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Fri 13th Jul 2018 - Propel Friday News Briefing

Story of the Day:

Simon Mitchell – new initiatives will complete Kerb’s unique ‘ecosystem’ for street food traders: Simon Mitchell, managing director of street food business Kerb, has said the company’s “ecosystem” is its unique selling point and two new initiatives would complete the circle from traders’ initial concepts to setting up their first restaurant. Speaking at the Propel summer conference, he told delegates the company is about to launch Kerb Vault – which is in beta testing mode – where entrepreneurs could download “everything they need to know about starting a street food business” and interact with Kerb’s community of 90 members. From the Vault, traders can move on to a series of peer-led workshops before entering the InKerbator scheme. Once traders pass that, they become a Kerbanist, a “fully fledged member” who can apply for Kerb’s full suite of products and access its lunch markets and public and private events. Mitchell said: “At this stage it’s fairly certain you’re going to succeed as a street food business. We offer incredible opportunities for these guys to survive and thrive.” The company is about to launch another initiative – Off The Kerb – that will complete the “ecosystem”. Mitchell told delegates: “We are currently looking for sites for this. The idea is we have a row of five shops somewhere. We fit them out, let them to the trader for a 12-month period and they can trial their restaurant concepts. They don’t have all the barriers to entry a normal restaurant would have – no six-month rent deposit, no big lawyers’ fees, no big fit-out costs. At the end of the period they can apply to us or anyone else for investment with a proof of concept. We’ve set up a scheme ourselves to invest in the traders so they get a good deal because they trust us not to take advantage of them. We will always insist they maintain control of their business. This is the end of the ecosystem. You come in at the Vault and workshop and then we need to get you out the other end because we need to make way for the next generation of street food traders. So it’s a real ecosystem. The most important thing about Kerb is we are a platform for new businesses to thrive.”

Industry News:

Women’s Entrepreneur Conference open for bookings: Propel has partnered with Elliotts chief executive Ann Elliott to launch the sector’s first conference featuring an all-female line-up of company leaders. The event, which is open for bookings, takes place on Tuesday, 4 September at One Moorgate Place, London. Speakers will be Wahaca founder Thomasina Miers (“How to ascertain if your business idea is genius or madness”); Mowgli founder Nisha Katona (“From barrister to bunny chow: why risk it all for restaurants?”); Sophie Bathgate, of Sophie’s Steakhouse (“What I would do differently next time”); Artizian founder Alison Frith (“How to market a startup”); Cheshire Cat Pubs & Bars founder Mary Mclaughlin (“Growing an idea from startup to sustainable”); Eve Bugler, founder of BabaBoom (“How to keep the joy when it’s all on your shoulders”); Jane O’Riordan, founder of The Dynamo (“The importance of patience”); Sally Jackson, owner of The Pink Pig Farm (“The ten hardest lessons I’ve learned”); Christine Winton, of Siam Eatery (“Can you have work-life balance when you start a business?”); Vanessa Hall, co-founder of Jack & Alice (“The importance of staying true to your values when you start and expand your business”); and Laura Harper-Hinton, co-founder of Caravan (“Why people are key to your success”). Elliott said: “Female entrepreneurs are making an enormous contribution to the hospitality sector – but we need even more of them. The conference is intended as a showcase of some of the sector’s best female entrepreneurs and to encourage even more of them to take the plunge.” Propel managing director Paul Charity added: “If our sector is to truly serve its market, we need more companies led by women at senior levels. We hope companies send their brightest female talent to the conference to pick up inspiration and develop their entrepreneurial talent. We also believe it’s a great opportunity for male colleagues to gain insights into female entrepreneurial skills.” Tickets are £195 plus VAT for Propel Premium subscribers, £245 plus VAT for operators and £395 plus VAT for suppliers and can be booked by emailing or calling her on 01444 817691.

