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Thu 15th Nov 2018 - Propel Thursday News Briefing

Story of the Day:

Costa extends loyalty programme to self-serve machines in first for UK on-the-go coffee industry: Costa Coffee has extended its Coffee Club loyalty programme to Costa Express machines across the UK following a trial. Now available at Costa Express’ 7,000-plus machines nationwide, the introduction of the digital loyalty scheme to self-serve machines is a first for the UK’s high-street coffee industry. The integration of Costa’s Coffee Club scheme enables customers to collect points on each Costa Express order and redeem them in Costa Coffee stores. Customers will be notified of the Costa Express addition through the Costa Coffee Club app. To claim points, customers scan a QR code on the machine screen using the app. Points are issued in real time and customers can spend their earnings in Costa Coffee stores. The scheme has been designed and built by Costa Coffee’s digital team, led by global digital and loyalty director Arslan Sharif. He said: “We understand the importance of delivering innovations to ensure our customers get the best experience from our brand. This extension of our loyalty programme enables customers to collect points at even more Costa Coffee locations on the go through Costa Express machines – an exciting move for our Coffee Club members who will be able to earn rewards faster.” The move comes as Costa Express launches recyclable Christmas cups and an exclusive range of festive drinks for its self-serve machines. The extension of the loyalty scheme follows the launch of a new Costa Express brand identity earlier this year that uses “bold language to showcase freshness credentials” under the banner “Real milk. Real beans. Real quick”.

Industry News:

Restaurant Marketer & Innovator tickets now on sale: The Restaurant Marketer & Innovator European Summit is returning for its second year following a bumper inaugural event. The summit is a partnership between Propel and Think Hospitality and aims to build a community, promote idea sharing, recognise talent and define the future of eating out. Bookings are now open for the two-day conference, which will be the centrepiece of the event series and take place on 16 and 17 January at One Moorgate Place, London. The event will focus on marcomms strategies, proposition and concept development, the latest market insights, technology and digital developments, building strong links between marketing and operations, embedding a brand throughout a hospitality business, and future trends. It has been designed for marketing, development and innovation teams as well as senior executives and investors who want to better understand the latest marketing, innovation and development opportunities to build market share and grow. The event will feature more than 40 speakers, with a unique blend of senior marketers, business leaders and entrepreneurs from companies including TGI Friday’s, YO! Sushi, Hakkasan Group, Casual Dining Group, Claus Meyer Restaurant Group, New World Trading Company, Wagamama, Hilton, Inception Group, Coca-Cola, Just Eat, Arc Inspirations, Novus, SSP, Be At One, Marriott International and Jamie Oliver Restaurant Group. As well as sharing successes from across the UK, the event will bring international speakers to the conversation. The 2019 edition will feature speakers from five countries including Anders Houman, partner at multi-award winning Victor Restaurant Group in Copenhagen; John Rigos, chief executive of New York-based Aurify Brands; and Australian entrepreneur Sarah Holloway, co-founder of Matcha Mylkbar, which became an overnight hit after posting one incredible shot on social media. Special guest speakers will include Chris Miller, founder of the White Rabbit Fund and investor on the BBC’s Million Pound Menu; Martin Morales, Ceviche Family founder and winner of Innovator of the Year 2018; and Zahra Kahn, founder of Feya, a concept designed with Instagram in mind. Tickets are £575 for operators and £845 for suppliers. Group ticket packages are available when purchasing three tickets or more. Tickets can be purchased by emailing Anne Steele, of Propel, at or calling her on 01444 817691.

Sustainability tops 2019 food and drink trends: Sustainability will be one of the top food and drink trends in 2019, according to a new study by Mintel. The company said a rise in operators’ sustainability efforts would not only include improvements to recycling but a move to offer upcycled goods and incentivise consumers to recycle packaging. Mintel associate director of food and drink Jenny Zegler said: “Demand for more corporate sustainability programmes will grow as consumers better understand what is required to get closer to achieving a truly circular food and drink economy. These sustainability efforts will include not only improving access to recycling but creating products with ingredients that are grown in accordance to regenerative agriculture practices.”

