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Morning Briefing for pub, restaurant and food wervice operators

Wed 6th Mar 2019 - Propel Wednesday News Briefing

Story of the Day:

Grind targeting 36 sites by 2022, reveals six new central London venues: Grind, the independent coffee and cocktail bar, is looking to grow to 36 sites by 2022 through a mixture of equity raised from its forthcoming crowdfunding campaign, free cash flow and debt, Propel has learned. It is understood 15 of the proposed venues will be franchise sites. Grind is beginning its next phase of expansion with six central London openings in the next 18 months – taking its portfolio to 16 – plus a new coffee-roasting facility. The company is understood to expect turnover to hit £11m this April and £17m by April 2020. As announced last week, Grind is returning to crowdfunding platform Crowdcube on Friday (8 March) for a third – and planned final – time as it aims to raise up to £3m to support its expansion. The campaign follows its £1.3m bond in 2015 and record-breaking £2.1m equity raise in 2017, which closed only five days after going live to the public. Coinciding with the Crowdcube return, Grind revealed it has secured two further restaurant bar locations – Southbank Grind, which will open in the fourth quarter of 2019, and Canary Wharf in the second quarter of 2020. Furthermore, Grind, which is opening in Broadgate Circle this month, has announced its first three franchised locations with transport hub foodservice specialist SSP – in London Bridge, Waterloo and Victoria stations – which will all open in the next few months. Grind will also relocate its Shoreditch coffee-roasting facility shortly into a new, much larger facility in Elephant and Castle. When fully up and running, the roastery will increase weekly capacity by more than seven times. Grind founder and chief executive David Abrahamovitch said: “I am thrilled to announce this exciting next phase of funding and growth for the business – our largest ever. With Broadgate Circle, Southbank and Canary Wharf, we’re taking Grind to a whole new audience through three large, prime, high-footfall locations. It’s also very exciting to be relocating our roastery to a much larger facility, which will give us the capacity we need as we grow to a planned 36 locations by 2022.” Since opening in Shoreditch in 2011, Grind has “burned the candle at both ends to serve coffee, food and cocktails to a killer soundtrack”. Last year the company debuted its Grind At Home collection – led by some of the UK’s first compostable coffee pods for Nespresso machines.

Industry News:

Propel managing director Paul Charity to give his perspective on the rise and fall of Patisserie Valerie: Propel managing director Paul Charity will give his thoughts on the lessons to be learned from recent troubles at Patisserie Valerie in an article for Premium subscribers, which will be sent out on Wednesday (6 March) at 5pm. Meanwhile, Propel Premium subscribers will also receive a 30-minute video on Friday (8 March) of Alasdair Murdoch, chief executive of Burger King, speaking about the role of leadership in business turnarounds. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, access to our database of 1,300 multi-site companies, discounts to attend Propel conferences and events, regular video recordings of key speakers from Propel events and conferences as well as regular columns from insights editor Mark Wingett. An annual premium subscription costs £345 plus VAT for operators and £445 plus VAT for suppliers – plus £50 each for additional team members. Email

Pubs and restaurants lead the way on February consumer spending, Barclaycard signs with UnionPay: Pubs and restaurants continued to lead the way regarding consumer spending in February despite overall growth only rising 1.2% year-on-year, which equates to a decline in real terms when adjusting for inflation. The findings by Barclaycard, which sees almost half the nation’s credit and debit card transactions, revealed that despite slower growth than in recent months, spending in pubs rose 7.4% year-on-year in February and 3.9% in restaurants. Essential expenditure rose 2.3% in February compared with a year ago, propped up by relatively modest growth in supermarkets (2.5%). Non-essential expenditure saw year-on-year growth of just 0.8%. After consecutive months of growth, hotel spending saw a fall of 3.8% compared with February 2018. Barclaycard said a drop in spending could be down to consumers re-evaluating their budgets. Almost one-third (32%) of Brits said they were cutting back on non-essential items such as eating out to make their money go further. Half of UK adults (50%) worry Brexit will have a negative impact on the UK economy and cause their personal finances to suffer, while 53% are concerned about a possible rise in the cost of everyday items during the next month. Meanwhile, Barclaycard has signed a partnership that will see 110,000 Barclaycard merchants in the UK accept UnionPay, which has the world’s largest cardholder base. Barclaycard said the partnership presented a “significant opportunity for British retailers to cater to the growing number of Chinese visitors to the UK”. A phased roll-out will begin this summer. The UK is expecting a boost in visits from China in 2019, with VisitBritain indicating bookings are up 31% from January to June this year compared with the same period in 2018. Visitors from China are some of the UK’s highest spenders, spending on average £2,059 each per visit, more than three times the all-market visitor average. Rob Cameron, chief executive of payment acceptance at Barclaycard, said: “China is one of the UK’s most valuable inbound visitor markets and this deal means our UK merchants will be able to better serve Chinese and global consumers who choose UnionPay as their preferred payment method when shopping online or in-store.”

