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Thu 16th Jan 2020 - Propel Thursday News Briefing

Story of the Day:

Asda to expand Food For Now trial as it eyes further partnerships with ‘well-known brands’: Asda is to expand its Food For Now concept as it looks to seal “new and innovative in-store brand partnerships” to cater for changing consumer tastes. Asda trialled alternatives to its fresh meat and fish counters in 13 stores last year, with customers able to try new ranges to take away including hot chicken and pie offers and sushi by Sushi Daily. Asda plans a further 35 Food For Now offers in the first quarter of 2020, with the aim to reach 150 by the end of the year. Asda’s Edinburgh Jewel store will also offer a food court-style dining experience, allowing customers to order from the in-store Sushi Daily and Subway concessions and pizza from its Asda Kitchen concept to eat in-store. Asda said it would launch further partnerships with well-known brands this year to follow the partnership it launched with Just Eat in 2019, which is now in place in 50 stores, with customers able to order the new ranges as part of the trial. Where meat and fish counters are replaced, Asda will offer pre-packed products instead. Food For Now senior manager Elizabeth Ruddiman said: “The popularity of our sushi concessions and international cuisine, along with Food For Now options, shows there’s been a shift in customer behaviour and a need to provide a greater choice in our stores. We will trial a number of exciting options, which will see Asda partner with new and innovative brands as well as popular favourites. We want to use this as an opportunity to better meet customers’ needs at a local level.”

Industry News:

Propel Multi Club Conference opens for bookings, David McDowall talks to Mark Wingett, two free places for operators: The first Propel Multi Club Conference of 2020 is open for bookings. The full-day event takes place on Thursday, 5 March at the Millennium Gloucester hotel in London. BrewDog chief operating officer David McDowall, who has overseen the growth of the company’s bar network from 14 sites to circa 100, talks to Propel insights editor Mark Wingett about the growth and development of its bar network, franchising, USPs, training, and future plans. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places by emailing Anne Steele at

Propel launches video of the week: Propel has launched a video of the week feature on its website – Each week, viewers will to be able to watch a new video of a speaker at one of Propel’s events. The first features Phil Eeles, co-founder of Honest Burgers, speaking at the Casual Dining Conference. In the video he shares how the business has avoided getting caught up in the wider issues the burger category faces and how Honest Burgers has built its culture while bringing experience across its management team. Find out more for yourself by clicking here

Full English breakfast ‘faces extinction’ as 18 to 30s seek healthier options: Despite being a mainstay of British dining since the Victorian era, almost one-fifth (17%) of Brits aged 18 to 30 have never eaten a full English breakfast, according to new research. In the 1950s, almost half the British population started their day with a full English but the study by the English Breakfast Society found health concerns have led one-fifth (20%) of 18 to 30 year olds to associate the dish with heart attacks, while the same number find it synonymous with obesity. Asked to rate how healthy a full English breakfast is on a scale of one to ten, with ten being very unhealthy, the average 18 to 30-year-old rated it a seven. Almost one-quarter (24%) believe it is too greasy, while more than two-fifths (42%) said it reminded them of “men in vests hanging around in transport cafes”. For almost one-third (29%), a full English conjures up images of Brits abroad. More than one-quarter (27%) said black pudding was the most unappealing thing about a traditional fry-up, while other aspects were greasy bacon (24%), lukewarm baked beans (8%) and processed sausages (6%). More than two-thirds (71%) of the 2,000 respondents would rather eat smoked salmon and scrambled eggs, smashed avocado on toast or oatmeal pancakes for breakfast, while 5% of those 18 to 30 year olds would rather eat muesli.

