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Fri 26th Jul 2019 - Propel Friday News Briefing

Story of the Day:

NewRiver sees ‘significant’ acquisition opportunities arising from Stonegate’s takeover of Ei Group: NewRiver chief financial officer Mark Davies has told Propel he believes Stonegate’s acquisition of Ei Group could generate “significant” acquisition opportunities for the company in 2020. Stonegate is set to dispose of at least 100 pubs as it looks to get the £3bn deal approved by the Competition and Markets Authority. However, Davies believes it is inevitable further pubs will become available. Speaking following NewRiver’s first-quarter update, Davies said: “First and foremost the deal is great for the sector because money is being put into the industry. The price being paid also shows the sort of value being placed on pub businesses. For us as a buyer rather than a seller of assets, we see it as a significant opportunity. Besides the reported 100 pubs Stonegate will sell to get the deal through, it’s inevitable further pubs will be sold as the company looks to reduce debt levels. At this stage we don’t know what pubs will be available, of course, but it’s something we’ll monitor. That’s more of an opportunity for next year, though. We’re keen to bolster the pub portfolio over the next few months if we can and we’re looking at potential deals.” Davies said he was “really pleased” with the 670-strong pub portfolio’s performance in the company’s first quarter, but he was now focusing on the half-year mark. He added: “April was ok but May and June was tough. July has been really good for us and we’re outperforming the market.” Davies said NewRiver would continue to invest in its pub portfolio, which had become even more important to the company given retail struggles on the high street. However, he said rent levels were holding up while the occupancy percentage was in the “high 90s” at its shopping centres.  

Industry News:

Mark Wingett to look at whether operators are planning long-term enough on delivery in latest Premium column: Propel insights editor Mark Wingett will look at whether operators are planning long-term enough when it comes to delivery as part of his latest opinion piece, which will be sent to Propel Premium subscribers on Friday (26 July) at 5pm. He will also explore why having a smaller sub-brand can be beautiful and whether it’s a better method than developing from within. Subscribers can also read about the latest industry whispers in Premium Diary. 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 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

Value vital to US diners but almost two-thirds notice menu price rises: Value remains vital to diners when it comes to eating out but almost two-thirds have noticed US restaurant menu prices increasing during the past year, according to research by insights firm Technomic. Its Value And Pricing Consumer Trend Report also revealed a quarter of consumers’ definition of value had changed during the past two years, with food quality and service, in particular, playing an increasing role. Almost half (47%) look for good value because it makes them feel better about eating out if they know they are getting a deal. Meanwhile, half said they cut back on add-ons occasionally to keep the cost of a meal down, while almost two-thirds (65%) have noticed an increase in menu prices in the past 12 months. Bret Yonke, manager of consumer insights at Technomic, said: “As definitions of value evolve, operators need to renew their focus on exceeding expectations across all aspects of the value equation – food quality, price, service and atmosphere. Look for high-traffic, high-volume segments such as fast food to further experiment with subscription models – such as $5 per month for a daily coffee – to drive value perceptions and visit frequency.”

Pizza Hut trials digital cubby holes for collections: Pizza Hut is trialling a digitally powered pick-up system that allows consumers to order ahead and collect their pizzas from a cubby hole. The company is testing a 12-compartment system developed by Brightloom, formerly Eatsa, at a restaurant in Hollywood, California. The system works with orders made through the Pizza Hut app, website or in-store, the company said. It will also work with phone orders. Once orders are ready, customers can retrieve pizzas from a cubby with a latched door that digitally displays their name. Nicolas Burquier, chief customer and operations officer for Pizza Hut US, told Nation’s Restaurant News: “So many people live on the go and don’t have time to wait in line, especially in urban areas and, let’s face it, many of us welcome any opportunity to skip the small talk. We took it on ourselves to introduce this seamless and innovative carry-out experience that eliminates the lines and the conversation.”

Company News:

Hills promoted to Bill’s managing director: Bill’s Restaurants, owned by Richard Caring, has promoted Sarah Hills to the role of managing director, Propel has learned. Hills joined the David Campbell-chaired business last September as executive operations director. Hills stepped down from Wagamama at the end of 2017 after 17 years with the then Duke Street Capital-backed business, including the last two as UK managing director. Bill’s is currently rolling out a new look across its circa 80-strong estate. Earlier this year the company reported like-for-like sales rose 12.2% in March. At that point, Bill’s had already converted 13 restaurants to the upgraded format and the company said these were all “significantly outperforming” the rest of the estate in like-for-like sales. A further 11 upgraded restaurants were due to open in the second quarter of the year, starting in Leeds. Separately, Propel understands the company is looking to move its site in Manchester from John Dalton Street, which is set to be redeveloped, to the former Giraffe unit in Spinningfields.

