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Morning Briefing for pub, restaurant and food wervice operators

Mon 4th Feb 2019 - Propel Monday News Briefing

Story of the Day:

Google continues to be customers’ go-to review platform: Google continues to outstrip Facebook and TripAdvisor for its percentage share of online reviews, according to new statistics from Feed It Back’s monthly social review tracker. The statistics, taken from thousands of social reviews across the restaurant, quick service restaurant and pub industries, revealed Google accounted for 64% of reviews in January, up slightly from 63% in December. TripAdvisor’s percentage of reviews remained stable at 26% from December to January. The percentage of reviews left on Facebook has fallen slightly from 12% in December to 10% in January. TripAdvisor saw an increase in its average review rating, which rose from 3.9 in December to 4.0 in January. Conversely, Facebook’s average review score fell from 4.4 in December to 4.3 in January. During the same period, Google’s average score remained flat at 4.1. Facebook’s score has been significantly impacted by its polarised methodology change to a yes/no recommendation, which has seen negative reviews rise from 15% in December to 17% in January. TripAdvisor’s increase in positive rating has been driven by an increase in reviews scoring 3.0 and 4.0 out 5.0. The average customer review in the pub and bar sector remained stable at 4.3 in January. However, the average rating of restaurants fell to 4.1, driven by an increase in negative reviews left across Facebook, where the average rating dropped from 4.3 in December to 4.1 in January. Across both sectors, speed of service and wait time still dominate the reasoning behind negative reviews. Price has been a prominent driver for positive reviews in January, shifting from terms such as “friendly staff”, “atmosphere” and “experience” in December. Feed It Back chief executive Carlo Platia said: “January is typically a difficult month for the industry, with a perfect storm of people going out less frequently after their Christmas festivities combined with health-driven new year’s resolutions and initiatives such as Dry January. However, in recent years the industry has fought back and proactively driven footfall, with the figures suggesting discount offers and deals have delivered positive reviews this January. Google has kick-started 2019 where it left off last year, steadily growing its share of reviews across the market. Interestingly, Facebook’s move to a polarised methodology in August, which has now all but rolled out across the entire platform, has had an adverse impact on reviews across the restaurant sector, which has seen an increase in negative reviews.” This data is part of a regular report Feed It Back runs across social reviews and just scratches the surface of their ability to drive revisits. To understand more about Feed It Back and to sign up for a monthly copy of this report, email

Industry News:

Propel Multi Club Conference open for bookings, two free places for operators, Tim Martin talks to Paul Charity: 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. JD Wetherspoon founder Tim Martin will talk to Propel managing director Paul Charity and reveal the top ten books that have shaped his business philosophy. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places by emailing Anne Steele at

Trade bodies commend business rates inquiry launch: Sector trade bodies have commended the launch of an inquiry into the impact of business rates. The Treasury Committee has begun an inquiry scrutinising how business rates policy has changed, including business rates retention, alternatives to property-based taxes such as the proposed digital services tax, and how changes to rates could have an impact on businesses. UKHospitality chief executive Kate Nicholls said: “A thorough examination of the effects of business rates has been a long time coming. The system is now completely out of date, doesn’t reflect the realities of business in the 21st century and disproportionately cripples hospitality. This is a positive sign business rates are still on parliament’s agenda despite the Brexit distraction, and rightly so. Only a complete overhaul of the system – as promised in the Conservative manifesto – will ensure high-street businesses, and hospitality employers in particular, will finally be taxed fairly.” British Institute of Innkeeping chief executive Mike Clist added: “Many of our members’ venues face disproportionately high costs for running their pubs in high-street locations, leaving their businesses more vulnerable than in other sectors.” Meanwhile, UKHospitality has warned the government against introducing “unnecessary” airside licensing legislation. Responding to the government consultation, Nicholls said: “The vast majority of people enjoy a drink at the airport responsibly and are well behaved. To introduce the Licensing Act airside to tackle a tiny minority of troublemakers is massively disproportionate.”

