings customers and suppliers together for the benefit of all?” The Summer Business Building Trade Show is expected to return next year.

Douglas Jack – operations improvements and asset repositioning starting to bear fruit at M&B: Peel Hunt leisure analyst Douglas Jack has said operations improvements and asset repositioning are starting to bear fruit at Mitchells & Butlers (M&B) ahead of its interim results next week. Issuing an ‘Add’ note on the shares with a target price of 300p, Jack said: “Like-for-like sales rose by 1.7% (against a -1.0% comparable) in the first quarter, ahead of the pubs’ constituent of the Coffer Peach Business Tracker (+0.9%). Excluding Easter, we would have expected average sales to be up 2.0% to 2.5% (like-for-likes circa 1.5%), aided by tail-end disposals, soft comparables, asset repositioning, operational improvements, digital marketing and online delivery (which we believe typically adds £300 to weekly sales in participating sites). M&B is finally making progress with rebranding assets, generating returns of 25% to 40% after arguably a decade of underperformance in this area. We believe M&B is right to increase its exposure to Miller & Carter and reduce the number of Harvesters, Toby Carveries and Crown Carveries, particularly in or next to leisure parks. We believe the company will eventually target having circa 12 brands, with circa 140 sites per brand. There should be £56m of cost increases in 2017E (3.5% inflation), comprising £30m labour (+4.8%); £12m input costs (+2.2%); £5m utilities (+7%); £6m business rates (+7%); and £3m Apprenticeship Levy. The company aims to partially mitigate this impact by renegotiating supply agreements (half are locked in for 2017E), encouraging customers to ‘trade up’, and cost-saving initiatives at both site and overhead levels. In terms of pension, the triannual review commenced in March 2016, and negotiations must complete by the end of June 2017. We expect management to try to play the long game in relation to cash flows, given that bond yields are likely to rise. We expect to hold our forecasts next week. In our view, the eight times EV/Ebitda rating is attractive for a high quality (south England-orientated, circa 85% freehold) estate that is starting to show signs of progress. We estimate the EV/Ebitda would be seven times without the pension deficit, and the pension deficit should fall if higher inflation eventually leads to higher bond yields.”

Paytronix appoints former Fourth chief sales officer to lead expansion into UK: US restaurant reward and guest engagement firm Paytronix has appointed former Fourth chief sales officer Steve Mansfield to lead its expansion into the UK. Mansfield has worked in the UK hospitality, foodservice and leisure industries for more than 20 years, including two public company directorships with Alphameric and Christie Group and his time at Fourth, software partner to the hospitality and leisure industries. He specialises in digital transformation for businesses interested in improving guest experience through technology and will report into Jim Mcloughlin, head of global sales at Paytronix. Mcloughlin said: “The UK is a natural market expansion opportunity for Paytronix. Our guest engagement platform is used by leading US restaurants and convenience stores. In bringing our offering to the UK, we will introduce the benefits of loyalty and engagement programmes for multi-unit restaurant chains that include reducing reliance on discounting. Steve’s extensive knowledge of the leisure and hospitality industry’s marketing technology needs will be invaluable.”

Clerkenwell bar brought to market: Charterhouse Bar in Clerkenwell, central London, has been brought to market by agent Fleurets. The end-of-terrace, Victorian venue is opposite Smithfield Market and close to the Barbican and Farringdon Station, with the new Crossrail Elizabeth Line station due to open next year. The area was originally part of the Smithfield Market development and the property’s freehold is still owned by the Corporation of London. A new lease is available with a nil premium. Harry Cody-Owen, of Fleurets, said: “The property is in a vibrant area of the City and is currently advertised as rental offers invited.”

Host of companies sign up for Inspirational Leadership Masterclass: A host of companies have signed up for the Inspirational Leadership Masterclass. They include Cambscuisine, Punch, Mitchells & Butlers, Vaulkhard Group, The Ivy Collection, My Lahore, Draft House, Jamie’s Italian, Brindisa Tapas Kitchens, Ponti’s, McMullen’s, Anglian Country Inns, The Inn Collection, Admiral Taverns, True North Brew, FrogPubs, Jo De Luccis, The Alchemist, The Piano Works, 16 Hospitality, The Barsons Eden Group, and Chameleon Bar and Dining. Propel has partnered with the UK’s leading thinker and teacher on multi-site foodservice management Professor Chris Edger and Tony Hughes, cited by many current industry leaders as the most influential figure in their career, for the event. Edger and Hughes will draw on their book, eMotion – how leaders mobilise positive feelings in super-performing teams, to outline the “ten moments of emotional truth” of leadership that separate the best from the rest. The event takes place in the Chartered Accountants Hall at One Moorgate Place, London, on Thursday, 8 June and Edger and Hughes will explain their book’s key proposition – that focusing on mobilising positive emotions lies at the heart of inspirational leadership. Speakers will include Gary Harris, who has been deputy chairman of British Rowing for almost 20 years – a period of unprecedented success. He will outline the ten key insights into coaching outstanding performances from teams and individuals. Meanwhile, writer and lecturer Dr Nollaig Heffernan, co-designer of the ILM72 psychometric test, will outline the key components that underpin mental toughness for inspirational leaders and how to incorporate them to overcome everyday stress and challenges. Click here to see the full speaker schedule. Tickets are £295 plus VAT for operators and £445 plus VAT for suppliers, while tickets for Propel Premium subscribers are £245 plus VAT. To book, email or call 01444 817691.

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