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Wed 13th Dec 2017 - Propel Wednesday News Briefing

Story of the Day:

Goodbody – up to 22% of smaller operators at risk of financial distress in 2018: Goodbody leisure analyst Gavin Kelleher has argued up to 22% of smaller operators are at risk of financial distress in 2018 as it shapes up to be a “very difficult year”, particularly for food-led operators. Kelleher said: “We see a number of challenges for 2018 including lacklustre market growth, a softer consumer environment, growing competition, and substantial cost pressures in the region of 300 basis points of a margin headwind. We expect most of these issues to be more painful for food-led operators. To assess the degree of financial vulnerability across the industry, we have analysed the financial statements of a mixture of smaller public and private UK operators. These operators had estate sizes ranging from five to 650 sites, with the median number of sites per operator being 50. These operators were predominantly managed and a mixture of dry and wet-led. Our sample covers a total of circa 7,000 sites, which is circa 6% of the estimated 119,000 pubs, restaurants and fast food outlets in the UK. If we were to exclude independents from the market population we believe our sample would cover a considerably higher proportion. We have found that at present five operators (8% of total) had a fixed-charge cover (using Ebitdar as the numerator) of fewer than one times. However, this doubled to ten (16%) when we simulated a 300 basis points margin decline and to 14 (22%) for a 400 basis points margin decline. However, we believe our analysis could actually underestimate the percentage of operators. Our choice of Ebitdar as a numerator in fixed-charge cover is likely to overestimate the capacity to fund fixed charges given the minimum reinvestment requirements in the estate. Competitive discounting has clearly been a growing theme across the sector in 2017 and is unlikely to recede any time soon. The potential impact on gross margins is difficult to estimate but in the absence of market growth it is likely to become more prevalent. Furthermore, distressed smaller operators may not always act rationally in a challenging period. Naturally, many of our data subjects’ most recent financial accounts cover reporting periods that are almost two years old and therefore their financial performance is likely to have worsened since because of cost headwinds. In the medium term, we believe the result of this is likely to be consolidation (as scale provides efficiencies around purchasing power, labour and central functions) and closures. Both would provide a small mitigation in the form of cost synergies and reduced competition, and may create an opportunity for larger operators to acquire smaller chains with strong brands for distressed valuation multiples. However, in the near term its effect on sector competition could be quite negative as distressed operators may not always act rationally.”

Industry News:

More than 350 booked for Restaurant Marketer & Innovator event series in January: More than 350 senior executives have now booked for Restaurant Marketer & Innovator, the most comprehensive marketing series the sector has seen. Propel will stage the two-day event in partnership with Think Hospitality on Wednesday, 17 January and Thursday, 18 January at One Moorgate Place in London. An array of marketers from agencies and early-stage, growing and rejuvenating brands will take to the stage to share their strategies and winning tactics. Companies and brands attending include Novus, Signature Pubs, Cafe Rouge, Wagamama, Brasserie Bar Co, Las Iguanas, YO! Sushi, Fuller’s, ASK Italian, Mitchells & Butlers, G1 Group, Costa Coffee, Ei Group, Jamie Oliver Restaurant Group, Brewhouse & Kitchen, Stonegate Pub Company, Be At One, Revolution Bars Group, Cabana, Thai Leisure Group, New World Trading Company, Pho, Maxwell’s Group, Gather & Gather, Oakman Inns and Restaurants, The Breakfast Club, The Coaching Inn Group, Gail’s Bakery, Gordon Ramsay Restaurants, K10, Giggling Squid, San Carlo Group, Ennismore, TLC Inns, Polpo, FrogPubs, The Real Eating Company, Claus Meyer Holding, VIP Pizza, 200 Degrees, Coppa Club, Snug Bars, Albion & East, Pint Shop, True North Brew Co, Darwin & Wallace, Chit Chat Chai, BabaBoom, Electric Star and Eat Poke. For full details of the two days, co-ordinated by James Hacon and Ann Elliott respectively, click here. Conference prices for two days are £525 plus VAT for operators and £795 plus VAT for suppliers. Companies buying two tickets will receive a third one free. A one-day rate of £345 plus VAT is available to operators only. For more information and to book, call Jo Charity on 01444 810304 or email or Anne Steele on 01444 817691 or

