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Morning Briefing for pub, restaurant and food wervice operators

Mon 12th Jun 2017 - Propel Monday News Briefing

Story of the Day:

Coffee shop operators ‘missing vital food sales opportunities’: Coffee shop operators are missing vital food sales opportunities as more than two-thirds of consumers buy food regularly from outlets, according to a new industry report from UCC Coffee UK & Ireland. The Food Menu Report, developed with UCC Coffee chef ambassador Sarah Hartnett, found one-quarter of consumers eat and drink on-site at coffee shops, with customers willing to pay more for quality food. Breakfast products are most in demand, while almost three-quarters (74%) of consumers who order food with their coffee opting for cakes or pastries. The top foods purchased with coffee are cakes, followed by sandwiches and pastries. However, the report warned indulgence is on the wane, with one in three consumers regularly buying healthier food with their coffee. UCC Coffee said a lack of healthy options meant operators were missing out on healthy food sales opportunities, with the most sought-after healthy menu item being fresh salad. Hartnett said: “Innovative and exciting menus are a key success factor for coffee shops – the battle to attract and retain customers will be fought on food. The UK is a world leader in hospitality, breaking ground and shaping food trends that traverse sectors and borders. Despite our impressive coffee culture, this is not always reflected in coffee shops. People want to buy food and stay on-site to eat. Operators aren’t just selling a coffee – they’re selling an experience. Venues that elevate the experience beyond coffee with well-paired, innovative and on-trend food offers will cement their reputation as a great destination. And people will be willing to pay.” Gareth Davies, head of coffee excellence at UCC Coffee UK & Ireland, added: “The way your customers choose a snack or dessert comes down to the taste – the decision is based on the experience they are craving when they reach the counter or at the end of a meal and how it’s going to make them feel. Operators need to ensure this craving is met in the context of coffee by understanding the basics of drink types – for example a flat white versus black filter, and roast profile from light to dark.”

Industry News:

Propel Multi-Club summer conference open for bookings, two free places for operators: The Propel Multi-Club summer conference and party is now open for bookings. The event, which takes place on Thursday, 6 July at the Oxford Belfry, which is just off the M40, will also involve the Propel summer party in the evening. Operators can claim two free places by emailing Jo Charity on The speaker line-up for the morning session is NPD Group UK foodservice director Cyril Lavenant, Morar Consulting chief executive Roger Perowne, David Bruce, co-founder of Firkin Pubs, The Capital Pub Company and The City Pub companies and currently chairman of The West Berkshire Brewery, and Ali Khan and Samrien Hussain, who operate escape rooms business Tick Tock Unlocked. Speaking after lunch are Marston’s Revere Pub Company managing director Colin Sadler, The Breakfast Club co-founder Jonathan Arana-Morton, and Black and White Hospitality chief executive Nick Taplin. The final session features Tahola commercial director Simon Blackbourne, Mowgli owner Nisha Katona, Amber Taverns managing director James Baer, and Rupert Clevely, managing director of Ei Group’s managed expert joint venture Hippo Inns.

Propel Premium members to receive Nick Miller audio on Friday: Subscribers to Propel’s Premium service will receive an audio recording on Friday (16 June) of Nick Miller, formerly of Miller Brands UK and Meantime Brewery, speaking at last week’s Propel Inspirational Leadership Masterclass. Miller shares his leadership learning experiences (good and bad) and highlights what he believes were his ten critical leadership moments. To sign up or find out more about Propel Premium, email

HGEM launches report that measures impact of third-party delivery services: Guest experience management expert HGEM has launched a new report that allows hospitality operators to measure the impact of third-party delivery services on their guests’ experience. HGEM said the emergence of third-party delivery companies such as Deliveroo, UberEats and Amazon had created a “unique stakeholder relationship between restaurants, delivery companies and guests”. However, it added that despite the potential for this relationship to be mutually beneficial, it was “not always clear where the blame lies if things go wrong”. A recent HGEM survey revealed 41% of guests hold the restaurant, rather than the delivery company, accountable if food arrives cold or is poorly presented. However, if food is delivered late, almost half (47%) of guests feel the responsibility lies with both parties. The survey also revealed more than half of respondents (60%) order a takeaway via third-party delivery companies at least twice a month. HGEM said there would be “challenges involved in ensuring all parties benefit equally” as the popularity of delivery services grew. HGEM said its new third-party delivery experience reports would offer operators data on factors such as delivery time and how well food travelled and retained heat. Operators will also receive bespoke analysis of trends revealed by the reports. HGEM founding director Sally Whelan said: “A traditionally offline market is going online – with a wealth of data on everything from customer purchase habits to restaurant ratings at operators’ fingertips. With drone delivery and further technological advances on the horizon, now is the time to ensure third-party delivery companies and brand owners are working together to strengthen, rather than compromise, the guest experience.”