Company News:

All-natural deli and meal delivery service Detox Kitchen launches £550,000 crowdfunding campaign: All-natural meal delivery service Detox Kitchen has launched a £550,000 fund-raise on crowdfunding platform Crowdcube to meet growing demand. The company is offering 7.28% equity in return for the investment, giving a pre-money valuation of £7m. Private equity-backed Detox Kitchen has delivered more than one million meals to thousands of customers in the capital and also operates two central London delis, which serve more than 2,500 customers a week between them. Funds raised would be used to increase kitchen capacity, invest in a technology platform for delivery services, and grow its marketing team. The pitch states: “Detox Kitchen aims to be one of the most disruptive brands in the diet and healthy food markets in the UK. From humble beginnings, founder Lily Simpson and her team have built a globally recognised, profitable and forward-thinking brand. We passionately believe healthy food should be as delicious as it is nutritious so we create real food from real ingredients. We conveniently deliver meals directly to our customers’ doors as well as serving an array of fresh salads at our two central London delis and in selected retail outlets. Since our launch in 2012 we have built a business that has delivered average monthly revenue of £243,000 in the current financial year, showing 32% year-on-year sales growth and positive Ebitda of £42,000 (April to August 2018); a thriving home delivery business that accounts for nearly 50% of revenue and has grown 70% year-on-year in the past six months; and published two best-selling cookbooks.”

Kerb to launch debut indoor food hall, in Seven Dials: Street food business Kerb is to launch its debut indoor food hall, in Seven Dials. The company has agreed a deal with landlord Shaftesbury for the venture in Thomas Neal’s Warehouse. Opening next summer, the 22,000 square foot Seven Dials Market will span two floors of the former banana warehouse, which was built in the 1800s. Seven Dials Market will also host regular community workshops run by food entrepreneurs. Kerb managing director Simon Mitchell said: “We had been seeking a special space in which to launch a destination, world-beating food hall for some time, and there is nowhere better than Thomas Neal’s Warehouse. The iconic building in the Borough of Camden – where Kerb was founded – is the ideal stage to showcase many of the great food talents London has to offer. We’ve worked closely with upwards of 150 brilliant independent food entrepreneurs over the past six years and we see Seven Dials Market as the next step.” Shaftesbury executive director Tom Welton added: “We have worked closely with Kerb to help evolve its highly successful offer and approach to create Seven Dials Market. The team has impressed us with its commitment to quality and ensuring Seven Dials Market reflects the needs of the community, not just visitors. Thomas Neal’s Warehouse is a significant building in Seven Dials that required something special to give it renewed purpose. Kerb has exceeded our expectations on every level.”

Starbucks to cut 5% of corporate headcount: Starbucks is planning to cut about 5% of its global corporate workforce, according to a memo sent by chief executive Kevin Johnson on Tuesday (13 November). About 350 employees in marketing, creative, product, technology and store development would be affected, Johnson stated. He said affected divisions would undergo “significant changes” as Starbucks narrowed its priorities to become a more nimble company. While the decisions were “incredibly difficult”, Johnson said, they were made following “very careful consideration”. He said affected roles were related to work that had been “eliminated” or “deprioritised”. The Wall Street Journal first reported the lay-offs, with the news following Starbucks’ September announcement it would cut corporate staff as it shuffled its organisational structure. Starbucks has scaled back on store growth and closed underperforming company-owned locations. In its fourth quarter, Starbucks said sales in stores in the US and Americas that had been open for at least a year grew 4%, beating Wall Street expectations of about 2.7%. Johnson said it was the company’s strongest like-for-like-sales growth in the US in five quarters. Starbucks said its loyalty programme grew 15% year-on-year, hitting 15.3 million members, while Starbucks Rewards members drove almost 40% of sales in the US.

Robinsons reopens Caernarfon pub as it eyes tenanted portfolio expansion: North west brewer and retailer Robinsons has said it will continue to eye acquisitions for its tenanted business following the relaunch of a pub in Caernarfon, North Wales. The company has relaunched the Four Alls following a two-month refurbishment. The pub is within the medieval walls of old Caernarfon, opposite the castle. Original stone walls have been exposed and restored to enhance the Welsh heritage feel, together with the installation of solid oak floorboards and flagged floors. There is an improved range of gin, wine and beer on offer alongside a menu of pub classics such as pie of the day, homemade burgers and hot and cold sandwiches. William Robinson, managing director of Robinsons’ pubs division, said: “We remain dedicated to our tenanted pub estate, supporting and developing our tenants’ businesses, and we will continue to look for further pub acquisitions. The Four Alls sits in an ideal location and, with this significant investment, we can see it performing very well.”

Six Degrees North to open fifth site, in Dundee: Scottish brewer and retailer Six Degrees North is to open its fifth site, in Dundee. The Stonehaven-founded beer company will launch Dynamo Dundee in Union Street next month based at the former Star & Garter pub, with much of the original, listed interior preserved. The bar will feature 24 taps, with beer supplied by brewers from across Scotland and further afield as well as Six Degrees North’s own range. Six Degrees North founder Robert Lindsay told The Courier: “Dundee has been on our radar for a long time. We have been waiting for the right opportunity to open a bar there, and now we’ve found it.” The company’s other sites are in Aberdeen, Edinburgh, Glasgow and Stonehaven.

