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Morning Briefing for pub, restaurant and food wervice operators

Fri 2nd Aug 2019 - Propel Friday News Briefing

Story of the Day:

Yum! Brands reports KFC UK sales up 17% in second quarter following last year's delivery saga: Yum! Brands has reported KFC system sales in the UK rose 19% for the second quarter ended 30 June 2019, compared with the previous year when it was still feeling the effects of a delivery saga that resulted in 750 of its sites being closed due to a mass chicken shortage. The UK accounts for 6% of KFC’s system sales worldwide. Globally, KFC like-for-like sales in the quarter increased 6% with US like-for-like sales up 2% – system sales worldwide rose 5%. Operating margin increased 8.6%, driven by refranchising, like-for-like sales growth and net new site growth. KFC opened 331 restaurants in 54 countries during the period. Operating profit was up 11% to $261m. Meanwhile, Pizza Hut system sales in Europe, including the UK, were up 6% – the continent accounts for 9% of Pizza Hut’s system sales globally. Individual figures for the UK were not included in the announcement. Pizza Hut sales were up 10% globally, with like-for-likes increasing 2%. US system sales, which account for 46% of global sales, rose 4%. Pizza Hut opened 221 restaurants in 42 countries during the period. Operating margin increased 4.1%, driven by refranchising, like-for-like sales growth and lower advertising spend associated with the US Transformation Agreement. Operating profit was up 18% to $96m. Yum Brands said it was likely to close almost 500 underperforming Pizza Hut restaurants in the US over the next two years. Dine-in outlets will be replaced by modern “express” sites. “We are leaning in to accelerate the transition of our Pizza Hut US asset base to modern delivery carryout assets,” said David Gibbs, Yum Brands! president and chief operating and financial officer, during the company’s second-quarter conference call. “This will ultimately strengthen the Pizza Hut business in the US and set it up for faster long-term growth.” Taco Bell like-for-like sales increased 7% and system sales were up 10%. Operating profit rose 7% to $159m. Taco Bell opened 55 restaurants in 12 countries. Yum! Brands’ total revenue in the quarter fell 6% to $1,310m.

Industry News:

Charlie McVeigh to reveal why he believes St Ives is setting an example for other seaside resorts to follow in latest Premium column: Draft House founder and My Million Pound Menu judge Charlie McVeigh will reveal why he believes the Cornish town of St Ives is setting an example for other seaside resorts to follow in the latest opinion piece, which will be sent to Propel Premium subscribers on Friday (2 August) at 5pm. 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 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

Average British consumer goes out to eat 63 times a year and for a drink on 85 occasions annually: The average British consumer goes out to eat 63 times a year, and for a drink on 85 occasions annually, according to new research by insights firm CGA. Its CGA Food Insights19 report also revealed the extent Brits now eat out – with 57% drinking outside the home at least once a week and 43% eating out at least weekly. Meanwhile, 56% of consumers said it’s important to them to be able to try new food trends when they dine out. The report also showed consumers spend the most on food and drink – £22.50 per head – when they’re on a date, while nearly a third of those who go out to eat on a date said they do so on a weekly basis. Another area of opportunity is the growth of on-the-go snack purchasing, with 61% of consumers tempted by these at least once a week, spending an average of £3.75. Likewise the report revealed the popularity of late-night snacks, with more than half (52%) of consumers buying a late snack on a weekly basis, spending an average of £6.20 when they do. Nearly half of respondents (47%) go out for breakfast at least once a week, spending an average of £8.75, demonstrating the opportunities that exist for operators at various times of the day. Fiona Speakman, CGA’s food client director, said: “Our research highlights consumer trends in eating out and areas of opportunity for operators. For example average spend per visit in the workplace is the lowest, but has one of the highest visit frequencies – an important consideration when location planning. We have seen a rise in eating out on less traditional occasions, such as breakfast and brunch but late-night snacking and on-the-go snacking have now become the most frequent reasons to eat out, which highlights the evolving nature of the out-of-home market. Informed operators are now thinking about the reasons diners are visiting them – whether it be a date, celebration or a quick bite to eat, and providing meals for these occasions such as sharing platters, light main meals or smaller plates, which can really maximise sales.”

