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Thu 26th Jul 2018 - Propel Thursday News Briefing

Story of the Day:

Ralph Findlay – new-build pub opportunity for Marston’s is as ‘strong as ever’: Marston’s chief executive Ralph Findlay has stressed the new-build pub and lodge opportunity for Marston’s is as “strong as ever”, despite reducing its opening programme this year to 15 sites. Findlay said the reduction in openings this year was the result of the company wanting to “take the temperature” but he added: “From the demand point of view there is lots of housebuilding in the UK – creating new towns and suburbs – and the demand for housebuilding is only going to get bigger. We expect to be able to find 20 or so locations a year (for new-build pubs) for the foreseeable future.” Findlay also pointed out competition for new-build sites was “quite low” at the moment. The Marston’s boss reported the Fifa World Cup had “probably added an extra week’s worth of turnover to the business”, showing again that “big events are huge for the trade”. Marston’s acquired Charles Wells last year, the latest in a series of regional brewery acquisitions, and Findlay suggested the company was “in the market for more since they have provided the highest return on capital the company achieves at a minimum of 20%”. Asked whether the company had seen any impacts arising from problems in the casual dining sector, Findlay said it had been a “mixed bag”, with the current negative impact on sector sentiment balancing out the medium-term positive outlook, which was likely to result in capacity coming out.

Industry News:

BII chairman Anthony Pender to step down: Anthony Pender is to stand down from his position as chairman of the British Institute of Innkeeping (BII) shortly. A BII spokesman said: “During the four years of his tenure, Anthony has led the way in making the organisation financially stable and sustainable and, in conjunction with chief executive Mike Clist, has restructured the membership programme and underpinned organisational structure. In addition to the internal developments made by Anthony, he has established the BII as an industry association that not only represents its members but is one listened to and consulted with by the government and other associations and bodies. With Mike, they have returned to the purpose and objectives on which the BII was founded. Having ensured firm foundations and a clear strategic direction under Anthony’s tenure, the BII is looking for a successor who will focus on delivering the strategic plan, enhancing benefits available to members and a renewed focus on its in-house training offer. The BII is inviting applications for the chair’s role and welcome enquiries from interested parties who feel they have the skills to build on the changes made to date.” Pender added: “It has been a fantastic four years working with a large team of members at Farnborough and exceptional individuals who volunteer time to make the BII tick. As a team we’ve focused the organisation on its key principles of training, professionalism and standards. With a stable foundation in place and clear direction, there is a real chance to continue the BII’s growth and ensure it supports the pub and hospitality workforce.” 

Home Office toolkit for EU nationals a welcome step forward, says UKH: UKHospitality has welcomed the launch of a Home Office toolkit that provides practical advice on how EU citizens can apply for settled status. Government has stated EU citizens who are resident in the UK or move here before 1 January 2021 have the right to remain and work in the UK. UKHospitality worked closely with the government to develop the package of advice and the trade association will support its members to communicate the message to employees. UKHospitality chief executive Kate Nicholls said: “Dissemination of information to employees is going to be crucial as we move towards Brexit. Members have consistently told us they need information from government to reassure their EU staff they are welcome in the UK and this is a big step forward. Clear communication with EU citizens on how to register themselves and their dependants for settled status is essential. Employers are going to play a crucial role in communicating the scheme to their employees and UKHospitality will support its members to ensure the message gets across. UKHospitality has liaised with the government exhaustively to inform and support the scheme and Home Office officials attended our recent conference to provide our members with information. Hospitality businesses need clarity and transparency to prepare for life beyond the transition period and outside the EU. UKHospitality will work with the Home Office to ensure hospitality businesses are armed with all the tools to prosper in the coming years.” 

