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Morning Briefing for pub, restaurant and food wervice operators

Fri 23rd Aug 2019 - Propel Friday News Briefing

Story of the Day:

Bird secures new backing as part of a pre-pack administration: Bird, the fried chicken & waffles chain, has sold a majority stake to the Crown Partnership, as part of a pre-pack administration. As part of the deal, the group's Shoreditch restaurant closed on 12 August, when administrator BM Advisory was appointed. Co-founder and managing director Paul Hemings said: “We are thrilled to have secured a better future for the brand and our amazing team. We look forward to working with Crown and being supported by their depth of experience.” Crown Partnership is a diversified hospitality and catering business, founded by Russell Morgan more than 40 years ago. Hemings added that after experiencing a number of funding pressures, the company is proud that the trading success, the team and the potential for the brand “have been valued” and they were excited the “future for us has just become much clearer”. Bird hopes to open a long-awaited site in Brixton later this year. Last month, Hemings said the five-strong business had its bank overdraft withdrawn only weeks before its Canary Wharf opening in late 2018, which had resulted in a knock-on effect throughout the business. Hemings told Propel last month: “We had to take on funding we didn’t really want to replace it and then the bottom fell out of the banking sector, at least for restaurants. We have had positive like-for-like sales for the past two years straight, every month. The restaurants are performing well and growing. We’ve had these issues recently but we’re not in the position where nothing is working – far from it.”

Industry news:

Propel Premium subscribers to receive new industry report: Propel Premium subscribers will receive a new industry report on Friday (23 August) that will provide insights into chefs’ employment wants and needs. Think Hospitality has partnered with The Staff Canteen to survey more than 500 chefs to develop the 62-page report, which will reveal insights such as 86% of chefs don’t like working with recruitment agencies, 96% of chefs gain inspiration from social media and blogs, and 85% expect their fair share of tips. The report will provide actionable insights and strategic direction for hospitality employment on key themes such as how chefs want to be recruited, how they research potential employers, what they look for in an employer, what encourages them to stay, and what they want from training. Premium subscribers will also receive our latest opinion piece on Friday at 5pm. This week, leading sector analyst Simon Stenning will reveal the growth opportunity of the breakfast out-of-home segment up to 2030, while there will be more sector whispers in this week’s 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 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

Paul Newby to step down as Pubs Code Adjudicator: Paul Newby will step down as Pubs Code Adjudicator in April next year at the end of his four-year term. Newby said: “There is still substantial work to be done to achieve Parliament’s aims embodied in the Pubs Code, notably a speedy and accessible right for tenants to go free-of-tie via the Market Rent Only option, if that is right for them. However, there has been significant progress and I expect to see this continue across all aspects of the legislation based on the solid foundations that have been laid during this formative period.” CAMRA national chairman Nik Antona said: “As the first person to hold the role of Pubs Code Adjudicator, we recognise the challenge of the new legislation and awful track record of behaviour by pub companies that Paul Newby took on when he was appointed. He and his deputy, Fiona Dickie, have made progress pushing pub companies to waive confidentiality on decision notices so pub tenants finally have access to vital information when in disputes with their pubco. Unfortunately, it is clear the Pubs Code is failing. It needs immediate reform to allow Mr Newby’s successor to deliver on the intended aims of the code and finally get a fair deal for tenants. We hope this will be an outcome of the current Statutory Review.”

UK Hospitality Index 2019 – survey to remain open until the end of August: Operators have one more week to take part in the Haysmacintyre UK Hospitality Index, the foremost financial benchmarking study for pubs, bars and restaurants, which covers trading, capital and funding data and views from operators on everything from Brexit to the latest trends. If you would like to complete this year’s Index survey, which takes less than 15 minutes, please click here. All entries are treated anonymously and the summary report will be shared with all contributors in October enabling them to benchmark their operations against others in the sector and hear from peers on their forecasts for the trading year ahead. The survey will remain open until Saturday, 31 August. 