Evuna to open fourth site: Evuna, the Manchester-based Spanish wine bar and restaurant, is to open a fourth site, this time in the centre of Altrincham. Evuna currently has branches in Deansgate, Manchester’s Northern Quarter and Knutsford. The new venue will be in a former Yorkshire Bank branch in Stamford New Road. Work is already under way ahead of an opening in February that will create 20 jobs. The restaurant will feature a 24-cover tapas bar, 55-cover dining room and a wine shop. Evuna founder Jane Dowler said: “It is hard to believe it has been 15 years since we opened our first site. Then the UK market considered the world of Spanish wine to consist of just rioja and sherry. Now, thankfully, it has so much more. We have been looking to open a site in Altrincham for a while. It has become a vibrant town centre thanks to the market and attracted a number of quality eateries, making it a real food and drink destination.”

North Wales-based concept in which diners cook meal on hot stones opens second site: A North Wales restaurant where diners cook their meal themselves on hot stones has opened its second site. John Jackson and wife Chloe launched their concept in Llandudno with the opening of Characters. Now they have opened Lava in Upper Gate Street, Conwy. The concept sees diners choose steak or fish and cook it to their own preference on a hot stone, while in-house chefs cook the vegetables. John Jackson told the Daily Post: “Cooking on hot volcanic stone is a sociable experience. It’s quite a European way to do things. We are full every weekend in Llandudno so hopefully it will go down well in Conwy.”

Douglas Jack raises price target for Ei Group shares ahead of preliminary results: Peel Hunt leisure analyst Douglas Jack has raised his price target for Ei Group shares to 120p ahead of the company’s results on Tuesday (20 November). He said: “We expect continued positive trading and deleveraging. The 20 November prelims should confirm like-for-like net income has stayed positive (for 21 consecutive quarters), helping net debt fall by circa £85m after £20m of share buybacks, by our estimate. The debt reduction investment case is intact. The next two catalysts should be disposal of the commercial lease estate and a return to Ebitda growth, of which at least one (mostly likely the former) should emerge in 2019E in our view. Pub Partnership’s like-for-like net income was up 1.3% after 47 weeks, having risen circa 2.0% in the second half. Consequently, full-year profit before tax should at least match consensus expectations. In the managed estate, like-for-like sales were up 6.6% during the same period, with the sites benefiting from a strong conversion programme. As at 6 September, the commercial lease estate had 376 properties, which generated 6.7% like-for-like net income growth in the first 47 weeks. These sites, all of which are on Retail Price Index-linked leases, are likely to be sold in 2019E, generating material debt reduction and equity value creation. We forecast £29m of Ebitda in 2019E from the commercial lease estate. If it is sold for circa £400m (13.8 times Ebitda), we believe Ei Group could use the proceeds to buy back £198m in unique A3 notes (6.54% coupon) and the 2022 corporate bond (£250m; 6.375%), potentially taking 1.0 times off net debt/Ebitda, creating almost 30p per share of equity value.”

Preston-based Inns & Leisure gets go-ahead for ‘high-end’ pub in Poulton-le-Fylde: Preston-based Inns & Leisure, founded by John and George Clarke, has been given the go-ahead to open a pub in Poulton-le-Fylde, Lancashire. The company has been granted permission by Wyre Council to convert a former NatWest branch in Market Place, creating 20 jobs. Inns & Leisure is proposing to open a “high-end” pub called Stocks and Shillings featuring sofas, a mezzanine floor and a tapas menu. The pub would open from 10am to 12.30am, Sunday to Thursday, and until 1.30am on Fridays and Saturdays, reports the Blackpool Gazette. Inns & Leisure’s other sites include the Old Town Hall real ale pub, which is across the road in Market Place.

Tim Hortons lines up Coleraine site as part of Northern Ireland expansion plans: Canadian cafe and bake shop Tim Hortons is lining up a drive-thru in Coleraine as part of its expansion plans in Northern Ireland. The brand made its debut in the country six months ago with a store in Fountain Street, Belfast, while a drive-thru in the east of the city, at Connswater Shopping Centre, is due to open next month. Now SK Group, which is leading the UK roll-out of Tim Hortons, has submitted plans to Causeway Coast and Glens Borough Council for a site in Coleraine. SK Group is proposing a £900,000 development at the former Isaac Agnew site in Riverside Retail Park next to McDonald’s, reports the Belfast Telegraph. Last month, Kevin Hydes, chief finance and commercial officer of the Tim Hortons franchise in the UK, said: “Tim Hortons is in the process of an expansion strategy that will see us identify a number of sites across Northern Ireland in the coming few years.”