Spirits sector grows 5.3% with strong value growth across on-trade: The spirits sector has grown 5.3% year-on-year with strong value growth across the on-trade, according to the latest insights from global distillers William Grant & Sons UK. Spirits is the second-largest sector in both the on and off-trade, worth £10.5bn. Total premium spirits are now worth more than £1.4bn, up 15.8% and accounting for 12% of all spirits value sales. Premiumisation remains a key driver for the spirits market, with premium brands accounting for £239m of incremental value compared with last year. The on-trade is driving the majority of the spirits sector’s actual value sales growth. In the on-trade, the spirits market is now worth £6.3bn, up 4.9%, driven by premium spirits and consumers trading up. Sales growth is being driven in actual terms by gin (up £181.9m), spiced or flavoured rum (£46.8m), non-cream liqueurs (£34.1m), and American whiskey (£17.2m). There are more than 121,500 outlets in the on-trade, with 113,400 featuring spirits, down 1.6% year-on-year, according to the report. Meanwhile, the off-trade is growing at a faster pace year-on-year, the report stated. More than 65% of spirits growth is being driven by gin, although flavoured spiced rum, non-cream liqueurs and American whiskey are growing strongly. In the off-trade, the beer, wine and spirits (BWS) market has grown almost £618m in the past year, with spirits accounting for almost 40% of growth. The spirits sector is worth £4.2bn, with value sales continuing to grow, up 6.0%. The spirits sector accounts for more than a quarter of BWS value sales, making it the second-largest category, adding £239m in incremental value sales in the past year. Neil Barker, managing director of William Grant & Sons UK and Ireland, said: “Our market report provides a deep understanding of today’s shifting consumer attitudes, which are more fundamental than ever before to drive brand relevance.”

Operators and training firms call for Apprenticeship Levy transfer fund cap increase to support sector: Operators and training companies in the sector have called for the Apprenticeship Levy transfer fund cap to be expanded from 10% to 50%. Speaking at the third and final UKHospitality Commission evidence session, they stressed to politicians the importance of skills-based learning in the industry. Witnesses highlighted the great strides taken over the past 25 years and called on MPs to champion the industry to help recruit new talent and tackle a negative perception of the industry. Among the speakers were Whitbread head of education Sandra Kelly, Yummy Pub Company co-founder Antony Pender, HIT Training managing director Jill Whittaker and Umbrella Training business relations director Sam Coulstock. Witnesses discussed how the Apprenticeship Levy had affected hospitality businesses, with small and medium-sized enterprises (SMEs) such as Yummy Pub Company suffering a negative impact. They called for the Apprenticeship Levy transfer fund cap to be expanded from 10% to 50% to help support SMEs, which make up 90% of the hospitality industry. Other topics discussed included the importance of careers advice and the need to communicate the new T-Level and its three-month industry placement to SMEs. The commission, led by UKHospitality, aims to promote understanding of the importance and potential of the hospitality sector and brings together a range of hospitality employers and All-Party Parliamentary Groups, along with other stakeholders, industry bodies and authorities, to deliver an employment foundation for the industry. UKHospitality will review the written and oral evidence and aims to publish a report with recommendations to the government, industry and education providers in September.

Allsop reports ‘strong but cautious’ investor appetite: Auction house Allsop has reported investor appetite remains “strong but cautious” as its latest commercial sale raised £80m. The company said despite the cautious mood of the market, investors demonstrated an appetite for good-quality investments, particularly in the south east. A total of 127 lots were sold with 23 lots achieving more than £1m. At the sale, A-grade yields eased slightly from the 2018 average of 5.7% to 6.1% (net initial). Allsop said this was not unexpected, given the spate of difficult news from the high street. Overall retail yield, including multi-let investments, stayed steady at 7.6% (year average 7.5%). Partner and auctioneer Duncan Moir said: “July’s auction demonstrates the market is cautious but still clearly cash rich – pricing is key. If pricing is overambitious and current rental values and the state of a local economy are ignored, demand will be limited. Proper pricing generates good competition, which leads to strong results. There is plenty of enthusiasm for correctly priced assets and the competition for the more attractive investments is broad-based.”