London hotel market seeing strong performance growth for May: The London hotel market has indicated continued strong performance growth, according to STR’s preliminary data for May. The company’s report revealed year-on-year increases in supply (3.2%) and demand (5.0%), while occupancy levels rose 1.7% to 83.1%. Average daily rate increased 7.0% to £153.04, while revpar rose 8.9% to £127.24, which would be London’s highest absolute revpar level for any May on record. The market has set revpar records every month in 2017 so far. Absolute occupancy reached 90% or higher nine times in May, including several days around the times of the Security And Counter Terror Expo (3-4 May), Museums Heritage Show (17-18 May) and London Wine Fair (22-24 May). STR analysts said hotel performance in London had reached record levels primarily because of the pound’s devaluation and subsequent boost in leisure business. The market maintained performance growth without disruption following the Westminster and Manchester terror attacks but STR said it was too early to gauge the potential impact of the recent attacks at London Bridge. STR will release actual May 2017 results later this month.

Pinsent Masons and Christie & Co to host free breakfast briefing: Law firm Pinsent Masons and agent Christie & Co are to hold a free breakfast briefing – Pubs, Restaurants and Hotels Sector: Challenges of 2017 and beyond – this month. The event takes place at Pinsent Masons’ offices at 3 Hardman Street, Manchester, on Tuesday, 27 June. The briefing will cover a range of legal and commercial issues affecting licensed businesses as well as a panel discussion featuring Living Ventures chief executive Jeremy Roberts, Palatine Private Equity investor director Kieran Lawton, Tower Hotel Management managing director Peter de la Perrelle, and Stephen Owens, head of valuation – hospitality at Christie & Co. Topics will include National Living Wage increases, the Apprenticeship Levy, disruption to recruitment following Brexit, business rates increases, rising food and beverage costs, and proposed changes to the Licensing Act. Click here for further details and how to register. 

Company News:

Fuller’s boss – ‘new turnover rent agreement is already seeing encouraging returns’: Fuller’s chief executive Simon Emeny has told Propel its new agreement based on turnover rent is already seeing encouraging returns. Emeny said there were now six of the agreements in place as Fuller’s increases investment in the tenanted division by more than 50% – to £3m – this year. He added: “It’s a very exciting period for us. We are putting in place continued capital investment so that will enable us to improve things such as the food offer further in these pubs. These agreements benefit both the company and the tenant, including better transparency of trade and trading patterns and giving the tenant greater flexibility in how they grow their business. We’re taking some of the things we’ve learned from our managed estate, such as the food improvements we’ve made, and are now applying them into our tenanted division.” Emeny said Fuller’s would continue to increase investment despite rising cost headwinds. He added: “The increase in business rates  – in our case £2m this year – is a problem facing every chief executive in this sector, particularly in London. The changes penalise companies like ourselves that are being successful and trying to put something back into the community.” Emeny said the company was looking to add to the 17-strong Stable estate, which it owns a 76% stake in, after a period of consolidation. He added: “Having opened a number of sites in a short space of time, we decided to pause and reflect on the operation we had and given the instability in the restaurant sector at the moment, I think that was the right decision.” Emeny said Fuller’s had increased the number of bedrooms in its pubs by 10% this year and, with the growth of staycations in Britain, it would continue to open more rooms. Looking ahead, Emeny said: “What we’ve seen in the past year with Brexit and the general election result is we are going through a major period of change. However, we will continue to make our pubs part of the community and make sure our customers are receiving the best possible service and offer. We are in a very strong position, both in terms of the team we have and the balance sheet.” 

Amber Taverns targets towns for further expansion across the UK: Community pub operator Amber Taverns has targeted a number of towns and cities across the UK as it gears up for further expansion. The company has released a target list that ranges across the UK, including Lancashire, the north east, West Midlands, Wales, eastern England and the south west. The company said it would pay 2% introduction fees to non-retained agents up to a maximum of £15,000 for any freehold sale it secured. Amber Taverns head of property Sam Frankland told Propel: “We continue to seek new freehold sites across England and Wales. We have had recent success securing and converting retail property and will also consider restaurants, offices and other suitably located property.” Last month, the company opened a site for its Hogarths Gin Palace in Newcastle-under-Lyme, Staffordshire, its 11th venue in total. It has further openings lined up for Darlington, Tamworth, Atherton in Greater Manchester and Port Talbot, Wales. Frankland told Propel the company had also submitted offers on sites in Ellesmere Port and Neath. The other Hogarths sites are in Blackpool, Bolton, Preston, Leicester, Wakefield, South Shields, Hereford, Newport, Swansea and Ilkeston.

