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Thu 23rd Jan 2020 - Propel Thursday News Briefing

Story of the Day:

Hawthorn Leisure in talks with operators including McDonald’s over dark kitchen space, would consider partnership deal for Stonegate/Ei Group sites: Hawthorn Leisure chief executive Mark Davies has told Propel the company has been having conversations with operators including McDonald’s about opening dark kitchens in its pubs. Davies said he had been “inundated” with enquiries since November after he told Propel the company was exploring the possibility of renting out kitchen space. He added: “The first challenge we have is to pair ourselves with the right partner – and we’re having conversations with a host of operators, including McDonald’s. Because we’re predominately wet-led, we’ve got some large kitchen spaces that aren’t being used so this is potentially a massive opportunity for us and makes a lot of sense. Dark kitchens are taking off – particularly in London. There are a lot of hurdles to get over but we definitely expect to have something open this year – watch this space!” Davies said Hawthorn would consider looking at the 42 sites set to hit the market as part of Stonegate Pub Company’s £3bn takeover of Ei Group – perhaps in partnership with another operator. “What we know from the Competition and Markets Authority is the sites are set to be sold in three packages,” said Davies. “Given the type of sites, I don’t think there are too many buyers for the whole lot so I think you’ll see a range of interest from companies, including ourselves. In terms of a partnership with another operator, I think that’s an option we would look at.” Davies said Hawthorn Leisure saw like-for-like volume growth of 1% in December against a strong comparable last year. He added: “What we did see was a move towards premiumisation, with a 4% increase in like-for-like sales of our premium lagers, where the average price is £3.50 to £3.60 while our standard lager is around the £2.60 to £2.70 price point. It’s something we’ve been seeing for a while but it was more evident over the Christmas period. The Bravo Inns pubs have also performed well. Often you get a fair bit of disruption when you’ve done a deal like that but we’ve not seen it. That has taken us to 100 managed sites and we’re hopeful of being at 150 by the end of the year.”

Industry News:

Mark Wingett to look at what this year could hold for main restaurant sector players in latest Premium column: Propel insights editor Mark Wingett will look at what this year could hold for the main restaurant sector players in his latest Propel Premium column, which will be sent to subscribers at 5pm on Friday (24 January). Paul Viner, founder of Intelligent Goat, will also ask whether companies can do more with less, while Premium Diary will look at the latest industry rumours. 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, and regular columns from Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,500 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

Propel Multi Club Conference open for bookings, Sharon Singh to present, 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. Sharon Singh, head of operations at Marston’s Family Pubs division and winner of the Rising Star award at the English Women’s Awards and the WeQual award, which recognises world-class women executives, will talk about the company’s evolution of a family friendly pub offer. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places by emailing Anne Steele at

Greggs places highest in fast food and pubs section of YouGov survey: Greggs has been named the “top” and “most improved” brand in the UK fast food and pubs section of YouGov’s 2019 BrandIndex Buzz survey. Greggs scored 11 to put it top of the rankings ahead of Nando’s (4.8); Costa Coffee (4.5); and Mitchells & Butlers’ steakhouse brand Miller & Carter and McDonald’s (both 3.1). Greggs’ score improved from 5.4 in 2018, which also meant the company topped the improvers’ table. KFC was second with an improvement of 4.6, followed by Pret A Manger (2.8), McDonald’s (1.3) and Starbucks (1.2). Brands were ranked using the Buzz score, which asks respondents: “If you’ve heard anything about the brand in the past two weeks, through advertising, news or word of mouth, was it positive or negative?” Net scores are calculated by subtracting the percentage of negative responses from the percentage of positive responses for each brand. The Buzz rankings chart shows the brands with the highest average Buzz scores between 1 January and 31 December 2019.