Trade bodies urge other authorities to follow Greater Manchester night-time economy blueprint: UKHospitality and the British Beer & Pub Association (BBPA) have backed a new blueprint for Greater Manchester’s night-time economy – and called for other regions to follow suit. The blueprint, published by the Greater Manchester Combined Authority, includes plans and proposals to regenerate Greater Manchester’s hospitality sector. It also sets goals to be achieved by April 2020. These include gaining a greater understanding of night-time travel in the city and how it can be improved, along with testing the viability of allowing hospitality businesses to stay open later while ensuring the safety of employees at night. The blueprint report also offers support for the Agent of Change principle, which protects venues such as pubs from noise complaints made by residents in new-build developments nearby. According to the report, Greater Manchester’s culture and leisure sector accounts for 44% of employment in the night-time economy, the equivalent to 181,000 jobs. UKHospitality chief executive Kate Nicholls said: “Perhaps the most encouraging sign here is that Greater Manchester Combined Authority understands the importance of the late-night hospitality sector. We need more local authorities that ‘get ’ what we do. We are therefore calling for yet more mayoral authorities to show the forward-looking approaches of London and Manchester. We want to see widespread appointment of night czars in cities from Aberdeen to Brighton, to support the immensely valuable late-night sector.” BBPA chief executive Brigid Simmonds added: “With its ambitious strategy, Greater Manchester has set a high bar. We sincerely hope other local and regional authorities follow in its footsteps.”

Tower Hamlets set to become one of first council's to offer protection to dozens of pubs at same time: Tower Hamlets Council is set to become one of the first local authorities in the country to offer protection to dozens of pubs at the same time. The council has identified 37 venues – almost a third of the London borough's pubs – it wants to list as assets of local importance. The listing gives the protection to buildings not considered grand or of important enough historical value to be registered by Historic England. It means developers wanting to build around them will have to ensure they preserve the pub and its characteristics. In the past 18 months, more than 1,140 pubs in England and Wales have closed, with many either demolished or converted into homes or offices. Tower Hamlets now has 130 pubs – 75 fewer than in 2001. Neighbouring Newham has seen the biggest decline in the country with fewer than half the pubs it had in 2001 still open. A Tower Hamlets Council spokesman told the East London Advertiser: “Sadly, across the country we have seen more and more examples of traditional venues closing in recent years and it is right that, where we can, we take steps to protect these heritage assets.” Campaign for Real Ale national chairman Nik Antona said: “Using local listings is an innovative way to give pubs extra protection and sets an example other local authorities may wish to follow.”

Premiumisation of beer category means sales value continues to grow despite volume decline: Premiumisation has meant the sales value of the beer category has continued to grow despite volume declines, according to new research by insights firm CGA and its US-based consultancy Nielsen CGA. While cask ale sales have dropped 9.8% in Britain over the past year and 9.3% in America, sales of imported beer, world beer, super premium lager and craft beer continue to rise, led in part by consumer demand for premium drinks. Beer is still the most popular alcoholic drink in the on-trade, accounting for 48% of drinks sold in Britain and 44% in America. The research, released to coincide with International Beer Day, showed over the past two years, value sales of craft beer in Britain have risen 21.7%, while world lager sales are up 26.5%. Similar rises have been seen in the US, with sales of craft beer up 4.5% and imported beer rising 9.4%. However, beer drinkers across both markets have an older profile (ages 35 to 55-plus), with younger drinkers (18 to 34-year olds) the least engaged consumers of beer and showing the most dramatic decline in beer consumption since 2017. In Britain, younger consumers prefer to drink lager (23%) and craft beer (14%), while in America they choose craft beer (51%), domestic non-craft (51%) and imported beer (47%). “Despite changing tastes and buying habits, beer is still the number one preferred beverage for the on-premise in both Great Britain and the US,” said CGA drinks expert Mark Jackson. “Premiumisation of the beer category has outpaced volume declines to realise an increase in dollar and pound sales value. We are seeing world lager in most growth in GB and import and domestic super premium leading the way in America. Rather than buying high volumes of cheap beer, consumers both here and in the US are opting for lower volumes of higher-quality beer.” Nielsen CGA beer expert Matt Drummond added: “It’s also worth noting how beer sells best in each region, with one stark difference being the serve preference. In the US, consumers reach for the bottle or can, while British consumers overwhelmingly purchase draught.” Today’s beer consumers across both markets generally have higher household incomes and an increased tendency to eat and drink out, according to the research. In Britain, beer consumers earn an average household income of £41,000, with 49% of them eating out and 41% of them drinking out weekly. In the US, beer drinkers earn an average of $71,000, with 73% of them eating out and 35% drinking out on a weekly basis.

