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Morning Briefing for pub, restaurant and food wervice operators

Tue 7th Nov 2017 - Update: Saturation in Manchester and the City, Whole Foods Market, Fever-Tree
City of London and Manchester show signs of saturation, says Imbiba partner: Imbiba investment fund partner Darrel Connell has told a Propel conference that both the City of London and Manchester are showing signs of saturation. Speaking at the Propel Multi Club Conference, he said: “We’re in tricky times from a cost perspective with a lot of inflation but excess supply is almost a bigger factor for us when we look at businesses to invest in. If there are two markets where you can really feel excess supply, one is the City in London. It’s astonishing how many operators have opened in the City since 2009. The Ned has just gone in, which is eight new bar restaurants, and Bloomberg has just opened with seven bar restaurants, it’s a huge influx. The second market is Manchester. I spent some time there a month ago with an operator who has 12 sites in total across various businesses and he reckons that in the last three years, £400m of extra F&B supply has gone into Manchester.” Connell outlined to delegates what companies needed to do to counter the problem. He said: “In a world of excess supply, it’s no longer good enough to serve the best burger or have the best site, you need to be able to drive demand to your venues. There are a number of ways this can be done, firstly with a genuine excellence in product quality. There are few places I would say are consistently excellent and as a result drive demand – one is Padella, a pasta place by London Bridge with queues round the block consistently. It’s seen as very good value. Secondly, there are very few businesses that have genuine brand power. The Ivy is one – the Ivy Brasserie sites that are opening all over the place, they’re generating £200,000-plus sales a week and that’s based on the brand. Soho House’s The Ned – the brand is 9.9 out of ten in my view.” Imbiba is looking to invest in early-stage multi-site companies through its new £50m Growth Fund, whose advisory board includes Karen Jones, Graham Turner and Karen Forrester. Connell said: “Imbiba looks very closely at a business’s strategy to drive demand. Sometimes we meet entrepreneurs who tell us that to drive demand they’re going to ‘hire someone who is 22 who is really good on social media’. That’s not really a strategy.”

Amazon to close two UK Whole Foods Market sites: Amazon is closing two Whole Foods shops in the UK just two months after completing its £10.7bn takeover of the upmarket grocery chain. The company is closing its stores in Cheltenham, Gloucestershire and Giffnock, East Renfrewshire meaning that there will be just seven UK shops remaining, all of which are in London. The company is only marginally profitable in the UK on turnover of £117m a year from its nine sites. “It makes perfect sense for Whole Foods to close both stores from a business standpoint, the logistics must be nonsensical,” said Steve Dresser from Grocery Insight. “I think it marks the new age from Amazon where the balance sheet is scrutinised and sacred cows in Gloucester and Scotland aren’t permissible just to ‘spread the brand’.” In the UK Amazon is largely using its Whole Foods acquisition to broaden the range of groceries available on its Amazon Fresh and Prime Now services by including items such as organic baba ganoush, crostini and fillet steak. It has also attempted to widen the Whole Foods appeal by slashing prices on some staple goods, such as apples, to become more competitive. “A decision on the future of the stores will be made after the company has consulted with team members to discuss the proposal,” a company spokesperson said. “In the event that the decision is taken to close the stores, we will work with team members to explore alternative employment opportunities.” Around 150 people are currently employed at the two Whole Foods shops. Whole Foods Market, which has nine sites in the UK, reported a second consecutive year of profit in the UK last year. The company lost money for eight consecutive years in the UK but turned to profit in its 2015 financial year. Companies House accounts for the year to 25 September 2016 show turnover up 3% on a like-for-like basis to £117.2m, from £114m the year before. Pre-tax profit was £1,206,000, down slightly from £1,312,000 the year before

ALMR names industry’s top operations managers: The Association of Licensed Multiple Retailers (ALMR) has announced the winners of the 2017 ALMR Operations Managers Awards at a celebratory ceremony in central London. The Operations Managers Awards is the only awards of its kind in the eating and drinking out sector, testing the finalists through a rigorous process that lasts seven months. The winners were announced at a standalone ceremony at the Pullman Hotel in Euston, London, following an exhaustive mentoring process and a rigorous weekend-long Masterclass testing the finalists’ enthusiasm, dynamism and business acumen. The 2017 winners are: Business Development Manager of the Year: Yvonne Fraser from Greene King Pub Partners; Area Manager of the Year: Emma Deabill of Yo! Sushi; Rising Star: Adam Sykes of Fuller, Smith & Turner. ALMR chief executive Kate Nicholls said: “Congratulations to this year’s winners, they should feel especially proud as the competition was particularly fierce and an exceptionally high standard. The ALMR Operations Awards are a fantastic asset, not only to the ALMR but to the entire sector. The sector is full of enterprising and talented individuals driving innovation across the sector and this competition does a great job spotlighting that talent.” ALMR Ops Awards founder Nick Bish added: “Each year the awards process seeks to reveal, prove and celebrate those individuals at the cutting edge of licensed hospitality. All of these men and women play a crucial role in the continuing success of the dynamic and exciting licensed retail hospitality sector.”

Fever-Tree promises results ahead of market expectations: Fever-Tree, the world’s leading supplier of premium carbonated mixers, has provided a trading update ahead of the year ending 31 December 2017. It stated: “The board is pleased to announce that the strong growth seen in the first six months of 2017 has continued during the second half. Fever-Tree’s pioneering focus on taste and ingredients continues to transform the global mixer category driving growth across all the group’s regions. The exceptional performance in the UK, the group’s largest market, has been particularly impressive with the rate of sales growth and momentum strong across both the on and off trade. The mixer category is now the fastest growing category across the UK soft drinks sector with Fever-Tree responsible for 97% of the value growth in retail over the last 12 months. Given the strong performance in the period to date, the board anticipates that the results for the full year ending 31 December 2017 will be materially ahead of current market expectations.”

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