Plans approved for Olympic Park restaurant pavilion: The London Legacy Development Corporation Planning Decisions Committee has passed plans for a 10,000 square foot pavilion at International Quarter London (IQL). The building will include two restaurants, a cafe and a Queen Elizabeth Olympic Park (QEOP) visitors’ centre, complemented by outdoor space and a roof terrace. The multi-storey pavilion will be formed by a series of timber terraces and create a gateway to QEOP in Stratford. The building will be an extension of the public realm, encouraging visitors to dwell in the area. Jonathan Emery, Lendlease managing director, property, Europe, said: “The pavilion represents a significant investment in place-making and amenity, which underpins our ambition to build a new neighbourhood here.” IQL will be home to about 6,300 workers by the end of 2018. Cancer Research UK and the British Council are due to swell the working population further when both move their headquarters to IQL in 2019 and early 2020 respectively, bringing a further 2,000 people. When complete, IQL will be home to about 25,000 workers. Shelley Sandzer, Nash Bond and CF Commercial are letting agents for the pavilion.

Company News:

Cambscuisine launches £550,000 crowdfunding campaign, James Spragg joins board: Pub and restaurant operator Cambscuisine, led by Oliver Thain and Max Freeman, has launched a £550,000 crowdfunding campaign on online investing website SyndicateRoom to open two pub restaurants. Investors can receive 30% income tax relief on their investment in addition to a number of other tax reliefs that are part of the government-backed Enterprise Investment Scheme. Cambscuisine owns and operates nine pubs and restaurants across Cambridgeshire. Thain said: “We are a Cambridge-centric restaurant business working with local suppliers and businesses and, of course, our loyal customers and employees. We love the idea of local people joining our journey and helping us grow and develop the business, as they have since our purchase of The Cock in Hemingford in 2001. It therefore made sense to raise with SyndicateRoom, a crowdfunding platform just ten doors from the Cambridge Chop House. This opportunity to raise funds will enable us to realise many potential opportunities and accelerate growth. We have a strong platform from which to develop sites. The focus will be freehold and leasehold pubs and restaurants in Cambridgeshire and the surrounding area.” Meanwhile, Casual Dining Group chief operating officer James Spragg has joined Cambscuisine’s board as non-executive director. He said: “I have followed the Cambscuisine business for a number of years and am delighted to be joining its board as a non-executive director and investor in the business. It has huge potential and a great base from which to build and grow.” Cambscuisine’s portfolio consists of two Smokeworks, two Chop Houses, modern brasserie Millworks and four country pub restaurants.

Stonegate Pub Company launches LGBT initiatives: Stonegate Pub Company has launched a number of initiatives to enhance its LGBT offering. Operating 12 LGBT venues across the country, the company said its late-night division had seen the sites contribute more than 4% of group profit. The Bar Safety initiative has been launched in collaboration with Diageo and the LGBT Foundation. All Stonegate staff will undergo training to ensure the venues remain a “welcoming, inclusive and safe space”. The training package provides tips and education on issues surrounding the LGBT community. Charity and local sponsorships will also remain a core focus, Stonegate said. From next month, the 12 venues will add exclusive community cocktails to their menus, with 75p from each drink supporting an LGBT initiative. With experience and events now the number-one driver in the late-night market, the bars will also focus efforts on maximising “key hooks” in the LGBT calendar. Dates such as World Aids Day saw sales increase 17.1% year-on-year, Stonegate said, with Pride London sales up 11.5% compared with the previous year. Head of marketing Alan Armstrong said: “As one of the largest gay bar operators in the UK it is key we provide the best nightlife experience in which the LGBT community feels included, welcome and safe. We have seen great success across the years with our venues and, with these initiatives under way, we are excited to see what the future holds.”

Thwaites reopens Beverley coaching inn after £6m investment: North west brewer and retailer Thwaites has reopened a 17th century coaching inn in Beverley, East Yorkshire. The Beverley Arms has reopened as a boutique hotel following a two-year, £6m restoration project. The property now features 38 bedrooms, a 68-coer restaurant, two private dining/meeting rooms, a bar and courtyard. The Beverley Arms is Thwaites’ first property in the town and a new team has been recruited led by general manager Chantell Dickinson-Clark. The development has created 70 jobs and the team is undergoing training to be ready for the grand opening on Monday, 30 July. A series of celebration events will also take place in August. Dickinson-Clark said: “There is so much love for The Beverley Arms. We have been overwhelmed by the interest and messages of support. Every day we have lots of excited people wanting to know when we are opening and to see what’s happening inside. It has taken so long for the work to be completed – but it’s important to get it right. The Beverley Arms has been part of the town for more than 300 years so we want to make sure we create a boutique hotel we can be proud of for the next 300 years.”

