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Mon 4th Sep 2017 - Propel Monday News Briefing

Story of the Day:

Food and beverage property market starting to cool off and showing signs of saturation, reports Colliers International: The food and beverage property market is starting to cool off and is showing signs of saturation, Colliers International has reported. Research from the company found Newcastle, Manchester, Bristol and Birmingham were over-indexing when it came to the proportion of leisure units in the city, suggesting a saturation situation. The percentage of overall city centre retail units in those cities used for leisure was 43%, 43%, 40% and 38% respectively, compared with a national average of 37%. But while these regional cities have seen rises in the proportion of leisure units in the past three years, Colliers said it believed the market was beginning to cool with a number of cities such as Norwich and Brighton and Hove seeing their leisure unit supply stagnate. Ross Kirton, head of Colliers’ UK leisure agency, said: “Eating out has continually grown as a popular way to socialise over the past few years. However, after numerous years of rapid growth, the market is clearly slowing down with signs of saturation and oversupply in certain locations. All too often landlords and developers have been ill-advised on the number of new units a scheme can sustain, and in many cases adding A3 concepts has been a ‘sticking plaster approach’ to fill voids in troubled schemes.” Colliers said good trading locations, such as Newcastle, Manchester and Birmingham, would continue to attract strong interest from leisure occupiers, despite the downturn in the market. A number of regional cities have seen a sharp increase in the proportion of units dedicated to leisure units. Newcastle has seen an accelerated growth in its food and beverage offer since 2014 compared with Manchester, boosted by Intu Eldon Square’s new restaurant development Grey’s Quarter, which fully opened earlier this year. Compared with 2016, Intu Eldon Square’s leisure stock has increased from 16.1% to 24.4%. Kirton added: “A good selection of new and exciting brands is helping to keep some locations performing well. Grey’s Quarter has included a number of new concepts such as fast-casual groups such as Pizza Storm and Smashburger and Thai Leisure Group’s Chaophraya, which includes a rooftop bar.” Colliers also found Bristol has rapidly increased the density of its food and beverage offer over the past three years, helped by becoming a prime destination for brands to locate their first outlets outside of London.

Industry News:

Propel Multi Club Conference open for bookings, Fuller’s Jonathan Swaine to present, two free places for operators: The final Propel Multi Club Conference of 2017 is open for bookings. The full-day event takes place on Wednesday, 1 November at the Millennium Gloucester hotel in London. Jonathan Swaine, managing director of Fuller’s Inns, will set out how the company has created a premium pub estate underpinned by service and training. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places by emailing Anne Steele on
Ex-Wagamama boss David Campbell to speak at Chris Muller Multi-site Management Masterclass: Former Wagamama chief executive David Campbell, who stepped down earlier this year, will be a guest speaker at the Multi Site Management Masterclass on Friday, 29 September. Campbell will chat with Professor Chris Muller, the leading thinker, teacher and author on multi-site foodservice management in the US, giving his thoughts on leading a team through a turnaround, talking about his past successes across industries, and the way he repositioned the team at Wagamama for growth and revitalisation. The event takes place at One Moorgate Place in London and is open for bookings. Leading UK businesses such as Mitchells & Butlers and TGI Friday’s have sent staff to be taught by Professor Muller at Boston University’s School of Hospitality – now Professor Muller is returning to the UK to lead this bespoke day. The event will provide valuable insights for founders and area managers of small and medium-sized multi-site companies and area managers of large companies. The sessions will include building the case for strategic growth, developing multi-unit managers from players to coaches and a discussion on the importance transition plays in the practice of management and leadership. Mastering Multi-Units founder Lee Sheldon will also talk about how to successfully drive profitable growth for your business. Tickets are £295 plus VAT for Propel Premium members, £345 plus VAT for operators and £445 plus VAT for suppliers. To book tickets, email Anne Steele at
New tourism vision for London launches: A bold new vision for tourism in London has been launched to bolster the capital’s status as a world-class destination. The Tourism Vision for London, which is backed by more than 100 industry partners and supported by the Mayor of London, has suggested tourism numbers in London are set to rise sharply by 2025. Projections show visitor numbers could top 40 million a year, an increase of 30% on current levels, with tourism spending projected to hit £22bn a year – up 50%. However, the vision stated the growth in visitor numbers is not a given with increasing competition from other destinations and other challenges such as continued access to talent, the supply of new hotel rooms and aviation capacity that could constrain growth. It recommends greater investment in pre-visit promotion to attract more first time visitors, boosting visitor numbers in off-peak periods and harnessing technology to allow visitors to make more of their visit and see more of the city. According to Google, London leads worldwide searches for city and short breaks ahead of Barcelona, Rome, Paris and Amsterdam, with the number of searches up by 17% year-on-year. London also tops Google’s search rankings for global cities to fly to. Mayor of London Sadiq Khan said: “It’s important all Londoners benefit from a growth in tourism. By inspiring visitors to come to our great city during quieter periods such as autumn and to find hidden gems off the beaten track, we can ensure the projected growth in visitor numbers is sustainable and the tourism and cultural industries work for everyone.”
US restaurant operators less optimistic as sales and visits soften: US restaurant operators are less optimistic about the coming months as they reported a softening of sales and visits in July. The combined results have led to a decrease in the National Restaurant Association’s monthly Restaurant Performance Index (RPI) for the first time in three months. The RPI, compiled through a monthly survey of restaurant operators’ sales and expectations, was 100.6 in July, falling 0.4% from 101 in June. The association considers the industry to be in expansion mode when the index is above 100. Sales results in July were mixed. According to the survey, 46% reported a like-for-like sales increase in the month, while 42% said like-for-like sales declined. That was a decrease from June, when 54% of operators reported an increase. Visits were also weaker, with 48% of operators reporting a decline and 37% reporting an increase. In June, 42% reported a decline in visits and 39% an increase. Operators were also less optimistic about sales growth in the months ahead. A total of 32% said they expected higher sales in the next six months, a decline from 42% the previous month. But operators were still working on or planning to grow. A total of 62% said they made a capital expenditure on equipment, expansion or remodelling in the past three months. Meanwhile, 50% said they were planning to make a capital expenditure in the next six months, but that was a decrease from 58% the previous month.
Plans delayed for Aberystwyth restaurant quarter: Plans to turn a grade II-listed former Welsh school in Ceredigion into restaurants and cafes have been delayed. In 2016, planning permission was granted to convert Yr Hen Ysgol Gymraeg, Aberystwyth, into a restaurant quarter. Two restaurants have so far signed up to the scheme – PizzaExpress and cafe brand Loungers. The complex was due to open by mid-2017, but the developer said this has been put back by about a year. Project manager Will Lloyd Davies added the delay had been caused by one of the building’s tenants failing to vacate. Lloyd Davies said the business should have left a year ago, but has now agreed to do so by the end of October. About nine months of construction work will follow, meaning the development should open in summer 2018. Lloyd Davies told the BBC no more businesses had been signed up, but the plan was to press ahead with construction with PizzaExpress and Loungers.
Deltic hopes to list once profits hit £20m: Bar and nightclub operator Deltic, which has been making the case for Revolution shareholders to opt to merge the company with Deltic rather than accept an alternative £102m offer from Stonegate Pub Company, hopes to list once profits hit £20m, the Sunday Times has reported. Commenting in an article that charted the medium-term decline in the nightclub sector, Deltic chief executive Peter Marks said: “We have four or five sites making more than £1m. If you went to any of these towns, you wouldn’t say the nightclub is dying. We’re positive and so are our investors, but not through being deluded. We’ve seen a lot of change, but no town has ever become busier or better by losing nightclubs.”

Vegan festival to make Mayfair debut: Vegan festival Vevolution, which launched at The Oval Space last year, is returning to London, this time at the 500-capacity Royal Institution in Mayfair. The event will take place in November featuring TED-style talks, street food and workshops. Vegan street food on offer will include barbecue burritos from Club Mexicana, dairy-free margharitas from One Planet Pizza, and pie and mash from the Young Vegans, The Nudge reports. Workshops will include the art of fermentation by community kitchen Made in Hackney.