Company News:

Mackay to step down as Benihana MD: Richard Mackay, formerly of Wagamama and Nozomi, is to step down as managing director of Benihana, the worldwide Japanese teppanyaki restaurant chain, Propel has learned. Mackay joined Benihana last year on the back of new investment from Minor International, which acquired a 75% stake in the company, to spearhead the business and oversee its expansion programme. He is leaving the company to head up Matal Eatery in Al Khobar, Saudi Arabia. Earlier this year, Benihana, which operates three sites in London, launched a 100-cover restaurant at the former Carluccio’s site in Glasgow’s West Nile Street. It was the first new Benihana restaurant in the UK for more than 20 years. In April, Benihana signed a host of international franchise deals, which will see it open five restaurants in Egypt, three in Pakistan, and one in in Mexico, creating a total of 29 across its global portfolio. Founder Hiroki Aoki opened the first Benihana in 1964. Benihana’s London restaurants are in Chelsea, Piccadilly and at The Grange hotel in St Paul’s.

Upham Pub Company reduces debt levels after completing sale and leaseback deal on 14 pubs: Upham Pub Company has completed the sale and leaseback of 14 of the 15 pubs within the group to CBRE Global Investors. The properties, all of which are in the south of England, provide a total of 151 bedrooms. Upham Pub Company director David Butcher told Propel the majority of the funds had been used to reduce debt levels. He said: “What we've done is made the business even more resilient and set us up for the next stage of our journey. We're going to spend the next six months bedding things down and we're probably then start looking at what's out there.” The pubs in the sale and leaseback deal were The Bunk Inn, Newbury; The George Inn, Warminster; The Hawk Inn, Andover; The Mill at Gordleton, Hordle; The Navigator, Lower Swanwick; The Peat Spade, Longstock; The Running Horse, Littleton; The Station House, Haslemere; The Thomas Lord, West Meon; The Weighbridge Brewhouse, Swindon; The Wheelwright’s Arms, Havant; The White Hart, Overton; The White Hart, South Harting; and The Winning Post, Winkfield. Upham Pub Company has retained its freehold interest in The Swan in Chiddingfold. Savills acted for Upham Pub Company on the deal. Kevin Marsh, head of licensed leisure at Savills, said: “Upham Pub Company has built up a portfolio of well-respected local pubs that benefited from diversified income streams and large site areas. We are pleased to have secured a successful sale and leaseback for our client that enables it to fund further expansion of this highly-respected, managed house pub company.” Paul O’Brien, at Marle Place Property, acted for CBRE Global Investors.

Wignell steps down as Ed’s brand operations director: Sam Wignell, formerly of Mitchells & Butlers and Tesco Family Dining, has stepped down as brand operations director of Ed’s Easy Diner, after almost three years with the Boparan Restaurant Group-owned business. Wignell, who joins Ed’s in October 2016 from Harris + Hoole where he as chief operating officer, has joined S4Labour as its new chief customer officer. Last month, Ed’s rolled out its new menu with added vegan and gluten-free dishes and “custom-build” options. Following the success of the brand’s vegan activity between January and March, Ed’s is now offering its first permanent vegan burger – the Beet-Root 66. Earlier this year, Ed’s and sister brand Giraffe underwent a CVA, which saw 27 of their combined 87 sites proposed for closure.

Deliveroo acquires Scottish software company Cultivate: Deliveroo has acquired Cultivate, an Edinburgh-based software design and development consultancy specialising in the development of custom software applications, for an undisclosed sum. With the acquisition, Deliveroo plans to build a technology hub in Edinburgh, where it plans to hire 50 highly-skilled technology workers within three years – primarily engineers, product managers, user researchers, designers, and data scientists. Deliveroo was formerly a client of Cultivate, with the Scottish software company building the delivery firm’s payments system. The companies said they would continue to look at developing ways to improve payment processes for both riders and restaurants. They said the work will build on Deliveroo’s ‘“Cash Out” feature, which allows riders to access their earnings immediately; give riders and restaurants more information on how they are earning through the platform so they can better manage their finances; and develop ways to offer more financial support, for example to help riders save and help restaurants to manage their cash flow. Dan Winn, vice-president of engineering at Deliveroo, said: “As a British company, Deliveroo is proud to be investing in Edinburgh and creating more high-skilled jobs in the UK. Edinburgh is one of the UK’s fastest growing technology hubs, with access to an excellent talent pool of highly-skilled people and university graduates. Deliveroo is committed to offering riders flexible, well-paid work and helping restaurants to grow their businesses. Building on Cultivate’s expertise, we are excited to create new products and services that will help us achieve this.”

