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Morning Briefing for pub, restaurant and food wervice operators

Thu 17th Jan 2019 - Propel Thursday News Briefing

Story of the Day:

Clive Watson – City Pub Group will be last venture but plenty of growth still ahead: City Pub Company executive chairman Clive Watson has told Propel this will be the last pub venture he’ll lead but he foresees many years’ growth ahead. Watson, who has been involved in the sector for about 30 years and previously sold Capital Pub Company to Greene King, said expansion would continue through measured growth. With City Pub Group on target to hit 75 sites by June 2021, Watson is eyeing phase two of expansion – and the 100-site mark – in the wake of its initial public offering. Speaking following the company’s full-year trading update, he said: “We had 33 pubs when we floated in November 2017 and will have 48 operating by autumn this year – so that’s good growth. We set the target of 75 sites but it doesn’t mean that’s the finishing line. Once we get there we can start looking at that 100-site mark. This will be the last pub venture I lead so it has got to be the best it can be. We’ve got a business model that works and can go on for many years. We are constantly getting offers for sites. We’re being very selective with acquisitions but we’ve got the headroom and financial firepower to manage that growth.” Watson, who increased his shareholding in City Pub Company to 4.37% after buying 40,000 more shares on Wednesday (16 January), said the company was eyeing its first move into the experiential sector at the former JD Wetherspoon-owned Tivoli pub, which will reopen in Cambridge this year. However, Watson said there would be no mass roll-out of the format. He said: “It’s a big site outside the city centre and we think we need something beyond a normal pub to draw people in, particularly students. We’re looking at a few things such as crazy golf as we think it will work well but it’s still at an early stage.” Watson said the company would continue to look to add rooms to the estate as they provide a “different dynamic to the business”. The company expects to have 100 bedrooms by the autumn and Watson hopes about 10% of group revenue will come from accommodation – or “rooms above the inn” as he prefers to call them – in the next three to four years. The company saw like-for-like sales increase 1.6% in the year, with total turnover up 22% to £45.6m. Like-for-likes over the festive period were up 7%. Watson said: “I am particularly pleased with the sales trend we’ve seen towards the end of the year, which has set us up nicely for the new financial year.” Watson also said he “slept the best in almost two and a half years” following the government’s defeat over its Brexit deal. He said: “For the first time since 23 June 2016 there is a realistic chance we are going to remain in the EU. If that happens the value of the pound will go up and the cost of food and drink will go down, which will be a big boost to the economy. People voted to leave because they thought they were going to get a better deal. At the moment no-one has come up with one and what we have on the table is a good one. I think we are rowing back to “remain”, although there’s still a chance of us crashing out so we’re not out of the woods yet.”

Industry News:

Propel Multi Club Conference open for bookings, two free places for operators, James Hacon to present: The first Propel Multi Club Conference of 2019 is open for bookings. The full-day event takes place on Thursday, 7 March at the Millennium Gloucester hotel in London. James Hacon, British Takeaway Award judge and founder of Think Hospitality, will give an overview of outstanding takeaway propositions and how performance of his investment roll-out takeaway brand, I am Doner, has been transformed through systems and marketing. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places by emailing Anne Steele at

