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Thu 25th Apr 2019 - Propel Thursday News Briefing

Story of the Day:

Loungers founders cash in shares worth close to £9m: Alex Reilley and Jake Bishop, founders of Loungers, which will begin its life as a plc on Monday morning (29 April), are each cashing in shares worth £4.43m and retaining a 7.03% stake worth £13m in the 146-strong business. The company launched its IPO admission document on Wednesday (24 April) with a conditional placing of 41,625,000 ordinary shares at 200p. As part of the placing, current backer Lion Capital is cashing in shares worth £11.6m and reducing its stake in the company from 67.3% to 38.6%. Chief executive Nick Collins is selling shares worth £750,000 and retaining a 1.41% stake worth £2.6m at the float price. Collins will also receive a one-off discretionary bonus of £1.1m, predominantly in options, to reflect his contribution to the listing process. He will be on a salary of £285,000. Based on the placing price, the market capitalisation and enterprise value of the company on admission will be £185.0m and £212.5m respectively. Previous reports had suggested an enterprise value of closer to £250m. However, the management team behind Loungers said it believes the company is starting life in a “very good position” despite the value attached to the business being at the lower end of expectations. A Loungers spokesman said: “We believe this reflects both the macro-economic environment and uncertainty around the UK consumer sector. As a result of this we scaled back the size of the fund-raise (to a 45% free float) as Lion, management and the founders were all more than happy to roll more equity into the plc and participate in the ongoing growth story. Loungers is delighted to have attracted a great book of institutional investors and believes it is starting its life as a plc in a very strong position.” On admission, Lion will hold about 39% of the issued ordinary shares while the executive directors, founders and senior management will hold about 16%.

Industry News:

Mark Wingett to look at European expansion opportunity in latest Premium column, Alastair Scott video: Propel insights editor Mark Wingett will discuss whether now is a good time for more companies to start looking towards Europe for expansion opportunities as part of his latest opinion piece, which will be sent to Propel Premium subscribers on Friday (26 April) at 5pm. He will also ask what’s next for the first wave of salad chain concepts. Subscribers will also receive a 30-minute video on Friday in which Alastair Scott, co-founder of food-led operator Malvern Inns and Catton Hospitality, speaks about how the company has set about creating a tool to motivate staff and optimise shift performance. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular video recordings of key speakers. They also receive access to our database of multi-site companies, which has now grown to 1,400 businesses. An annual premium subscription costs £345 plus VAT for operators and £445 plus VAT for suppliers – plus £50 each for additional team members. Email

Propel summer conference and party open for bookings, Ted Kennedy to present, two free places for operators: The Propel Multi Club summer conference and party has opened for bookings. It takes place on Thursday, 27 June at the Oxford Belfry, which is just off the M40. The conference will be followed by the summer party, with an evening barbecue, the Big Fat Quiz and the legendary sounds of DJ Big Lee. Ted Kennedy, owner of Pebble Hotels and veteran operator of pub assets, will set out ten key lessons learned as an operator and how these have been applied to making Alan Yau’s Duck and Rice concept profitable. Operators can claim up to two free places by emailing Jo Charity at Rooms (bed and breakfast) are also available at £125 plus VAT and can be booked by emailing Jo.

Food halls, trucks and meal kits to ramp up pressure on restaurants: The increasing appeal among younger consumers for emerging channels such as food halls, food trucks and meal kits is set to ramp up the competition for restaurants, according to a report by insights firm Technomic. In its 2019 Emerging Channels Consumer Trend Report, more than three-quarters (78%) of 1,500 respondents agreed food halls often introduce them to dishes they have never tried before, while more than one-quarter (27%) of meal-kit users have switched companies since they started using the service. Three-fifths (60%) say if their favourite food truck opened a restaurant, they would be likely to visit. Technomic manager of consumer insights Bret Yonke said: “Restaurant operators will have to pick and choose how to compete as variety and uniqueness are currently competitive advantages for emerging channels. Watch for restaurants to turn the tables by utilising certain emerging channels to expand their own brands, which some have already done by offering meal kits and creating their own branded food trucks.”