Company News:

7Bone eyes Derby city centre for expansion into the Midlands: 7Bone Burger Co, which is backed by Kings Park Capital, plans to open a restaurant in Derby city centre for its first site in the Midlands. The company has applied to Derby City Council to convert a former Boots store in Victoria Street. The building has been vacant for a number of years after Boots relocated elsewhere in the city. The main dining area would be on the ground floor, with external seating to the front of the property, Derbyshire Live reports. Planning documents submitted by Paul Ashton Building Surveying and Project Management on behalf of 7Bone stated: “The applicant is proposing to bring its highly successful chain of premium burger restaurants to Derby. 7Bone currently operates from a number of sites across the south of England and has plans to expand its offering into the Midlands. Currently, the restaurants extend from Eastbourne, along the south coast and up to Weston-super-Mare in the west.” If approved, the restaurant would create 18 jobs and open from 10am to 11pm, Sunday to Thursday, and 10am to midnight on Fridays and Saturdays. 7Bone currently has nine restaurants across the southern counties, including Berkshire, Hampshire, Somerset and Sussex.

Hawksmoor opens first Scottish site, in Edinburgh: High-end steak brand Hawksmoor has opened its first Scottish site, in Edinburgh. The company has invested £2m to convert the banking hall of the former Royal Bank of Scotland headquarters in St Andrew’s Square into the 170-cover restaurant. As for further sites in Scotland, co-owner Will Beckett told The Scotsman the focus was on measured growth and seeing how the Edinburgh site performed. Hawksmoor’s original site opened in Spitalfields in London, close to where architect Nicholas Hawksmoor built Christ Church. There are three other restaurants in London – in Seven Dials, Air Street near Piccadilly Circus and Knightsbridge. The company has since opened in Manchester while its first international site will launch next year, in New York.

Bistrot Pierre to open Preston site at former Baptist church next month: Private equity-backed restaurant group Bistrot Pierre is to open a site in Preston on Monday, 6 August. In a first for the group, Bistrot Pierre will open the venue in a 19th century Baptist church in Fishergate, which has stood in the town centre for almost 160 years. It will be the company’s fourth site in the north west. The Fishergate bistro, which will create 50 jobs, will seat 164 customers inside and 50 outside. Bistrot Pierre, which currently operates 22 sites, received £9.8m from private equity firm Livingbridge in 2015 to support its expansion plans.

Red Mist Leisure reopens Hampshire village pub for tenth site: Pub operator Red Mist Leisure has reopened The Temple Inn in the Hampshire village of Liss, which it acquired from London brewer and retailer Fuller’s in April. The village pub, which had been closed since January 2017, is the group’s tenth site and has undergone a £300,000 refurbishment. The pub now features a combination of traditional wooden tables and modern booth seats surrounding a rustic log burner, while a decking area in the garden features picnic benches and festoon lighting. Head chef Dale Harris has created a seasonal menu with traditional classics such as Red Mist Ale-battered haddock with thick-cut chips, mushy peas and homemade tartar sauce; and homemade chicken, ham and leek pie with seasonal greens, red wine jus and seasoned chips. Red Mist Leisure was approached by the Save Our Temple Inn group over fears the pub might be lost to the community. Manager Nat Thatcher said: “This is the start of a new era for The Temple Inn and we hope the locals who were keen to save their pub are proud of what we have achieved together.” Red Mist Leisure was founded by Mark Robson and Mark Williams in 2004, with its ten pubs split evenly between Surrey and Hampshire. An 11th pub, The Wellington Arms in Stratfield Turgis, near Basingstoke, will open this winter.

Barworks applies to convert The Diner in Dalston into gastro-pub: Barworks, the central London bar and pub operator, wants to transform its The Diner site in Dalston back into a pub. The company has applied to Hackney Council to convert the venue in Kingsland Road. The building was built as a pub and housed The Crown And Castle until the turn of the century, when it became a Chinese restaurant, reports the Hackney Gazette. A report attached to the application stated: “Barworks is seeking to create a space that will combine food with a pub and showcase its take on what a gastro-pub should be like in Hackney. Looking at the Barworks portfolio, you will see it has used its entrepreneurial spirit to create different concepts and have no doubt the new concept will be a positive contribution to the area.” Barworks said it would invest a “significant amount of time and money” to restore the building. The company first arrived in the borough in 1998 with the opening of The Hoxton Bar and Kitchen. Barworks’ portfolio consists of 12 pubs and six The Diner sites across the capital.