Sector sees like-for-likes fall 0.9% in January despite big gains on New Year’s Day: Like-for-like sales were down 0.9% in January compared with last year despite big gains on New Year’s Day, according to S4Labour, the online labour-scheduling management system from Catton Hospitality. Analysis of more than 100 organisations that use S4Labour software showed a strong Christmas period was followed by a fall, with wet-led venues bearing the brunt as drinks sales decreased 2.8% accompanied by a 1.8% drop in food sales. Food-focused businesses fared better, where analysis shows year-on-year sales grew 1.0%, made up predominantly by a 1.3% uplift in food sales and aided by a 0.6% increase in drinks sales. There were real gains on New Year’s Day this year, where operators saw an overall 5.7% increase in sales compared with the same day in 2018. The figure was boosted by particularly strong food sales in drink and food-focused businesses alike.

Operators encouraged to participate in Beer Day Britain: Operators are being encouraged to get involved in Beer Day Britain 2019, the UK’s annual national beer day on Saturday, 15 June. The event, in its fifth year, encourages people to visit a pub to celebrate Britain’s national drink by raising a glass at 7pm and using the hashtag #CheersToBeer on social media. Last year there were 8.25 million social media engagements. Pubs are being encouraged to host special events such as beer and food pairings and mini-beer festivals. The event was founded by beer sommelier and writer Jane Peyton. She said: “Join us for a national party so we can make Beer Day Britain the best beer fiesta in the world!” For more information, click here

Only A Pavement Away begins ex-offender activity programme with operators: New charity Only A Pavement Away (OAPA) has started its programme of activity with operators to help ex-offenders find employment in the hospitality industry after leaving prison. OAPA plans to hold a series of recruitment fairs in prisons across the country to explain how it can help job-seekers find employment once they have served their time. The first one took place last week at HMP Thameside and was supported by London pub retailer Young’s. A further five are planned in conjunction with brewer and retailer Greene King. In addition, OAPA is also organising a series of pre-employment seminars, also in conjunction with Greene King, to explain the available roles and opportunities within the hospitality industry. The first one will take place at the end of February. OAPA founder and chief executive Greg Mangham said: “We spoke to numerous inmates near completion of their sentence who are concerned about how they would reintegrate into society. We explained how we can help to find them work in the hospitality industry. In many cases ex-offenders will already have a catering qualification covering basic hygiene and health and safety, so they will be in a good position to apply for one of the positions advertised on our job site, which is operated by our partner company Harri.” OAPA’s ex-offender programme operates in partnership with Novus, which delivers education, training and employment opportunities to adults and young people in UK prisons; Sodexo Justice Services, which aims to reduce reoffending and improve the quality of life of offenders; and Cleensheet, a registered charity that helps people into sustainable employment after they leave prison. The Ministry of Justice is also supportive of the programme. Mangham established OAPA in 2018 to help people living on the streets, ex-offenders and ex-service personnel find employment in the hospitality industry.

London Craft Beer Festival to return for sixth year: The London Craft Beer Festival will return for its sixth year, at Tobacco Dock, east London, in August. The festival, founded by Dan Sylvester and Greg Wells, will take place from 9 to 11 August and feature more than 80 brewers from around the globe. Sylvester said: “The London Craft Beer Festival is a unique opportunity to experience the modern beer movement in one place, with great beer, music and food. We’re hard at working finishing our best line-up to date and we can’t wait to announce who will join us this August."

Company News:

London Cocktail Club reports festive like-for-likes up 7.8% to hit £1m revenue milestone for first time: London Cocktail Club, the wet-led operator founded by John James Goodman and James Hopkins, with Dragons’ Den star Sarah Willingham and chef restaurateur Raymond Blanc on the board, has said trading during the Christmas period broke all its records with four consecutive weeks of growth reaching £1m of revenue in December for the first time. Like-for-like sales during December were up 7.8%, with like-for-like Ebitda for the same period up 25%. Total revenue for the second half of calendar 2018 was up 15.3%, with site Ebitda up 14.5% and company Ebitda increasing 17.9% driven by consistent sales, new openings and cost control at head office. London Cocktail Club said its three latest venues – in Bristol and in London’s Liverpool Street and Old Street – all traded significantly ahead of expectations, while the board said it was also delighted to announce the recent signing of what could become its flagship site, in Clapham. Improvement in Ebitda performance is expected to continue in calendar 2019 as the new sites start to mature along with the opening of the Clapham site. Last month, The Sunday Times reported the 13-strong company had been “placed on the market”. Dow Schofield Watts (London office) is retained corporate finance advisor to London Cocktail Club.