Company News:

Greene King shares fall after publication of HSBC note: Greene King shares fell on Friday (1 September) after HSBC said the pub operator was the riskiest bet in the sector. Consumer confidence in the UK is weakening and, while pub company earnings proved resilient through the 2008 recession, it was in part thanks to an expansion into food, HSBC said. This time round, a greater reliance on food makes them more vulnerable, it said. Cost mitigation is the other big risk because only JD Wetherspoon looks to have the power to raise prices, said HSBC. Greene King in particular has not given clear guidance on where it will find a target of £40m to £45m savings, it cautioned. “Operators have already struggled with this even in a benign consumer environment,” said HSBC. “We don’t see obvious valuation support, and think downgrades will drive share price weakness.” HSBC set a 595p target on Greene King, which slipped 3.8% to 663p. A mixed wider market left the FTSE 100 higher by 7.88 points at 7,438.50.
Pizza Hut reports sales growth as estate remodelling plan nears completion: Pizza Hut UK has reported sales rose 3% to £233m in the year to 4 December 2016, with like-for-like sales up 3%. At the year-end its estate stood at 266 sites, down six from the year before. Operating profit was £7.36m, 12% lower than the previous year because of an increase in royalty rates under its franchise agreement and increases in staff costs. Trading Ebitda was £28.32m, which is 15% ahead of the year before and “continues the healthy growth in performance delivered by the business over the past two years”. The company reported it had 192 refurbished restaurants at its year-end, representing 72% of total restaurant locations – return on investment from refurbishments is “well ahead of target”. Pizza Hut expected to refurbish another 40 restaurants in 2017 so that 90% of the estate will have been updated by the end of the year. Five restaurant closures are planned for 2017, with its first new site since 2012 opening at the White Rose shopping centre in Leeds. Pre-tax profit was £5,222,000, down from £7,891,000 the year before.
Filmore & Union receives £3.5m investment from Business Growth Fund: Filmore & Union, based in the north of England, has received a £3.5m investment from the Business Growth Fund. The company, founded in York five years ago by former recruitment consultant Adele Ashley, will use the cash to expand beyond its 14 sites, which are mainly in Yorkshire. Filmore & Union raised £865,000 through the crowdfunding platform Crowdcube two years ago and made revenue of £3.9m in the 12 months to March. The restaurant chain specialises in selling local produce and gluten-free desserts. The money will be used to expand into the north east and Midlands. As part of the investment, Kevin Bacon, the former managing director of Frankie & Benny’s and Jamie’s Italian, will become chairman. Ashley set up Filmore & Union with £250,000 from savings and the sale of her house.

Analysts pour cold water on Whole Foods Market 43% discount: Analysts have claimed prices at Whole Foods Market have ben reduced by less than the 43% headline figure claimed by its new owner Amazon. The price cuts were applied in stores as of last Monday (28 August), following the finalisation of the brand’s acquisition by Amazon. While Amazon discounted certain products by as much as 43% in an attempt to rid the chain of its “whole paycheck” reputation, CNBC reports “a closer look at a broader set of products suggested the discounts were still modest”. In a note published by Gordon Haskett analyst Charles Grom, the average price of 114 arbitrarily chosen products declined only 1.2%, and 78% of the items saw no price cut whatsoever. “We will continue to monitor the situation going forward, but our initial checks suggest Amazon’s bark may be greater than its bite,” Grom wrote in the note, comparing this announcement with similar ones by Walmart in the past by “announcing a plethora of price actions that on the surface look deep, but in reality only reveal modest reductions”. Mikey Vu, grocery expert at Bain & Co, told Bloomberg: “Unless it slashes prices, it’s not going to dramatically expand the income band of customers it goes after. It was a bold statement on the first day, but it wasn’t that many items that were moved.”
Sixth Roxy Ball Room to open, in Nottingham: Jones Bar Group is to open its sixth Roxy Ball Room site, in Nottingham, offering “games”, craft beer, signature cocktails, food and music, on Thursday, 12 October. The brand offers ping pong, pool and beer pong, at the bar – the Nottingham site will be located above the recently opened Mojo in Thurland Street, Hockley. Roxy Ball Room has seen a rapid expansion since the first bar opened in Leeds in 2013. Nottingham will be the sixth opening in five years and first in the Midlands for Yorkshire-born brothers Matt and Ben Jones. Matt Jones said: “Roxy Ball Room was founded in a rebellious spirit, going against the norms of what was around us. We were inspired by the games culture in London bars and wanted to offer something fun and different to customers. We’ve secured a perfect location in Hockley and we are really looking forward to introducing the Roxy brand into the city.” Ben Jones, who is head of finance, added: “Every Roxy Ball Room is tailored to the local area, with bespoke beer pong tables hand built and spray painted in-house for all of our bars. We’re also going to have a unique private hire area called The Shed which will have its own games tables and draught beer station.”