Number of apprenticeship starts in hospitality for top levy payers rises 5%: The number of apprenticeship starts in hospitality and catering for the top levy payers has risen 5% so far this year to 2,100, according to new figures. The figure has increased on 2017-18, when there were 14,000 starts in hospitality and catering through 900 different employers. The number of new apprentices has soared in recent years, with 165,000 people starting apprenticeships in hospitality and catering between 2013 and 2018. The findings, by the British Pub & Beer Association (BBPA), come as it highlights the vital role apprenticeships play in the future talent pipeline of brewing and pubs as well as the wider hospitality sector. The BBPA is among sector bodies and companies attending a parliamentary showcase of apprenticeships on Wednesday (6 March) as part of National Apprenticeship Week. More than 125 MPs will also be in attendance, including apprenticeship minister Anne Milton and tourism minister Michael Ellis. BBPA chief executive Brigid Simmonds said: “I am a great believer in apprenticeships. I didn’t go to university and know and admire many people for whom an apprenticeship route into employment or during their employment was enormously valuable. It is essential everyone recognises this across government and in all our educational establishments so apprenticeships aren’t seen as second best to university degrees. Without a doubt the hospitality sector as a whole needs to attract more people to work in the industry. National Apprenticeship Week allows pubs and the wider hospitality sector to demonstrate what a great industry it is and what more we can do to recruit and retain great teams.”

Licensing update: Licensing solicitor John Gaunt & Partners produces a useful monthly summary of topical issues. To access the latest, click here

Company News:

Restaurateur David Moore branches out into pub sector with acquisition of central London site: David Moore, owner of Michelin-starred restaurant Pied-à-Terre, has entered the pub sector after acquiring The Devereux, just off the Strand. The former Greene King-owned pub closed in early 2017, although the grade II-listed building in Devereux Court dates to 1676 when it housed the Grecian Coffee House. It was remodelled as a pub in 1843. Moore plans to restore the property in collaboration with business partner Tony Bennett – they have taken a new 20-year lease at the property. The site covers about 3,000 square feet over ground, basement and first floors with A3/A4 planning consent. Moore has been an eminent figure in the hospitality industry for more than 30 years and said he had been searching for the right project in the pub sector since meeting Bennett 14 years ago. He added: “I have always loved the idea of owning a traditional pub with a proper publican at the wheel. Having been an iconic London pub since the 19th century, Tony and I feel obliged to honour the history and tradition of The Devereux. Above all, we just want to run a ‘proper pub’ with excellent-quality food and drink but without pretence.” The pub takes its name from Robert Devereux, the second Earl of Essex. Devereux, once a favourite of Elizabeth I, fell from favour and was beheaded in 1601, the last person to be executed inside the Tower of London. Agent Davis Coffer Lyons acted for Marsa Holdings, landlord of The Devereux. In October, Moore launched a petition calling for a cut in VAT and the replacement of business rates with a US-style sales tax.