Birmingham’s casual dining scene hit by further wave of closures: Birmingham’s casual dining scene has been hit by another wave of closures. Spanish restaurant Amantia in Bennetts Hill will shut next week only days after Rodizio Rico and sister site Osteria Rodizio Rico closed in the Cube. Italian restaurant Pinocchio, which was a short-lived venture in The Mailbox, has now confirmed it will also close after initially saying it was “undergoing a refurbishment”. It isn’t all doom and gloom in Birmingham, however. Chef Adam Stokes opened The Oyster Club close to his eponymous Michelin-starred restaurant this month, while another Michelin-starred chef, Robert Ortiz, is set to launch restaurant Chakana in the city. Mosaic Pub and Dining has launched a darts bar in the Jewellery Quarter, while next month cat cafe concept Kitty Cafe will open its third site. In an upbeat message ahead of its closure on Sunday, 5 May Amantia’s owners told The Business Desk: “We are already working on a new, exciting (but slightly different) venture we will share with you soon.” Rodizio Rico’s two sites were taken back by the landlord ahead of Easter weekend but the restaurants’ owners are fighting the closure claiming the action is a “genuine mistake” related to rent.

Home-sharing registration scheme ‘crucial to tackling rogue landlords’: UKHospitality has supported the mayor of London’s calls for a registration scheme to enforce short-term letting laws. Sadiq Khan is calling on the government to introduce a new registration system for anyone wishing to rent out a property for fewer than 90 days in a calendar year in London to help protect the capital’s housing for long-term residents. UKHospitality chief executive Kate Nicholls said: “A registration scheme to ensure fair letting of residential property is exactly what we need to tackle rogue businesses and provide fairness. UKHospitality has been calling on the government to do more to provide transparency in the home-sharing sector, including introducing such a scheme. Home-sharing platforms have helped revolutionise tourism and hospitality for consumers and provide great choice. The problem is some of these properties are not being let in the spirit of the new technology. Property owners renting out multiple sites all year are effectively trading like businesses without being subject to the legislation, restrictions and taxes other businesses are subject to. Landlords who wish to list their home on platforms such as Airbnb should be free to do so but if they want to operate as an accommodation business they should adhere to the same rules as any other. Introducing a registration scheme would be a helpful step in cracking down on rogue businesses and provide transparency for customers, some of whom may be put at risk by fly-by-night landlords. This is a great proposal by the mayor of London and we hope other policy-makers follow suit to provide protection and fairness for consumers and businesses alike.”

Company News:

YO! begins concessions trial with David Lloyd Clubs: YO! Sushi, the Richard Hodgson-led group, is to extend the concessions side of its operation after launching a trial within health and leisure business David Lloyd Clubs, Propel has learned. The group, which is currently in the midst of a two-site concessions trial with Tesco, has launched units in five David Lloyd sites in the UK – Beckenham, Cheadle, Hatfield, Milton Keynes and Leeds. The company told Propel the trial was “going exceptionally well”, with gym-goers appreciating the “high-quality fresh and healthy Japanese food we are providing”. The trial is part of the company’s focus on developing opportunities with retailers and health clubs. Late last year, YO! agreed a deal with Tesco to pilot YO! To Go counters at two UK stores – in Surrey and Bournemouth. Earlier this week, YO! announced it was to eliminate the conveyor belt from some of its restaurants in an attempt to broaden its appeal. It will establish its first restaurant without the kaiten belt snaking around the premises at Westfield shopping centre in east London. It will also remove the belt at its Manchester Piccadilly station site. Hodgson said the change was “probably the biggest thing that’s happened to YO! since it was founded”.