Intu launches £72m leisure extension: Intu has launched its £72m leisure extension at Intu Lakeside in Essex. The 225,000 square foot expansion will increase Intu Lakeside’s 20 million footfall a year by more than two million and transform the centre into a major south east tourist destination. Puttshack’s second site, one of Hollywood Bowl’s biggest venues and trampoline park brand Flipout have now opened at the extension while a fourth leisure anchor, Nickelodeon’s first UK family entertainment centre, will launch in the autumn. The Hall, the first out-of-town concept from food hall operator Market Halls, and a range of other restaurants including new brands Chiktopia and Casco Lounge have all joined Intu Lakeside’s growing dinner offer. Two former car parks were transformed into the new area, which overlooks Intu Lakeside’s 22-acre lake as well as a new 7,000 square foot public realm space featuring landscaped areas and integrated lighting, sound and water-powered technology to further engage visitors. Intu chief executive Matthew Roberts said: “Compelling leisure experiences are well-recognised drivers of shopping centre footfall and dwell time and a project of this scale is a real first for the UK market. It has been created to ensure Intu Lakeside remains one of the country’s most popular retail and leisure destinations for many years to come and we have curated a fantastic of mix of flourishing leisure and dining brands to guarantee its success.”

UK’s youngest award-winning vegan chef, aged 11, launches debut pop-up: Omari McQueen, 11, the UK’s youngest award-winning vegan chef, has launched his debut pop-up, at Boxpark Croydon. McQueen started cooking at age seven when his mother was diagnosed with hemiplegic migraines. A year later he launched a YouTube channel and vegan snack business Dipalicious, which offers plant-based snacks such as vegan pizza fingers and dips including Caribbean Kick. His Dipalicious pop-up will run until Saturday (24 August). McQueen also teaches other children to cook at workshops he runs from home.

Company News:

Pure hires Said Takhamt as chief operating officer: Healthy food-to-go group Pure has appointed Said Takhamt as chief operating officer in a newly created role. He will join ten-year-old Pure in the autumn following roles in operations and development at Pret A Manger, Itsu, EAT and Cojean. Takhamt began his career as general manager at Pret A Manger, working his way up to international head of operations focusing initially on the London business and then across the UK, France and the US. He oversaw Pret’s expansion into airports, seeing it flourish at Stansted, Heathrow’s T5 and Gatwick among others. While at Itsu he led expansion across new territories in cafes, regional stores and airport businesses, while his EAT experience involved leading the rebrand strategy and rebuilding the operational business model. This saw him use his travel hub expertise at Madrid airport and Paris’ Gare Du Nord. Pure chief executive Spencer Craig said: “We are truly delighted to bring Said and his expertise on board at this very exciting time in the business. We believe his skills will help grow the Pure business as it continues to expand across London and into major travel locations. His wealth of unrivalled experience makes him perfectly placed to take on this challenging new role.” Takhamt will be responsible for running day-to-day operations at Pure’s 21 sites and additions as the business expands further in 2020. He will also be responsible for all recruitment, learning, training and development.

Breakfast Club takes over Polpo site in Soho: All-day concept The Breakfast Club has taken over the Polpetto site owned by Polpo in Berwick Street, Soho, with the aim to open in September, Propel has learned. Polpo, which has gone through a company voluntary arrangement, has placed its Berwick Street and Notting Hill venues on the market. A letter to creditors earlier this year reported an offer of £160,000 had been made for the Berwick Street site but the company received professional advice suggesting a price of circa £250,000 should be obtainable. Polpo has forecast a return to profit in 2020. It estimates sales of £10,286,000 and a net loss of £174,000 in 2019. For 2020 it forecasts net sales of £10,389,000 and a net profit of £286,000 and for 2021 it forecasts sales of £10,493,000 and a net profit of £280,000. At the start of this year, Breakfast Club founder Jonathan Arana-Morton told Propel he couldn’t be more optimistic about its future following a “misleading” report the company had been handed a last-minute lifeline by its bank. The Breakfast Club breached part of its banking covenant with Santander last year, which has agreed to waive the defaults, The Sunday Telegraph reported. However, Arana-Morton told Propel improvements to the financial performance during the past year led Santander to address the covenants and they were now at a level “most banks would lend to if we were to seek funding now”. Arana-Morton said: “In truth it was not a last-minute lifeline Santander gave us. The business is in a healthy state with ten of our 11 sites making a profit, more than £2m in site Ebitda and an offer guests are still willing to queue for, which in the current market is pretty good going.”

