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Morning Briefing for pub, restaurant and food wervice operators

Wed 19th Jun 2019 - Propel Wednesday News Briefing

Story of the Day:

Peach to undergo sale and leaseback deal on its four freehold sites: Peach Pub Company is to undergo a sale and leaseback deal on its four freehold sites as it looks to raise funds for acquisitions and invest in its estate. The freehold investments, subject to new 25-year index-linked leases to Peach, have been released to the market through agent Fleurets. The four properties are The Richard Onslow in Cranleigh, The One Elm in Stratford-upon-Avon, The Rose & Crown in Warwick, and The Swan Salford near Milton Keynes. The total portfolio rent of £555,000 per annum equates to 10.7% of 2018 turnover and 44% of 2018 Ebitda, thereby providing significant operation headroom following completion. The assets also offer strong underlying vacant possession value. Offers for the portfolio are invited in excess of £9,400,000, which would equate to a net initial yield of 5.5% after purchaser costs of 7.26%. Peach Pub Company director Hamish Stoddart said: “Peach aims to be the best gastro-pub company on the planet. We are operators through and through. This move allows us to be debt-free, invest in our pubs and carry on looking for opportunities to do a few new ones.” Fleurets managing director Graeme Bunn added: “The leases provide five-yearly, index-linked rent reviews to the Consumer Price Index with an annual collar and cap of 1% and 3%, full repairing tenant covenants, and without tenant break. I anticipate significant purchaser appetite for this exceptional portfolio of pub investments. Peach is a proven, award-winning operator of high-quality, food-focused pub restaurants. The assets are well invested and offered on long indexed-linked leases at sensible rents.” Peach Pub Company also operates 15 leasehold sites.

Industry News:

Peter Borg-Neal to feature in next video for Propel Premium subscribers: Oakman Inns and Restaurants founder and chief executive Peter Borg-Neal will feature in the next 30-minute video for Propel Premium subscribers, which will be sent out on Friday (21 June). Borg-Neal talks about growing the company through new financing routes and partnerships and adapting to the economic climate. 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, regular video recordings of key speakers from Propel events and conferences, and regular columns from insights editor Mark Wingett. 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

Adventure golf sector increasingly prevalent due to ‘adaptability for sites and audiences’: The adventure golf sector has become increasingly prevalent because of its adaptability to different sites and audiences, Christie & Co’s head of leisure and development Jon Patrick has argued. He said: “In recent years the adventure golf sector has seen a boom and many operators are experiencing strong demand from consumers and investors. What this tells us is the market is evolving for traditionally low-tech concepts such as crazy golf and darts which, with the introduction of new technology and slick design of scoring and booking systems, are now placed in the competitive socialising framework. Once their position in the market has been established these businesses can drive on-site food and beverage and return visits and capitalise on their unique selling points with consumers, who are consistently looking for new experiences. The adventure golf sector has become increasingly prevalent due to its adaptability to different sites and audiences, ranging from adult-focused custom to the family friendly end of the spectrum such as themed golf parks. The overall market has been expanding organically with indoor and outdoor concepts both gaining ground and we see potential for consolidation as well as potential for outdoor and indoor operators to combine. This could ensure a balanced operating platform with a hedge against the weather or bring some of the indoor technology to the outdoor market, as well as widening the demographic appeal within one business.”

CAMRA overhauls voucher scheme with on-trade support: The Campaign for Real Ale (CAMRA) is overhauling its voucher scheme with support from the on-trade. As of 1 July, CAMRA members will receive £30 in vouchers that are each worth 50p off a pint. The vouchers will replace the traditional partnership with JD Wetherspoon and cover more than 1,400 pubs nationwide across four pub chains. The vouchers will cover pints poured at Wetherspoon, Stonegate Pub Company (real ale hand-pumps only), SA Brain (own-brand beer only) and Castle Rock Brewery. CAMRA said it was relaunching the voucher scheme to make pub-going more affordable for consumers and to raise footfall at participating venues. The move coincides with CAMRA’s #SummerofPub campaign to support the pub trade. CAMRA is also expanding its Real Ale Discount Scheme to cover 3,000 independent pubs across the country. National chairman Nik Antona said: “We are grateful these companies have approached us to ensure pub-going remains an affordable activity. By offering vouchers at pub chains and discounts throughout independent pubs, we aim to support a wider range of pubs by driving footfall. Regular pub visits can be expensive for many of us and we hope that by partnering with more pubs large and small we can get people out to their local.”