ASK Italian and Zizzi owner becomes first UK restaurant company to sign chicken welfare commitment: Azzurri Group, which owns restaurants ASK Italian, Zizzi and Coco di Mama has become the first restaurant company in Europe to sign the Better Chicken Commitment. The commitment is a new set of standards for improving the welfare of chickens farmed for meat. It has been devised by a group of animal protection organisations including The Humane League, Compassion in World Farming, and the RSPCA. Azzurri Group has committed to achieving the Better Chicken Commitment standards by 2026. New standards in the commitment eliminate the worst health issues relating to fast growth and overcrowding, and provide a better living environment for chickens. Those chickens farmed for meat, called “broiler” chickens, account for 95% of all land animals farmed in the UK. The Humane League UK managing director Vicky Bond told Farming UK: “These meaningful changes are set to benefit the lives of millions of chickens and we encourage other companies that care about the welfare of animals in their supply chain to follow suit.” Over the past few years, the vast majority of the UK food industry has committed to eradicating cages for laying hens in their supply chains.

Absurd Bird flies into Scotland with Glasgow launch: Absurd Bird, the Southern US-inspired chicken restaurant brand from Splendid Restaurants, part of the Splendid Hospitality Group, has opened its debut Scottish site. The company has opened a venue in Glasgow’s Nelson Mandela Place in a former American Apparel store. It features walls veiled in Johnny Cash and Dolly Parton memorabilia, reports Glasgow Live. Absurd Bird offers food and drink inspired by the southern US states, with a brand identity built around the story of two “unruly birds” that have escaped London and fled “deeper south”. The Glasgow site is the sixth Absurd Bird in total, with its launch in Spitalfields, east London, followed by branches in Soho, Bath, Exeter and Leeds. In April, Splendid Restaurants scrapped plans to bring Absurd Bird to Newcastle.

Mikhail Investments reveals plans to revitalise Cains Brewery brand as part of £7m investment: Merseyside-based operator Mikhail Investments has agreed a deal designed to rejuvenate the Cains Brewery brand and create 200 jobs. Andrew Mikhail is behind proposals that include investing an initial £7m in four phases as part of bringing a 15,000 square foot scheme to life across three levels plus a basement. Proposals include a craft brewery with cask and keg beer, a market-style venture and a sky bar. A further drinks venue with capacity for 120 people, dubbed The Quarter Hoop, is also lined up, as is a brewery hall with capacity for 400 guests. Mikhail told Insider Media: “After speaking with Cains’ former managing director Sid Dusanj for about six months, he told me he was delighted to pass on the Cains brand to someone passionate about the Brewery Village scheme and the city. Cains is a resilient brand, just like Liverpool, and we’re really excited to be bringing Cains Brewery back, albeit with a new direction.” Dusanj added: “The Brewery Village concept started five years ago and it’s great to see Cains beers will be brought back to life by Andrew within the grade II-listed brewery after brewing stopped in May 2013.”

North east-based Uno Ristorante eyes Richmond for third site: North east-based Uno Ristorante, which has restaurants in Yarm and Middlesbrough, has submitted plans to open a third Italian restaurant in the region, this time in Richmond, North Yorkshire. The family-owned company has applied for planning permission to convert a shop in Market Place that was recently a discount store called Goodwins but is currently used by Yorkshire Trading as an extension to its nearby premises. The building is owned by Yorkshire Trading, which intends to lease it to Uno, Richmondshire Today reports. Supporting documents state: “Marketing evidence shows retail use of the building is no longer required and cannot be made viable. The restaurant is planned to have 80 to 90 covers and open until 10pm. This will be a major support for the evening economy and leisure role of the town centre.”