TRG Concessions ‘actively pursuing’ further Crepeaffaire franchise sites with debut venue ‘exceeding expectations’: The Restaurant Group (TRG) Concessions has said it is “actively pursuing” further franchise sites with Crepeaffaire, the crepe concept backed by BGF, with sales at the debut site so far “exceeding expectations”. The first venue opened at London Luton airport in December. Its success follows strong growth across the Crepeaffaire business during the first quarter of 2019, with the company believed to have seen a double-digit increase in like-for-like sales in January. The brand’s new quick-serve format has been key to the strong performance seen at the Luton airside unit, TRG Concessions said. The separated service and production counters, combined with a speedy product chute, make service speeds up to 50% faster to meet the needs of time-sensitive passengers. The format operates without outside extraction requirements, giving it maximum flexibility in sites such as travel hubs, cinemas, stadiums, universities or service stations. The franchise partnership is now actively pursuing opportunities across the UK. TRG Concessions managing director Nick Ayerst said: “We are delighted by our partnership with Crepeaffaire and very pleased with the early performance of our first collaboration.” Daniel Spinath, founder and chief executive of Crepeaffaire, added: “Speed at peak times in an airport location such as Luton is imperative to achieve success. Entertainment for the taste buds can now be achieved at high speed at any place experiencing strong volume peaks.”

Former Hakkasan group pastry chef launches gourmet doughnut concept: Graham Hornigold, ex-group pastry chef at Hakkasan Group, and Heather Kaniuk, former executive pastry chef at Mandarin Oriental, are set to launch gourmet doughnut concept Longboys. The venture will open at Boxpark Wembley on Thursday (7 March) with a permanent site opening in central London later this year. Longboys will specialise in classic finger doughnuts with menus changing on a monthly basis. Fillings will include rhubarb, custard and orange; sticky toffee, date and pecan; and raspberry, rose and lychee. The doughnut menu will be complemented by a range of soft-serve ice cream, made in-house and changing seasonally, as well as coffee from London’s Assembly roastery and ethical soft drinks from Karma Cola. Prior to launching Longboys, Hornigold oversaw the global expansion of Hakkasan Group on the pastry side. Between 2011 and 2017, the group expanded from four UK-based operations – Hakkasan, Yauatcha, Sake no Hana, and HKK – to 47 restaurants globally.

Goodbody – Domino’s Pizza targets for 2019 to be key focus of full-year results: Goodbody leisure analyst Rachel Fox has said Domino’s Pizza’s targets for 2019 will be the key focus of its full-year results next week. Issuing a ‘Hold’ note on the shares with a target price of 245p, Fox said: “Following its January fourth-quarter update, most headline numbers are broadly known for FY18. Group system sales were £1,260m, up 7% year-on-year (UK and Republic of Ireland system sales of £1,156m and international £104m). We forecast FY18 profit before tax of £93.9m, in line with management guidance in January that profit before tax would be at the lower end of consensus (£93.9m to £98.2m). The ongoing conflict with UK franchisees has been well documented in the media, with franchisees said to be refusing to roll out stores in the first half of the year. As we have said before we believe the company has two options to resolve these issues  – provide a greater level of support to help offset the cost that inflation franchisees are facing or accept roll-out run rate will have to reduce as growth is reliant on use of new/smaller franchisees. A key focus for us will be on management guidance for 2019 UK store openings and any update on its relations with franchisees. While the stock has seen a significant de-rating we remain cautious as growth in the UK is challenged by the franchisee issue and the international turnaround is not without its risks. We would note a narrowing of losses in international is a key driver of group profit growth forecasts. Trading on 10.7 times FY19 EV/Ebitda we believe further downgrades to growth forecasts would be badly received.”

Whitbread launches debut ZIP by Premier Inn, in Cardiff: Whitbread has launched a debut site for its ZIP by Premier Inn brand, in Cardiff. The brand offers “small rooms at small prices”, from £19 a night. The hotel is in Roath, not far from the city centre. ZIP by Premier Inn offers a Hypnos bed that can be configured as two singles or a double, a power shower, Wi-Fi and 24-inch smart television. Rooms measure 8.5 square metres, while the hotel has a large communal area where breakfast is served. After breakfast, the area transforms into a workspace and bar. Meanwhile, Whitbread is lining up a second Premier Inn in Torquay, Devon. The company has agreed to develop a 120-bedroom hotel and restaurant in Montpellier Road, creating 30 jobs. Whitbread’s current Premier Inn in Torquay is in Shedden Hill Road. Last week, Whitbread announced the departure of Premier Inn acquisitions manager Joanna Moon as part of streamlining of management roles following the sale of Costa Coffee to Coca-Cola. Alex Flach has an expanded role, UK development director, which includes property acquisitions and construction. Mark Anderson continues to run the overall property and international function within Whitbread, while acquisition work in the UK and Ireland will be driven by Derek Griffin, who is head of London and south east England, and Kevin Murray, who is head of north and Ireland.