Company News:

Revolution Bars Group focusing on management of estate, menu relaunch key to sales increase: Revolution Bars Group chief executive Rob Pitcher has told Propel the company is focusing on the “active management of its estate”. In its half-year trading update on Wednesday (15 January), the company revealed it has reached agreement with Aprirose, landlord of nine of its properties, to surrender five Revolution leases of loss-making sites and re-gear four leases with a small net rent reduction. The closures and rent reductions will improve the company’s full-year operational cash flows by about £1.2m a year. Asked whether the company was talking to other landlords, Pitcher said: “Of the five sites we’re looking to exit with Aprirose, three are closed (Lancaster, Wood Street in Liverpool and Wolverhampton) and two are trading (Lincoln and Fallowfield in Manchester). Two of the sites have been shut for five years and the other for six months. One of the benefits of not doing openings is it gives the property team the opportunity to actively manage our existing estate.” The company has seen like-for-like sales increase 1.2% in the first half of its financial year, with revenue up 3.4% to £81.2m, and Picher said its new Revolution food and drink menus had been key. The relaunch has seen the return of Revolution favourites such as pizza, while the offer has been trimmed slightly to be “consistent with the quality”. Pitcher said general managers were now staying longer with the company, which meant its 3,500-strong team was being led by people with more experience, resulting in better customer service. The company’s app has had 195,000 registered downloads since launch and has been “re-engaging” with the student population, which has helped drive loyalty and brought in new customers. Customers left 4,500 reviews during the festive period with the average rating 4.3 out of five, up from 3.9 the previous year. Pre-booked Christmas sales were also “very strong”. Pitcher added: “That gives us clear indication the initiatives we’ve introduced are delivering and we’re in line with where we want to be. However, there’s still a lot of work to be done. Our experiential programme is no longer an initiative being rolled out – it has been embedded across the company. We’re seeing really good uptake on the events space programmes we’ve introduced in the early part of the week so we’re not so reliant on Friday and Saturday nights.” Pitcher said the company still expected to return to the expansion trail in the 2021 financial year but the focus remained on investing in its current estate. He added the company was getting “good” customer reviews for its virtual brand The Cuban Sandwich Shop, which went live in two Revolución de Cuba sites, in Manchester and Sheffield, in November. He added: “We are refining the offer slightly but delivery isn’t going to change the world for us – it’s about getting people into our sites.” Meanwhile, sales and marketing director Kate Eastwood will leave the business on Friday (17 January) while, as previously reported, commercial director Myles Doran left at the end of last month.    

Shane Kavanagh to step down as Crussh chief executive: London-based healthy food and juice brand Crussh has announced chief executive Shane Kavanagh is to step down to take on a new challenge. During his four years at the helm, Kavanagh has led Crussh from a 28-store London high-street business to an estate of 35, including the brand’s first sites outside London, in Birmingham and Bristol. He has forged franchise partnerships with SSP and Sodexo, initiated an exclusive retail range with Sainsbury’s and introduced workplace catering in WeWork across London. Executive chairman Jonathan Hart will lead the business during the search for a new chief executive. Hart said: “Under Shane’s leadership Crussh has evolved a strategy of franchise, concessions and product supply that’s now delivering significant results. In tandem with this, Shane has navigated the core business through the most turbulent times ever faced by London’s food-to-go market place. With the prospect of rapid growth for our product supply business, we now have a fantastic opportunity to develop Crussh as a national and international FMCG brand alongside our company-owned, franchise and concession stores. Crussh has the potential to significantly build on its leadership in the healthy food-to-go sector and we look forward to finding someone with the skills and experience to take Crussh on to this next exciting phase of our development. We have an outstanding team at Crussh and I would like to thank Shane for creating a great future for Crussh and for leading the business with such passion and energy. He leaves with our best wishes.” Kavanagh leaves his role at the end of February and will retain an advisory position while the new chief executive is recruited.