Christie & Co – British pubs have ‘turned the corner’, cause for optimism among independent and smaller restaurant operators: Last year may have been the turning point for British pubs, according to the latest report by agents Christie & Co, while independent and smaller restaurant operators can be “cautiously optimistic” in 2019 as “innovation, new concepts and technology come to the fore”. In its Business Outlook 2019 report, Christie & Co said more people were employed in the sector than ever, increasing the value of the UK pub to the national economy. The number of UK pubs has declined by about 28% since 1989 but survivors have not only absorbed trade from the pubs that closed but generated new business. The report said those pubs and bars were leading the sector and attracting private equity companies and a wider range of operators, as reflected in Christie & Co’s transactional activity in 2018. Average prices increased 2.7% on the previous year and the report predicted 2019 would generate “modest opportunity for value growth, driven by trading performance”. The report highlighted opportunities for operators to differentiate themselves and navigate obstacles such as introducing lettings rooms, mitigating costs by buying British goods and embracing emerging trends. Rising operational costs continue to challenge the sector, with overheads now averaging 52.5% of net revenue, up 3% in two years. The report identified wage inflation and property costs as key pressures and predicts further margin erosion during the year with limited opportunity to pass costs on to customers. Neil Morgan, managing director of pubs and restaurants at Christie & Co, said: “As a result of the decline in pub numbers, improved trading performance and increased average prices, interest is expected to remain strong and investors can look forward to increased opportunity in the pub sector. Freehold ownership remains a long-term aspiration for many operators and we can look forward to strong performance across the sector in 2019, especially within the private pub market.” The report also said independent and smaller restaurant operators could be “cautiously optimistic” in 2019 as “innovation, new concepts and technology come to the fore, strengthening the sector as a whole”. However, the report suggested further high-street casualties were “inevitable”, with Christie & Co expecting at least “three larger corporate operators” to resort to company voluntary arrangements in the first half of 2019. Movement in average prices in the restaurant sector were down 1.3% on the previous year. Christie & Co head of restaurants Simon Chaplin said: “The troubles being felt by many of the larger brands is not just down to cost pressures but reflects the general change in consumer tastes. Many are looking for an experience, which can be an interesting menu, venue or added entertainment. Independent operators are more able to fine-tune their offer to fit changing habits. Landlords are also seeing this and looking to encourage such operators by offering ever-improving lease terms.”

Sharp rise forecast in escape rooms fuelled by ‘intellectual property-approved’ experiences: Experts have predicted a sharp rise in the popularity of escape rooms in 2019, fuelled by the emerging trend of “intellectual property-approved” immersive experiences. Tom Parslow, founder of escape room SaaS software company Buzzshot, said the officially supported Sherlock: The Game Is Now and Doctor Who escape rooms – both launching in the UK in early 2019 – would bring brand-approved immersive experiences further into the mainstream, opening up the industry for wider investment and providing fertile ground for entrepreneurs. Parslow said: “The few intellectual property-approved escape rooms in North America (notably a Mission Impossible room) haven’t lived up to the brand promise, a likely reason why media companies have been slow to connect with the opportunity. I’m confident that won’t be the case with Sherlock: The Game Is Now – it has lifted the global escape room bar to another level.” Officially launching at the end of January, the 100-minute game sees teams of four to six people play detective in a new case that features original content from the show. Industry commentator Ken Ferguson, who founded The Logic Escapes Me website and who has documented the evolution of European escape rooms since 2013, is equally bullish about opportunities across the industry. He said: “Sherlock: The Game Is Now is the most eagerly awaited game in the history of escape rooms. With the inevitable success of this themed immersive experience, we’re likely to see a rapid increase in the number of officially licensed rooms of well-known entertainment brands opening worldwide.”

Allsop reports property supply tightens as investors seek alternative high-street investments: Auction house Allsop has reported property supply tightened in 2018 with investors seeking investments that might prove resilient to uncertainties surrounding high street retailing. Allsop said A-grade assets saw average yields remain steady at 6%, underlying the sector’s long-term appeal. Demand for £1m-plus lot sizes was at its greatest since 2014 and increased 5% compared with 2017. Sales volumes in London and the south east recovered during 2018, returning to the four-year average of 48%. Allsop’s auctions in 2018 raised a total of £518m, down from £623m the previous year. The average lot size fell to £601,000 from £665,000. Allsop stated: “2018 has proved a challenging year with fewer lots offered and total sales easing by 17%, most of this adjustment being seen over the second half of the year. Investors sought areas of the market that might prove resilient to the current uncertainties in high-street retailing. Premises used for convenience stores, medical and dental practices, motor trade, funeral parlours and care homes were all sought after. Clearly investors are still prepared to pay for good-quality retail investments while, for properties let on shorter leases in secondary/tertiary locations, demand and yields continue to weaken, reflecting the increasing risk of owning such assets. Supply of property across all sectors has tightened, as predicted, as continued political uncertainty dogs the market. Demand, though, has remained strong.” Allsop said supply would continue to tighten in 2019, while properties in more secondary and tertiary locations or further from London were likely to continue to weaken where rental values were under increasing pressure. However, with the continuing period of historically low interest rates Allsop said real estate continued to be an “attractive investment” while demand continued “unabated for correctly priced stock”.