Whitbread pensions boss to step down: Lesley Williams will retire from her role as Whitbread’s group pensions director at the start of 2018 after 11 years in the role. Williams, who is also chairwoman of the Pensions and Lifetime Savings Association (PLSA), will retire after 31 years in the industry. Current Asda senior director for pensions and treasury Steve Jones will take over her role at Whitbread from 1 January. Williams joined Whitbread in 2007, after leaving her role as head of pensions at Henderson Global Investors after four years. She was also a consultant at Hazell Carr Consulting from 2003 to 2004, and head of pensions at Pearl Assurance from 1994 to 2002. She was appointed chairwoman of the PLSA in 2015, but will step down in October when PTL managing director Richard Butcher succeeds her. Jones has been senior director at Asda since 2014, alongside his role as a trustee director for the Premier Foods pension scheme, which he has held since 2015. He was also previously a pensions manager for the supermarket company.

The Real Greek opens restaurant in Dulwich: Mediterranean restaurant The Real Greek, which is owned by Fulham Shore, has opened a site in Dulwich, south east London. The company has opened the restaurant in Dulwich Village. It has capacity for up to 100 diners and features a Santorini Island-inspired interior as well as outside seating. The menu includes cold and hot mezes, grilled skewers, marinated meats and Souvlaki wraps alongside a selection of hand sourced wines and beers from Greece and Cyprus. The Real Greek head of operations Christos Karatzenis said: “We’re excited to be bringing a taste of the Med to the people of south east London. The new restaurant offers locals and residents of Dulwich Village a relaxed space to get together with friends and family to enjoy an array of authentic Greek cuisine.” The Real Greek operates 14 sites across London and the south of England.
The Alchemist opens 11th site, at MediaCityUK: The Alchemist, which is backed by Palatine Private Equity, has opened a site at MediaCityUK in Salford. The company has invested £1.2m in the waterside venue, which is based between The Lowry Theatre and MediaCityUK. The venue has 96 covers in a 4,900 square foot space, and has created up to 60 jobs. The restaurant features bold and modernist features such as an angular blackened steel-and-bronze bar, and gold-clad roof and walls. The bar wraps around from the interior to the enclosed outdoor terrace, offering sweeping views of the water and surrounding area. Managing director Simon Potts said: “This is our 11th Alchemist in the UK and a significant one for the brand. This particular building has a unique and visionary design aesthetic as befitting our location.” The Alchemist’s other sites are mainly in UK city centres, including London, Manchester, Birmingham, Leeds and Newcastle. Palatine Private Equity supported the buyout of The Alchemist from Living Ventures in 2015. Last month, The Alchemist reported turnover increased 52% to £22,578,262 for the year ending 31 March 2017. Potts previously told Propel the company plans to focus on expansion in London in 2018 as it looks to eventually build an estate of up to 50 UK sites.
Walthamstow-based Wild Card Brewery completes crowdfunding campaign after raising £300,000: Walthamstow-based Wild Card Brewery has completed its campaign on crowdfunding platform Crowdcube to expand its production and bar facilities after raising £300,000. The company, founded by William Harris and Andrew Birkby, was offering a 7.15% equity stake as it looked to raise £250,000. It has now completed the campaign with 384 investors pledging the £300,000. The largest investment was £20,000. The pitch stated: “The company has been on an exhilarating growth story – from hobby, to shoestring startup, to becoming a leading London craft brewery. We currently produce a range of five core beers complemented by small batch brews. Right now, demand for our beer outstrips supply and we’re ready to take a big step forwards. The money will be used to open a bigger production facility at Lockwood Way, significantly increasing our production capacity from 8,400 litres to 21,600 litres. We will also open a second bar at our Lockwood Way site, creating a new and vibrant drinking space for the Blackhorse area in Walthamstow. We will refurbish our existing bar at our site on the Ravenswood Industrial Estate to increase service speed and introduce serving tanks and launch our barrel-aged beer programme at our existing site. In the year to July 2016, we had turnover of £555,032 and net profit of £26,857, yet in the year to July of this year we had turnover of £694,000 and an expected net profit of £46,500.”