Byron boosted by £10m investment: Investors behind better burger brand Byron have injected £10m into the business as it battles to improve trading following a bruising year in which it had to close 19 sites. The funding will allow Byron to refurbish restaurants in an attempt to lure diners back. The fund-raise comes less than 12 months after Byron secured £34.5m from private equity firm Three Hills, an existing backer that became the firm’s controlling shareholder as part of the company voluntary agreement approved in January 2018. Byron chief financial officer Russell Hoare told The Sunday Times: “This is a clear sign the Byron chain is now on the right track. We are making good progress across the board.” In December, Simon Cope stepped down as the company’s chief executive, with chairman Mauro Moretti becoming an active investor in the business to support Hoare, managing director Steve de Polo and property director Adrian Saunders. Byron made a pre-tax loss of £55m on sales of £88m for the year to June 2017.

BrewDog valued at £1.1bn following latest Asset Match trading day: Scottish brewer and retailer BrewDog has had its valuation set at £1.1bn after completing its latest auction on Asset Match, the platform that provides liquidity in private company shares. In total, 138,364 shares changed hands at £15 per share giving almost £2.1m in total. Asset Match received 800-plus instructions with about 300 leading to shares being bought or sold. It is the third trading day BrewDog has completed on Asset Match having been admitted to the platform on 5 November 2014.

Patisserie Valerie administrator ‘blocks’ rescue attempt by former Druckers boss as bidding moves to second round: Patisserie Valerie administrator KPMG has “blocked” a rescue attempt by former Druckers boss David Scott. Law firm Gateley, which is assisting KPMG, has written to Scott to tell him he won’t be granted access to private information prepared for interested parties, the Sunday Telegraph reports. Scott, who sold Druckers to Patisserie Valerie in 2007, hoped to save “at least half” of the struggling bakery chain’s remaining 122 stores. Bidding for Patisserie Valerie moves into a second round this week after the deadline passed on Friday (1 February) for indicative offers. KPMG said there had been “significant” expressions of interest and it would select bidders to be taken forward, with those parties attending management presentations in London and Birmingham this week. Meanwhile, staff made redundant by Patisserie Valerie have told the BBC they haven’t been paid for their final month’s work. Up to 900 staff lost their jobs in January when KPMG closed 70 sites. They must now apply to the government for redundancy and statutory notice pay, which may take up to six weeks. A KPMG spokesman said: “We recognise this is a very difficult time for those members of staff who have lost their jobs. We are providing them with support, including assisting with claims to the Redundancy Payments Service.”

Oakman Inns adds Buckingham pub to portfolio: Oakman Inns and Restaurants has acquired the Number Thirteen pub in Buckingham for an undisclosed sum. The company has bought the property from Abbarco in a deal brokered by agents Davis Coffer Lyons. Number Thirteen is a detached, three-storey pub in Buckingham’s high street. The property also features four self-contained flats, customer parking and outdoor seating. Oakman Inns, led by Peter Borg-Neal, currently has 25 sites in operation across the Home Counties up to Warwickshire with others in the pipeline. The company’s most recent opening was The Royal Foresters in Ascot in August. Keith Goodwin, associate director at Davis Coffer Lyons, said: “Number Thirteen has been owned and operated by our client for about 11 years, trading as a late-night pub and bar. While the property is already well known, Oakman Inns plans to completely refurbish and extend this grade II-listed property. Oakman Inns has an outstanding reputation as an operator of great quality as well as one that is community conscious, so we are certain Peter and his team will make a tremendous success of this venture.” Meanwhile, Oakman Inns has been given the go-ahead to transform a former post office in Welwyn Garden City, Hertfordshire, into a bar and restaurant. The company has been granted permission by Welwyn Hatfield Council to convert a three-storey property in Howardsgate, which has been empty since 2016. Oakman Inns property director Malcolm Schooling told the council’s development management committee: “It is a genuine aim we develop the property in a way that’s both sensitive and responsive to its context.” The application was approved by 11 votes to two, reports the Welwyn Hatfield Times. 