MPs unite to demand pub business rates reform: There was a rare agreement across the political divide in Parliament on Wednesday (16 January), when MPs from across the spectrum called for meaningful reform of business rates during a Parliamentary debate on the future of Britain’s pubs. The debate, which was secured by St Albans MP Anne Main, saw MPs share examples of UK pubs that have been lost or are under threat because of business rates. Main said 30 of the 50 pubs in St Albans had seen a rates rise that had left them needing to sell “about 180,000 more pints per year to cover those increases”. She told fellow MPs: “CAMRA, which is based in my constituency, recently provided a comprehensive submission to the chancellor ahead of the Budget in September. It has called for a full review of the business rates system with regard to pubs. It maintains the current system is unfit for purpose and a review is needed to tackle the unfair penalisation of property-based businesses such as pubs, especially given the vastly reduced levels of taxation paid by online retailers.” CAMRA chief executive Tom Stainer said: “It is great to see MPs from across the political divide come together to recognise pubs are a force for good. It’s clear MPs want fundamental reform of our outdated and unfair business rates system. I’d urge the government to listen carefully to unified calls from backbenchers and the pub industry to safeguard the long-term future of the Great British Pub.”

Four Elms in Cardiff scoops inaugural Parliamentary Pub of the Year award: The Four Elms in Cardiff has won the inaugural Parliamentary Pub of the Year award at a ceremony in the House of Commons. The pub was picked from 14 regional winners and was highlighted as an “exceptional community pub that represents the important role pubs play within their locality”. The competition was launched last summer by Toby Perkins MP, chairman of the All Party Parliamentary Pub Group, and attracted more than 100 entries. Fresh from the Brexit deal vote, MPs gathered to make a live vote for the winning pub. Perkins said: “The quality of the entries was outstanding and we have a worthy winner in The Four Elms – a business that had the edge in a strong field.” British Beer and Pub Association chief executive Brigid Simmonds added: “The quality of beer and food on offer at all pubs that entered was second to none.”

Company News:

Charles Wells reports December like-for-likes up 4% in UK and 7.5% in France: Bedford-based brewer and retailer Charles Wells saw UK like-for-likes increase 4% in December, with its French estate up 7.5% during the month. Chief executive Justin Phillimore told Propel the company was confident of delivering good growth again in the new financial year having this week reported a turnover and profit boost for the year ending 30 September 2018. Turnover on its continuing operations increased 8.6% to £43m, with profit before tax up 226.9% to £4.6m. Phillimore said the company aimed to open about six sites a year for its six-strong Pizza, Pots and Pints concept in the UK and three or four annually in France, where it is about to open its 14th pub. While Phillimore said the company was looking to grow Pizza, Pots and Pints and its French portfolio to 20 sites each by 2020, the current pipeline suggested those targets would be exceeded. Phillimore added it would begin converting three of the four sites bought from the Orange Tree Group later this year. The venues in Nottingham, Loughborough and Leicester are being run under their current format while Charles Wells “gets to understand the trading environment” given it is a new market for the company. Phillimore said Nottingham would be the first conversion. The remaining site – Kelso in Loughborough – will remain a late-night bar. Phillimore added: “The past year has been about making sure we have the systems and teams in place for expansion and we feel we can now add pubs to the estate at a reasonable rate, if we can find them – that’s the challenge. If we can do further small group acquisitions, we will.”