Restaurant operators urged to make cancellations easier to address no-show crisis: Operators need to make it easier to cancel bookings to address the restaurant no-show crisis, according to new research. The findings by guest experience management expert HGEM revealed half of diners believe restaurants need to make their cancellation process easier, while almost three-fifths (56%) expect an option to cancel in any correspondence they receive. Additionally, more than one-quarter (27%) would welcome being able to cancel via text message and 17% through a restaurant’s app. The study also revealed more than three-fifths (61%) of guests would be more likely to turn up if they received a reminder about the reservation 24 hours in advance. Of those respondents, 62% would like a reminder via text, while 35% would prefer an email. Meanwhile, almost three-fifths (58%) of consumers would never book a restaurant that required a deposit. For those who would book a restaurant that required a deposit, almost half (47%) said they expected to pay a deposit when there was a large group, while more than one-quarter (28%) are happy to pay to secure a table for a special occasion. That said, 69% would be more likely to turn up if they paid a deposit. HGEM founding director Sally Whelan said: “Restaurant no-shows is a topic that has been particularly prevalent in our industry in recent months. Our research has revealed that while diners are more likely to turn up for their tables if they receive direct communication in advance, there’s a clear opportunity for operators to offer a smoother cancellation process across a variety of methods. Incorporating these learnings would have a positive impact on restaurant bookings.”

UKHospitality reveals Operations Managers Awards finalists: UKHospitality has revealed the finalists for the 2019 Operations Managers Awards, the annual search for the best in the licensed hospitality sector. In the managed category, the finalists represent Deltic Group, Mitchells & Butlers, Stonegate Pub Company, True Pub Company and Arc Inspirations, and in the franchised and leased sector the finalists come from Greene King, Punch, Star Pubs & Bars, Ei Group and Hawthorn Leisure. The finalists are Amanda Bloor, Gavin Cook, Sarah Edmunds, Nikki Greenhailgh, Ben James, Lee Jarvis, Jason Lake, Simon Lynch, JP McKeown, Ian Morley, Niki Plumb, David Stallard, Adrian Swain, Shane Roe, Glynn Wallis, Andy Wearn and Greg Yeats. Awards founder Nick Bish said: “We have another highly promising group of operations managers from across the industry sectors – casual dining, late-night, accommodation and, of course, the high street.” The next judging phase is a full day in the trade, where they will be judged on business meetings, investment projects and running an estate of pubs. The finalists will attend a strategy and leadership three-day masterclass next month as well as a profiling and extensive feedback session that explores and supports their own management style. The winners will be announced at an awards event at Salsa Bar on the Embankment on 8 October.   

Company News:

Wade to swap Prezzo for Roadchef: Darrell Wade has stepped down as chief commercial officer at Prezzo to join motorway services operator Roadchef, Propel has learned. Wade joined Prezzo at the start of last year. Before that he spent almost ten years at TGI Friday’s UK working across a number of executive functions including marketing director, commercial director and most recently chief operating officer. Prior to joining TGI Friday’s Wade spent seven years at Yum! Brands in marketing roles for KFC and Pizza Hut UK spanning brand, retail, new product development, advertising, media and channel management. He will join Mark Fox-led Roadchef at the beginning of July in the newly created board-level position of chief commercial officer. Last month, Prezzo appointed Dean Challenger, formerly of David Lloyd Leisure and Premier Inn, as finance director. Earlier this year Propel revealed Paul Barton had stepped down as operations director of Prezzo, which is now led by Karen Jones, after more than two-and-a-half years with the business. Propel understands the company won’t replace Barton but its regional operations directors will report straight into executive chairman Jones. Earlier this month, natural fast food brand Leon signed a five-year exclusivity agreement with Roadchef as it prepares to open two more restaurants as part of their partnership – with more to follow.