M&B reports 13% growth in brunch sales at All Bar One with help of influencer marketing: Mitchells & Butlers has reported a 13% rise in brunch sales across its 50-strong All Bar One estate with help from influencer marketing. It follows a three-month “Brunching” campaign by the brand to increase awareness of its food offering among professional women aged 25 to 34, which coincided with the launch of its summer menu in May. Using micro-influencer platform Tukumi, All Bar One sourced a diverse selection of ten influencers with a combined reach of more than 200,000 people, who were challenged to take a visual report of their brunch. As well as creating their own content around their brunch experience, influencers were asked to link through to All Bar One’s “Time for Brunch” competition, which encouraged people to send in their own brunch selfies (or brunchies) to win a Mulberry handbag. Despite publicising the competition using its own channels and paid social, All Bar One found the majority of the 200 entries and more than 4,000 engagements came via the influencers. These micro-influencers generated a 5% engagement rate on each of their posts, helping to grow the number of followers on All Bar One’s Instagram account by 18%. All Bar One marketing manager Michael Duffy told Marketing Week: “We felt whatever we did needed to drive advocacy, recommendations and user-generated content that’s more believable and trustworthy than anything we could say as a brand. We ended our year at 13% sales growth in the brunch time slot. In real terms that increased the number of brunches sold by 1,800 a week.” Going forward all future All Bar One campaigns will include an influencer aspect but Duffy said influencer marketing was part of a wider strategy spanning owned social activity, promoted ads and posts that reinforce the message.
Loungers opens site in Stafford: Cafe brand Loungers, which is backed by Lion Capital, has opened a site in Stafford. The company has opened Verso Lounge in Staffordshire Place, the £38m development that is also home to Staffordshire County Council. The venue has 103 seats and features eclectic artwork, pop art-inspired table tops, vintage sofas and school benches, reports the Express & Star. Loungers, which also operates the Cosy Club brand, was founded in 2002 in Bristol by friends David Reid, Alex Reilley and Jake Bishop. Last month, it reported like-for-like sales for the 14 weeks up to the 30 July increased by 7.6%. The company has 106 sites across the two brands.
Chef Adam Handling opens second site for The Frog restaurant concept: Chef Adam Handling has opened the second site for his restaurant concept The Frog, in Covent Garden. Handling, who launched the concept in Shoreditch last year, has opened the new venue in Southampton Street. The flagship restaurant showcases Handling’s distinctive cooking style – combining technical savvy with the best possible produce – with a sizeable open-plan kitchen and a large private dining room in the basement complete with its own kitchen. The restaurant serves breakfast, lunch and dinner all year round, with a team of 37 staff. Alongside the food, Handling showcases his love for premium cocktails in a speakeasy-style basement bar with its own entrance. Handling said: “The Frog E1 has been so well received and set the standard for The Frog as a group. The new restaurant is rooted in those foundations but also has its own distinct style with its own dishes. The bar is a new venture for me – I’ve always loved creating and drinking quality cocktails. Having a separate space downstairs dedicated purely to the drinks offering has given me scope to be so much more creative in creating its own identity separately from the restaurant and my food offering.”