YO! confirms Sainsbury’s link-up for YO! To Go range: YO!, the Richard Hodgson-led global multi-brand, multi-channel Japanese food group, has confirmed it will launch its YO! To Go range in more than 300 Sainsbury’s stores. The range will launch this month as part of YO!’s multi-channel strategy to increase the availability of sushi and fresh Japanese food and follows the roll-out of YO! manned kiosks in 50 Tesco stores. Earlier this month, Propel revealed YO! is to further ramp up its retail sector presence through the trial of a kiosk concept with Asda under the new Panku brand, which has been developed through its Taiko Foods arm. A YO! spokesman told Propel: “We are excited to partner with Sainsbury’s to introduce our YO! To Go range in the front-of-store fridges of more than 300 Sainsbury’s stores. Developing our YO! To Go range is an integral part of our multi-brand, multi-offer approach using the combined knowledge of the YO! group and Sainsbury’s was the perfect partner to help us progress this.” At the start of this year, Crussh Fit Food & Juice Bars announced it was to roll out its retail range to more than 300 Sainsbury’s stores in the UK this May. The move follows the range’s debut in 61 Sainsbury’s convenience stores in London.

Ten Entertainment Group sees double-digit like-for-like growth with new-concept site, planning next phase of food roll-out: Ten Entertainment Group chief executive Duncan Garrood has told Propel the refurbishment of its Cheshire Oaks venue into its new-concept site has led to double-digit like-for-like growth. The company has revamped the venue at Coliseum Leisure Park to showcase a range of customer innovations and concepts. This includes introducing a Houdini’s escape room, electronic darts machines and an augmented reality climbing wall. The site also features the family friendly Hyperbowl concept. Speaking following the company’s full-year trading update on Wednesday (15 January), Garrood said: “Cheshire Oaks is acting as our research and development centre and we’ve seen double-digit like-for-like growth at that site. We’ll use it to help form a blueprint for future refurbishments as well as new sites.” The company is planning the next phase of its food and beverage roll-out. This includes upgrading its burgers and hotdogs as well as introducing pizza at some of its venues. Garrood reiterated the offer would remain “bowling friendly” – easy to prepare and eat. The company saw like-for-like sales increase 8% during the year and Garrood said that came from more people visiting rather than price increases. Garrood said the company was working on “several” potential sites, which were a mix of new-build and existing bowling alleys. He said the group expected to open two to four sites in 2020, including its first new-build venue, at Manchester Printworks. Of the potential for international expansion, he said: “I think we have plenty of room for growth in the UK and that is our focus. However, I do think there’s an opportunity to go overseas in the future. The experiential leisure scene is set for continued growth for years to come. We are concentrating on investing in the business, improving the quality of our sites, offering our customers a better experience, and adding more venues to the portfolio.”

Beds and Bars promotes Gemma Placey to finance director: Pan-European hostel and bar operator Beds & Bars, led by Keith Knowles, has promoted Gemma Placey to finance director. As well as heading up the finance team, Placey, who was group financial controller, will sit on the board of directors. Placey arrived at Beds and Bars as European finance manager in 2009 and has worked her way up the ranks. She has been involved in several hostel openings in Europe, introducing a new booking engine and the start of franchising, and buying out minority interests in Paris and Barcelona. Managing director Murray Roberts said: “We will all benefit from having Gemma’s knowledge of the business at such a senior level. The team couldn’t be more pleased with the news and we’d like to congratulate Gemma on her promotion, wishing her all the best in her career with us. She will also be a fantastic addition to the board.”

NZR reports 10.9% sales growth at Chotto Matte’s Soho site in December, brand expands into Saudi Arabia: NZR Group, the Kurt Zdesar-led business that operates the Chotto Matte, Black Roe and Fucina brands, has reported its Chotto Matte site in Soho saw record 10.9% year-on-year sales growth in December. The company said it was the seventh consecutive festive period of sales growth at the site, which saw “extremely strong trading” throughout December culminating in its best-performing New Year’s Eve. NZR Group managing director Paul Sarlas also told Propel the company had secured its first franchise in Saudi Arabia. The company said it had secured a prime location in Saudi capital Riyadh for Chotto Matte, with the launch date and partner to be “announced in the first quarter of this year”. Last week NZR Group filled four management positions created to support its international growth plans. John Darling joined as group head of operations, while Peter Boswell was appointed group learning and development manager. Grace Ryan joined as events sales manager, while Siim Kutser is guest experience manager. Sarlas said: “The Chotto Matte brand will replicate its success in the managed arm of the business in the UK, US and Canada through a franchise model and, with NZR growing its team, we have a solid platform in which to grow the business.”