Peel Hunt issues ‘Buy’ note on Marston’s shares after trading update: Peel Hunt leisure analyst Douglas Jack has issued a ‘Buy’ note on Marston’s shares after the company’s trading update on Wednesday (25 July). He said: “Its dividend policy remains progressive. Third-quarter trading is in line overall with total managed and franchised like-for-like sales in growth year to date, supported by half the group’s profits deriving from wet-led businesses. We are holding our forecasts of 7% profit before tax growth in 2018E, a year in which management expects the dividend to increase, and we forecast debt/Ebitda to fall from 6.2 times to 5.9 times. Marston’s expects to open 15 pubs and six lodges this year. Expansion from 2019E has been reduced to ten pubs and five lodges per year, resulting in a £25m annual capex reduction, prior to a £5m annual increase in organic investment, appropriately repositioning value destination pubs into more premium formats. We believe Marston’s dividend is sustainable, albeit with net debt/Ebitda forecast to be stable in 2018-2020E, with circa £30m per year of securitised debt converting into bank debt. Under this lower capex scenario, we forecast circa 4% earnings growth per annum from 2019E. Our ‘Buy’ recommendation reflects the attractiveness of the dividend.”

Loch Lomond Brewery hits £350,000 crowdfunding target to double production: Loch Lomond Brewery has hit the £350,000 target in its crowdfunding campaign on Crowdcube to double production and bring packaging in-house. Co-founders Euan and Fiona MacEachern are offering 10.36% equity in return for the investment. So far, 401 investors have pledged £371,910 and the campaign is currently “overfunding”. The Scottish company’s beers are stocked in major retailers including Marks & Spencer, Co-op, Morrisons, Aldi and Lidl, while it exports to Europe, Asia and the Nordics – selling more than 415,000 pints last year – and has just entered the Canadian market. It also plans to build a brewery, taproom, restaurant and visitors’ centre on the shores of Loch Lomond. The pitch states: “In 2011 we set out as a husband-and-wife team to create a brewery. Fast-forward seven years and we’ve gone on to win multiple awards – 31 to be precise. We have on-boarded Brakes as a wholesale partner and we’re exporting 20% of production to Europe, Asia and the Nordics. Due to the increasing popularity of our beers we are near production capacity. We also outsource our packaging adding extra mileage to our beers before they reach customers. Investment will enable us to purchase equipment to double production and bring our packaging operation in-house, enabling us to meet demand. We are in the planning stage with developers to open our first combined brewery and taproom on the shores of Loch Lomond, aiming to open by 2020. The footprint of the building will be 1,200 square metres, with a third of that space dedicated to a restaurant, visitors’ centre and store. We want this to become a key attraction for the loch’s annual four million visitors.”

St Christopher’s Inns launches ‘interactive filter bubble’ to deliver travel advice: St Christopher’s Inns, which is owned by pan-European hostel and bar company Beds and Bars, has created an “interactive filter bubble” that delivers travel advice to people visiting London. The technology gives users a continuous stream of tailored London travel tips via their social media platforms. Users will be shown the “local haunts your city guidebook never led you to”. The first three bubbles are the Vegan Bubble, featuring the best vegan pages to follow on social media and the coolest vegan places to eat and drink in London, the Royal Bubble – for information on the Royal Family – and the British Food Bubble, which reveals the best places to get authentic British dishes in the capital. St Christopher’s Inns marketing director Sophie Herbert said: “We have created a handy travel hack that provides a real-time resource serving unique travel tips and events more traditional travel guides may find difficult to update. The niche content these filter bubbles deliver would take a backpacker in a new city months to cultivate themselves. Creating our own filter bubbles shows there are positive ways to go around the current algorithmic system – and by allowing our users to hijack this they are experiencing travel and discovering a new city like never before.” St Christopher’s Inns operates 21 hostels in Europe including sites in London, Cardiff, Edinburgh, Bath and Newquay. 