US chef and restaurateur Mario Batali steps down from B&B Hospitality Group following harassment allegations: Chef and restaurateur Mario Batali has stepped down from operations of US-based B&B Hospitality Group following allegations he sexually harassed four women. Batali, who is a partner in B&B Hospitality along with Joe and Lidia Bastianich, issued a public apology and did not deny the allegations, reports Eater New York. According to the report, some of the alleged harassment occurred while Batali was chef at the now-defunct restaurant Pó in New York during the 1990s. In a statement, B&B Hospitality said the allegations were being taken very seriously and the decision for Batali to step down was mutual. Batali is also an investor in Italian food emporium Eataly’s US division, which recently opened its fifth location in Los Angeles with another planned for Las Vegas.

Company News:

Deltic Group becomes first late-night bar and club operator to accept digital identification as form of ID: The Deltic Group, the UK’s largest operator of premium late-night bars and clubs with 57 venues, will roll out digital identity app Yoti across its estate next month. The move, which follows a three-month trial, will see the company become the first late-night bar and club operator to accept digital identification as a form of ID. Deltic said the app would improve customer safety and security and address age verification issues surrounding physical IDs and fraudulent activity around event tickets. The company said the app would also allow a smoother admittance process. Founded in 2014, Yoti is a free UK-based app. Users take a selfie and scan their photo ID on their phone, which Yoti verifies. All personal data is encrypted throughout, with the private keys stored on the user’s device. Yoti cannot access personal data and the app allows users to share encrypted, verified information about themselves. Door staff can use their own phone to scan a Yoti QR code to verify the user’s age. Deltic Group marketing director Tim Howard said: “The technology will not only revolutionise our customers’ experience, it will also have an immensely positive impact on our business through reducing queuing times and drastically cutting fraudulent activity and attempted under-age entry to our clubs.”

Mercato Metropolitano launches £400,000 crowdfunding campaign as it eyes Canary Wharf site for expansion: Italian street food market Mercato Metropolitano has launched a £400,000 crowdfunding campaign as it looks to open further sites in London. The company is offering a 5.40% equity stake in return for the investment. So far, 34 investors have pledged £165,952 with 59 days remaining. The largest donation is £100,000. Mercato Metropolitano opened its first site outside Italy in a disused paper factory in Elephant and Castle in July 2016. The free to enter, 45,000 square foot market attracted 590,000 visitors between November 2016 and July 2017. Now the company wants to expand the concept and said it had identified a number of potential new sites in London including one in Camden Market and another in Canary Wharf. The pitch states: “Mercato Metropolitano started with a pilot project in 2015 during the World Expo in Milan. Our first flagship site in London is where we started to refine our business model for expansion. Since January, we have seen an average month-on-month growth in gross sales of 18%, going from £342,000 sales in January to more than £900,000 in July, with an estimated footfall in July of more than 90,000 customers. We have identified a number of potential new sites, some of which are being negotiated with property developers. Among these is a development of more than 28,000 square feet within Camden Market and an 18,000 square foot space in Canary Wharf. Our monetisation strategy has several core elements – an entry fee charged to third-party operators and profit-sharing with them of 18% of net sales on food and 25% on everything else; licence fees charged on floor space to non-food operators; and directly operated activities.” The company said some of the funds raised would go towards the Elephant and Castle site to repay some outstanding creditors to free up operating cash flow for expansion, install a power substation, and launch an affordable co-working space. It said the remaining funds would go on due diligence for its second site, which was “likely to be Canary Wharf”.