Goals Soccer Centres appoints Deloitte to ‘assess options’, brings in new interim CFO: Goals Soccer Centres, which suspended trading of its shares on AIM in March while it investigates a £12m VAT misdeclaration, is appointing Deloitte to help “assess its options”. The company, which operates 50 soccer centres, stated: “The company can confirm it is in the process of engaging Deloitte to work alongside its current advisors and lenders in assessing future corporate options. The scope of the engagement is to consider and plan for certain scenarios the board may consider actioning either after or alongside its discussions with HMRC regarding the potential misdeclaration of VAT.” Goals Soccer Centres has also appointed Mike McGill as interim chief financial officer. McGill, who has worked with Baxters Food Group, McDonald Hotels and Murray Group, replaces Martin Johnson, who previously held the role on an interim basis and leaves Goals Soccer Centres on Wednesday, 31 July. McGill isn’t a director of the company. Forensic accountants have been investigating Goals Soccer Centres’ accounting policies and practices to establish a final value for the misdeclaration of VAT. The shares remain suspended while the company warned last month it might be unable to complete its 2018 full-year audit by the 30 June deadline as per AIM rules. Goals Soccer Centres also said at the time it expected its 2018 and 2019 full-year results to be “materially below expectations and historically reported financial performance”.

Bierschenke in talks for two more sites as it prepares to double up in City: London-based authentic German beer hall Bierschenke is in negotiations for two more sites as it prepares to double up in the City this month. Founder Gerry Hanratty will open a venue in Tower Hill on Thursday, 27 June. Extending more than 6,000 square feet with traditional maple furniture sourced from Munich, the bierkeller will accommodate 240 across traditional beer tables, with a total capacity of 400. The debut Bierschenke launched in London Wall in 2014. Hanratty said: “Bierschenke was created to bring an authentic Bavarian experience to the City of London. We have respect for the tradition and cultural importance of good food and drink – it’s the Bierschenke way. Since opening our London Wall site we have experienced huge demand to extend our presence further and are currently in negotiations for two more sites. Tower Hill will offer the consistent Bierschenke experience and we hope the people of London are as excited as we are about the opening.”

Bubble tea brand Gong Cha opens debut UK site, in Manchester: Gong Cha, the global bubble tea brand, has opened its first UK site, in Manchester. The company, which operates circa 1,500 sites in more than 15 countries, has launched at City Tower having agreed a deal for a 1,516 square foot site with landlord Schroder Real Estate. Rob Cosslett, investment manager at Schroders, told The Business Desk: “We aim to create a complementary line-up that will flourish and provide greater amenity for tenants at City Tower. We are really pleased to welcome Gong Cha. It is testament to Manchester and the location of City Tower that the company has chosen to launch its first UK operation here.” Russell McGill, associate at Savills, which advises Schroders, said: “The retail and leisure offering at City Tower continues to develop at pace. It is brilliant to see a brand such as Gong Cha establish its first UK operation at City Tower and create an alternative offer.”

Just Eat launches gift card: Just Eat, the market place for online food delivery, has unveiled its first gift card offer in the UK. The company has partnered with electronic payment and pre-paid solutions company Epay for the initiative, which will be available to consumers and corporate customers. The partnership will be rolled out across further markets globally, starting later this year. Customers will be able to purchase physical and digital gift cards, initially through the Just Eat website. The cards will then be rolled out across major UK retailers during the next 12 months, with denominations of £15, £20, £25, £30, £40 and £50. More than 70% of consumers in the UK have purchased at least one gift card in the past three years. The category has proved to be particularly popular with younger consumers, with more than two-fifths (44%) of 18 to 34-year-olds buying at least one every other month. Just Eat’s trials revealed customers who tried the brand for the first time via a gift card went on to make repeat orders of a greater value. 