Firezza looks to consolidate estate: Firezza, the London-based pizza delivery and takeaway business, has moved to consolidate its 15-strong estate by placing three sites on the market. The company, which was acquired from PizzaExpress by Darsana Patel-led Net Gold Star in November 2017, has placed its sites in West Hampstead, The Broadway in Wimbledon and Bond Street in Ealing on the market through agent Restaurant Property. PizzaExpress acquired the then 22-strong Firezza in February 2016 for circa £4.7m before disposing of the company in November 2017. The sale didn’t include the Firezza dine-in restaurant in Soho, which has subsequently become waffle concept Japes. During the past 18 months Firezza has disposed of its five sites outside London, which PizzaExpress opened as part of the expansion of a brand it once believed could expand nationwide.

Soho Coffee Co opens Malaga airport site, strengthens team: Artisan food-led coffee company Soho Coffee Co has strengthened its overseas portfolio by opening a site at Malaga airport. The outlet, which has launched in partnership with UK-based transport hub foodservice specialist SSP Group, is airside and has 80 covers. The opening adds to the brand’s existing venue at the airport, which opened in 2010. Meanwhile, Soho Coffee Co has strengthened its team by appointing Laura Sherwood as franchise and brand implementation manager. She will work alongside Mark Kassapian, director of franchising and specialist markets, to further develop and maintain franchisee brand standards across its growing estate in the UK and abroad. The company said it was committed to strengthening its comprehensive audit programme to ensure customers received “great food and coffee, and super service wherever they are”. Sherwood has a wealth of coffee knowledge having forged a career in the industry spanning 15 years, including time with Matthew Algie, Beyond the Bean, and most recently Bailies Coffee Roasters. The company’s next opening will be in central London at the end of May.

New York-based LDV Hospitality to open first site outside US, in Knightsbridge Green: New York-based LDV Hospitality, which owns modern Italian concept Scarpetta Restaurants, will open its first site outside the US, in Knightsbridge Green, London, in June. Sette will be housed on the ground floor of Bulgari Hotel London but operate independently offering authentic Italian food. Sette, which translates as “lucky” number seven in Italian, will bake bread and make pasta on-site. The menu will feature renowned Scarpetta dishes and additions such as veal tenderloin with gnocchi alla romana and glazed sweetbread. The drinks list will focus on a “robust and eclectic” mix of Italian wine. Below Sette, “underground” bar Nolita Social, named after New York neighbourhood North of Little Italy, will offer cocktails, live music and DJs playing 60s rock, 70s soul and 90s hip-hop. LDV Hospitality founder John Meadow said: “Our Scarpetta approach has always been comfortable yet aspirational and modern yet grounded with a love for old-world hospitality. Sette will follow this core ethos of our Scarpetta identity, capturing a quintessential New York balance of high energy and effortless elegance. We are delighted to bring our passion to guests in London.” Meadow founded LDV Hospitality in 2008 by opening his flagship Scarpetta restaurant, followed by signature brands American Cut and Dolce Italian. The company operates restaurants in nine US cities.

Stonegate reveals plans to take Tank & Paddle outside London via York conversion: Stonegate Pub Company has revealed plans to take its Tank & Paddle brand outside London for the first time. The company acquired Tank & Paddle’s three sites from Novus earlier this year and has revealed plans to take the craft beer and pizza brand to York by converting its Missoula Montana Bar & Grill, which opened in the city in 2014. In documents submitted to the city council, Stonegate argued the rebrand was required to save the Bridge Street venue from closure, reports York Mix. The application states: “The rebrand is an attempt to attract more customers to the site to enhance the economic well-being of this commercial leisure facility. The closure of this bar would have a far more detrimental impact on the special historic significance, interest, character and appearance of these listed premises, the settings of the neighbouring heritage assets and the wider conservation area than the proposed replacement signage scheme.” The current Tank & Paddle sites are in Bishopsgate, Heddon Street and Minster Court.