The Cat’s Pyjamas opens takeaway following 2018 rescue: Yorkshire-based restaurant chain The Cat’s Pyjamas, which was rescued from administration in a pre-pack deal last year, has opened a takeaway in Leeds. The Indian street food and craft beer brand has opened a venue in New Briggate that serves Indian-inspired breakfasts, wraps and takeaway curries. The Cat’s Pyjamas was acquired from administration in a pre-pack deal in October, with owner Alison White vowing to fight on to save the jobs of all her workers and pay outstanding debts to other local businesses. A financial rescue package from members of White’s family enabled the chain to continue trading, with all 100 jobs saved. White told Insider Media: “Morally, I need to pay everybody back. I’ve worked in hospitality for nearly 20 years and building restaurants since 2014. Yorkshire is my home and I want to put this right. I went back to work five days after giving birth and I’m working every single day of every single week. My fiancé Paul, who owns I am Döner, looked after Elsie for the first three months of her life so I could continue working to keep the restaurant doors open. As a result, the Eastgate, Headingley, Harrogate and York restaurants are still very much open for business. We had to take the decision to close the Sheffield site simply due to location. Now we’re opening the takeaway closer to home which, as the manager, I can give my full attention.”

Franco Manca eyes Wales debut: Pizza brand Franco Manca, which is owned by Fulham Shore, is set to open its first restaurant in Wales. The company plans to launch a pizzeria in Church Street in Cardiff city centre. A licensing application has been submitted to Cardiff Council to transform a unit previously occupied by vegetarian restaurant Atma, Wales Online reports. In December, Fulham Shore reported revenues of £33m (2017: £27.5m) for the six months ended 23 September. Chairman David Page said the company plans to increase openings for Franco Manca and its The Real Greek brand. Page said: “The board remains confident Fulham Shore, underpinned by its unique brands and clear growth strategy, remains well positioned for continued growth and a great future.” Franco Manca has about 40 restaurants in the UK, the majority in London. 

Liverpool-based Love Lane Brewing hits target in £900,000 crowdfunding campaign: Liverpool-based Love Lane Brewing has hit the target in its £900,000 fund-raise on crowdfunding platform Seedrs. Love Lane, led by former Caledonian managing director Stephen Crawley, is offering 9.41% equity in return for investment, giving the company a pre-money valuation of £8.7m. So far, 367 investors have pledged £904,418. The pitch states: “We produce several well-known brands including Love Lane and Higsons beers and Ginsmiths gin. Our home, Love Lane Brewery, has bars and a kitchen and houses our distillery. It is also a great events space and offers tours. We see it as a real statement of intent and a significant investment. When we opened retail in December 2017 we were known as H1780 Tap & Still but we have since evolved to be known as Love Lane. Great reviews for the food and drink, our friendly service, and good ambience at events mean we are all excited by the next stage in our journey.” Crawley transformed a run-down warehouse in the Baltic Triangle area of Liverpool into H1780 Tap & Still in December 2017. 

Bijoux gets go-ahead for third bar, in Glasgow: Bar operator Bijoux has been given the go-ahead to open its third site, in Glasgow. The company has been granted permission by the city council for the venue in part of the Sauchiehall Centre building in Bath Street. It will add to the Bijoux venues in Newcastle and Marbella, Spain, reports the Evening Times. A statement with the plans said: “It is our goal to take Bijoux to the next level by opening a restaurant and bar in Glasgow. We want to bring an international and European feel to Bijoux Glasgow, being known as a great place to relax, have a good time and drink. We want to be known as an all-round venue for eating and drinking.”