Douglas Jack – Ten Entertainment Group in line for another strong year: Peel Hunt leisure analyst Douglas Jack has said Ten Entertainment Group is in line for another strong year. Issuing a ‘Buy’ note on the shares with a target price of 325p, Jack said: “Like-for-like sales have slowed from being up 5.1% in the first quarter (13 weeks) to 3.1% over the first half, implying a circa 1% increase in the second quarter. This follows a similar pattern to last year, when like-for-like sales slowed from 5.7% in the first quarter to 0.4% over the first half, with hot weather also undermining like-for-like trading in the second quarter of 2017. We believe spend per head and like-for-like footfall were both in growth in the first half. The quarter started very strongly due to wet Easter weather in early April, but May to June combined were hotter and drier in 2018 than 2017. The World Cup has not been helpful but June is traditionally a quieter month for bowling. The company is ‘well-positioned for the second half’, to which there is a slight bias in full-year profitability. This bias partly reflects the addition of four new sites, which are currently trading but unlikely to make much of a contribution until the ‘tenpinisation’ process is complete towards the end of the third quarter. The business is also benefiting from the roll-out of Pins On Strings, which should be building momentum. Like-for-like sales have averaged more than 5% per annum during the past 4.5 years, even though there have been large swings in short-term like-for-like sales reflecting the impact of hot and cold weather. The long-term trend is being supported by attractive supply and demand dynamics as well as ongoing innovation. We estimate every 1% of incremental like-for-like sales generates 4% extra earnings growth. We forecast 18% earnings growth in 2018E and a 15% compound annual growth rate over the next three years during which we forecast a growing net cash position. In comparison to this, we believe the 4.4% dividend yield, 8.4% equity free cash flow yield and 13.7 times price-to-earnings ratio represent attractive value.”

Lavazza launches UK headquarters and cafe, in Uxbridge: Italian coffee group Lavazza has launched its UK headquarters and cafe at a former Coca-Cola bottling plant in Uxbridge, Middlesex. The company has taken 8,500 square feet of office space on the fourth floor of The Charter Building in the town centre, with the cafe opening in the atrium. The building has been developed in a joint venture between Landid Property and Brockton Capital. The work was completed last year, with businesses such as pharmaceutical technology company TraceLink, data security solutions startup Jazz Networks, and flexible workspace firm Spaces leasing units. Landid director Chris Hiatt told GetWestLondon: “Adding the UK headquarters to the building’s growing business community along with the Lavazza coffee bar will create even more of a buzz in the building and is a real boost for Uxbridge town centre.” Last year, Lavazza said it was targeting the UK as it looked to open up to 15 cafes around the world.

Marston’s opens pub restaurant in Ystradgynlais: Marston’s has opened a pub restaurant in the South Wales town of Ystradgynlais (population 8,092). The company has launched The Clock Works, which is named after a famous factory in the town. About 2,000 people once worked at the old Anglo-Celtic Watch Company, known as Tick Tock, and the pub is built on the same site. The menu features pub classics as well as a selection of pizzas and grilled choices. Drinks include cocktails, mocktails, wine, beer as well as hot and cold drinks, reports Wales Online. Ystradgynlais is on the edge of the Brecon Beacons National Park.

JD Wetherspoon to transform Cleckheaton pub after acquiring bank branch next door: JD Wetherspoon is to transform The Obediah Brooke in Cleckheaton, Yorkshire, after acquiring an adjacent bank branch. The pub in Bradford Road will undergo a £711,000, four-week refurbishment to reopen on Monday, 27 August. As well as proving extra capacity, the neighbouring building will allow Wetherspoon to add a first-floor area with views to Albion Street. Inside, the pub will be given a new colour scheme, carpets, seating booths and lighting. Pub manager Michael McDonald told the Telegraph & Argus: “Wetherspoon is spending just over £700,000 on the pub, providing further investment into the town. We are confident customers will be impressed by the refurbishment and extension.” Earlier this week, Wetherspoon reported like-for-like sales increased by 5.2% in the ten weeks to 8 July 2018 and total sales increased 5.6%. In the year to date (49 weeks to 8 July 2018) like-for-like sales increased by 5.2% and total sales were up 4.2%. The company has opened six pubs since the start of the financial year and has completed the sale of 23. No further openings are expected in the current year. 