Ei Group invests £3m in West Midlands estate: Ei Group has invested more than £3m in the past six months to reinvigorate its pubs across the West Midlands. Refurbishment projects include a £115,000 investment in the Denbigh Arms in Monks Kirby to allow the business to build on its food offering, and a £122,000 makeover of The Horseshoe at Shipston-on-Stour. Craft Union pub the Prince Of Wales in Rugby is undergoing a £180,000 refurbishment to reopen later this month, while the Newhampton Inn in Wolverhampton is set to reopen as a new Craft Union pub in May following a £180,000 investment. Ei Publican Partnerships regional manager Paul Vavasour said: “We have a large portfolio of fantastic pubs across the West Midlands, which means we can usually find the right venue for our publicans to thrive. We work closely with them to make sure they have the tools and ongoing support to create pubs that truly become the hub of their community.” Ei Group operates circa 4,500 pubs across England and Wales. 

Domino’s Pizza reports global sales up 4.6% in first quarter: Domino’s Pizza has reported global sales increased 4.6% in its first quarter of 2019. Like-for-like sales were up 3.9% in the US and 1.8% in the international division. The quarter marked the 101st consecutive quarter of international like-for-like sales growth and the 32nd consecutive quarter in the US. Total revenue in the quarter increased 6.4% to $836m. The company added 200 stores during the period – 173 internationally and 27 in the US. The quarter also marked the opening of the 16,000th site globally. Diluted earnings per share in the quarter were up 10.0% to $2.20. Chief executive Ritch Allison said: “It was a good quarter for our US business and I’m pleased with our balanced retail sales growth, driven by a healthy combination of solid like-for-like sales and unit growth. We remain focused on improving international comparables but I’m encouraged by the strong unit growth in the first quarter and remain confident in the fundamentals related to market share, retail sales growth and unit economics within this terrific segment of our business.”

Former Soho House Group and Gordon Ramsay chef to head new all-day restaurant at Stratford development: Former Soho House Group and Gordon Ramsay chef Ben Harrington is to head an all-day restaurant that will open next month at the Manhattan Loft Gardens development in Stratford, east London. Harrington will run The Stratford Brasserie at the 42-storey skyscraper at London’s Queen Elizabeth Olympic Park as part of a project by Manhattan Loft Corporation, a company founded by Harry Handelsman, the visionary behind the restored St Pancras Hotel and Chiltern Firehouse. Located at the building’s entrance, The Stratford Brasserie will act as a “social hub” for The Stratford Hotel & Lofts, which integrates short and long-term stays. Harrington’s menu will focus on light sharing dishes featuring seasonal British ingredients. Pizza from the outdoor wood oven will be served all day alongside salad and small plates. At dinner, traditional brasserie fare such as schnitzel, risotto and burgers will be offered alongside dishes such as chopped Cornish bream with smoked crème fraîche, pickled celery and rye. Handelsman said: “The Stratford Brasserie will be the first welcome as guests and residents enter Manhattan Loft Gardens. The skyscraper’s architecture has been designed to encourage spontaneous interaction and The Stratford Brasserie is at the heart of this.” Harrington added: “We want to be a home from home, not only for people staying in the building but for people from the area too.” Manhattan Loft Gardens will also house Allegra, a restaurant from former Chiltern Firehouse head chef Patrick Powell.

West Berkshire Brewery opens first pub under sole ownership: West Berkshire Brewery has opened the first pub under its sole ownership. The company has relaunched The Grapes in Oxford having previously acquired the lease from City Pub Group. The George Street venue has been refurbished and West Berkshire Brewery has brought its own beer as well as those from local breweries. Money has been invested in the cellar, while Victorian-style floor tiles have been installed along the bar to complement hand-made wooden booths. The pub is also serving food including bar snacks, sandwiches and “bowls of joy” such as spiced pork meatballs with potato dumplings, baked Oxfordshire cheese on toast and fennel, and orange and halloumi salad. Managing director Tom Lucas told the Oxford Mail: “It is such a beautiful pub. I love boozers but we wanted The Grapes to be more inviting and comfortable and I think we have achieved that.” West Berkshire Brewery operates three London sites with Maverick Pubs – The Oxford Tavern in Kentish Town, Old Suffolk Punch in Hammersmith and The Depot in Lower Holloway.