Punch opens 150th retail pub, in Ramsbottom: Punch has opened its 150th retail site after father and daughter Iain and Naimi Davies took on their second site with the company. The Railway in Ramsbottom, Greater Manchester, has reopened following a £500,000 refurbishment by Punch to create a larger trading area, while its outside spaces now celebrate the steam railway station opposite by featuring carriage-style booth seating. The Railway offers cask, craft and world beer, premium spirits, a gin menu and a new food menu that includes a breakfast offer. The Davies family also operates the White Horse in Bolton and have ambitions to turn The Railway into the first cashless pub in the area. Iain Davies said: “We pride ourselves on running a fantastic pub that serves great food – and that’s exactly what we’ll do here.” Punch managing director Andy Spencer added: “The Railway is one of our biggest investments and shows our continued commitment to creating epic community pubs.” Punch owns and operates 1,300 pubs across England, Scotland and Wales and is investing £32m in its estate in the next year. It operates retail pubs in two segments, Mighty Local and Our Local, while also housing the Champs brand in the retail portfolio.

Italian Job managing director to launch dedicated street food space, in Holloway on Monday: Simone Moroni, managing director of Italian craft beer pub concept The Italian Job, is to launch a dedicated street food space at Nag’s Head Market in Holloway, north London, on Monday (24 June). The Upper Place will feature Moroni’s own bakery concept, Paneria, which operates three stores in Rome, and 16 other traders including Three Uncles (Cantonese roasted meat); Maize Blaze (Colombian street food), which has a kiosk in Camden Market; Dirty Bagels, which also operates at Old Spitalfields Market; Que Que (Dominican street food); and Pasta Mood (homemade pasta). The food hall in Hertslet Road will also host workshops and cookery classes, Hot Dinners reports. The Italian Job opened its debut site in Chiswick before launching a second at Mercato Metropolitano having raised more than £400,000 on crowdfunding platform Crowdcube. A third site launched in Notting Hill in December 2016. The Italian Job is a joint venture between the founders of Italian brewery Birrificio del Ducato and Marco Pucciotti, who owns several pubs and restaurants in Rome.

Whitbread launches three-bedroom Premier Inn to help young people with additional needs return to work: Whitbread has opened a three-bedroom Premier Inn in Coventry that will help young people with additional needs return to work. The project is a partnership with Hereward College and, while the mini-hotel won’t take paying guests, it is an exact replica of a Premier Inn with trainees learning all areas of hospitality in a realistic environment. Young people taking part in the programme will also have an opportunity to undertake supported internships, with the aim to gain paid jobs in Premier Inns across the country. Premier Inn managing director Simon Ewins said: “We welcome people from all walks of life and every corner of the world – it’s only right our workforce reflects this. Diversity is at the core of our people plan as we continue our focus on becoming the most inclusive hospitality business. We recognise a diverse and inclusive culture brings significant business benefits and ultimately leads to better business performance.” The venture follows an industry-first partnership between Premier Inn and Derwen College in Shropshire as part of Whitbread’s Force For Good programme. Almost half the students who have trained at Derwen have gone on to be directly employed by Premier Inn since the partnership launched in 2013.

Former Prescott & Conran operations manager launches bowl food concept in Soho: Former Prescott & Conran operations manager Peter Farrell has launched a bowl food concept in Soho. SOW has opened in Great Marlborough Street offering “globally inspired, seasonal bowl food” devised by former national chef of the year Frederick Forster, who has worked alongside Raymond Blanc and Michel Roux Jr. The project is backed by Pastaio investor Shemeel Khan, with plans to launch two more London sites this year. The 22-cover Soho restaurant also offers grab-and-go options.