Greggs trials first UK drive-thru: Bakery business Greggs is trialling its first UK drive-thru, in Salford. The menu includes all the bakery’s classics, from steak bakes to sausage rolls, as well as sandwiches, cakes, biscuits and buns. The new Balanced Choice range of healthier sandwiches, salads and soups – all fewer than 400 calories – are also available to grab and go. Greggs chief executive Roger Whiteside said: “When it comes to food on-the-go, our customers tell us convenience is key. We’ve been working hard to take Greggs to where our customers need and want us to be including office parks, industrial estates, retail parks and travel hubs. A drive-thru offers the ultimate convenience and seemed the logical next step.”

Five Guys submits licence to open restaurant at former Yates’s pub site in Croydon: Better burger brand Five Guys has submitted a licence application as it bids to open a restaurant on the site of a former Yates’s pub in Croydon town centre. The company has applied to Croydon Council to open the 209-cover venue on the former Stonegate Pub Company site in High Street, which shut in April 2015. Five Guys is aiming to open the new restaurant, which would create 42 jobs, in September. It has applied to open the venue from 8am until 12.30am on Mondays, Tuesdays, Wednesdays, Thursdays and Sundays, shutting an hour later on Fridays and Saturdays. It also intends to sell alcohol on the premises, reports the Croydon Advertiser. Five Guys, which was founded in Virginia in the US in 1986 by the Murrell family, has more than 60 restaurants in the UK having opened its first in Covent Garden in 2013. It recently opened sites in Piccadilly Circus and Cheshire Oaks, while locations listed as “coming soon” on its website include Clapham in London and Frederick Street in Edinburgh.

Encant owner Victor Garvey opens cheese and wine bar in Covent Garden: Victor Garvey, chef-patron of modern Spanish restaurant Encant, has opened wine and cheese bar Sibarita a few doors down in Maiden Lane, Covent Garden. Garvey, who has partnered with his father, also Victor, for the venture, said the venue is the “kind of laid-back wine and cheese joint we like to go to ourselves”. Sibarita, which means “epicure” in Spanish, offers Spanish cheese and charcuterie alongside tapas-style dishes. The wine list is all Spanish. Krisztian Palinkas, who has worked alongside Garvey at Encant for three years, is head chef at the 26-cover site. New dishes created for Sibarita include crispy calamares a la romana, and oven-baked torta del casar cheese with farmer’s market crudites and garlic bread. Garvey said: “Krisztian is a real talent and it’s time he had his own kitchen. Sibarita is intended to be fun, casual and affordable, a place anyone can drop into at any time.” Garvey Snr added: “Even before Victor became a chef and opened restaurants of his own, we said when I retired from corporate life we’d start somewhere like Sibarita together. When this great site came up so close to Encant, we knew our moment had come!" Garvey launched Encant, his first solo venture, in March 2016. He will open a second restaurant, Rambla, focusing on Catalan cuisine, in Soho in September.

Healthy quick-service concept Vita Mojo raises more than £3m for expansion as it closes crowdfunding campaign: Healthy quick-service concept Vita Mojo has raised more than £3m in its campaign on crowdfunding platform Crowdcube to aid expansion. The company, founded by Nick Popovici and Stefan Catiou, hit its £1.5m target to fund expansion within hours of launch. It was offering a 7.18% equity stake in the company in return for the investment. In total, 1,179 investors pledged £3,278,790 and the campaign has now closed. The largest investment was £1m. Backed by global caterer Elior Group, Vita Mojo, which has three sites in London and strives to make food “personal”, is looking to open restaurants in the UK as well as franchise the concept in other regions. The company is on track to deliver revenue of £2.7m this year. The pitch states: “We plan to open two more restaurants in 2017, with three in 2018 and four in 2019. We also plan to franchise the concept in other regions. We will also invest funds in refining our software, ready for a pilot later in 2017, followed by leasing our software from 2018 onwards to operators around the world. We forecast revenue of £2.7m in 2017 with Ebitda of £1.0m, revenue of £10.4m with Ebitda of £0.3m in 2018, and revenue of £23.5m with Ebitda of £2.2m in 2019. Although we are not in control of the options that might be available in the future, we are targeting a full trade sale or initial public offering in the next few years. Vita Mojo secured £1m investment from Elior Group prior to launch, which is included in the campaign total and at the same share price as all investors.”