Comptoir Libanais to launch breakfast menu: Comptoir Group, the operator of Lebanese and eastern Mediterranean restaurants, is to launch a new breakfast menu for its Comptoir Libanais brand at its flagship restaurant in London Bridge on Tuesday (30 April) ahead of an estate-wide roll-out. Founder Tony Kitous has recalled his childhood in Algeria and travels across the Middle East to influence new recipes and dishes such as Lebanese full breakfast, which features spicy lamb sausage, za’atar-roasted mushrooms, sumac-fried egg, chargrilled tomato, Lebanese potatoes and flatbread. More than half of the menu is vegetarian. Desserts include pancakes, porridge and natural yogurt while the drinks menu includes breakfast cocktails such as the Harissa Bloody Sirine (vodka, pickled chilli, harissa and sumac-spiced tomato juice). Earlier this month, Comptoir Group reported group revenue increased 16.1% to £34.3m (2017: £29.6m) in the year to 31 December 2018. The company had 31 restaurants (27 owned and four franchise) trading as at 31 December 2018.

Administrators of London meat supplier in talks to realise £4.1m from directors’ loan account: Administrators of north London-based meat supplier Nigel Fredericks are holding discussions with its directors in a bid to realise £4.1m of funds from a directors’ loan account, a new report has revealed. In their progress report, administrators Rachael Wilkinson and Zelf Hussain, of PricewaterhouseCoopers, said they had been reviewing “potential options” to realise funds from the asset for the administration. The report stated: “We have been holding regular discussions with the directors over the past few months to reach an agreement to settle the directors’ loan account. However, due to complexities surrounding the recovery of this asset, these discussions are ongoing. We will update creditors on progress in our next report. We also understand the company has incurred circa £500,000 of tax charges in relation to the directors’ loan account, which may be recoverable from HMRC on repayment of the loan. We are continuing our investigations to obtain more clarity in respect of the exact amounts paid and establish whether any of this tax can be recovered.” The report also revealed one of the secured creditors, Royal Bank of Scotland (RBS), had been paid £4.22m. As previously reported, it is estimated RBS and fellow secured creditors NatWest Bank and Lombard North Central will receive 60% of the £8.7m they are owed. Unsecured creditors aren’t expected to receive any distribution. Nigel Fredericks was sold in a pre-package agreement to Nigel Frederick Trading in September for a consideration of £23,033.29, with all employees transferred to the new owner.

Bradford-based high-end cocktail bar and eatery to expand into Halifax: Bradford-based high-end cocktail bar and eatery Alibi is to open its second site, in Halifax. The company has agreed a deal with landlord Teakwood Investments to open in the former Le Metro site at Somerset House in Rawson Street. Alibi, which launched in Bradford’s Sundridge Wells underground retail complex in 2016, focuses on cocktails, wine, champagne, spirits and craft beer. Co-director Wayne Heseltine told The Business Desk: “Halifax will be an excellent location for us to roll out the format we honed in Bradford. The grandeur and opulence of Somerset House struck us the moment we viewed it and we will showcase many of the original interior features.”

Pastelaria concept Santa Nata opens debut UK site, in Covent Garden: Portuguese pastelaria concept Santa Nata has made its UK debut by launching the first of two sites it is opening in Covent Garden this spring. The concept focuses on pastel de nata – a Portuguese pastry with egg custard filling. Santa Nata’s debut site is in Russell Street, while a second unit will open in New Row next month. Santa Nata features white tiles, black-frame panelling, dark wooden flooring and marble counters. Co-founder Francisco Oliveira’s family have been baking since 1900 and own seven bakeries in Portugal. Customers can watch tarts hand-made daily with a bell rung every time a batch is removed from the oven. Santa Nata also offers Portuguese cherry liqueur ginjinha, port and an espresso known as bica. Oliveira said: “I am confident our authentic offering will be something everyone visiting Covent Garden will enjoy.”