Former Scottish & Newcastle boss John Dunsmore lodges plans for Edinburgh Beer Factory’s first retail site: Edinburgh Beer Factory, the craft brewery owned by John Dunsmore, former chief executive of Scottish & Newcastle and C&C Group, has lodged plans for its first retail site. The company has applied to Edinburgh City Council to open a restaurant and bar in a former Royal Bank of Scotland branch in Forrest Road. The application is awaiting assessment by the planning department, reports Herald Scotland. Dunsmore launched Edinburgh Beer Factory in his home city with wife Lynne and daughter Kirsty in 2015. The micro-brewery is housed in a converted industrial unit in west Edinburgh. It produces craft lager Paolozzi, which is named after the late Edinburgh artist Sir Eduardo Paolozzi.

Tattu opens Birmingham restaurant for third site: Contemporary Chinese restaurant group Tattu has opened its Birmingham city centre site, creating 80 jobs. The 160-cover, split-level restaurant has opened in The Grand development in Barwick Street as the company’s third site. New dishes created by executive chef Andrew Lassetter include chilli and sesame-roasted scallops with Chinese sausage, while the restaurant also offers a dedicated lunchtime menu featuring the brand’s best-selling small plates and new dishes from the wok and grill. Interiors are inspired by yin and yang with the ground-floor space hosting a bar and private dining rooms to represent the yang element, while the main restaurant downstairs reflects yin elements with oriental fretwork and Tattu’s signature blossom trees. Tattu owner and managing director Adam Jones said: “We have taken some new design risks with the site, which we feel pay respect to the heritage space within The Grand while marking the start of what we hope will be an exciting new chapter for the building.” Tattu launched in Manchester in 2015 with a second site opening in Leeds city centre in June 2017. The company plans to open a fourth site, in Edinburgh, in the summer.

Gordon Ramsay to launch Asian-inspired concept in place of Maze in Mayfair: Gordon Ramsay has closed his Maze restaurant in Mayfair and will replace it with an Asian-inspired concept. The Grosvenor Square restaurant closed on Saturday (2 February) after 14 years and will be transformed into Lucky Cat – an “authentic Asian eating house” and late-night lounge inspired by the drinking dens of 1930s Tokyo and the Far East. The restaurant’s name is inspired by Asian culture, where the “lucky cat” is a talisman believed to attract good luck and fortune. The venue is set to open this summer. Ramsay said: “I can’t wait to open the doors of Lucky Cat and bring a new flavour of Asian food and culture to Mayfair. I can honestly say there won’t be a bad seat in the house. Every table will have a unique view and each guest will come away having experienced something sensational, whether it be the menu, the service or the look and feel. Maze leaves large shoes for us to fill but I have no doubt Lucky Cat will more than step up to the plate.”

Punch welcomes suppliers to see post-takeover business changes: Punch hosted more than 150 suppliers to let them see for themselves the changes in the business since its takeover last year. The supplier day was hosted in the Training Academy and enabled suppliers to meet Punch representatives and network with others in the sector. Chief executive Clive Chesser said: “Following the change in ownership and leadership of Punch last year, there has been an incredible effort to enhance and build relationships with long-established suppliers and seek new ones to enable us to grow and move forward, aligned to our strategy. Hosting events such as this is a fantastic opportunity to share our vision as we all strive to provide the best support for our publicans and create epic community pubs.” Following the sale of 1,900 pubs to Heineken, Punch was acquired by Patron and May Capital and currently has about 1,300 pubs.

Health and fitness delivery brand Food extends £350,000 crowdfunding campaign to open three dark kitchens: London-based health and fitness delivery brand Gym Food has extended its £350,000 fund-raise on crowdfunding platform Crowdcube to open three dark kitchens in the capital. The company, founded by managing director George L Streatfield, is offering 16.67% equity in return for investment, giving the company a pre-money valuation of £1.75m. So far, 86 investors have pledged £114,740 with 19 days remaining following the two-week extension. The company operates a dark kitchen in Bethnal Green that is averaging sales of £23,000 a week. The company said it saw 278% organic growth from November 2017 to November 2018. The pitch states: “Now exceeding £90,000 a month in sales, Gym Food is looking to execute a low cap ex expansion model. We have no storefronts, shop fits or premiums – we trade purely via delivery. With this investment we plan to open three additional sites – Battersea, Vauxhall and King’s Cross – high volume food delivery locations that will also grow our corporate audience.” 