Tommy Banks applies for York pub licence: Michelin-starred chef Tommy Banks has applied for a licence to open a pub in York. Banks, whose restaurant The Black Swan at Oldstead was rated the world’s best restaurant in the annual TripAdvisor awards in October, announced plans to launch a venture in York in April. The Press reported the restaurant, which will be named Roots York, is set to open at a site in Marygate that was formerly occupied by the Bay Horse pub. City of York Council has now received a licensing application for the building from Roots York. Banks and his brother James took over The Black Swan when they were only 17 and 19 years old, while Tommy was the youngest British head chef to win a Michelin star, aged 24. The Roots York website states: “Roots will offer casual and playful sharing dishes with the same focus on quality cooking Tommy has become famous for.”

Five Guys set to replace YO! Sushi in Chester: Better burger brand Five Guys is set to replace YO! Sushi in Chester after the chain announced it was closing its site in Bridge Street. A YO! Sushi staff member told the Chester Chronicle the restaurant would close “imminently”, with the majority of staff relocating to the company’s Cheshire Oaks branch. Plans have been lodged with Cheshire West and Chester Council’s planning committee for replacement frontage and signs at 46 Bridge Street. Five Guys opened a site at Cheshire Oaks last year. The Murrell family founded the company in Virginia in 1986. It opened its first UK site in Covent Garden in 2013 and now has more than 80 restaurants in the region.

Numis – Ei Group has potential of accretive asset sales to come: Numis leisure analyst Tim Barrett has issued a ‘Buy’ note on Ei Group shares with a target price of 200p a share because he believes the company has accretive asset sales to come. He said: “Recent changes to bond-holder covenants provide more flexibility on disposals of free-of-tie assets and, in due course, we expect a material disposal similar to the 18 sold in 2017 (6.6% yield) but on a wider scale. Therefore, in this note we show pro-forma analysis of a portfolio of between 350 and 500 sites (the latter being Ei’s FY20 target). If sold at a 7% yield with half the proceeds returned, this could be up to 46% enhancing to net asset value, creating material value. The stock trades at a 32% discount to tangible net asset value even prior to disposal benefits and we reiterate a ‘Buy’ recommendation. In our view Ei Group’s strategy is being well executed. Key performance indicators in the tenanted business continue to improve and the group is leveraging the recently created managed pub infrastructure through conversions. For the former, unplanned business failures fell to 1.3% in the first half – from a peak of 7.3% in 2009 – rents were stable and capex projects continued to create value. Updated targets are a reflection of favourable market rent only (MRO) outcome. Halfway into its five-year transformation programme, Ei Group has adjusted its targets, essentially reducing the target for the commercial (free-of-tie) portfolio from 700 to 500 and tweaking managed pub targets. We view this as a sensible response to the relatively limited take up of free-of-tie leases under new MRO legislation. It in no way detracts from the potential to create value in the managed estate and the target of 500 commercial leases still implies a portfolio with a mature value of circa £525m, we believe. Favourable short-term outlook trading proved resilient in the first half of 2018, with slight growth in like-for-like net income in spite of adverse weather. From a shorter-term perspective, strong Peach Tracker data for the pub sector in the past two months (+3.5%, +2.8%) confirms the boost from favourable weather and the World Cup. We remain alert to possible downside from cost inflation having an impact on the sector, although to date leased and tenanted licensees have proven adept at mitigating the cost growth.”