Danieli Holdings to turn one of Newcastle’s oldest pubs into boutique hotel with roof terrace: North east-based Danieli Holdings is set to turn one of Newcastle’s oldest pubs into a boutique hotel with roof terrace. The company has acquired the Duke of Wellington in High Bridge, which has been a popular pub for tourists, football fans and cask ale drinkers for decades. Danieli Holdings plans to build on the site’s cask ale heritage while developing a 14-bedroom boutique hotel on the upper floors. It will also extend its neighbouring bar, Yolo Townhouse, into the Duke of Wellington. The company also wants to open up the gable end of the historic building to create a heated terrace, with other plans including live music and increased capacity. Food would be served from 7am. Danieli Holdings chief executive Neill Winch told Chronicle Live: “The upper floor hasn’t been in use for more than 50 years and the plan is to bring those floors back into the heart of the building by creating a boutique hotel accessed by a lift.” Danieli Holdings’ Newcastle portfolio includes shipping container collective Stack, pan-Asian restaurant and cocktail bar The Muddler and Hadrian’s Tipi, while it operates Yolo bars in Ponteland and Newcastle.

Crate Brewery launches £500,000 crowdfunding campaign to incorporate Silo in London: London-based Crate Brewery has launched a £500,000 crowdfunding campaign to fund a major refurbishment of its Hackney Wick home that would also see zero-waste Brighton restaurant Silo brought to the capital. Crate’s founders, brothers Tom and Jess Seaton and Neil Hinchley, are offering 4.0% equity in return for investment giving the company a pre-money valuation of £12m. Part of the refurbishment of The White Building would see the team develop a restaurant space with Silo founder Doug McMaster, who would also host workshops in a new space next to the restaurant alongside talks on food, beer, art and culture. The pitch states: “We started life in July 2012 with a dream of creating the ultimate craft beer and food experience. We wanted to create a place where people would come and be free to enjoy themselves – to drink, eat, dance, connect and share in an environment that was stimulating and fun. We opened Crate, a micro-brewery and pizzeria, producing full-flavoured and accessible beer alongside hand-rolled pizza. We now have the chance to turn our already wonderful space into a true mecca for craft beer fans and a proper hub for creativity. Your investment will allow us to add a brewery for experimentation and innovation where we can let creativity run wild; open a restaurant with dishes inspired by a new culinary thinking; open an events space and launch a year-round programme of cultural events; transform our taproom from 4,000 to 8,000 square feet; and build 1,000 square feet of affordable workspace to act as an incubator for talent. Having just secured a national listing in almost 1,500 Tesco stores, we are also looking for funding to spread the word of what we do to the rest of the UK. Crate achieved £3.95m turnover in FY 2018 with an Ebitda of £88,000. We recently invested in sales and marketing heads and extended the lease on our venue, the White Building, to set the foundations for growth.”

Epic Hospitality Group secures multimillion-pound refinance package to support expansion: Epic Hospitality Group, led by Simon Beer, has secured a multimillion-pound refinance package structured by Allied Irish Bank (GB) to support its expansion strategy. The independent hotel group’s portfolio spans Liverpool with a mix of apartments, aparthotels and the 128-bedroom Seel Street Hotel by Epic, which opened in December in partnership with Elliot Group. The partnership with Elliott will also see Epic operate a hotel in the Baltic neighbourhood. The £70m, 306-bedroom hotel will offer views across Liverpool’s south docks. Beer said the refinance deal would give the company a “solid platform to confidently develop new sites and consider new opportunities to take the business to the next level with potential expansion into other UK cities”. He added: “This deal has come at an important stage of growth for Epic. The refinance package will allow us to press forward with our next development in Liverpool – 151 Duke Street – and facilitate our plans to take the Epic experience to other cities in the UK.” Allied Irish Bank (GB) area director Jonny Beckwith added: “Epic is a young and dynamic business that has won many awards and built a reputation for offering quality accommodation that appeals to a wide market. We are delighted to work with the company to help its next phase of growth.”