Crussh launches loyalty app with pre-order and pay function: Crussh, the London-based healthy food and juice brand, has launched an app that allows customers to pre-order and pay via their smartphone. The Crussh App also offers a loyalty scheme and uses push notification to send exclusive food perks and discounts. The app uses iBeacon technology, which recognises a user when they enter a store and initiates automatic payment and loyalty functions. Users can pre-order and collect juices, smoothies, coffee, lunch and breakfast and skip in-store queues. If a user is logged in, in-store Bluetooth beacons pick up the customer’s profile and charge them remotely. Crussh head of marketing Helen Jones said: “The app will make it easier for customers to order, pay and access our menu and nutritional information, all at the click of a button. It will reward customer loyalty with multiple schemes, exclusive rewards and regular food offers. What also excites us about the app is the opportunity to better understand how our customers behave and the ability to use this data to improve their experiences.” Founded in 1998, Crussh has 30 outlets across the capital, including a concession at Sainsbury’s in Pimlico.

Subway to have 200-plus stores at Euro Garages sites by end of 2018 as it strengthens partnership with Bristol launch: Subway has revealed it is set to have more than 200 stores at Euro Garages sites by the end of next year having further strengthened its partnership with the forecourt and roadside operator. Subway has opened its 161st UK and Ireland outlet with Euro Garages, at Eastville Park in Bristol. It is the first non-traditional site in the UK to carry the new Subway Fresh Forward branding, which was launched in August. The new-look store design features digital menu boards, free charging points, and special displays for the brand’s freshly prepared salads, veggies and subs. It has seating for 24 customers. Two more Subway stores are scheduled to open at Euro Garages sites by the end of the year, with the forecourt operator planning a further 40 Subways by the end of 2018. Euro Garages has also opened two Subway franchises in the Netherlands and is working on a plan to roll out additional stores across the Netherlands, Belgium and France. Justin Goes, Subway International regional director Europe, said: “Non-traditional development has been an area of growth for Subway in recent years and, in line with our ambitious plans to increase our store count to 3,000 by 2020 and create 5,000 jobs, we expect further growth.” Euro Garages group head of operations Ahmed Kazi added: “Partnering with Subway enhances our offering for our customers and we look forward to continuing our relationship with the brand by opening new sites in 2018.”

SSP opens first Ritazza site in Scotland: Transport hub foodservice specialist SSP has opened its first Ritazza coffee shop in Scotland, at Glasgow Prestwick airport. The coffee shop offers a range of hot and cold beverages alongside toasties, baguettes, breakfast rolls, pastries and cakes to eat in or take away. The site includes a 50-cover dining area, while it also features the new look and style of its debut site at London Euston station. SSP UK and Ireland chief executive Simon Smith said: “We have had great success with our rebranded Ritazza at London Euston station and we are delighted to be able to bring the Ritazza experience to Scotland. The brand is a perfect addition to the mix at the airport, with a great range of food and drink for customers to enjoy before they fly.” Derek Banks, Glasgow Prestwick finance and commercial director, added: “We are delighted to work alongside SSP and open the first Ritazza coffee unit in Scotland, continuing our excellent partnership with SSP. This new brand gives our passengers and visitors a great choice and complements our current facilities.”

Former Petersham Nurseries chef to head new farm-to-table concept in St Albans: Cat Ashton, former chef at Petersham Nurseries and Urban Pubs and Bars venue Paradise By Way Of Kensal Green, is to head the kitchen at a new farm-to-table concept. The Abbey will open early next year at a 2,000 square foot site in St Albans, Hertfordshire, which was formerly occupied by Indian restaurant Koh-I-Noor. The new venture is the brainchild of restaurateur Ben Cain, who has signed a new 15-year lease on the property in George Street at a rent of £50,000 per annum. Ashton’s all-day menu will focus on her interpretation of classic seasonal and sustainable dishes. Guy Marks, senior surveyor at Restaurant Property, which brokered the deal, said: “There was high demand for this location. The Abbey has all the hallmarks to be an exciting and successful restaurant in St Albans.”