Douglas Jack – M&B on the right track: Peel Hunt leisure analyst Douglas Jack has described Mitchells & Butlers (M&B) as “on the right track” ahead of its results next Thursday (22 November). He said: “We expect margins to have grown slightly in the second half, aided by 2% growth in like-for-like sales and cost mitigation. Although like-for-like sales have recently moved ahead of the sector, we believe this is a time for caution ahead of Brexit and higher increases in the National Living Wage – holding forecasts and continuing to pay down debt should do just fine. In 2018E, like-for-like sales rose 1.8% (first half 1.6%; second half 2.0%), having risen 2.2% during the eight weeks to 22 September, ahead of the sector. The drivers behind the company’s like-for-like sales include Ignite 2, which consists of 43 workstreams (improving product, service and digital marketing as well as reducing costs), investing in the estate (now on a six to seven-year cycle) and gradual improvements in the company’s market positioning. The first-half trend of drink outperforming food, driven by spend per head, should have repeated in the second half in our view. This scenario, partly reflecting greater premiumisation in the estate, should have also supported margins. Combined with no change in cost guidance (circa £60m inflation; £26m of mitigation), we expect Ebit margins to have risen in the second half. Given the pace of wage inflation another challenge will be to maintain the pace of cost mitigation in 2019E. M&B opened seven sites and completed 232 conversions/remodels in 2018E. The resultant minimal change in capex and ceasing the interim dividend should have resulted in debt falling by circa £35m, by our estimates, despite minimal disposal activity. From 2019E, we forecast deleveraging being driven by recovering Ebitda as well as falling net debt. The EV/Ebitda rating is 7.6 times despite more than 80% of the estate being freehold or long leasehold. We expect the key catalysts for the shares to be like-for-like sales (for which the right things are being done), reductions in the pension deficit (which might not exist if base rates rise to 1.5%) and deleveraging. The latter two are interconnected – the next tri-annual pension review, which must complete by the end of June 2020, could result in a material reduction in the £45m of extra annual pension cash contributions.”

Navitas appoints commercial director: Food safety business Navitas Group has appointed Dan Hawkie to the newly created position of commercial director as it looks to expand after securing £745,000 of equity funding. Hawkie brings more than 15 years of hospitality industry experience to the business, most recently as head of business development with operations management company Trail. In his new role heading up the Navitas sales team, Hawkie will oversee the recruitment of ten new sales staff as the company seeks to secure enterprise partnerships, enhance its reseller network and develop new channels – particularly for its digital food safety management system, Navitas Food Safety. Hawkie said: “I am excited to join Navitas at such a pivotal stage in its development and help maximise the fantastic market opportunity we have. It’s a business with an unrivalled set of products and services to support hospitality operators – from environmental health consultancy and training to compliance and digital food safety management – combined with a great reputation and pedigree.” Navitas chief executive Ben Gardner added: “Dan is a proven performer in the food and hospitality sector and will play a key role in helping us meet our ambitious growth targets. He joins us from another innovative company and, through Dan, we hope to be able to develop a closer relationship with Trail in the coming months.” Earlier this year, Navitas secured £745,000 of equity investment in its digital food safety management business from the Midlands Engine Investment Fund. Foresight Group made the investment that will allow Navitas to roll out its automated digital food safety technology to food and hospitality outlets across the UK and overseas. In addition to increasing headcount, Navitas plans to use the finance to bring its manufacturing in-house.

Nando’s to open Yeovil restaurant next month: Nando’s will open a restaurant in Yeovil, Somerset, next month. The company will open the venue in South Western Terrace between a Beefeater restaurant and Kaspa’s dessert parlour. The site has been empty since the area was redeveloped, when a Whitbread-owned Premier Inn was built above the row of shops, reports Somerset Live. Nando’s has applied to South Somerset District Council for a licence to sell alcohol daily from 11am to midnight.