Douglas Jack – Loungers carrying powerful momentum into 2020E: Peel Hunt analyst Douglas Jack has said Loungers, the listed operator of neighbourhood cafe-bar restaurants trading under the Lounge and Cosy Club brands, is “carrying powerful momentum into 2020E” with the company’s final results due on Wednesday (28 August). Issuing a ‘Buy’ note on the shares with a target price of 285p, Jack said: “We expect the final results to be in line but with strong trends that point to very attractive, self-financed growth in 2020E. Like-for-like sales were last reported to be up 7.7% in the 24 weeks to 24 March 2019. We expect like-for-like sales to have remained strong in early 2020E, helped by April’s menu price increases (including trading-up opportunities). Our 285p target price reflects the pace of equity value growth we expect from like-for-like trading and expansion over the next year. Like-for-like sales rose 6.9% in the year to 21 April, with second-half like-for-like sales up 7.3% by our estimates despite the 2019E financial year not including all the Easter weekend. This continues an improving like-for-like sales trajectory, from 5.5% in 2017 to 6.0% in 2018, with like-for-like volume growth averaging 4% per annum over this three-year period. Ebitda margins (post pre-opening and central costs) have also been on a rising trajectory, from 9.7% in 2016 to 11.8% in 2017 and 12.1% in 2018, reflecting like-for-like sales growth and increasing scale economies. Our 2019E forecast allows for a higher depreciation charge rate, a 20 basis point fall in Ebitda margins and a 30 basis point fall in Ebit margins. The company’s price increases have averaged 1.8% per annum for drink and 2.5% for food during the past four years. However, by our estimates summer menu prices increased 2.1% for drinks and 2.9% for food versus the recent winter menus. As this represents only six months, there should be a larger price component to like-for-like sales in 2020E, with a follow-on benefit to gross margins. Like-for-like sales should also benefit from the introduction of the Big Lounge Breakfast, at £11.95 versus £7.65 for a Lounge Breakfast. We believe a lot of customers took advantage of this trading-up opportunity during the trial stage. The Big Lounge Breakfast has only been available in all outlets since the beginning of the new financial year. Last year 25 sites opened – 22 Lounges and three Cosy Clubs – taking the estate to 146 sites. We expect this year’s expansion to be weighted – ten in the first half, 15 in the second half. Propel reported one recent opening, in King’s Lynn, may have set a new Lounge opening-week record. 2020E will be the company’s first full financial year as a PLC into which it carries strong like-for-like sales and pricing momentum. It also has great scope to drive down costs over the medium term through centralising distribution, contract retendering and introducing differentiated pricing. We believe recent market-driven share price weakness has created an excellent buying opportunity.”

Inn Collection Group submits plans for 42-bedroom hotel on Sunderland seafront: The Inn Collection Group, which was acquired by Alchemy Partners from Kings Park Capital for £12m last year, has submitted plans for a 42-bedroom hotel and restaurant on Sunderland seafront. Plans have been lodged to transform an area in Seaburn formerly occupied by the Pullman Lodge hotel and restaurant, which was demolished in 2017. Under the plans, 42 rooms would include two allocated for managers’ accommodation alongside a ground-floor family restaurant. A 60-space car park would be created to the rear and include two electric car-charging ports. The proposals have been designed to fit in with the council’s vision for the seafront, which includes the recently approved STACK shipping container village. Inn Collection Group managing director Sean Donkin told the Sunderland Echo: “It will fill a gap in the market for visitor accommodation, encouraging people to extend their stay and spend in Sunderland and provide local people with a new place to eat and drink in a first-class location.” Graeme Miller, leader of Sunderland City Council, added: “Seaburn is the jewel in Sunderland’s crown. We want to enhance its natural charm and ensure it becomes a destination.” The Inn Collection Group operates ten venues and secured £10m from OakNorth earlier this year for its plans to expand to 21 sites by 2022.