Bespoke Hotels to operate Coventry boutique hotels: The operator of a new 1950s-style boutique hotel at the former Coventry Telegraph offices has been named. Bespoke Hotels was founded in 2000 and manages more than 9,500 hotel rooms in 21 countries, ranging from Australia to the US. It has an 8,000-strong workforce and assets of £815m. The group manages 96 hotels in the UK including the Bermondsey Square Hotel in the heart of London’s creative district, art deco-themed Hotel Gotham in Manchester, the Billesley Manor Hotel in Stratford and the Carnoustie Golf Hotel. Complex Development Projects has appointed Bespoke Hotels to manage the venue in Coventry’s Corporation Street. Construction is planned to start at the end of 2018, creating 100 bedrooms, a ground-floor restaurant and bar, meeting rooms, penthouse suites and a rooftop bar after planning approval was granted by Coventry City Council on 16 July. Final approval from the council is awaited for the long-lease extensions necessary to deliver the project.

Brasserie Blanc expands hotel format with Manchester airport launch: Brasserie Blanc, the French restaurant group led by chef Raymond Blanc, has opened its second Marriott hotel venue, at Manchester airport. The brasserie is in the newly refurbished, four-star Manchester Airport Marriott Hotel in Hale Barns, just minutes from the terminal. The space offers a 120-cover restaurant and 100-cover bar, with an additional 50 covers on a terrace. The space features reclaimed oak parquet floors, velvet-and-leather banquettes, art deco-style lighting and an atrium. The brasserie provides breakfast, lunch, afternoon tea and dinner as well as room service for hotel guests. Brasserie Blanc chief executive Mark Derry said: “This is part of an exciting new phase for Brasserie Blanc’s development. We’ve seen success from our sites that operate within or in association with hotels in Cheltenham, Bath and Bournemouth and we are excited to be expanding this side of the business.” Brasserie Bar Co has 19 French brasseries and 17 pub brasseries in the UK.

Authentic Alehouses extends £10m crowdfunding campaign until August: Leeds-based Authentic Alehouses, led by Burning Night Group boss Allan Harper, has extended its £10m fund-raise on crowdfunding platform Crowdstacker. The company launched its funding bid in July last year to revive the fortunes of underperforming pubs by attracting a new generation of customers with a menu of “quality artisan food and drink, updated decor and a variety of entertainment”. It opened its first venue in November by relaunching The Albert Hotel in Hull following a £1m refurbishment. Its other venues are The Fountain Inn in Barnoldswick, Lancashire; The Countess Of Rosse, near Bradford; and the Albert Hotel in Southport. Authentic Alehouses is offering investors a 6.5% per annum interest rate through a peer-to-peer loan. Backers are also given the potential to earn income tax-free by investing via Crowdstacker’s Innovative Finance ISA. Authentic Alehouses’ campaign has so far raised £6,206,513. The next closing date is Thursday, 23 August. Authentic Alehouses plans to use the capital to refurbish sites in prime locations, streamline and modernise its operation to cut waste, and introduce higher-quality food, a broader range of drinks, and more family-orientated entertainment.

Sanchez-Iglesias to convert Bristol pizzeria into creative kitchen for ‘epic future projects’: Michelin-starred chef Peter Sanchez-Iglesias is to convert Bristol pizzeria Pi Shop into a creative kitchen to be used for “epic future projects”. Pi Shop is the most casual restaurant in the Sanchez-Iglesias estate and is located between Michelin-starred sister restaurants Casamia and Paco Tapas in a former general hospital in Redcliffe. Pi Shop has a reputation as one of Bristol’s best places for pizza but Sanchez-Iglesias announced on social media it would close on Saturday, 4 August with the creative kitchen opening in its place to be used by the Sanchez Brothers Group.

Byron trials vegan freakshakes: Better burger brand Byron is trialling the UK’s “first” vegan freakshake as part of a new collection of dairy-free milkshakes. The drinks are being trialled at the chain’s sites in Manchester, Shoreditch, Camden, Oxford Circus and Islington. The move follows Byron’s launch of vegetarian and vegan burgers in April. The Vegan Brownie Freakshake features vegan vanilla ice cream with coconut milk, dairy-free whipped cream and chocolate sauce topped with a whole brownie from Vegan Antics bakery. The two dairy-free milkshakes come in strawberry and chocolate brownie flavours. Byron head of food Paul Mason said: “Since the launch of our new menu we’re seeing one in ten customers choose one of our vegan or vegetarian burgers. The feedback we kept hearing was our non-dairy drinking fans longed for vegan versions of our extra-thick shakes so these new additions to the menu means nobody misses out.”