Rooney Anand joins Chiktopia board as better chicken concept opens debut site: Casual Dining Group chairman and former Greene King chief executive Rooney Anand has joined the board of Chiktopia as non-executive director. Anand joins as the better chicken concept opens its debut site, at Intu Lakeside in Essex, and follows a personal investment he has made in the company, joining other industry leaders such as Abokado chief executive Mark Lilley, Tortilla managing director Richard Morris and Mystery founder Dan Einzig. The new 120-cover restaurant offers the brand’s fried and grilled chicken burgers and tenders, skinny fries, salads, wraps, vegan and vegetarian options, thick dairy shakes and Louisiana biscuits. Chiktopia, led by former Ole & Steen operations director Alastair Gordon, uses technology to offer a counter-less restaurant with 100% kiosk and app ordering. In May, Gordon told Propel the Chiktopia team would concentrate on the Lakeside site this year to make sure the offer was “absolutely right” before looking at potential expansion. He said: “We have a compelling offer with an excellent price point but the rest of this year will be about spending the time working out what works and what doesn’t. We’ve been in this game long enough to know we can’t just start a mass roll-out. Intu Lakeside, with its mix of couples and families and driven by state-of-the-art leisure experiences and a well-established retail destination, is the perfect platform on which to demonstrate the broad appeal of our brand and our philosophy of fast food to feel good about.” 

Barworks adds two pubs to London estate: London bar and pub operator Barworks has secured two new pubs in the capital including the Beef & Brew site in Hackney, Propel has learned. The group, led by Marc Francis-Baum, has completed on the former Beavertown-owned Duke’s Brew & Que pub, which Beef & Brew took on for its second site last year. Barworks will rebrand the venue to its original name, the Duke of York. The company has started renovation work on the site, mainly moving the bar and “opening lots of windows that were once covered and bringing back some nice features”. Francis-Baum told Propel: “It will be a Barworks pub – a proper boozer, drink-led, with great food.” The company has also taken on the White Bear in St John Street, Farringdon. Francis-Baum said: “Renovations will hopefully start next week. It’s a beautiful bay-fronted pub on a fantastic street with some great food operators. We will be ‘the’ pub on that street.” Barworks currently operates 12 pubs, plus Mare Street Market and five under The Diner name, which have been part of Barworks since the beginning of the month. The Diner sites will be converted to independent wet-led operations during the next year. Mare Street Market is the group’s most profitable site, with the largest turnover.

Mildreds appoints Luke Bishop as managing director: Vegetarian restaurant group Mildreds has appointed Luke Bishop, formerly of Polpo, as managing director, Propel has learned. Bishop left Polpo in summer 2017 following six years with the business, including the last two as managing director. He has since been consulting across the sector with businesses including JKS Restaurants and Greyhound Cafe. He is also co-founder of Dabbers Social Bingo. Mildreds was founded by Diane Thomas and Jane Muir in Greek Street, Soho, in 1988 and is credited with “reinventing vegetarian food”. It has four sites, the latest opening in Dalston. Last year, reports suggested Encore Capital had invested an undisclosed sum in the business, which both parties denied. However, Propel understands Shirin Gandhi, a partner at Encore, is now a Mildreds director. Encore, which specialises in providing £1m to £10m in equity finance to established companies looking to grow, led a £2m investment in Detox Kitchen in 2016.

Fuller’s buys new HQ as it goes through ‘transitional year’: Fuller’s chief executive Simon Emeny has told Propel the company has bought the freehold of a new headquarters as it goes through a “transitional year” in the wake of selling its brewery to Asahi Europe for £250m. The new headquarters is less than two miles from its current base in Chiswick, overlooking the Thames at Strand-on-the-Green. The company aims to move in by the new year. Emeny said the company was now in an “exceptionally strong position financially” to acquire assets but had a number of options to grow organically. These include the expansion of its bedroom stock from 817 rooms to more than 1,000 in the next few years. Fuller’s has now introduced turnover agreements across 35 sites within its tenanted division. The agreement sees licensees pay a percentage of net turnover in rent, which means rent flexes according to seasonal variations in trade. Of the future, Emeny added: “To take Fuller’s into the future we have a vibrant, creative and energetic executive team in place that will be complete when our new finance director, Adam Councell, joins in August, and we finalise the recruitment of a new leader for our tenanted inns. Fred Turner, who has been instrumental in introducing the new turnover agreement during his tenure heading our tenanted division, moves to become retail director where he will be responsible for our managed pubs and hotels. Peter Turner retains his brief as property director and Jane Jones remains as marketing director. Dawn Browne, previously head of operations for our City pubs, joins the executive team in her new role as people and talent director. It’s early days but I’m very excited by the potential of this team. As a new team, we have already started to plan for the future and refine our vision and strategy. We will continue to build on our fantastic estate of iconic pubs in stunning locations, an exciting portfolio of interesting drinks – which will be supported by our long-term supply agreement with Asahi – our commitment to delicious, fresh-cooked, seasonal food and outstanding accommodation, together with a great team of people and our financial strength. There’s no doubt this is a transitional year for the business but it will be exciting, full of opportunity and enables us to take this wonderful company to new heights.”