Greggs to roll out nationwide delivery with Just Eat: Bakery chain Greggs has confirmed Just Eat as its official delivery partner. Following a trial in London, Newcastle and Glasgow, Greggs will work exclusively with Just Eat and roll the service out to Bristol and Birmingham this week. The order of the roll-out is being determined by an ongoing customer poll held by Just Eat, which has received more than 38,000 responses so far. The service will launch in Leeds, Manchester, Nottingham and Sheffield in the spring, with the aim to achieve national coverage by the end of the year. Greggs chief executive Roger Whiteside said: “We know from the trials our customers love the idea they can get Greggs delivered directly to their door and we’re delighted to work with Just Eat to provide that service.” Just Eat UK managing director Andrew Kenny added: “This is an exciting exclusive partnership for Just Eat. Greggs has proved extremely popular with our customers, especially during breakfast, demonstrating as a nation we love the convenience of getting our favourite food delivered.” Greggs orders can be placed from as early as 7am, with no minimum spend.

All Star Lanes appoints Freeman as finance director: All Star Lanes, the boutique bowling alley operator backed by Luke Johnson, has appointed Charles Freeman as finance director. Freeman, who was finance director of the circa 290-strong Orchid Pub Group for seven years, replaces Meera Depala, who stepped down from All Star Lanes in November. Freeman also previously worked at circa 120-strong pub company Tom Cobleigh. Johnson acquired five-strong All Star Lanes out of administration for £2.325m in September through his Risk Capital Partners vehicle. Mark von Westenholz and Adam Breeden founded the business in 2006, with Breeden stepping down from the business in 2012 to focus on his ping-pong concept Bounce. Since launching its debut venue in Holborn, All Star Lanes, which is led by managing director Graham Cook, has opened sites in Westfield Stratford City, Westfield White City, Brick Lane and Manchester.

Coco di Mama ditches plastic water bottles: Azzurri Group-owned brand Coco di Mama has removed all plastic water bottles from its shelves. The Italian-to-go brand is offering free water refills in its 28 London stores instead and a resealable and recyclable canned version, manufactured by CanO Water, for £1 in a move that will save 180,000 plastic bottles a year. Sara McCraight, head of brand at Coco di Mama, said: “We monitor our customer feedback trends closely and the biggest thing they are asking us is to reduce the amount of plastic packaging we have in our stores. The choice to remove plastic water bottles is certainly not going to make us any money and is likely to hit profitability in the short term but we believe it’s the right thing to do. We’re on a mission to completely remove single-use plastic.” Last month, Steve Holmes-led Azzurri Group reported a 7% increase in group sales to £299.4m for the year ended 30 June 2019, with like-for-like sales growth across all four of its brands.

Wright & Bell appoints Suzanne Grantham as operations director: Restaurant and bar company Wright & Bell, which is backed by Imbiba, has appointed Suzanne Grantham, formerly of Pho and Mitchells & Butlers (M&B), as operations director. Grantham spent a year as an operations manager at Pho and before that nine years at M&B, including four as an area operations manager in Castle Pubs. Last year Wright & Bell opened its third site in the City of London – Lino – in a former carpet warehouse in the Square Mile. The space takes inspiration from minimalist Finnish design, with the centrepiece a clover-shaped, tulipwood bar lined with shelves of craft spirits and jars of house ferments that can be mixed into cocktails. Wright & Bell, which is led by Sarah Clark, also operates Kitty Hawk and The Back Room Wine Bar, in Moorgate, plus Whyte & Brown in Kingly Court.