Graffiti Spirits Group to convert Slim’s Pork Chop Express to gourmet chicken takeaway and arcade: Graffiti Spirits Group is to convert its Slim’s Pork Chop Express site in Liverpool into a gourmet chicken takeaway and speakeasy-style retro arcade concept. The company is transforming the Seel Street property into 16 Bit Chicken, which will open this summer as a takeaway restaurant serving fried chicken pieces and burgers. However, the venue will feature an arcade at the rear featuring 16 retro games including Pac-Man, Point Blank, Time Crisis and Golden Axe. Co-founder Matt Farrell told the Liverpool Echo: “We are combining moreish takeaway food with a retro arcade that will take our guests on a journey back to the days when these games were really popular.” Earlier this month Graffiti Spirits Group added to its portfolio of sites in Liverpool by launching Duke Street Food and Drink Market, which houses six traders and three bars along with a restaurant from Pilgrim, which was given the opportunity by Farrell after winning his investment on BBC show My Million Pound Menu.

Beautiful Pubs Collective launches fourth site, in Leicester: The Beautiful Pubs Collective has reopened King Richard III in Leicester for its fourth site. The Highcross Street pub, which had been closed since January, has undergone a £110,000 redevelopment jointly funded by Beautiful Pubs and freehold owner Everards. The new-look venue features a chophouse, palm tree wallpaper, theatre lighting, floor-to-ceiling mirrors and a new year-round garden. Beautiful Pubs founder Sam Hagger told Leicestershire Live the chophouse would offer an “ever-changing menu with a strong focus on locally sourced meat on the bone cooked on a robata coal grill and other dishes with a European influence”. The Beautiful Pubs Collective also operates the Rutland & Derby Arms and the Knight & Garter, both in Leicester, and The Forge Inn in Glenfield. The company employs 90-plus staff and has a turnover of more than £2.5m. Hagger is also behind non-profit recruitment company Hospitality Minds. He founded Ssoosh Inns – or The Beautiful Pubs Collective as it is known locally – in 2008.

Subway franchisees open company’s debut drive-thru in south of England: Subway franchisees Steve and Sue Pasco have opened the company’s first drive-thru in the south of England. The Pascos, who own 15 Subway stores in Bristol and the surrounding area, have opened the outlet in Barnfield Close, Swindon. The couple are also business development agents for Subway in the Bristol and west region. Located below a Travelodge, the drive-thru also has seating for 32 customers. The store marks Subway’s sixth drive-thru in the UK and Ireland, joining sites in Belfast, Guisborough, Rochdale, Salford and Wakefield. Colin Hughes, country director for Subway UK and Ireland, said: “Subway is always looking for great locations to open stores. Drive-thrus open up new possibilities for our guests in that they don’t even need to leave the comfort of their own car.” Subway has more than 2,500 stores in the UK and Ireland.

North London-based meat supplier ceases trading after collapsing into administration for second time in nine months: North London-based meat supplier Nigel Fredericks has ceased trading after failing to find a buyer following its second collapse into administration in nine months. Lisa Moxon and Ben Barrett, of Dow Schofield Watts Recovery, had been working with the directors and attracted a number of potential buyers – but none were willing to conclude a deal. A total of 250 jobs have been lost. In recent years Nigel Fredericks had invested heavily in equipment but subsequently faced cash flow problems due to rising costs, increased finance lease costs and a reduction in credit insurance. Nigel Fredericks entered into administration with PricewaterhouseCoopers in September 2018 and was subsequently acquired by independent shareholders and directors. However, despite their efforts they have been unable to make the business viable. Moxon told Insider Media: “We have been working with the board to review options for the business including finding a new buyer but, while there were a number of interested parties, none was willing to take it forward. It is with regret we have had to announce the closure of this long-established business.” The assets of the business are being sold by auctioneer and valuer Landwood Group.