Parogon Group boosts workforce after introducing new work experience programme for chefs: Staffordshire-based pub company Parogon Group has boosted its workforce after introducing a new work experience programme for chefs. The partnership with Stoke-on-Trent College has seen three students earn a job. Jack Wall has joined the team at The Wayfarer as a part-time commis chef while Wiktor Pocalun and Kyle Johnson-Cooper are the latest recruits at the Orange Tree. Parogon Group operations support manager Ben Allison said: “I was honest about the hard work and dedication our teams put into making our business a success and explained we are able to maintain this by recruiting the right individuals.” Katy Chesters, business development associate at Stoke on Trent College, added: “We are proud to work in partnership with Ben and his team to provide a 12-week work experience programme for our catering students, and even prouder this led directly to commis chef roles at The Wayfarer and The Orange Tree for Jack, Wiktor and Kyle.” Parogon Group operates six sites across Staffordshire and Cheshire.

The Lion Group snaps up second Northampton pub: Pub operator The Lion Group, which operates The Wedgwood in Northampton, has acquired a second site in the town. The Press in Abington Square will reopen on Monday, 11 February following a major refurbishment. The Lion Group will also renovate the pub’s all-weather garden in time for the summer and increase its local cask ale selection. The new team at the pub will be led by award-winning chef Paul Taylor, who wants to revive The Press as a “great traditional hub of the town centre, where people are comfortable coming to drink and socialise or for a meal”. Lion Group chief executive Daniel Fisher told the Northampton Chronicle: “It has taken time to find the right person for The Press. Paul is perfect for it. He is highly experienced, knows what it takes to build a fantastic pub business after running another one of our sites successfully for the past ten years, and is passionate about great hospitality and meeting the needs of the customer. Paul is also a brilliant chef, which will ensure the pub has a good dry as well as wet trade.” The Lion Group relaunched The Wedgwood in March 2018.

Numis – market is mispricing Merlin Entertainments given Legoland opportunity: Numis leisure analyst Tim Barrett has argued the market is mispricing Merlin Entertainments given the Legoland opportunity. Issuing a ‘Buy’ note on the shares with a target price of 454p, Barrett said: “Since its initial public offering in 2015, Merlin has opened two parks – Dubai and Japan – and added New York and Korea to its development pipeline, which we estimate will deliver a 12% pre-tax return. Merlin’s track record is outstanding. Since it acquired the original six parks from Kirkbi for €375m in 2005, it has grown Ebitda at a compound annual growth rate of 17% and created a business worth £3bn on our appraisal. More recently, since 2015 we estimate a 50% incremental return on the ‘new business development’ capex allocated to the division. Lego toy sales in North America and Europe fell in 2017 but it remains the best-selling toy globally and has significant potential from the movie (after the Lego Movie in 2014 toy sales were up 14% and Legoland like-for-likes up 13%). The step up in capex required to build two major theme parks is substantial and will clearly limit free cash over the next three years. However, our analysis shows they can be largely funded from internally generated cash and with no increase in group leverage, which remains within the group’s two to three times target. The midway division has been disappointing in recent years, as evidenced in flat Ebitda over the past five years and fall in return on capital expenditure from 14.3% to 10.5% over the period. While some concepts are being de-emphasised, other brands have great potential in our view, particularly the Peppa Pig franchise. Equally, Merlin’s London exposure will go from being a drag in 2017-18 to positive this year and recent visitation data is very encouraging (up 9% in the past three months). We view the bear case around visitor satisfaction as overdone. For example, the London Eye is still the second highest-ranked paid attraction in the city after 20 years. Merlin trades on a FY19 price-to-earnings ratio of 16.2 times, EV/Ebitda of 9.3 times – attractive value for leading intellectual property, asset backing and the strong pipeline. We see 35% upside to our discounted cash flow-based price target.”

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