Revolution Bars Group launches new induction process at Revolucion de Cuba, relaunches flagship Manchester site: Revolution Bars Group has launched a new team-induction process at Revolucion de Cuba that aims to give new recruits better insight into the stories of Cuba and the diverse rum range that forms the focal point of its drinks offer. The Revolucion de Cuba team has recently returned from its annual cultural immersion trip to Havana and Miami, where a group of general managers and the brand team visited the bars and restaurants that inspired the development of Revolucion de Cuba. Their experiences from the trip are now helping to shape the induction process for new staff. Chief executive Rob Pitcher said: “To stay true to our brand heritage it’s crucial we invest in our teams and give them first-hand experience of the inspiration for our venues and allow these stories to come to life in an authentic way. The culture of Revolucion de Cuba is a vital part of the brand success and this trip is the best way to ensure our team experience it for themselves and are then able to retell the stories to our guests so they can all share in the vibrancy Cuba has to offer.” The research trip has also inspired the revamp of the company’s flagship Revolucion de Cuba site in Manchester. The Peter Street site will reopen on Friday (26 July) following a £450,000 refurbishment with a focus on delivering an enhanced entertainment experience including an upgraded audio-visual system and new stage areas on both levels. Taking inspiration from the paladars of Old Havana and the bars and restaurants of Miami’s North Beach, Wynwood and Little Havana, the ground-floor bar has had a complete overhaul to reflect the brand’s Cuban heritage. 

Cubitt House to open The Beau Brummell in Haymarket: London gastro-pub operator Cubitt House’s latest opening, in London’s Haymarket, will be called The Beau Brummell. The pub, the group’s sixth, will sit in the central courtyard of St James’s Market with a terrace and two floors of seating and dining. The pub will open on the former Veneta site that was operated by Salt Yard Group and will mark the company’s first venture into St James’s. It is thought the pub is being named after George Bryan “Beau” Brummell, who was an iconic figure in Regency England and for many years the arbiter of men’s fashion. Tony Gualtieri, managing director of Cubitt House, said: “The pub will offer an extensive focus on wine including a special range from the best British producers as well as fine ale, crafted cocktails and a locally sourced, farm-to-fork food offering available from breakfast through to dinner.” Cubitt House, whose sites include The Alfred Tennyson and The Thomas Cubitt, secured investment from private investors in 2015. The consortium of investors acquired a majority stake in the business and provided funding to facilitate expansion. The company opened its most recent site in London – The Coach Makers Arms in Marylebone Lane – at the end of 2017. Davis Coffer Lyons is thought to have acted on the Haymarket deal.

Brian Niccol – Chipotle sales gains ‘just the beginning’: Chief executive Brian Niccol has said Chipotle’s recent sales gains are “just the beginning”. This week the company reported sales in the US grew 13% to $1.4bn in its second quarter to 30 June. The results have been driven by a year-long effort to unleash relevant marketing, improve digital experiences for consumers and increase speed of service. Digital sales grew 99.1% and accounted for 18.2% of sales for the quarter. Niccol told Nation’s Restaurant News: “This was more than we did in digital sales during all of 2016.” On taking up his role, Niccol called the brand “invisible” after being haunted by food safety scares. He said: “We are delighted to see the response we’re getting – but this is just the beginning. We’re very bullish on how we can drive this.” The company’s revamped loyalty programme, which contributes to digital sales through an app, also has room to grow, Niccol said. At the close of the quarter, the chain had circa five million members, up from two-to-three million in the previous quarter when the programme launched. Speed and efficiency have become so important the company launched a quarterly cash bonus programme for staff. Eligible workers can earn up to an extra month’s pay each year if they help stores meet certain performance metrics. 