Michelin-starred chef takes over Pontefract pub: Michelin-starred chef Gary Pickles, who has worked under Marco Pierre White and Gordon Ramsay and appeared on television with Michelle Roux Jnr, has taken over a pub in Pontefract, West Yorkshire. Pickles, who won his Michelin star at Bella Luce in Guernsey, has gone into partnership with friend and landlord Dean Smith at the Tap & Barrel in Front Street. The new venture has been named Martha’s Kitchen after member of staff Martha Smith. Pickles told the Yorkshire Evening Post: “It is going to be brilliant. I know it’s going to be good food because it’s what I want to eat and we’re making everything in-house.” Pickles trained at Michelin-starred restaurant The Box Tree in Ilkley under Pierre White and spent six years working for Gordon Ramsay Group at Claridge’s, among others.

Crouch End supper club to turn into permanent restaurant next week: Crouch End supper club Chicken Of The Woods is to turn into a permanent restaurant. Former Smokehouse chef Chris Slaughter will transplant the concept into a restaurant by launching Through The Woods in Middle Lane on Thursday, 2 August. The venue will feature only 16 seats and a small set menu “very much in the same vein as the supper club”, Slaughter told Hot Dinners. The menu will be mostly vegetarian with only one meat dish.

Arc Inspirations appoints Fleet Street Communications to handle PR: Arc Inspirations, the Leeds-based operator of a number of fast-growing brands including Manahatta, Banyan Bar & Kitchen and The Box, has appointed Fleet Street Communications to oversee its trade and corporate PR as it looks to expand into new markets. Established in 1999, Arc Inspirations operates 16 bars in the north of England with plans to open two sites in Manchester and one in Leeds this year. The company said it also had a healthy pipeline as it looked to take its concepts to new cities. Fleet Street Communications will deliver a programme to increase awareness of the company and its brands and offer regional support for site launches. Arc Inspirations chief executive Martin Wolstencroft said: “We are looking to cement our position as one of the leading bar and restaurant operators in the north of England. This appointment marks the next step in an incredibly exciting time for our business.” Earlier this week, Arc Inspirations reported turnover increased £2.0m (8.6%) from £22.2m to £24.2m in the year to 1 April 2018. Like-for-like sales were up 1.0%, while Ebitda increased 33% from £2.4m to £3.2m. 

Chilango integrates technology providers: Mexican brand Chilango has taken the next step in its digital journey by adopting new EPOS, digital ordering and loyalty technologies. The solutions, provided by Centegra, Preoday and Swipii respectively, will enhance the brand’s personalised guest service and experience. Through the digital ordering service, guests will be able to pre-order from the menu and collect on arrival. Orders placed via the restaurant’s new app or web-ordering page will be sent directly to Chilango’s EPOS, meaning it can manage remote orders and keep all financial data in one place without needing to reconcile online payments with in-store transactions. Chilango will also leverage Swipii’s digital loyalty solution, integrating it into Preoday’s ordering platform and Centegra’s EPOS system to provide a “seamless guest experience across all channels”. The loyalty programme will offer points and rewards to encourage return visits while gathering guest data. That data, combined with information gathered via the ordering platform and EPOS, can be used to enhance marketing activity and strengthen engagement. Chilango co-founder Dan Houghton said: “The Chilango brand is strong, colourful and modern. It was vital to us when building our digital services that we retained the character our guests know and love. We wanted to take our time to develop an integrated platform that was perfect for our and their needs, which is why we chose to work with three technology providers rather than choosing an all-in-one solution. These companies are helping us optimise the guest journey, collect the data we need to manage our menu, marketing and loyalty programmes, and maintain our strong brand image.”

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