Heineken reports rise in UK first-quarter volume: Heineken has reported volumes in the UK were up “low single digits” in its first quarter helped by some inventory build-up in anticipation of Brexit and a relisting at a large retailer. Overall, consolidated beer volume was up 4.3% organically, with growth in all regions. Heineken volume was up 8.3% with double-digit growth in Africa, the Middle East, eastern Europe and the Americas. Jean-François van Boxmeer, chairman of the executive board and chief executive, said: “We had a positive start to the year with volume growth across all regions, despite the later timing of Easter, underlining our continued focus on growth and the breadth of our geographic footprint. The Heineken brand volume was up 8.3%. Our outlook for 2019 remains unchanged. We anticipate our operating profit to grow by mid-single digits on an organic basis.”

Broadwick appoints Venue Lab to manage new London events spaces: Broadwick Venues, which operates Printworks London and is a subsidiary of festival specialist Broadwick Live, has appointed Venue Lab to manage its new events spaces – The Drumsheds and Exhibition London. The Drumsheds is a former ten-acre gasworks in Enfield that will feature four interlinked warehouses offering a total indoor capacity of 10,000. It will be serviced by new overground station Meridian Water with its debut event, Field Day Festival, launching in June. Exhibition London will sit at the heart of Westfield London’s £600m expansion in White City. The former Dimco building is being transformed into a multi-purpose music, events and hospitality space with total standing capacity of 1,400. The 34,000 square foot venue is taking bookings for events from January 2020. Broadwick Venues managing director Bradley Thompson said: “Following our successful partnership at Printworks London, Venue Lab is the natural choice to help us develop The Drumsheds and Exhibition London as new cultural spaces.”

Oxfordshire-based brewery almost doubles equity offer in £250,000 crowdfunding campaign: Oxfordshire-based Chadlington Brewery has almost doubled the equity offer in its £250,000 fund-raise on crowdfunding platform Crowdcube to expand capacity and build a taproom and visitors’ centre. The company was offering 7.35% equity in return for the investment, giving a pre-money valuation of £3,150,000. It is now offering 13.51% equity, reducing the pre-money valuation to £1,600,000. So far, 83 investors have pledged £116,200 with 16 days remaining. The company stated: “The initial fund-raising for our campaign has been very positive with a lot of local and regional support. However, we have received a number of questions from the investor community relating to our valuation and, as a result, our raise progress has slowed. The purpose of our raise is to increase our capacity and capability and build a taproom in a fantastic location. We want to enable a successful raise and, while we worked hard on our valuation using external references for startups etc and thought we had judged it correctly, it is clear we had not.”

Angel Central owner extends Vue Cinemas’ lease and acquires former bank branch: CBRE Global Investors, owner of north London shopping centre Angel Central, has announced cinema operator Vue has extended its lease while it has grown its footprint in the area by acquiring a former Barclays bank branch in Upper Street for £2.2m. Vue, which opened at the centre in 2002, has committed to Angel Central for an additional 25 years. Angel Central is being enhanced with an £11m investment to transform the basement into new retail and leisure space and restaurants. Another initiative is in the pipeline to improve the 170,000 square foot centre’s visual presence from Upper Street by creating gateway units with the potential for a rooftop restaurant. Laura Wilson-Brown, head of asset management UK at CBRE Global Investors, said: “We are delighted Vue has chosen to commit over the long-term to Angel Central. By acquiring 14 Upper Street we have increased our ownership in the area and our long-term commitment to Angel Central.”

Zonal makes Scotland’s top 100 private companies list: Hospitality management solutions company Zonal has been named on Grant Thornton’s Top 100 Private Companies In Scotland list for the first time. The recognition comes as Zonal marks 40 years since the company was founded by Ralph McLean, who developed the first EPOS system for the hospitality sector. The Edinburgh-based company is now run by McLean’s son and chief executive Stuart. He said: “My father would be so proud of our success and growth over the decades through technology innovation and jobs creation in Scotland and throughout the UK.” The Scotland Limited report identified private firms contributed Ebitda of more than £2.7bn to the economy. Andrew Howie, managing partner of Grant Thornton Glasgow, said: “The top 100 companies have all demonstrated our country’s economy is diverse, robust and resilient.”

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