Diners seek more direct feedback channels regarding restaurant experience: Although 87% of diners choose where to eat based on online reviews, they would welcome more direct channels of feedback with operators, particularly email and conversations with the manager, according to research by guest experience management expert HGEM. For operators hoping to rescue a customer following a negative experience, a follow-up email is the choice of almost one-third (31%) of respondents, especially over-65s and baby boomers (44%), while one-quarter (25%) would prefer to feed back directly to on-site staff and 14% prefer to use an online review site. The most popular option for sharing feedback after a positive experience was communicating face to face (28%), followed by receiving an email after their visit (22%) and via an online review site (15%). However, more than one-fifth (21%) of Generation Z diners see online review sites as the best way to share feedback. The survey also revealed employee engagement has a direct impact on many dining experiences, with more than one-third (36%) of respondents happy to spend 10% more time in a restaurant or pub that employed engaged staff, while more than one-fifth (22%) would spend 20% more time. More than one-quarter (27%) of respondents wouldn’t return to a venue that had disengaged staff. HGEM founding director Sally Whelan said: “The research highlights a potential gap in the way operators source feedback from diners, with perhaps too high a dependence on online review sites and social media and less on direct channels of communication options – such as email and manager feedback – that consumers clearly value. It also reveals a trend that means employee engagement could be one of the keys to unlocking operator reputation and driving customer loyalty.”

UK enjoys tourism boost as visitors from mainland China increase 155% in 2019: There has been a huge rise in the number of tourists from Asia visiting the UK, with guests from mainland China surging 155% in 2019 compared with the year before, according to analysis by Expedia Group. Last year’s growth follows a 160% year-on-year increase in 2018. Package demand from China also shot up – by 260% year-on-year. Research from VisitBritain revealed travellers from China spend 2.8 times the global average when in the UK, while more than three-fifths (62%) of visitor nights are spent outside London. In 2019 there were also large year-on-year increases in the number of visitors from Japan and South Korea (both 30%) and Hong Kong (25%), with significant double-digit growth from Malaysia, Thailand, Taiwan and Singapore. This week, “destination UK” looks set to enjoy another surge in visitors to celebrate Chinese New Year, which begins on Saturday (25 January). In 2019, London’s Chinese New Year celebrations attracted 483,000 visitors from China alone. Helen Maher, of Expedia Group, said: “Chinese New Year traditionally attracts a lot of visitors from Asia and our data shows substantial interest from travellers coming to the UK from a number of Asian markets.”

Almost two-thirds of Scottish hospitality businesses ‘growing’ or ‘stable’ in 2019: Almost two-thirds (64%) of Scottish hospitality businesses reported they were “growing” or “stable” throughout 2019, according to the latest market review by the Scottish Licensed Trade Association (SLTA). The announcement comes despite almost half (47%) of outlets stating Brexit-related uncertainty had a negative impact on their business. The SLTA highlighted an “encouraging” performance from rural outlets, which performed ahead of the market for the first time during Christmas and New Year, with 50% citing a stable performance and 33% in growth. Three-quarters of all hospitality businesses recorded trade as being stable or growing over the festive season. On-trade retailers now see government legislation at national and local level as the biggest challenge their businesses face. The review found a significant increase this year in concerns over rates and the legislative impact of staffing costs. Operators expect to see continued growth in food for the year ahead, particularly in healthier options, as well as in online bookings, craft beverages and experiential offers such as drinks tastings, the report said.

Company News:

M&B shareholders rebel over vice-chairman’s reappointment as corporate governance row rumbles on: Mitchells & Butlers (M&B) shareholders have rebelled against the reappointment of Ron Robson as vice-chairman and two of its non-executive directors. The row comes amid continued concerns from shareholders over M&B’s “lack of independence” and concerns that the appropriate corporate governance structures “aren’t in place”. Robson, who is a nominated shareholder representative of Piedmont – M&B’s largest shareholder with a 27% holding – saw 26.0% of shareholders vote against his re-election at the company’s annual meeting on Tuesday (21 January). Eddie Irwin, who has been a non-executive director since 2012 and is a nominated shareholder representative of Elpida Group, which has a 23% stake in M&B, saw 25.1% of shareholders oppose his reappointment. Josh Levy, who has been a non-executive director since 2015 and is a nominated shareholder representative of Piedmont, saw 22.7% of shareholders vote against his re-election. Despite the opposition, all three were re-elected and all motions at the meeting were passed. M&B stated: “The board notes the level of votes against the resolutions concerning individuals who represent one or other of our two largest shareholders. The UK Corporate Governance Code contains best practice recommendations in relation to corporate governance yet acknowledges, in individual cases, these won’t all necessarily be appropriate for particular companies. Accordingly, the code specifically recognises the concept of ‘comply or explain’ in relation to divergences from the code and the company has explained the circumstances of these appointments in detail in its 2019 annual report.”