Carter promoted to UK people director at Pret: Pret A Manger, the JAB Holdings-backed chain, has promoted David Carter to the role of UK people director. Carter has been with Pret for more than 18 years, and has been head of HR and recruitment for the past six-and-a-half years. Last month, Pret announced the appointment of Kate Stein to the newly created role of global technical director, starting on Monday, 2 September. At the start of July, the company announced chief executive Clive Schlee was to retire at the end of September after more than 16 years in the role. Schlee will hand the reins to chief operating officer Pano Christou. Schlee will remain on Pret’s board as a non-executive director. The announcement came on the eve of Pret completing its acquisition of fresh food to go retailer EAT. Since then, EAT’s chief executive Andrew Walker and director of food and beverage Arnaud Kaziewicz have stepped down from the business.

Whitbread to open first out-of-town Bar + Block restaurant: Whitbread is to open the first out-of-town site for its Bar + Block steakhouse restaurant brand this month. The restaurant will open at its Premier Inn hotel in Winnersh, Berkshire, on Friday, 16 August. The 418 square metre, 189-cover restaurant will include the brand’s trademark open kitchen and copper feature bar as well as decorative finishing touches such as the Bar + Block neon cow. The all-day, casual dining concept places an emphasis on high-quality steaks at affordable prices. The Winnersh site will be the 11th Bar + Block to open since the brand was launched in Birmingham in 2016. Annelise Watson, senior brand development and marketing manager at Whitbread Restaurants, said: “The restaurant is our first opening in an out-of-town location and we are excited to be adding to the local food and drink scene and providing a new destination all-day dining concept to the community of Winnersh.”

Dodo Pub Company set to make Berkshire debut: Oxford-based operator Dodo Pub Company is set to open its first site in Berkshire, after a securing a site in Reading. Propel understands Dodo, which was founded in 2009 by Leo Johnson and Chris Manners, is set to take on the Prince Of Wales in Caversham, with plans to reopen it later this year under the name the Last Crumb. In April, the company reopened The Somerset Arms in Marston Road, Oxford, as The Up in Arms. Earlier this year, Johnson said the company was seeking to open ten to 15 pubs across the Home Counties with rescuing rundown and unloved pubs at the heart of its plans. The company, which is chaired by Patrick Henchoz, who set up the Esporta rackets and gym chain, also operates The Rickety Press and The Rusty Bicycle in Oxford as well as The Bottle Of Sauce in Cheltenham.

The Kitchens team to open fifth site this month: The team behind The Kitchens concept is to open its fifth site – and fourth in London – this month. Bloomsbury Street Kitchen will open in Bloomsbury Street on Saturday, 10 August. The restaurant will showcase a selection of contemporary Mediterranean and Japanese small plates, complemented by a diverse variety of wine, sake and signature cocktails. The restaurant will have 74 covers, split between 60 in the main dining area, eight on a semi-private dining table and six at the chef’s counter, which will offer diners the opportunity to experience the kitchen team working at a raw bar. A lounge bar will feature an additional 46 covers, while the outdoor garden will seat a further 16. The Kitchens concept also comprises London-based May Fair Kitchen, Monmouth Kitchen and Leicester Square Kitchen along with Peter Street Kitchen in Manchester.

Star Pubs & Bars sponsors 100 apprentices: Heineken-owned Star Pubs & Bars has committed funding to sponsor 100 new apprentices in its estate this year. The move is designed to help licensees attract and retain the best talent in the kitchen and behind the bar in order to develop future hospitality managers. Prompted by feedback from the company’s licensee forums that recruiting and keeping permanent staff is one of their biggest challenges, Star Pubs & Bars has teamed up with service provider Remit to help licensees find and train apprentices. Star Pubs & Bars is funding the employer contribution for the first 100 licensees who sign up to use the scheme. Stephen Rooney, head of Business support said: “Apprenticeships provide the structure for young people to get off to a good start, and our scheme will hopefully help encourage more to follow a career path in our sector. In particular, we want to help develop experienced chefs and managers, who are in short supply. We have listened to licensees concerns about recruiting and keeping staff and put in place support to help them grow their own talent. Apprentices also bring energy and enthusiasm, along with a fresh perspective, to the teams they work with, so taking on an apprentice is a win-win for all.” The Star Pubs & Bars pub apprenticeship scheme sits alongside Heineken's wider apprentice programme, which includes brewing operations. This year, Heineken is increasing the intake of brewing apprentices from six to 22, extending its engineering apprentices opportunities to advanced process operator, brewer and manufacturing manager roles. 