Sethi family to relaunch Bubbledogs with bigger focus on champagne: Karam, Jyo and Sunaina Sethi, the family behind JKS Restaurants and London venues such as Gymkhana and Brigadiers, is to refocus hotdogs and champagne concept Bubbledogs in Fitzrovia to focus on the drinks side. The Charlotte Street venue will close for refurbishment on Sunday, 24 March to reopen on Tuesday, 14 May with a much bigger focus on grower champagnes alongside more still wine from the region. The hotdog list will be “refined” to include the Truffle Shuffle, topped with truffle celeriac remoulade, and the New Yorker (aged beef and caramelised onions). There will also be new bar snacks such as tater tots with caviar and crème fraiche, Hot Dinners reports. The room will be refurbished to create a “refined and modern wine bar, with deep purple and mustard tones highlighted by copper accenting”. A new marble high-top table will seat eight guests at the centre of the room with a built-in champagne trough. The rest of the seating will have a “lounge-like feel with low-level tables and banquettes”. Bubbledogs is the brainchild of Sandia Chang and husband James Knappett, who launched the concept in 2012. Chang remains the creative spark behind the concept, while Knappett operates Michelin-starred restaurant Kitchen Table at the back of Bubbledogs. In October, the Sethi family launched Iranian concept Berenjak in Soho.

Lovely Pubs opens debut hotel: West Midlands-based Lovely Pubs, led by Paul Salisbury and Paul Hales, has opened its first hotel. The company has opened the 16-bedroom hotel as part of its Barasat Barn restaurant, near Stratford-upon-Avon. Salisbury and Hales, who oversaw the roll-out of Mitchells and Butlers’ 80-strong Premium Country Dining Group of country gastro-pubs, founded Lovely Pubs in 2012. It currently operates seven sites, including The Boot Inn in Solihull and The Queens Head in Bromsgrove.

Independent American-Italian restaurant Smoke and Dough to open debut site, in Liverpool: Independent American-Italian restaurant Smoke and Dough is to open its debut site, in Liverpool. Founded by Deepak Bahuguna and Sachin Bajpai, the restaurant will open at Liverpool ONE after a deal was agreed with owner Grosvenor Europe. The 7,000 square foot venue will include 150 covers and feature a late-night, 50-cover bar with outdoor seating. Smoke and Dough will provide an “interactive experience” centred on a smokehouse. Every table will feature a lava pit that will allow customers to grill meat and fish to their taste. Smoke and Dough will also serve sourdough pizza, burgers and flatbread. Bajpai said: “Liverpool ONE is an actively managed, thriving location led by a team with an ethos that reflects our own. It is a great location in which to launch Smoke and Dough and we’re confident our new brand will be well received.” Alison Clegg, director of asset management at Grosvenor Europe, added: “Smoke and Dough will deliver an enjoyable, engaging and interactive dining experience. The brand’s approach will add a fresh dimension to Liverpool ONE and is aligned to our enlivenment vision for visitors.” Cushman & Wakefield and Metis Real Estate Advisors acted for Liverpool ONE. Smoke and Dough dealt direct.