Veeno shuts Nottingham site: Italian wine cafe Veeno, which was acquired out of administration by Rodrigue Trouillet in March, has closed its Nottingham site. A Veeno spokesman told Nottinghamshire Live the venue in Middle Pavement was “no longer viable after footfall declined around the Intu Broadmarsh shopping centre”, which is currently undergoing redevelopment. Veeno said it hoped to relocate staff affected by the closure. In May, Trouillet told Propel the company was “still committed to its franchise model” despite closing its sites in Brighton, Cardiff, Croydon and Kidderminster, leaving Reading as the company’s only franchised outlet. The Kidderminster branch only opened at the £3m Riverside development in the town in June last year. At the time, Veeno said it had rolled out hot food across the estate and was “turning attention” to its drinks offer. Trouillet’s deal to buy the firm out of administration saved almost 70 jobs. Veeno now operates ten sites. 

EasyHotel acquisition moves forward: The proposed takeover of EasyHotel has moved closer after the company behind the bid agreed a deal to acquire further shares in the business. Earlier this month the board of Citrus UK Bidco and the independent directors of EasyHotel reached agreement on the terms of a recommended cash offer by Bidco, a newly incorporated company owned by a consortium of Cadim Fonds, part of Ivanhoé Cambridge, and ICAMAP Investments. A purchase price of 95p per EasyHotel share was agreed, valuing the business at about £138.7m. ICAMAP announced on Wednesday (21 August) it had agreed to acquire about 2.6 million additional shares, representing about 1.78% of the issued share capital of EasyHotel. The acquisition is expected to complete on Friday (23 August), at which point Bidco will either hold or have received acceptances in respect of EasyHotel Shares carrying more than 50% of the voting rights. EasyHotel’s portfolio includes 12 owned hotels and 1,340 rooms, with a further 26 franchised hotels and 2,293 rooms.

Hard Rock promotes Pellow to senior vice-president of cafe operations: Hard Rock International has promoted David Pellow to senior vice-president of cafe operations. Pellow, a Brit who has been with Hard Rock for almost 20 years, was previously area vice-president of cafe operations for Europe, where he managed operations for Hard Rock Cafes in 13 countries across the continent. In his new role, Pellow will lead the cafe operations team, managing more than 60 company-owned locations throughout the US and Europe. He will also oversee the brand’s area vice-presidents, facilities team, retail operations, and sales and marketing team. He will report directly to president of cafe operations Stephen K Judge, who said: “David Pellow has been a vital part of the Hard Rock team for many years and is the ideal executive to be at the forefront of the cafe business.” During his time with Hard Rock, Pellow has been instrumental in the openings of nine Hard Rock Cafes in Europe including the new flagship location in London’s Piccadilly Circus, which opened last month. 

Iconic bar in Manchester’s Gay Village acquired for £1.2m: The freehold interest of an iconic bar in Manchester’s Gay Village has been acquired off an asking price of £1,295,000. The Molly House in Richmond Street has been bought by Henry Kennedy-Skipton with funding secured through broker Christie Finance. The business can accommodate 208 covers across the ground-floor Public Bar & Tea Room, the first-floor Bordello bar, and the late licensed Company Bar in the basement. The Molly House offers real ale, beer, wine, spirits and cocktails alongside a food offering that encompasses Spanish and South American tapas, brunch and lunch. Kennedy-Skipton plans to run the business under management while modernising the interiors. He said: “This is an iconic venue in a vibrant part of the city. The previous owner did a great job, now the opportunity exists to improve the venue even further, something that excites me greatly. This will benefit our customers and the Village as a whole.” Christie & Co director Keith Stringer, who handled the sale, said: “Freehold properties in Manchester city centre continue to attract interest from a range of parties, particularly as most prime sites tend to be available on a leasehold basis only.”