Mayfair restaurant Wild Honey goes on market: Mayfair restaurant Wild Honey has been put up for sale, Propel has learned. The site in St George Street is being advertised on Restaurant Property’s website. Premium offers are being invited for the 2,267 square foot space, which has a rent of £103,000 per annum. Chef Anthony Demetre and Will Smith launched Wild Honey in October 2007 as a sister restaurant to Arbutus in Soho. It won a Michelin star within a year of opening but lost it in 2016. In the same year, Demetre and Smith sold Arbutus and Smith moved to Scotland to pursue private ventures. Demetre now runs Wild Honey as an independent solo business. Its menu showcases classic French techniques matched with British seasonal ingredients.

Pure reports vegetarian and vegan sales rise more than 30%: Pure, the healthy food-to-go concept, has reported sales of its vegan and vegetarian range increased 30% this month. The announcement comes as Pure released research showing almost three-fifths (57%) of Londoners have been eating more vegetarian and vegan food since the start of the year. Slightly more women (58%) said they had been eating more vegetarian food in January compared with men (56%), while almost two-thirds (64%) of under-35s said it was their aim for January. Pure co-founder Edward Bentley said: “Sales of our most popular vegetarian and vegan soups, pastas and hot boxes have grown by more than 30% in January. It is incredible to see so many people embracing a plant-based lifestyle.” Founded in 2009 by Bentley and Spencer Craig, Pure operates 17 shops in London. Whitbread acquired a 51% stake in the company in 2016 and it has “several” more openings planned before the end of 2019, including at the Broadway Centre in Hammersmith.

Korean restaurant owner to launch lunch box concept for third London site: Lee Wooyung, who operates CheeMC in Southwark and GoGo Pocha in Waterloo, is to launch a new concept for his third Korean restaurant in London. Unimini will open in Eastcheap specialising in Korean and Japanese lunch boxes. Customers will be able to choose rice or noodles and build their box using ingredients such as kimchi, meat, vegetables and sashimi, with a “huge variety of possible combinations”. Wooyung said: “This concept will extend our business to meet the growing demand for good takeaway options in central London. Hungry tourists and workers will be able to eat quickly and for excellent value while being able to construct their bento boxes in a way that is completely tailored to them.” Tom Crosthwaite, of CDG Leisure, who acted on behalf of the previous tenant, said: “Unimini will fit well in this area of the City, which is developing rapidly in terms of retail and leisure. With the operator’s expertise in Korean cuisine, the restaurant is guaranteed to be a welcome addition to the lunchtime offer.”

Bonnie Gull managing director to open fishmonger, deli and champagne bar in Chelsea: Alex Hunter, managing director of British seaside restaurant concept Bonnie Gull, is to open a venue in Chelsea that will operate as a fishmonger and delicatessen by day and turn into a seafood and champagne bar at night. The Sea, The Sea will launch in Pavilion Road in April offering seafood sourced from mainly British fish markets. The venue, which is named after the Iris Murdoch novel, will also sell stocks, sauces, marinades, pies, ceviche, and pickled and smoked seafood from its deli. The Sea, The Sea will also host masterclasses on seafood-related activities such as oyster shucking, curing and fish filleting. Appearances by guest chefs such as Ikoyi’s Jeremy Chan and Londrino’s Leo Carreira have also been scheduled, Hot Dinners reports. In the evening, the oyster bar will convert into a champagne bar offering small plates, bowls and shellfish platters. Bonnie Gull operates seafood shacks in Soho and Fitzrovia, while Hunter launched grab-and-go concept Salt ‘n’ Sauce in Oxford in March 2018. 