Michael Caines acquires beach-front restaurant for first Cornish site: Michelin-starred chef Michael Caines has acquired beach-front restaurant The Cove in Maenporth, near Falmouth, for his first site in Cornwall. The venture is being backed by Cornish entrepreneurs Roger and Helen Edwards. The chef will take over the restaurant in March when it will undergo a refurbishment. While closed, The Cove’s team will head to Caines’ Devon country house hotel, Lympstone Manor, to learn The Cove’s new brasserie-style and tasting menus, which will feature some of Caines’ signature dishes and champion the best of the Cornish produce. The restaurant has been owned and operated by Arty Williams and Annette Rickard for the past 17 years. Caines said: “I am delighted to take on the restaurant and work with the dedicated team to continue to champion the best of Cornish produce in this informal and beautiful setting.” Caines also operates the Coach House by Michael Caines restaurant and a consultancy at Kentisbury Grange Hotel, near Barnstaple, and will launch an as yet unnamed venture in Exmouth this summer.

Black Sheep Coffee makes Oxford debut and expands in Manchester: London-based speciality coffee shop operator Black Sheep Coffee has made its debut in Oxford and opened a fourth site in Manchester. The site in Oxford’s George Street spans two floors, while the site in Manchester’s Gateway House joins its other venues in the city – in Piccadilly Place, Spring Gardens and Deansgate. Both sites are available to hire for private events and will also host Black Sheep’s coffee and cocktails masterclasses. Founders Gabriel Shohet and Eirik Holth said: “These openings showcase the exciting expansion of the Black Sheep Coffee family.” Shohet and Holth launched the company in London in 2013. It operates circa 30 sites in the capital and two franchise sites in Manila in the Philippines. In July, Black Sheep Coffee acquired eight London sites from Taylor St Baristas, which have also been incorporated into its estate. Having raised £13m in a new funding round last year, the company plans to grow its estate to 70 sites UK-wide. 

KellyDeli appoints Mike Williams as global chief HR officer: KellyDeli, owner of the Sushi Daily concept, has appointed Mike Williams, formerly of Byron, as global chief HR officer. Williams spent four years at Byron heading up its HR function, leaving his role as chief people officer last year. Recently, he has been a consultant for Nando’s. KellyDeli currently operates circa 800 sites in ten countries and is rapidly expanding across Europe. Founded by Kelly Choi, the business opened its first non-kiosk Sushi Daily in London’s New Oxford Street at the start of last year.

Douglas Jack – Marston’s will need to adjust PBT forecast unless it steps up like-for-likes given forthcoming NLW rise: Peel Hunt leisure analyst Douglas Jack has argued Marston’s will need to adjust its profit before tax forecast unless it steps up like-for-like growth given the forthcoming National Living Wage rise. Issuing an ‘Add’ note on the shares with a target price of 140p ahead of the company’s trading update on Friday (17 January), Jack said: “The wet-led Taverns estate has outperformed the food-led Destination & Premium estate in terms of like-for-like sales in each of the past five years. The company will now merge its wet-led, food-led, managed, franchised, tenanted and leased pubs into one operating and reporting group. We estimate its pub profits (83% of group profits) are evenly split between food-led and wet-led. Our 2020E forecasts assume managed like-for-like sales rise 1.7%, assisted by extra investment in pub training, pub team incentives and digital marketing. Like-for-like sales should also benefit from higher maintenance capex, the pause in expansion and improving consumer cash flow, driven by higher average earnings growth. With Marston’s no longer having to find and develop new sites, we believe the company should now focus on reducing costs and creating/executing work streams to drive like-for-like profits. Previous guidance of the company needing 1.5% like-for-like sales to offset 2% to 3% cost inflation post mitigation was based on the National Living Wage rising 4.5% per annum. April’s 6.2% increase equates to an extra £3m to £4m per annum of costs, by our estimates, and profit before tax forecasts will need to adjust unless like-for-like sales step up. We forecast circa £55m of net debt reduction in 2020E due to capex falling £45m and disposal proceeds increasing from £43m to £70m. Of this £70m, £50m has already been done, and there is good visibility of the last £20m. We estimate this should drive 32% growth in equity value (based on current Ebitda forecasts) over the next two years. In an improving market, it is possible disposals/debt reduction forecasts could increase.”