Papa John’s beefs up team to drive UK expansion: Papa John’s has beefed up its management team to drive further development and acquisition of stores in the UK. New appointments include Aman Virk and Matthew Brennan as acquisition managers responsible for finding new Papa John’s sites, while Andy Malthouse, Susan Henley and Sarah Dellow join the project team to oversee new-build stores. John Mott, who joined Papa John’s in 2012 as construction and development manager, has been promoted to development director, while Phil Gaffer has been appointed franchise sales and business development manager responsible for franchisee recruitment. Mott said: “We currently have 5,000 stores in more than 40 international markets, 350 of these outlets are in the UK and we are heavily focused on further expansion. To manage our planned growth strategy we have bolstered our team by carefully selecting ambitious individuals for these key appointments who share our core values and passion for the business. We are delighted to welcome our new team members who will be instrumental in helping our franchisees to continue to deliver our top-quality product and service day-in, day-out to our growing customer base.”

Greek street food restaurant The Athenian to open third London site, in Belgravia this week: Greek street food restaurant The Athenian is to open its third London site and fourth in total, in Belgravia on Wednesday (13 December). Efthymios Vasilakis and Neofytos Christodoulou opened the first Athenian in 2014 offering Greek street food as a healthy but fast snack. In October, the company opened its third London restaurant, in White City, following its debut sites in Shoreditch and Elephant and Castle. The new Athenian will open in Elizabeth Street offering meat and vegetable souvlaki alongside salads, mezze dishes and a Greek wine list. Joanna Lea, retail director for landlord Grosvenor Britain and Ireland, told Hot Dinners: “The Athenian’s fresh, delicious Greek street food has wide appeal. We want our London estate to support thriving, enterprising businesses and new independent brands like The Athenian will help to drive this vision further.” The Athenian’s other site is in Bristol.

New World Trading Company submits licensing application for second Florist, in Liverpool: Graphite Capital-backed pub restaurant group New World Trading Company has submitted a licensing application to open its second Florist site, in Liverpool. The company has applied to the city council to vary the premises licence for the former Old Blind School restaurant in Hardman Street, which was previously operated by New Moon Pub Company. New World Trading Company is seeking permission to open until 2am daily. The Florist is set to open at the beginning of next year and would offer cocktails and world ales alongside deli, rotisserie and grill-inspired dishes and live music in the evening. New World Trading Company, which also operates The Club House and The Smugglers Cove in Liverpool, is also opening a Florist site in the old Goldbrick House in Bristol next year. Chief executive Chris Hill told Insider Media: “We are excited to be opening our second Florist in the former Old Blind School pub. We are looking forward to immersing Florist in local life.” New World Trading Company, which also operates The Botanist, The Oast House, The Trading House and The Canal House, was acquired by Graphite Capital for £50m in June 2016.

Wimpy franchisee to bring brand back to Sittingbourne for third site: Wimpy franchisee Adnan Etemi will open his third site next week in Sittingbourne as the brand makes a return to the Kent town after a six-and-a-half year hiatus. Etemi, who runs Wimpy stores at Chatham Docks in Kent and Westcliff-on-Sea in Essex, will open the 100-seat restaurant in High Street on Monday (18 December). He has invested almost £200,000 in the venture and hopes to add to his portfolio in the future. The opening will mark a return to Sittingbourne for Wimpy, which shut its previous branch in the town in February 2011. Wimpy UK general manager Chris Woolfenden told Kent Live: “We are delighted Wimpy has finally been able to return to Sittingbourne. We know from his successes with his two other restaurants that Adnan and his team will do a fantastic job and we wish him all the very best.” Wimpy, which is owned by South Africa-based Famous Brands, has 79 sites in the UK.

Former Barrafina head chef and manager to launch solo venture in Mayfair next month: Nieves Barragán, who was head chef of renowned tapas brand Barrafina since its debut a decade ago, and its general manager Josè Etura are to launch their own venture in Mayfair next month. Sabor will open in Heddon Street at the end of January offering regional dishes from across Spain, including the Basque and Catalonia regions. Dishes are likely to include diver-caught scallop with ham consommé, and wild rabbit empanada, Hot Dinners reports. The main dining counter will be on the ground floor, surrounding the open kitchen, while there will be a separate bar offering sherry, Vermouth, beer, Spanish wine and a large selection of Spanish gins. The bar will also have its own menu with dishes such as fried chicken oyster bocadillo. The upstairs space will focus on the Galicia and Castile regions, with octopus and suckling pig a speciality. Galician octopus will be cooked in traditional copper pans with olive oil and paprika, while Castilian roast suckling pig will be cooked in an asador (a traditional wood-fired oven). Large sharing tables will overlook the open kitchen. Barrafina is owned by the Hart brothers, with two sites in Covent Garden and one in Soho.