Lyle’s team to launch ‘little sister’ in Borough Market next month: James Lowe and John Ogier are set to launch a “little sister” to their Michelin-starred Shoreditch restaurant Lyle’s, at Borough Market next month. Flor will open on Thursday, 11 July as a wine bar, bakery and restaurant inspired by the “buvettes of Paris and the pintxos bars of San Sebastian”. Split across two floors joined by a cast-iron spiral staircase, Flor will be housed in a 19th century building in the centre of Borough Market, with floor-to-ceiling windows and banquette seating. The bakery counter will focus on sourdough loaves and pastries using stone-ground wheat milled at Lyle’s. Daytime dishes will include raw scallop with preserved gooseberry and green tomato, while the evening menu will feature simple plates such as Cornish pollack brandade with pickled peppers, and loganberry fool using Sussex fruit. There will also be weekend brunch, while wine will be sourced from “agriculturally responsible producers”. Lowe said: “Whereas at Lyle’s we focus on the best produce Britain has to offer, Flor will pay homage to the European ingredients available in London. It will be a smaller, more laid-back space – but with a big personality.”

Leicester-based restaurant owner opens Italian coffee bar for third site: Leicester-based restaurant owner Jaimon Thomas has opened an Italian coffee bar for his third site. Thomas has launched Merchant of Venice in Granby Street in the former Plan Burrito premises. The design of the coffee bar has been inspired by the Shakespeare play of the same name. Merchant of Venice serves Julius Meinl coffee, while the food offer combines Italian and English cuisine, reports Leicestershire Live. Thomas also runs restaurants Kayal and Herb in Granby Street.

Saltaire Brewery expands ownership as it reports 20% year-on-year sales increase: West Yorkshire-based Saltaire Brewery has expanded ownership of the business as it reported a 20% increase in year-on-year sales. Sales director Nick Helliwell and operations director Dan Spampinato have joined the board of the independent brewery. Until now, Saltaire was wholly owned by founder Tony Gartland and managing director Ewen Gordon. Since 2017 the company has invested more than £3m in a 40-barrel brewhouse and 1,000 square metre packaging plant to create a contract brewing and bottling business that launched in March. The business is now brewing 65,000 litres and bottling 70,000 bottles a week. Current year-on-year sales of its own beer to on and off-trade combined show an increase of 20%. Gartland told The Business Desk: “Recognising the need for long-term stability in the management team and the contribution made by Nick and Dan during this significant period of expansion, we are pleased to be able to offer them the opportunity to share in the value of the business as it continues to grow. Both have significantly added to the quality of the board and it is the next logical step to invite them to take part in the ownership structure.” 

Elegant Hotels completes refinancing: Elegant Hotels Group, the owner and operator of seven freehold hotels and a Barbados restaurant in which sector investor Luke Johnson holds a 12.5% stake, has completed a refinancing of its loans and bank facilities. Prior to the refinancing, the group’s loans and facilities were due to expire in May 2020. These consisted of US$59.4m of term loans, US$5.0m of revolving credit facility, and a Bbds$20.0m (US$10.0m) overdraft facility. As a result of the refinancing the loans and facilities have been extended to 2024 at similar commercial terms to those currently in place. The group now has US$64.4m of term loans consisting of US$59.4m and Bbds$10.0m, while it also retains its Bbds$20.0m overdraft facility. The remaining repayment period of the loans has been extended from ten years to 15.

Center Parcs to make Irish debut next month: Center Parcs will open its first holiday resort in Ireland next month. Longford Forest will be set among 400 acres of woodland in County Longford, with 466 self-catering lodges, 30 apartments and up to 1,000 staff. The site will offer more than 100 indoor and outdoor activities including the Subtropical Swimming Paradise, reports Insider Media. Center Parcs, which has invested €233m (£208m) in the venture, operates five short-break destinations in the UK.

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