JD Wetherspoon gets go-ahead to transform Westminster bank into pub: JD Wetherspoon is set to transform a former bank branch in London into a pub. Westminster Council has approved the company’s plans to convert the ground floor and mezzanine of a grade II-listed building in the Strand into a 591-capacity, 27,000 square foot bar. The upper floors would continue to be used by Outer Temple Chambers, reports the Evening Standard. The property, which was built as a restaurant for the nearby Royal Courts of Justice, features ornate tile friezes, a fountain and carved pillars. After the restaurant closed in 1886, the building became a Lloyds bank.

Aprirose appoints Fleurets to market Revolution Bars Group sites: Real estate investment company Aprirose has appointed agent Fleurets to market four Revolution Bars Group sites as investment opportunities and a further five sites sold with vacant possession. It follows the announcement on Wednesday (15 January) that Revolution Bars Group had exchanged contracts with Aprirose to surrender five leases of underperforming sites and to re-gear a further four leases. Fleurets director Ed Sandall has been instructed by Aprirose to sell the five properties that have been surrendered and the four re-geared investments.

Whitbread acquires City of London police station for hub by Premier Inn: Whitbread has completed the acquisition of Snow Hill police station in the City of London and will turn the building into a hub by Premier Inn. Whitbread has acquired a 151-year lease from the City of London Corporation, with police operating from the station until December 2020 to allow time to decommission the building. Whitbread acquisitions manager for central London Jonathan Langdon said: “The site’s close proximity to the City and some of London’s most historic attractions makes it a prime location. We recently opened a Premier Inn at Smithfield and are building another hub by Premier Inn in Farringdon Road so the Snow Hill acquisition is a great opportunity for us to grow our hub by Premier Inn portfolio in such an important London catchment.” The corporation is looking to build combined courts and police headquarters in Fleet Street. Sir Michael Snyder, chairman of the City of London Corporation’s capital buildings committee, said: “As we work towards realising our vision of the City as a round-the-clock destination, it is estimated more than 4,000 hotel rooms will be required to meet demand from workers, tourists and residents. Developments like this will be crucial in meeting that target.”

Domino’s Pizza independent non-executive director to step down: Domino’s Pizza has announced Ebbe Jacobsen, an independent non-executive director, will step down from the board on Tuesday, 28 January at the end of his second term in office. Interim chairman Ian Bull said: “On behalf of the board, I would like to thank Ebbe for his dedication and significant contribution to Domino’s over the past six years. We wish Ebbe every success.”

Lake District hotel brought to market for £3.25m: The Castle Inn Hotel, near Bassenthwaite Lake in the Lake District, has been brought to market at a guide price of £3.25m by agent Savills on behalf of a private client. The hotel comprises 45 en-suite bedrooms with another three rooms used by the owners as office space. The property also features The Castle Inn Tavern and Ritson’s Restaurant, along with conferencing and events facilities, and a leisure club with gym and indoor swimming pool. Tom Cunningham, director at Savills Manchester, said: “Opportunities to acquire freehold assets in the Lake District don’t come about very often so we’re delighted to bring The Castle Inn Hotel to market.”

QikServe acquires Preoday: Mobile technology company QikServe has acquired rival Preoday in a deal that will unite loyalty, delivery, payment and EPOS integrations to provide operators and partners with the “technology to power multi-channel, seamless experiences for customers”. QikServe provides operators with an enterprise content management and third-party integration platform for in-store digital order and payment solutions, customisable for use with kiosks, tablets, web and mobile apps. The business operates in the UK, US and Europe, with clients including Merlin Entertainments, Shake Shack and HMSHost. QikServe founder and president Daniel Rodgers said: “We recognised our businesses are stronger together, with huge synergy between products and solutions. Our merger will allow us to accelerate and extend our services across hospitality to serve more sectors in more countries while providing operators with much-needed simplification.” Preoday chief executive Nick Hucker added: “We operate in 15 countries, delivering millions in revenue across 600 locations. We are delighted to enter this new chapter with QikServe, which will offer customers the ultimate in speed and convenience in this experience-driven age.”

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