Brains eyes Coffee#1 sale: Cardiff-based brewer and retailer SA Brain & Co is considering selling its fast-expanding coffee business Coffee #1. The company has appointed City of London advisory firm Sapient to look at strategic options, including the company only selling a minority stake in the business, according to the Sunday Times. City sources said several private equity firms had expressed interest in the business, which could be worth up to £60m. SA Brain & Co acquired Coffee#1 from entrepreneur James Shapland in 2011. The brand directly employs 300 staff and is on track to launch its 100th venue by 2018, focusing on regional openings. Revenues at Coffee#1 rose 28% during the year. Its sales now account for close to 20% of all SA Brain revenues. 

Yorkshire nightclub with military links fights off moves to cut opening hours: Club Louis, a nightclub trading in a Catterick garrison but serving both a military and civilian market, has fought off moves to cut its opening hours. As part of a licence review, North Yorkshire Police were seeking to cut the closing time of the club from 3am on Thursdays and 4am at the weekend to 2am. The club is owned by Nidderdale Inns director Mark Arrol and Stephen Wignall. Solicitor Jonathon Smith, of Poppleston Allen, was able to demonstrate the long-term trend of incidents was downward and management had implemented a plan to ensure it was working strenuously towards upholding the licensing objectives. Richmondshire District Council’s licensing committee found the club could continue to open until 4am at the weekend but accepted the club’s offer to close at 2am on Thursdays. Arrol said: “We are delighted the council accepted we have worked tirelessly to uphold the licensing objectives in what is a difficult market place. It will allow us to carry on providing a vibrant nightclub to our diverse client base.”

Former Fera executive chef to open restaurant in Cornwall: Dan Cox, former executive chef at Simon Rogan’s Fera restaurant at Claridge’s Hotel in London, is to open a restaurant in Cornwall. Cox has taken on Crocadon Farm in St Mellion, near Plymouth. The new restaurant at the venue will be run in partnership with Sean O’Neill, of the Modern Salad Grower and Good Earth Growers. Writing on his Instagram account, Cox said: “The day has finally come. I have taken on the most amazing 120-acre organic farm and buildings in St Mellion, Cornwall.” Cox served as head chef at Roux for three years from 2008, before joining research kitchen Aulis in 2011. He left London after his previous restaurant and Claridge’s ended their three-year partnership in April, reports the Plymouth Herald. The restaurant will continue to be led by head chef and Rogan protégé Matt Starling, but with a new culinary vision.

Arc Inspirations launches cocktail delivery service from Manahatta site in Leeds: Arc Inspirations has partnered with Deliveroo to launch Leeds’ first cocktail delivery service, from its Manahatta venue in Greek Street. The “beat of New York” bar, which opened in March, is offering a selection of four drinks. Arc Inspirations bar development manager Mark Austin said: “Deliveroo cocktails give customers the opportunity to enjoy the same premium drinks experience they’d expect at the Manahatta bar from the comfort of their own home. This is so much more than shake-and-mix cocktail kits – we strive to offer our customers a bespoke mixology experience away from our bar.” Founded in 1999, Arc Inspirations operates 15 bar and restaurant venues in the north of England across nine brands grouped into five core markets – student suburban bars, aspirational neighbourhood venues, American bars, high-street retail, and late-night experience. The company has a turnover of £20m. When the Manahatta site launched in Leeds, Arc Inspirations reported a record opening week for one of its sites.

Gordon Ramsay blames Brexit as he hires team to tackle food costs: Celebrity chef Gordon Ramsay has drafted in a specialist team of negotiators to tackle rising food costs at his restaurant empire. Gordon Ramsay Holdings has recruited a buying team to negotiate cheaper prices across the group as the cost of imported ingredients spirals because of the weak pound. The company blamed the price rises on Brexit and the small group of buyers will haggle with suppliers to drive down the cost of ingredients across the group’s 31 restaurants. Previously venues negotiated on a restaurant by restaurant basis, not benefiting from economies of scale. A spokesperson for Ramsay told The Guardian: “The biggest currency exposure is on buying wine so we are working on our supply chain to mitigate the impact of fluctuations in sterling. This includes sourcing wines from around the world and using purchasing power better.” Despite the added pressures, Gordon Ramsay Group bounced back into profit for the first time in two years thanks to restructuring and international expansion. At the end of May, the company posted earnings of £739,000, up from a £2m loss a year ago, on sales of £51.9m.