Wright Brothers opens fifth London site, at Battersea Power Station: Wright Brothers, the oyster specialist and seafood wholesaler, has opened its fifth London site, at the Battersea Power Station development. The company, founded by Ben Wright and Robin Hancock, has opened a 150-cover restaurant that features an open theatre-style kitchen with Josper charcoal oven, marble tables, an oyster display bar and bespoke leather banquette seating. There is also a private dining room for up to 24 people and a riverside terrace with views of the power station. Wright Brothers Battersea follows the group’s “sea to plate” ethos, offering high-quality sustainable seafood and shellfish such as Isle of Lewis langoustine, grilled prawns, and roast crab. Since founding their seafood wholesale business in 2002 and launching their debut restaurant at Borough Market in 2005, Wright and Hancock have opened further venues in Soho, Spitalfields and South Kensington. The wholesale side of the business has moved from Borough Market to Billingsgate to aid expansion.

Redcomb Pubs bans plastic straws and stirrers: Redcomb Pubs, led by Dan Shotton, has stopped buying plastic straws and stirrers for its 14-strong estate. They are made from petroleum products designed to last forever and are particularly harmful to marine life. Currently, eight million tonnes of plastic waste leaks into our oceans each year, killing more than one million seabirds and 100,000 mammals. Studies estimate unless there is a significant shift in the amount of plastic we throw away, plastic refuse in our oceans is set to outweigh fish by 2050. Shotton said: “Our pubs use thousands of straws and plastic stirrers each year and by removing them from our business we will be positively contributing to the worldwide efforts to help reduce plastic waste and it’s negative impact on our coastlines, marine life and oceans. All too often straws and stirrers are added to drinks without customers even asking for them.” Other companies to ban plastic straws include Oakman Inns and Restaurants, JD Wetherspoon, Be At One, The Alchemist, Laine Pub Company and Liberation Group.

Wales-based Indian buffet restaurant Tiffins to cross the border for third site: Indian buffet restaurant Tiffins is to open its third site, in Swindon. Owner Raj Baksh will launch the venue this month at the Regent Circus leisure development. It will have space for 350 diners and feature attractions such as a full-size Indian tuk-tuk, fountains and rickshaws, reports the Swindon Advertiser. As well as buffet-style dining, Tiffins also offers an a la carte menu. The company’s other restaurants are both in Wales – in Cwmbran and Newport.

Harcourt Inns reopens Three Cranes in City of London for debut site: Harcourt Inns, the new venture from former Racine chef patron Henry Harris and James McCulloch, owner of The Harcourt in Marylebone, has reopened the Three Cranes pub in the City of London for its debut site. The pub in Garlick Hill features a new menu with a heavy focus on grilled food and a wine list themed around bottles from Bordeaux. The pub is the first of three venues acquired by Harcourt Inns earlier this year. The company will relaunch the Coach & Horses in Clerkenwell in January, while The Truscott Arms in Maida Vale will reopen in March as the Hero of Maida offering French cuisine and traditional Sunday roast. Harris will create seasonal menus relevant to each pub, blending French and British influences. He said: “It’s a great feeling to be planning menus for each of these dining rooms with these excellent new teams.” McCulloch said he bought the sites to save them from being converted into “real estate or non-descript chains”. He added: “We originally asked Henry to join as a consultant but, thanks to our mutual desire to create noteworthy pubs with exceptional dining, we invited him to become a partner so we can all work together to create genuinely special establishments.”