Adventure Leisure eyes Deltic Group site in Basildon for golf brand: Adventure Leisure is eyeing a Deltic Group site in Basildon, Essex, for its adventure golf brand Mr Mulligan’s Lost World Golf. Adventure Leisure has submitted plans to Basildon Council to convert Chicago’s at Festival Leisure Park. The plan includes two nine-hole crazy golf courses, a bar, restaurant and mezzanine. Deltic Group planned to close Chicago’s in December but changed its mind to “take advantage of the Christmas and New Year party season”. The company told Propel the future of Chicago’s had still to be confirmed and insisted it was business as usual for now. Adventure Leisure operates eight Mr Mulligan’s Lost World Golf sites, including Cheltenham and Milton Keynes.

Acai Berry opens fourth London site, in Chelsea: Brazilian superfood brand Acai Berry has opened its fourth London site. Founders Marcus Carmo and Renato Damiano have launched the superfood bar in King’s Road, Chelsea, focusing on acai – a staple in Brazilian and US daily diets – in bowls and as snacks or smoothies. It also offers protein balls, brownies and organic coffee. The venue is the brand’s largest yet, while menu additions include the Tropical Funky, served for two people inside a fresh pineapple bowl and filled with acai, fresh strawberries, kiwi fruit and organic coconut flakes; and Kale Kick (acai, organic coconut water, fresh kale and banana). Carmo said: “We are glad our customers have embraced our brand. Renato and I have enjoyed this incredibly delicious superfood all our lives in Brazil and we wanted to share it with the UK. It is a lifestyle thing. If you have a desire to be healthy and fit and the best version of yourself, you’ll love acai.” The brand began as a stall in Brick Lane and has grown to permanent sites in Argyll Street, Carnaby Street and Oxford Circus, while it also operates a pop-up bar in Ibiza.

SSP to open six restaurants at Phoenix airport: SSP America, a division of SSP Group, the UK-based transport hub foodservice specialist, is to open six restaurants during January in Terminal 3 of Phoenix Sky Harbor International airport (PHX). The restaurants will be a mix of local and national brands as part of the terminal’s $590m modernisation programme. The new restaurants are Original ChopShop (protein bowls, salads, sandwiches, superfruit bowls and protein shakes); Überrito Fresh Mex (burritos, bowls, salads and nachos); Tarbell’s Tavern (chef-driven plates in a fast casual environment); Christopher’s (gourmand plates); The Habit Burger Grill (chargrilled burgers and sandwiches); and Peet’s (craft coffee). SSP America vice-president of business development Scott Welding said: “Sense of place, taste of place and commitment to the community combined with optimum choice for the passenger and exceptional customer service are the hallmarks of SSP America’s new contract with PHX.” SSP America began operations at the airport’s Terminal 4 in 2013 with a ten-year contract that includes 26 restaurants.

Cutter & Squidge to start expansion with City of London launch: Cutter & Squidge, the sister-owned Soho bakery, is to start expansion by opening a second site, in the City of London. The boutique will open at The Royal Exchange in Threadneedle Street on Monday, 11 February offering the brand’s freshly baked cakes, “biskies”, brownies, macarons, cake truffles, cookies and afternoon tea. All items will be made from natural ingredients with a “less is best” approach to fat and sugar. The drinks list will focus on coffee and the brand’s signature rainbow tea lattes. Cutter & Squidge said it already catered to a number of City-based customers through its online and delivery services, while the new site would allow the company to extend its click-and-collect service. Cutter & Squidge co-owner Annabel Lui said: “I started my career working in the City but always dreamt of following my true childhood passion of owning a bakery with my sister, Emily. We made that happen and now, on the fifth anniversary of our first market stall, to return to the City as a baker not a banker feels like a huge milestone.”

Kentish Town cocktail bar launches in Camden for number two: William Borrell, who operates cocktail bar Ladies and Gentlemen (L&G) from former public toilets in Kentish Town, north west London, has started expansion of the brand by opening a sister site in Camden. Borrell, who is also founder of vodka brand Vestal, has opened the bar in former public toilets close to Camden Road station. In an Instagram post, Borrell quipped: “Yes, it’s our number two.” Award-winning bartender Josh Powell will be at the helm of 45-cover L&G Camden, which will feature a mix of high-top and table seating, Hot Dinners reports.