Pizza champion Made of Dough opens first bricks and mortar site: London-based pizza concept Made of Dough, which operates at Pop Brixton, street food markets and festivals, has opened its first bricks and mortar site. The reigning London Pizza Festival champion has launched the restaurant in Bellenden Road, Peckham, with the 50-cover site featuring a chef’s table, cocktail bar and wood-fired pizza oven. The menu features Made of Dough favourites, created with signature 60-hour fermented dough, alongside some new toppings exclusive to Peckham, including a merguez sausage collaboration with local butcher Flock & Herd. Cocktails include Amalfi lemon bellinis and Cointreau espresso martinis, alongside gelato milkshakes. The restaurant is open seven days a week, from midday to 10.30pm, with monthly live music and wine-tasting nights planned.

Online beer distributor EeBria closes crowdfunding campaign after raising more than £750,000: Online beer distributor EeBria has closed its campaign on crowdfunding platform Crowdcube after raising more than £750,000. The company, founded by David and Rachael Jackson and whose customers include BrewDog and Innis & Gunn, passed its initial £500,000 target within six hours of its launch. EeBria offered a 7.69% equity stake in return for the investment to expand and “further push” into the large pub companies. In total, 503 investors pledged £750,200 and the campaign is now closed. The largest investment was £200,000. The pitch stated: “Powered by our bespoke tech platform we operate selling craft beer to individuals, and selling to pubs, shops, bars and restaurants nationwide. Customers can access more than 300 breweries and 2,000 different drinks through the websites, including EeBriaTrade, which achieved more than 500% year-on-year growth. By operating a market place we have no warehouse costs and don’t have the risk of stock going out of date so can carry a wider range, and at typically cheaper prices, than other distributors all shipped nationwide and brewery fresh. Funds will predominantly be used for new hires and working capital, including an experienced sales-team hire to further our push into the largest pub companies. This round will help support this roll-out with the goal of becoming a global market place. The company forecasts revenue of £732,631 this year, growing to £3,131,431 by the end of 2018, while Ebitda is expected to be -£226,149 this year, increasing to £791,157 a year later.” In 2015, Eebria raised £288,000 on crowdfunding platform Seedrs to fund expansion.

TV chef Damian Wawrzyniak opens debut restaurant House of Feasts in Peterborough: Chef, author and television presenter Damian Wawrzyniak has opened his debut restaurant, House of Feasts, in Peterborough. The menu focuses on sharing platters using seasonal ingredients from House of Feasts’ own garden, alongside barbecue dishes and hog roasts. The restaurant in Crowland Road has outdoor seating for 120 people, an outdoor bar and a gazebo for wet days. Wawrzyniak said: “Guests should expect feast-style food with something new to try every time, made using only the best-quality and local ingredients. Menus could change daily or weekly and our huge garden will be open for large parties, weddings and family gatherings. We have a large barbecue and spit roast, where we will cook whole pigs.”

North west-based Indian restaurant Barton Rouge to open third site, in Liverpool: North west-based Indian restaurant Barton Rouge is to open its third site, in Liverpool. The company is launching the venue in Exchange Street on the former site of Anderson’s Bar following a £500,000 investment. Set across two storeys, the 5,650 square foot restaurant, which is due to open later this month, will have 180 covers. Founder Amit Kumar told the Liverpool Echo: “When it comes to Indian restaurants our ethos is to shy away from the takeaway culture and instead capture the true essence of fine dining. Our new cosmopolitan postcode will provide a sleek and sophisticated setting that will allow guests to explore new-age Indian cuisine at its finest.” Barton Rouge’s other sites are in Chester and Heswall.

Restaurateur Bea Vo launches American-influenced bakery and tea room in Shepherd’s Bush: Restaurateur Bea Vo, who founded the Beas of Bloomsbury chain, has launched an American-influenced bakery and tea room in Shepherd’s Bush, west London. Butterscotch Bakery has opened in former BBC media village White City Place. The new venue takes inspiration from Vo’s American roots, with the menu including layer cakes, pies, cobblers, brownies, marshmallows and cupcakes. Vo also operates the bakery as an online business, with collections available from her Boondocks restaurant in City Road. Vo is also behind Stax in Carnaby Street and Famous Flames in Kentish Town Road.