Greene King opens multimillion-pound Farmhouse Inns near Nottingham: Brewer and retailer Greene King has opened its multimillion-pound new-build Farmhouse Inns site near Nottingham. Construction work on the 320-cover site near Strelley began at the start of June with the launch creating 100 jobs. The pub features a double carvery deck, with meat in the middle and vegetables on either side to halve queuing at peak times. Drinks include craft ale from local micro-brewers, while a “distraction area” is next to the family dining area so parents can keep an eye on their children. It features rides, interactive activities and large television screens showing films for under-fives and Xbox games for older children. General manager Steve Richards told the Nottingham Post: “It’s a destination restaurant and family restaurant rather than a pub.” Greene King recently reported average weekly sales of £58,000 per pub for its Farmhouse Inns brand, with Ebitda per pub of £539,000. The company had 60 Farmhouse Inns at the end of the first half of the financial year, with four further openings due by year-end.

Antipodea opens third London site, in Richmond: Melbourne-inspired all-day restaurant Antipodea has opened its third London site, in Richmond. Founded by the team behind independently owned cafe group Brew, the 2,452 square foot, 50-cover Antipodea has opened in Hill Street with interiors inspired by modern Australian design and Richmond’s landscape. The space is divided into three distinct areas – a dining space with Bali-style bench seating, a central bar, and a dining area with a central feature fireplace. The all-day restaurant offers an informal atmosphere during the day, transforming into a brasserie-style offering in the evening with an a la carte menu. Dishes such as grilled half lobster and 45-day aged Aberdeen Angus steak are cooked on a robata grill, while seasonally changing pizzas are produced in a wood-fired oven. The drinks list focuses on new world wine from Australia and New Zealand, alongside craft beer and cocktails. Antipodea’s other sites are in Kew and Putney.

Seasonal small plates pop-up Nest opens permanent site in Hackney: Seasonal small plates pop-up Nest has launched its debut bricks-and-mortar site, in Hackney, east London. The venue has opened in Morning Lane focusing on seasonal dishes that require the kitchen to use only one cut of meat at a time. The menu will start with Aylesbury duck before moving on to lamb later in the year alongside low-intervention wine by the glass. Other dishes include pickled celeriac with truffle and hazelnut, while desserts include chocolate with yogurt and olive oil, Hot Dinners reports. Vegetarians have a separate menu with duck meat replaced by duck egg and onion, while there is also a cheese course. Nest is the brainchild of former Harwood Arms and Anglo chef Johnnie Crowe, with Luke Wasserman and Toby Neill working front of house and matching drinks. The concept appeared as a pop-up earlier this year at the Summer In The Square event in Mayfair.

Easyhotel opens Newcastle site after rebranding property in less than an hour: Easyhotel, the owner, developer and operator of “super budget” branded hotels, has opened its new site in Newcastle after rebranding the property in less than an hour. As guests checked out of the Newcastle Tune Hotel at Proctor House on Monday (11 December), Easyhotel’s team moved in to rebrand and prepare the site. Easyhotel marketing manager Jorge Rodriguez said: “This is a great hotel in a fantastic location and we’re delighted to have opened the doors so quickly. Over time we’ll introduce our trademark extras such as bedside USB ports for phones and ‘fake views’ – £1 pictures of Newcastle’s best views to save the expense of window views from so-called luxury hotels.” The property opened as a Tune hotel in 2014.

Lisburn-based Hughes Craft Distillery to open gastro-pub, gin school and visitor centre: Lisburn-based Hughes Craft Distillery is to open a gastro-pub, gin school and visitor centre in Moira. The company, which is behind the RubyBlue range of fruit liqueurs and Ireland’s first potato-distilled vodka, will launch The Stillhouse in Main Street at the former Four Trees bar. Owners Stuart and Barbara Hughes also plan to relocate their bottling and distilling operations to the site early next year, and add an interactive visitor centre and gin school. Barbara Hughes told the Irish News: “We wanted to find a setting to really showcase our craft. With the creation of our experiential visitor centre, gin school and gastro-pub we’re creating a true food tourism hot spot to showcase the best local produce complemented by our small-batch spirits.”

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