Burger & Lobster to launch lobster nuggets for late-night snackers, expands Smack concept: Burger & Lobster is to launch lobster nuggets on its menu to satisfy “late-night, posh-nosh nugget cravings”, while it is expanding its delivery-only concept Smack. Spicy Atlantic Lobster Nuggets will appear on menus on Tuesday (27 August) in all the brand’s restaurants but will only be available from 8pm. Diners will be able to order six nuggets for £15.95 containing lobster sustainably sourced from the coasts of Nova Scotia and coated in a spicy batter. The dish can be paired with a fresh lemon dip or truffle mayo and is also available for delivery. In June, the company turned its lobster roll concept Smack in Soho’s Dean Street into a delivery-only brand. The company will launch a second Smack site, in the City of London, on Monday (26 August). The company told Propel it would launch more virtual Smack restaurants during the “coming months”, although no dates had been set. A Burger & Lobster spokeswoman said: “We are also working with Deliveroo to expand our reach further within London using Editions and then, ultimately, other key areas that have an undersupply of the luscious lobster meat in our buttery brioche rolls.” Burger & Lobster launched in Mayfair in 2011 and now operates nine sites in London, two in New York and one each in Bangkok, Dubai, Genting and Kuwait City. 

Leicestershire-based micro-brewer eyes second site: Leicestershire-based micro-brewer Tim Arnold, who runs the Elbow Room in Hinckley, has applied to open a second site in the county. Arnold has applied to transform a former Co-op store in Church Street in Burbage into a bar called the Crafty Elbow. The pub would operate as a cafe in the afternoons. Arnold told Leicestershire Live: “We are aiming for a small, stylish modern communal bar where people living in or visiting Burbage can enjoy a quiet drink and food from a limited menu. The decor will be Scandinavian in style with simple clean lines, exposed brickwork, concrete, brass, lightwood furniture and quirky but practical lighting. There will no TV, gaming machines, pool tables or jukebox. The aim is to create a social meeting place where good conversation and friendships can flourish or where customers can sit quietly and read or contemplate the world.”

Glasgow-based vegan cake cafe Rawnchy to start expansion: Glasgow-based vegan cake cafe Rawnchy is to start expansion by opening a second site in the city. Poppy Murricane launched the concept in Maryhill Road last year. She has quickly carved a signature style that has gone down a storm with health-minded foodies – her cakes are dairy free, gluten free, refined sugar free, soya free and organic. Murricane will now open a venue in Dennistoun in the east of the city. She told Glasgow Live: “We have signed a lease on a second property in Dennistoun. It will initially house our wholesale kitchen and, in a few months, will start to become a second Rawnchy cafe. The Maryhill Road cafe will expand when our big kitchen moves to Dennistoun. We’ll double our seating capacity and expand our savoury menu to include breakfast options, more lunch options and afternoon tea.”

Giraffe launches nutrition-focused children’s menu and child-friendly cutlery: Giraffe, which is owned by Boparan Restaurant Group, has launched a children’s menu that focuses on balanced nutrition following guidance from the Soil Association and Public Health England (PHE). Each meal offers at least two portions of vegetables, with other initiatives including default broccoli instead of fries and petit pois instead of baked beans. Drinks sizes have changed to 150ml and are served in colourful reusable plastic cups, while the brand now offers children’s-size cutlery. Giraffe said the new cutlery encouraged development and dexterity, with NHS guidance emphasising the importance of self-feeding for children aged six months to seven years old. Giraffe has also partnered with Schleich toys to offer free “love me for life” animal figurines with each children’s meal. Giraffe Restaurants chief executive Tom Crowley said: “Families have always been an important part of Giraffe and we’re partnering with PHE and the Soil Association to make sure we’re offering healthy options for kids.” Rob Percival, head of policy at the Soil Association, added: “It is important for families to trust restaurants to offer healthy options.” Giraffe operates 45 sites globally. Last week Propel Diary revealed the brand broke a milestone of £1m in sales from its TRG Concessions-operated Giraffe, Giraffe Stop! and Wondertree estate in a single week. 