Levantine bar and kitchen concept Arabica to start expansion with King’s Cross launch: Levantine concept Arabica Bar & Kitchen, which is based in Borough Market, is to start expansion by opening a site in King’s Cross. Founder James Walters will launch the site in a ground-floor corner of the recently opened Aga Khan Centre in Lewis Cubitt Walk in September. The 66-cover interior will feature an open plan kitchen and bar with counter dining, leather banquettes and a communal table for 20 guests. A further 40 covers will be available on a terrace. New dishes on the menu will be inspired by trips to Lebanon, Istanbul and Tel Aviv. Dishes will include Istanbul-style mussels with walnut tarator, while there will be pitas stuffed with a blend of dry-aged short rib and chuck steak, enriched with bone marrow and charred over hot coals. Arabica will also offer an a la carte menu of small plates and a specials board featuring British produce. The bar will offer eight wines on tap alongside the restaurant’s drinks list, while Arabica products will be available to buy. Walters said: “We have been searching for the right neighbourhood to open in for a while. We’ve always been intentional about being part of a community from our roots in Borough market so we’re glad we took the time and found a place we feel connected to and energised about being part of.” 

Euro Hostel sells Liverpool and Newcastle sites to YHA: Euro Hostel has agreed to sell its city centre sites in Liverpool and Newcastle to the Youth Hostel Association (YHA) as it expands its portfolio across the UK. In the same family ownership for almost 20 years, staff will be integrated into YHA on completion of the deal. The sale will leave Euro Hostel with two sites – in Edinburgh and Glasgow. YHA chief executive James Blake said: “Both sites will ensure thousands of young people will be able to learn, meet new people and improve their well-being and life skills as part of our operations in Liverpool and Newcastle. We can’t wait to get started and bookings for both sites are open now.” Jon Patrick, head of leisure and development at Christie & Co, which brokered the deal, added: “Rising expectations, lifting of the maximum age for guests and higher spending power have encouraged substantial upgrading of facilities in the sector. This has resulted in hostels appealing to a more mature and affluent guest base as well as the introduction of new hostel concepts and emerging brands, which now compete with conventional hotels. The sale demonstrates the evolving nature and attractiveness of the hostel/multi-occupancy trading format and demand remains strong for sites in key leisure and education locations.” YHA is a registered charity comprising 151 hostels and 45 campsites. It has invested more than £37m in its hospitality portfolio since 2011.

Former Palomar head chef to lead kitchen at Iranian concept launching in Covent Garden on Tuesday: Former Palomar head chef Jeremy Borrow is to lead the kitchen of Iranian concept Nutshell, which is set to launch in Covent Garden on Tuesday (30 July). The restaurant will open in St Martin’s Lane led by husband and wife Mohammad Paknejad and Marwa Alkhalaf. It will focus on bread, brining, pickling, drying and fermentation. The venue will accommodate 80 diners over two floors, featuring an open kitchen with counter dining on the ground floor and a semi-private first-floor space for larger groups to book, Hot Dinners reports. Nutshell’s website states: “Iran is blessed with an abundance of spices, herbs, fruit and nuts. Centuries of trade at the heart of the Silk Road have influenced a wild diversity of regional dishes. Nutshell hopes to lift the lid on this glorious complexity and tell the untold stories of the enchanting, ancient cuisine of Iran.”

Krispy Kreme launches digital-centric redesign: Krispy Kreme has unveiled its first store redesign in a decade at a newly opened location in the US. The JAB Holding Co-owned doughnut brand plans to roll out 45 redesigned stores by 2020. The new site in Concord, North Carolina, features a digital-centric interior and an expanded menu. The new store format integrates in-store ordering with online orders, delivery, digital menu boards, a designated area for mobile order pick-up and digital order confirmation. The store also features an expanded drive-thru, adding two lanes to ease order congestion. The centrepiece of the redesigned shop is a “doughnut theatre”, where customers can view the entire doughnut-making process. The redesigned menu features “scoop sandwiches” (doughnut ice cream sandwiches), milkshakes made with doughnut-infused ice cream, and build-your-own doughnuts, where customers can choose from five glazes, ten toppings and five drizzles. Andy Skehan, Krispy Kreme president for North America, told Nation’s Restaurant News: “This new shop experience honours the heritage of Krispy Kreme while acknowledging and addressing the rising expectations of our customers.” 