Corbin & King brings lease of Bellanger to market: London-based restaurant group Corbin & King has brought the lease of its Bellanger site to market. Having revealed earlier this week the Islington restaurant would close, Corbin & King has now instructed Christie & Co to find a buyer for the existing lease. The 6,800 square foot space is arranged entirely across the ground floor. Corbin & King co-founder Jeremy King said: “Although we loved being in Islington, we just couldn’t make it the success we aspired to, and with seven other restaurants, plus a recently acquired site in Notting Hill and working on the opening of Manzi’s in Soho, the time was right to move on.” Christie & Co is seeking offers for the leasehold interest by way of an assignment.

Gusto Pronto Group acquires fifth pub: Suffolk-based brewer and retailer Gusto Pronto Group has acquired its fifth pub. The company, founded by husband-and-wife team David and Roxane Marjoram, has added The Fox in the village of Bulmer Tye to their portfolio. Its website states: “We’re delighted to announce The Fox at Bulmer Tye has joined the Gusto Pronto family. The Fox is a pub with a fabulous history and we can’t wait to share in its future with you when we open in early September.” A minor refurbishment is being carried out on the pub, which has been closed since January, ahead of the reopening. Founded by the Marjorams in 2008, the company operates fours pubs in and around Bury St Edmunds as well as its craft brewery, Brewshed.

Hawthorn Leisure launches partner training programme for new publicans: Hawthorn Leisure, which is owned by NewRiver, has launched a partner training programme for new publicans. Partnering with training provider LJD Innovation, Hawthorn Leisure hopes to train about 180 licensees across the first year of the “seven steps to sales success” programme. The course will coach practical marketing and business-building strategies, providing key advice and recommendations to help them grow sales. Hawthorn Leisure managing director of operations Mark McGinty said: “By working together with our partners, we help to ensure they have the tools and support they need alongside investing into our pubs to create long-term, sustainable businesses, and this training programme will provide invaluable insight and learnings for our new partners, setting them up for lasting success.”

26 Grains eyes Borough opening: 26 Grains, the café concept founded by Alex Hely-Hutchinson, is looking to open a second site in London, in Borough Market. Propel understands the business, which opened its first permanent site in 2015 in Neal’s Yard, Seven Dials, has lined up the former Rabot 1745 site in Stoney Street for an all-day offer. 26 Grains was started by Hely-Hutchinson to create the West End’s first grains-based cafe. Porridge is the primary focus but also sits alongside muesli, granola, risotto and salads on the menu. Following a successful run of pop-up venues, Seven Dials was the first permanent location for the brand.

Mercedes Benz launches ‘autohaus’ hospitality concept: LSH Auto UK, part of Mercedes-Benz dealership LSH International, has opened its debut licensed bar as part of a new hospitality concept. The company has opened the UK’s first Mercedes-Benz Autohaus, in Stockport. The purpose-built, three-storey, site off Brighton Road features a bistro, events facilities and a garden alongside a traditional dealership space. The licensed bistro serves paninis, cakes and pastries alongside wine and craft beer. The concept has its own dedicated hospitality manager and a screening room available for hire with cinema-style seating.

Beds and Bars retains IIP platinum status: Bed and Bars, the pan-European hostel operator led by Keith Knowles, has retained its Investors in People (IIP) platinum status. The company is one of only six hospitality businesses worldwide to achieve platinum status and part of the 0.01% of all IIP organisations that has achieved platinum status twice. The average benchmark result Beds and Bars achieved was 750, well above the IIP average of 724 and that of “food and beverage service activities” at 715. Knowles, said: “It is a privilege to be ranked for double platinum as a hospitality business – a clear indication of the dedication and hard work the team has invested in the business. The standard of what we have achieved together has been heartwarming – we've gone from gold, champion, platinum to double platinum in 2019.” Achieving double platinum status has been a significant milestone for the company as it continues the legacy of Knowles' late wife, Franca. She steered Beds and Bars through the first IIP process, where she went on to win the company's first IIP award.

Catapult launches in Germany: On-demand artificial intelligence staffing platform Catapult has launched in Germany. Catapult said it aims to address the unique challenges Germany’s highly regulated staffing industry presents such as mandatory paper contracts, while record-low unemployment rates make attracting quality candidates difficult for employers. Catapult uses behavioural science and artificial intelligence to match highly-skilled and experienced part-time workers with employers via an app and online booking system. Candidates can choose which shifts they work. Germany is the second market for Catapult, which has expanded across the UK. Jette Schaffran, Catapult chief operating officer and managing director of Germany, said: “Germany has some catching up to do when it comes to finding innovative solutions to the issues within the staffing industry. We're really excited to provide a streamlined system to some of these manual processes, inject flexibility into hospitality and retail recruitment and give some control back to part-time workers in Berlin.”

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