MasterChef champion to launch cookery school above debut restaurant next month: MasterChef champion Kenny Tutt is to launch a cookery school next month above his debut restaurant in Worthing, West Sussex. Pitch opened in Tutt’s home town in May, with herbs and botanical ingredients grown in a workshop. Pitch Cookery School will open on the top floor of the restaurant in Warwick Street, hosting eight cooks per class with a designated chef’s table for guests to enjoy what they have created. Classes will span a number of topics, while Tutt will host monthly chef collaborations and taster classes for budding chefs during school holidays. 

Middle Eastern vegetarian concept Bubala to open first permanent site, next month: Bubala, the vegetarian Middle Eastern concept, will open its first permanent site in London’s Spitalfields, next month. The brainchild of Marc Summers, co-founder and former general manager of Berber & Q, and head chef Helen Graham, who has worked at The Palomar, The Barbary, The Good Egg and Ottolenghi, Bubala has been popping up for the past year and a half in London at Carousel, Brunswick East, Berber & Q and Untitled Bar. Bubala, which is Yiddish for “darling”, will now open a 30-seater restaurant in Commercial Street at the site formerly occupied by Gul and Sepoy, which closed last year. The restaurant will launch on Thursday, 12 September offering dishes designed for sharing, including fried aubergine with zhoug and date syrup, cabbage braised in pomegranate with zaatar chimichurri, and confit potato latkes.

JD Wetherspoon tries again to open pub in Newport Pagnell: JD Wetherspoon has submitted a planning application to Milton Keynes Council to open a pub in Newport Pagnell, Buckinghamshire. The pub would be in St John Street at the former Robinson’s restaurant opposite Newport Pagnell library. Wetherspoon previously applied for planning permission in May 2016 but had subsequent appeals dismissed earlier this year. Planning permission was rejected on the grounds of “heritage”.

Glasgow-based Paesano Pizza to launch pasta concept for third city site: Glasgow-based pizzeria brand Paesano Pizza has had plans approved to launch a pasta concept inside an iconic city centre building. Sugo will open in the Charles Rennie Mackintosh Herald Building featuring an open-plan design similar to Paesano’s pizzerias in Miller Street and Great Western Road. A Paesano spokesman told the Evening Times: “Sugo will specialise in fresh pasta made by hand every day in our kitchen. Our pasta dishes will be served as they are traditionally throughout the varying regions of Italy. The emphasis will be on authenticity of the dishes served and provenance and quality of produce. Each pasta style will be paired with a sauce or ingredients traditionally served in each region. The restaurant will be a large, bustling open space with diners able to watch our chefs produce fresh pasta as they dine and see their dishes cooked.” The listed building in Mitchell Street first opened in 1895 as a newspaper office.

Derby-based kebab shop owner launches Afro-Caribbean restaurant in city centre: Ambar Sajjad, whose family owns McTurk kebab shop in Derby, and business partner Mushtaq Afsar have launched an Afro-Caribbean restaurant in the city centre. Afrikana has opened in Queen Street opposite Derby Cathedral offering peri-peri chicken with other meat, fish and vegan and vegetarian options alongside live music and student deals. The venue has previously housed bars under the names Jack Rabbits, Junk and Blok. Sajjad told the Derby Telegraph: “We promise to bring a different experience to Derby in a relaxed and vibrant atmosphere. The products we use are out of this world.”

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