BrewDog to open first bar of 2019, in Carlisle next week: Scottish brewer and retailer BrewDog will open its first bar of 2019, in Carlisle next week. The company will open the venue on Friday, 25 January in Botchergate – its first site in Cumbria. It will offer 22 taps of craft beer alongside wine, spirits and coffee, roasted at the company’s Ellon headquarters, alongside BrewDog’s menu of pizza, burgers and wings. BrewDog, which has also secured a long-sought venue in Dalston, east London, opened 34 sites in 2018, taking it to 81 worldwide. Like-for-like sales in its UK bars grew 4.1% during the year, with international like-for-likes increasing 5.4%.

Ascot Brewing Company passes halfway mark in £250,000 crowdfunding campaign: Ascot Brewing Company has passed the halfway mark in its £250,000 fund-raise on crowdfunding platform Crowdcube to move to larger premises and buy equipment to meet demand. The brewer, which was acquired by local businessmen Chris Davies and Mike Neame last year and is based in Camberley, Surrey, raised more than £270,000 on Crowdcube at the start of last year to ramp up brewing capacity. It has returned for a second funding round, offering 14.29% equity in return for the £250,000 investment, giving the company a pre-money valuation of £1.5m. So far, 169 investors have pledged £126,760 with 15 days of the campaign remaining. The pitch states: “To accelerate the next phase of our growth we are raising further capital to move premises and equip the brewery appropriately. We aim to increase brewing capacity and our sales team, meeting demand for kegs and cans in the UK and for export; increase revenue by maximising value from our brewery, web and brewery shop, and micro-pub; roll out contactless ‘smart pump clips’ to pubs that will instantly answer consumer questions about a beer’s style, hops and process; and test-market Ascot House Amarillo handcrafted gin using our knowledge of hops, flavours and aromas.”

Former Domino’s Pizza distribution warehouse in Cumbria on market for £1.5m: A former Domino’s Pizza distribution warehouse in Cumbria has gone on the market with a guide price of £1.5m. Located on a 1.96 acre site at Gilwilly Industrial Estate in Penrith, the 28,632 square foot facility comprises nine dock-level loading doors, and parking for 30 cars and 14 heavy goods vehicles. It was built in the early 2000s and features 17,718 square feet of warehouse space, 7,254 square feet of production space and two storeys of office space. The site has been brought to market through agent Colliers International following the relocation of Domino’s Pizza distribution and production operations to a 117,000 square foot site in Warrington, reports Insider Media.

Gail’s Bakery upgrades EPOS: Gail’s Bakery, which is backed by sector investor Luke Johnson, has upgraded the EPOS and stock control technology across its 47-strong estate. Installation of Access Hospitality’s EPOS and Stocklink programmes has been boosted by bespoke bakery ordering processes and staff training as well as hybrid use of hardware to minimise costs. A biometric sign-in has also been developed to connect to third-party systems. In addition to faster transaction times, Gail’s head office can take live data to create business intelligence reports. Further work is under way to integrate e-commerce applications, including reducing waste within the stocking process, as the next steps in the business’ expansion.

St Peter’s Brewery appoints former Adnams national account manager as head of sales: Suffolk-based St Peter’s Brewery has appointed former Adnams national account manager Rob Breakwell as head of sales as it looks to significantly grow on-trade sales. Breakwell’s initial objective is to grow the brewery’s cask distribution nationally and evolve its new draught distribution offering. Breakwell was at Suffolk brewer and pub operator Adnams for almost 13 years before taking the director of sales role at London-based honey craft beer company Hiver. St Peter’s Brewery managing director John Hadingham said: “This year is going to be one of big changes for St Peter’s. Rob is hugely experienced and respected within the industry. He is incredibly well known and well connected. We have many opportunities ahead, particularly across the on-trade, for which Rob’s experience will be invaluable.” Breakwell added: “I am thrilled to join St Peter’s at such an exciting time.”

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