Welsh distillery Penderyn outlines expansion plans: Welsh distillery Penderyn, which is based near Aberdare, has outlined plans to expand into other areas of the country. The proposals include opening in Swansea and Llandudno. The Llandudno plans include a retail outlet, visitors’ centre and training hub for workshops in a bid to spread knowledge of the whisky brand, reports Insider Media. Speaking at the 20Twenty Business Growth Programme, Penderyn managing director Stephen Davies said: “We have grown to the point where turnover is about £11m and we employ 50 workers so we are looking further afield. We believe in the product and have a passionate team with a fabulous brand, which tells a story that resonates with people, especially in Wales.”

Sleeperz opens Dundee hotel for fourth site: UK budget hotel operator Sleeperz has opened a 120-bedroom hotel in Dundee, creating 40 jobs. The city’s redeveloped railway station concourse has reopened, with the hotel occupying the upper part of a new £38m building. Its curved frontage looks out over the River Tay and two visitor attractions – Captain Scott’s polar expeditionary vessel RRS Discovery and the V&A Museum of Design. Sleeperz Hotel Dundee sits at the centre of an 8km waterfront development that includes restaurants, bars, hotels, commercial office space, leisure venues, public gardens and industrial units. Sleeperz chief executive David Myers said: “Dundee’s transformation and regeneration is making headlines across the world and now is the perfect time to open a Sleeperz hotel in the city. The opening of the V&A Museum of Design in September will attract visitors from across the UK and internationally and they will benefit from our ultra-convenient location at the gateway to Dundee.’’ Sleeperz’ other hotels are in Cardiff, Newcastle and Edinburgh and are aimed at business travellers, families and couples seeking longer city breaks.

CH&Co Group and Prince’s Trust help young people ‘get into hospitality’: CH&Co Group has joined forces with The Prince’s Trust to help eight young people graduate from the new Get Into Hospitality With CH&Co programme. The initiative provides unemployed people aged 16 to 30 with an opportunity to gain skills and experience in the hospitality sector alongside support to secure further training and employment. Eight candidates took part in the three-week programme, working at CH&Co venues including London Zoo, the Law Society and Kensington Palace. Working with the group’s chefs and front-of-house teams, they were given training and work placements covering areas of hospitality such as barista training, knife skills, nutrition and health, customer service, and health and safety. They also received guidance in life skills such as managing finances and employability. The group said it had committed to provide ongoing support to all graduates through further training and employment opportunities. CH&Co marketing and communications director Andrew Merrett said: “We have a duty to invest in the development of future generations of talented hospitality professionals. The eight young people who took part in the programme are a great example of what someone can achieve given the right opportunities, guidance, mentoring and encouragement. We are more than happy to welcome them into our team and look forward to watching their careers continue to grow.” CH&Co employs more than 6,200 people at 750-plus locations in the UK and Ireland.

Thornley Leisure buys central Wales holiday park: North Wales-based holiday park operator Thornley Leisure has acquired Brightwater Lakes in central Wales. Set over 30 acres, Brightwater Lakes includes two fishing lakes and an indoor heated swimming pool. It provides 153 plots, 53 chalets and 100 privately owned caravan holiday homes. It is set to benefit from further investment from Thornley Leisure, which owns eight other sites in North Wales, Cheshire and North Yorkshire. Managing director David Thornley told Insider Media: “One of Brightwater Lakes’ greatest strengths is its appeal to people who want a holiday home where the main attractions are the tranquillity and beautiful surroundings. We are keen to continue moving the park forward and raise the quality bar even higher for the benefit of the holiday homeowners.”

East Lothian-based operators put guest house on market for more than £1.2m: East Lothian-based operators Alan and Audrey Russell have put four-star guest house Adniston Manor on the market for offers in excess of £1.2m. The couple, who also run a number of restaurants in the area, are selling the property in Macmerry through agents Christie & Co. The property has seven en-suite bedrooms – four in the main house and three in an adjoining single-storey cottage. Owners’ accommodation is also included in the main property within a large, second-floor attic conversion and offers an en-suite double bedroom plus private living space on the ground floor. Alan Russell said he would continue to run the restaurants.

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