US street food brand The Halal Guys to open second UK site next month: US street food brand The Halal Guys is to open its second UK site, on Saturday, 10 August. Restaurant operator ITICO F+B, which owns franchise rights for The Halal Guys in the UK, will open the venue in London’s Earl’s Court, adding to the brand’s debut European restaurant that opened near Leicester Square in the spring. ITICO F+B is targeting 20 Halal Guys sites across the UK within five years. The brand offers a basic menu of grilled chicken and gyro beef – a Greek version of a doner kebab – in a pitta, wrap or on a bed of rice. There is also a vegetarian alternative made with falafel. Egyptian immigrants Mohammed Abouelenein, Ahmed Elsaka and Abdelbaset Elsayed launched The Halal Guys as a cart on a New York street corner 28 years ago catering to Muslim taxi drivers. As the company name suggests, all meat is slaughtered according to Islamic law. There are now 85 outlets under The Halal Guys brand across North America and Asia, with 400 more in the pipeline. In February, ITICO F+B partner Jan van Delden told Propel the plan was to grow small clusters of restaurants in cities across the UK, starting in London. He said: “We are the only brand that operates in this space and, given how The Halal Guys has been received in each territory it has launched, we’re confident of its success in the UK.”

Secret Pub Company to reopen second site with Star Pubs & Bars: Nottingham-based operator The Secret Pub Company is to reopen its second site with Heineken-owned Star Pubs & Bars next week. David Hage and Mark Osborne founded The Secret Pub Company in 2016 to “breathe new life into village pubs”. The company opened The Railway in Lowdham in 2017 following a £400,000 refurbishment with Star Pubs & Bars. The companies have joined forces again with a £450,000 refurbishment of The New Trent in Radcliffe-on-Trent, which will reopen as The Radcliffe with a new bar and a 75-cover dining space including an eight-cover chef’s table. Hage said: “The success of The Railway surpassed even our expectations. We’ve done what we set out to do, which is build a brand and business famous for offering consistent, great-quality service, food and drinks, and an exciting calendar of events. It was always our intention to open three pubs in the area in four years. We’ve bided our time waiting for the right opportunity.” Star Pubs & Bars regional operations director Alun Johnson added: “David and Mark have an excellent track record at The Railway and a passion for excellence. They know how to make a village pub a success.”

AB InBev reports ‘great’ second quarter for UK business: Anheuser-Busch InBev (AB InBev) has reported a “great” second quarter for its UK business, with strong volume and high-single-digit net revenue growth. Budweiser Brewing Group UK and Ireland president Paul Lindenberg said: “We have enjoyed a fantastic start to the summer, which is a huge time for beer sales. Corona is seeing double-digit growth across total trade. We have also seen demand for no-alcohol beer continue to rise, with growth at 25% year to date. In the low-alcohol segment, Bud Light is growing by double digits in the on-trade. Year to date, we are the UK’s second-largest brewer, moving up from third place, and we have lots planned to keep up the momentum. By offering our customers a broad range of premium drinks and linking our brands to key cultural moments throughout the year, we have our eyes firmly set on top spot.”

Bolton-based micro-brewer to open debut standalone bar: Bolton-based micro-brewer Blackedge is to open its first standalone bar. Founders Wayne Roper and Shaun Reynolds will launch the outlet in Westhoughton. Blackedge Brewing Company is converting the Horwich Carpets site in Market Street ahead of an opening at the end of August. The bar will offer seven hand-pulled ales, mainly from Blackedge, seven ciders and up to ten craft beers. There will also be wine, spirits, mixers and soft drinks. Roper told The Bolton News: “The beer industry is so competitive we felt another outlet for our brand would benefit the brewery business.” Roper and Reynolds launched Horwich-based Blackedge Brewing Company in 2011 and added a taproom in 2015.

Bun House founders turn original Soho site into late-night bar and restaurant: The founders of bao and pickle cafe concept Bun House have transformed their original site in Soho into a late-night bar and restaurant. Z He and Alex Peffly relocated the restaurant from Greek Street to a larger site in Chinatown London in April. Now He and Peffly have transformed the original venue into Wun’s, a late-night bar and restaurant with a “1960s Hong Kong vibe”. The venue is set across two floors and features a downstairs bar with neon lights and velvet seating, while upstairs resembles a dai pai dong – a Hong Kong open-air street cafe. He has plundered her childhood for recipe ideas with mains including sour plum-braised duck, and wine-glazed quail with dry-fried asparagus. Drinks include green bamboo and quince, and plum and “coke”. He told Hot Dinners: “1960s Hong Kong was an interesting time, when the city prospered and the nightlife took off, so Wun’s is a nod to that era and my own little slice of Hong Kong in London.”

Leeds-based coffee shop to open second outlet, new site to focus on takeaway: Leeds-based coffee shop If Coffee is to open a second site in the city, this time focusing on takeout. Stephen Tyldsley will launch the venue in Vicar Lane in mid-August. Tyldsley said the outlet would be a smaller takeout version of its Call Lane premises but would serve the brand’s signature cakes, sandwiches and toasties. He told the Yorkshire Evening Post: “We are doing the same coffee and cakes and it’s all take out. To be honest, I think the building is great so I wanted it just for that.”

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