Former Greenhouse executive chef leads kitchen at new gourmet sausage concept in Islington: Francesco di Marzio, former executive chef of two Michelin-starred restaurant The Greenhouse, is heading the kitchen at a gourmet sausage concept that has just launched in Islington, north London. X-Upper has opened in Upper Street at a site formerly occupied by tapas and paella restaurant Jamon Jamon. It features recipes created by James Tanner, who operates Barbican Kitchen in Plymouth, gastro-pub The Kentish Hare in Tunbridge Wells with brother Chris, and who has appeared on television shows such as Ready Steady Cook and Saturday Kitchen. The X-Upper team claims it walked 152km across 14 cities in Europe and trialled 513 sausages in its quest to find the “best and highest quality sausages”, Hot Dinners reports. However, there are only six sausage varieties available at X-Upper – a protected Swiss bratwurst, an Italian chicken and pork sausage, the English Cumberland, a Spanish chorizo, a low-fat chicken sausage, and a spicy merguez – alongside daily specials from across Europe.

Punch launches magazine for publicans: Punch has launched a magazine for its publicans. The Round allows licensees to share experiences, expertise and “inspire each other as well as their teams”. The magazine features case studies, insights and supplier support. The Round will be published quarterly with the first edition covering the importance of having outdoor areas ready to operate to maximise sales in the warmer months. An accompanying supplement, Pub Guide, shares details of the Punch Campaign Club and a What’s Hot And What’s Not feature on how to “stand out from the crowd”. Strategy director Russell Danks said: “The Round is an informal magazine designed to get publicans to make the most of their pubs and opportunities. It’s simple to understand and use, promising what they read is suitable, has impact and makes a real difference”. The first edition of The Round has been sent to 1,250 Punch publicans and is also available online.

Devon-based floating cafe operator takes over Lympstone pub for second site: David Foa and Paul Craven, who operate floating venue the River Exe Cafe in Exmouth, have taken over The Swan Inn in Lympstone for their second site in Devon. The pub now offers dishes such as East Devon pork belly with potato terrine, heritage carrots, spiced apple confit and black treacle jus; and Yellow Hammer beer-battered fish with chips. Foa told the Exmouth Journal: “The Swan is a community institution and we have been regulars for years. Taking over this year-round destination allows us to retain our talented team at River Exe Cafe, which only opens between April and September. We’re in the perfect location – a stone’s skim from Exeter.” Lympstone has been gaining status as a culinary hot spot. Michael Caines’ Michelin-starred Lympstone Manor opened in 2016 and last year British charcuterie company Good Game relaunched The Globe in the heart of the village. River Exe Cafe was brought to national attention when Michel Roux Jr visited the floating cafe for Channel 4’s The Hidden Restaurants programme, which explores Britain’s most unusual destination restaurants. Roux called its mussels “mind-blowing”.

Halewood expands to Australia as it buys Ironbark Distillery: Halewood Wine and Spirits has expanded by taking a majority stake in a New South Wales counterpart. The company’s Australian business – Ironbark Distillery – will import and market its British-produced Whitley Neill, Dead Man’s Fingers, Aber Falls, JJ Whitley and Peaky Blinder spirits ranges. Ironbark will look to triple production of its gin, rum and whisky while its namesake brand will enjoy increased distribution by Halewood in the UK, US and China. Halewood Wine and Spirits chief executive Stewart Hainsworth told Insider Media: “The formation of the Halewood Australia business is an exciting step for us internationally and will allow us to introduce our wider portfolio. We look forward to developing the Ironbark brand globally.” Reg Papps, master distiller and director of Ironbark, said: “When you create a brand you always dream it will be carried on for generations. To have a business partner such as Halewood Australia behind Ironbark gives us the opportunity to see the business grow to its full potential and be carried forward for many generations.”

Peterborough-based vegan street food pop-up goes permanent: Peterborough-based vegan street food pop-up Resist! Vegan Kitchen has opened a debut bricks and mortar site. The brand began with a residency at The Ostrich Inn in North Street but has opened its own permanent site at the Key Theatre. Dishes include Resist! Doner Kebab, slow-cooked sticky barbecue ribs (with sugar cane bone), fried Chickun varieties and loaded fries, all made from scratch in-house. The venue also sells a range of merchandise and donates excess food to the homeless. Resist! was founded Gareth Ellison to feed gig-goers. He told Vegan Food & Living: “We are delighted to take over the Riverside restaurant at the Key Theatre. Resist! Vegan Kitchen offers our street food with an extended menu, pre-theatre set menus, fine-dining events and live performances.”

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