Japanese and Chinese fusion restaurant Mei Ume opens at Four Seasons Hotel London: Restaurant Mei Ume has opened at the Four Seasons Hotel London in Ten Trinity Square, blending Chinese and Japanese cuisine. The kitchen is led by head chef Tony Truong, previously of Royal China, alongside former Sake No Hana sushi chef Mun Seok Choi and dim sum chef Liang Kian Cheng. Dishes include crispy baby squid with salted eggs, stir-fried Dover sole with cloud ear mushroom, and celery-braised pork belly with crab, Hot Dinners reports. Kagoshima-sourced Wagyu beef is served with Japanese spicy barbecue or sake butter sauce. The cocktail menu has a similar fusion feel, with Taiwanese and Japanese sake, shochu and whiskey. The venue also features a private dining room for 14 guests and a sushi station. Mei Ume joins La Dame de Pic, a French restaurant that opened in the hotel in January, which marked the UK debut of three Michelin-starred chef Anne-Sophie Pic.

Randall & Aubin starts expansion with Manchester sister site: Soho-based seafood restaurant and oyster bar Randall & Aubin has started expansion by opening a sister site in Manchester. The restaurant, owned by chef Ed Baines and property and restaurant entrepreneur Jamie Poulton, has opened a 130-cover venue in Bridge Street on the site of the former Rankin Style furniture shop. As well as seafood, the restaurant offers rotisserie chicken and other brasserie classics. The decor, designed by Poulton himself, features tiles and marble with lots of benches and high stools. Poulton told The Business Desk: “When we started in Soho 20 years ago, it was quite a creative and vibrant place. That was the feeling when I got off the train (in Manchester).” Randall & Aubin launched in an old Edwardian butcher’s shop in Soho’s Brewer Street in 1996.

Tom’s Kitchen launches new summer menu: Michelin-starred chef Tom Aikens has launched a new summer menu for his Tom’s Kitchen brand. The menu uses seasonal and sustainable ingredients to create contemporary British dishes with an emphasis on vegetarian and gluten-free dishes. Starters include chilled pea soup with fresh peas, lemon, crème fraiche and olives, with main courses including courgette, dukkha, fennel and turmeric salad with turmeric and saffron dressing, and roast fillet of sea bream with braised chicory, heritage tomato salad and olives. The grilled section features grilled baby spatchcock chicken, while desserts include peach melba sundae. Tom’s Kitchen has four restaurants in London – in Chelsea, Canary Wharf, St Katharine Docks and Somerset House – and another in Istanbul. Its first regional site opened in Birmingham late last year.

Douglas Jack – ‘Fuller’s is a solid performer in an uncertain world’: Peel Hunt leisure analyst Douglas Jack has said Fuller’s is a solid performer in an uncertain world. Issuing an ‘Add’ note on the shares with a target price of 1,200p, Jack said: “Managed like-for-like sales rose by 3.7% (versus 4.8% comparable) in 2017, with drink up 3.1%, food up 4.5% and accommodation up 6.4%. This was ahead of the Coffer Peach Business Tracker, which was up 0.7% for managed pubs (2.2% in London; 0.2% outside London) over the same period. Although the managed pub market has picked up since March, Fuller’s 6.6% increase in like-for-like sales is, nevertheless, excellent and among the best in the sector. Managed Ebit margins fell by 60 basis points, all of which was due to higher depreciation. At our conference, the company stated it expects to grow managed margins over the long term. However, we expect cost increases to be slightly higher in 2018E than 2017 due to higher business rates and the Apprenticeship Levy. The company believes it needs to grow like-for-like sales by 4% to hold margins flat. Fuller’s acquired five pubs, opened four Stable restaurants and transferred two pubs from tenanted to managed in 2017. We cautiously assume just four new managed outlets are added in 2018E. Tenanted like-for-like profits fell by 1%, excluding the benefit of 18 tail-end pub disposals, which we estimate should eventually boost average pub profitability by 4% to 5%. This division is now targeting growth through food. Brewery volumes fell by 2% in a cask market that fell by 6%, although turnover rose by 17% due to the revenue contribution of Nectar Imports. Our forecasts assume a slowdown in expansion and just 3% like-for-like sales growth in the managed estate. Although the political backdrop has become more uncertain, it reduces the likelihood of new regulation and increases the chances of sterling remaining weak, which is good for Fuller’s (benefiting inbound tourism, with the company having a low reliance on imports).”

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