MasterChef winner Simon Wood opens debut restaurant: MasterChef winner Simon Wood has opened his debut restaurant, in Manchester. Wood, who won the BBC show in 2015, has launched the 80-seat eponymous venue in First Street. It has an open kitchen with chef’s table in front and a private dining room at mezzanine level. It offers a la carte and “blind-taste” menus, with a third list featuring the three dishes that bagged Wood the MasterChef title. A la carte dishes include pigeon with fig, endive and lardon; and scallops with gremolata, sardine and lemon. Mains feature duck with peach, sauternes, hazelnut and chard; and chicken with chorizo, black olive, saffron and pimiento. Desserts include milk and cookies; and beurre gelato. The tasting menu will be presented to booked guests on a sealed scroll on the night, while the chef’s table will be available on Friday and Saturday nights only, reports the Manchester Evening News.
Curious Group sells Nottingham site less than a year after opening: Nottingham-based operator Curious Group has sold its Curious Townhouse site in the city less than a year after opening. The company, owned by father and son Dan and Dean Brown, has sold the site in High Pavement to a “South American taco operation”, reports The Nottingham Post. Curious Townhouse opened in September last year, replacing the Loom Bar, which shut when its owner ran out of money. A statement from Curious Group said: “The Townhouse thanks all of its lovely customers for their trade over the last year on what has been an exciting project. The business has now been sold and an exciting new venue will be coming here soon, watch this space.” Earlier this year, Curious Group sold its Cured and The Parlour sites in West Bridgford. The company now operates four venues in the city.
Costa Coffee tasks Lida with developing loyalty programme: Whitbread-owned Costa Coffee has tasked Lida with developing its loyalty programme, Costa Coffee Club, and deliver brand consistency across the markets in which it operates – the UK, China, UAE (Dubai) and Poland. The appointment follows Costa’s decision to hire Bartle Bogle Hegarty London as its global advertising agency earlier this year, having previously worked with 101. Costa digital director Arslan Sharif told Campaign: “[Lida] demonstrated what we could expect from the next generation of loyalty. We were impressed with its understanding of retail loyalty programmes. In line with this, the team came prepared with solutions and possibilities to allow us to connect and engage with our customers in more effective ways.” In the UK, Costa will continue to work with Prophecy to execute the Costa Coffee Club campaign. Bristol-based Prophecy was formerly The Real Adventure and was awarded Costa’s UK customer loyalty business in 2015. A spokeswoman for Prophecy said the agency’s remit “has not grown or shrunk” as a result of Lida’s appointment. Lida chairman Matthew Heath added: “With the loyalty market undergoing its biggest change in recent years, Costa has been one of the first brands to embrace this change and look ahead to what this means for customer experience.”
Premier Inn pulls out of Newport scheme: Whitbread has pulled out of a planned 60-bedroom Premier Inn in Newport city centre but said it remained interested in sites in the town. The company said the site’s developer, Richard Hayward Properties, was unable to complete the project to the agreed specification. A Premier Inn spokesman told Insider Media: “Unfortunately the developer at this site has been unable to deliver the specification, which we had originally reached an agreement on in 2012, before work started on the site in January 2015. It is unfortunate the developer has ultimately not been able to overcome the barriers to its successful delivery and therefore Premier Inn is reluctantly withdrawing from the scheme. Premier Inn still believes Newport is an exciting location, and remains interested in potential sites in the town should they become available.” Richard Hayward Properties was previously awarded £450,000 through the Welsh government’s Vibrant & Viable Places programme to support the redevelopment of the former Yates’s Wine Lodge. The company has invested more than £1.4m in acquiring the site and clearing asbestos from the grade II-listed building.

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