End-of-the-pier cafe to relaunch in January: The cafe at the end of Deal Pier in Kent will reopen as Deal Pier Kitchen in January. Tim Biggs and Rebecca Hodson will launch the concept on Friday, 4 January having previously secured a 20-year lease for the property from Dover District Council through agents Fleurets. Deal Pier Kitchen, which will have a series of soft opening events during the festive period, will offer an all-day dining menu and feature a baby grand piano. Biggs said: “We are focused on providing fresh, organic, local and wholesome food, and a gourmet experience through our food and drink.” Hodson added: “Tim and I met through our work together at a renowned Kent wedding venue and quickly bonded with a combined passion for high-quality customer service and our love of all things food. Discussing our experiences and goals it became apparent we should work together and we have been searching for the right opportunity to get our teeth into and create something special. Deal Pier Kitchen is that opportunity.”

Belfast-based Taiwanese street food restaurant submits plans for second site: Belfast-based Taiwanese street food restaurant Bao Bun has submitted plans for its second site in the city. The concept launched in Botanic Avenue last year. Now an application has been lodged with the city council for a second site, in Lisburn Road. Bao Bun wants to convert a former hair salon into a restaurant with an apartment on its upper floors, reports the Belfast Telegraph.

Five Guys to open Chester site this month: Better burger brand Five Guys is to open a site in Chester this month. The company will open the venue at a former YO! Sushi site in Bridge Street on Monday, 19 November, reports Cheshire Live. The Murrell family founded Five Guys in Virginia in the US in 1986. It opened its first UK site in Covent Garden in 2013 and now has more than 80 restaurants across Britain. Last month, the company closed a site in the UK for the first time when it shut its restaurant at the Westwood Cross shopping centre in Thanet, Kent, having opened at the complex in 2016. Earlier this summer, Five Guys secured a £100m banking facility from Goldman Sachs to support its expansion plans in the UK and Europe.

Leicester Tigers submits £22m hotel plans: Leicester Tigers rugby club has formally submitted plans for a £22m hotel on land next to its Welford Road stadium. The Premiership club has been working on the proposals, which include 183 bedrooms and 35,520 square feet of reception, circulation, lounge and dining areas, with Leicester-based developer Pick Everard. If approved, the development would also feature a business centre, and retail and lobby areas. There would also be a flexible fanzone and public open space as well as a fitness suite, restaurant and fifth-floor sky bar. The original plans for the former Granby Halls site, which is currently used as a car park, included 165 hotel rooms. Leicester City Council agreed to sell the site in 2016. The club has yet to name an operator for the hotel.

Gin lab to open in former Prezzo site in Nottingham this month: A gin lab, restaurant and bar is to open at a former Prezzo site in Nottingham city centre this month. Juni will take over the premises in Low Pavement, which closed earlier this year. Juni will launch on Friday, 30 November, reports the West Bridgford Wire. The Low Pavement branch of Prezzo was one of 94 across the country to close as part of a company voluntary arrangement agreed earlier this year.

Holiday park operator gets multimillion-pound backing for luxury lodges: West Country holiday park operator John Fowler Holidays has received a multimillion-pound finance package from HSBC to build 180 luxury lodges between two sites. The company, which has 11 holiday parks across Devon, Cornwall and Somerset, has used the eight-figure funding package to upgrade St Ives Holiday Village in Cornwall and Sandy Meadows Holiday Park in Berrow, Somerset. St Ives Holiday Village has had 140 luxury holiday lodges with self-catering facilities and woodland views built, while the park layout has been redeveloped. Sandy Meadows, which is near the beach and close to Cheddar Gorge, is a new site for the business and has added 40 luxury lodges, each with balconies and hot tubs. John Fowler Holidays managing director Martyn Fowler told Insider Media: “We are delighted with the outcome of the redevelopments, which wouldn’t have been possible without HSBC’s backing.” James Jordan, HSBC UK’s head of corporate banking in the south west, added: “We have seen John Fowler Holidays go from strength to strength over the years, which makes supporting its ambitious expansion plans an easy decision.

Searcys returns to spiritual home with The Alnwick Garden deal: Searcys has been appointed official caterer for The Alnwick Garden and The Treehouse Restaurant, which are in the grounds of the ancestral home of the Duke of Northumberland in Alnwick. The deal marks a homecoming for Searcys – in 1837 the Duke and Duchess of Northumberland employed confectioner and pastry chef John Searcy, who went on to set up his own catering company, John Searcy & Sons, in 1847 helped by funding from the duke. The Treehouse is one of the largest wooden structures in the world and features a cafe, meeting room and restaurant. Searcys will launch a coffee shop, a revamped restaurant and cafe menus in the spring. Searcys managing director Matt Thomas said: “We are honoured to become official caterer to The Alnwick Garden. We will continue to support the values important to this landmark British location and Searcys’ spiritual home.” 

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