Dawson steps down as special projects director at Leon: Nick Dawson, former general manager of Taco Bell UK and Europe, has stepped down from natural fast food brand Leon after less than a year with the business, Propel understands. Dawson was given the newly created role of director, special projects and operations support and reported in to co-founder and chief executive John Vincent. During his time at Leon, Dawson led a team that managed business process and optimisation projects across company and franchise operations. Under Dawson the team developed and launched a prototype concept last year aimed at driving profitable growth and accelerating company and franchise development outside London. The prototype, which launched in Leeds train station, features a reduced menu, a smaller footprint, improved kitchen fit-out and design, and digital ordering. Dawson also scoped, developed and trialled a labour management system that is set to roll out across Leon’s company restaurants during the next 12 months.

Chick-fil-A to push ahead with plans for ‘permanent’ UK site: Chick-fil-A, the largest chicken and third-largest US fast food restaurant chain, is pushing ahead with plans to open a “permanent” outlet in the UK – despite a backlash over its funding of anti-LGBT causes. Chick-fil-A closed its only Scottish location, a “pilot” at Macdonald Aviemore, at the weekend while its site at the Oracle shopping centre in Reading won’t run beyond its initial six-month period. Both restaurants opened in October but attracted criticism after it emerged Chick-fil-A pumped millions of dollars into organisations that actively oppose same-sex marriage. The company has since changed its charity-giving policy. Chick-fil-A said the Aviemore outlet didn’t close as a result of public pressure but was “in line” with its plans to trial the franchise. A spokeswoman told Herald Scotland: “These insights will help us immensely as we look to have a permanent location in the UK.”

Tootoomoo to explore franchise route for expansion: London-based, pan-Asian tapas concept Tootoomoo is to explore a franchise route for further expansion in the UK. Propel understands the business, which was founded by Philip McGuinness, has started working with Seed Consulting to find suitable franchisees. A Tootoomoo restaurant can operate from kiosks as small as 200 square feet up to 2,500 square foot restaurants and operate eat-in, click-and-collect and delivery services. The brand operates from secondary real estate with rent always less than 10% of sales, which has historically allowed each restaurant to pay back its investment on average in two years. Tootoomoo currently operates restaurants in Islington, Crouch End, Highgate and Whetstone.

Shake Shack UK appoints Sophie Street as head of property: US better burger brand Shake Shack has appointed Sophie Street, formerly of Bill’s and The Ivy Collection, as UK head of property. Street was formerly head of estates and acquisitions at Bill’s and before that was acquisitions manager at Richard Caring-backed The Ivy Collection. She joins Shake Shack as it looks to add to its 12-strong UK estate. The company opened its latest UK site at Brent Cross shopping centre in north west London before Christmas. The venue offers Shake Shack’s signature 100% Aberdeen Angus burgers, griddled flat-top hotdogs, frozen custard and crispy crinkle-cut fries, alongside beer and wine. Since the original Shack opened in New York in 2004, the company has expanded to more than 260 sites in the US and more than 80 internationally. In October, The Restaurant Group Concessions and Diverse Dining opened the first Shake Shack in a UK airport, at Gatwick.

Greene King expands inclusion and diversity programme: Brewer and retailer Greene King is partnering with four organisations to help the company expand its inclusion and diversity programme. Greene King will join Stonewall’s Diversity Champions Programme for its LGBT+ community; Women in Hospitality to support women and developing their careers; and the Business Disability Forum. The company will also sign Business In The Community’s Race At Work Charter. Meanwhile, Greene King has launched its own employee-led groups including LGBT+ group Village Greene and women’s network Team 47. The company said it expects to launch two further groups covering race and disability in the coming months. Group HR director Andrew Bush said: “We want to celebrate the diversity of our teams, which are representative of the people we serve. We are acting to build and nurture an inclusive culture and we’re pleased to join these four organisations to help us do this.”

McDonald’s launches career progression app for US employees: McDonald’s has launched an Archways To Careers app to help restaurant staff in the US take the next step in their career, whether inside or outside the company. Built in partnership with the Council For Adult And Experiential Learning and supported by career coaching organisation InsideTrack, the app offers a tool that connects to InsideTrack’s advisers. The move builds on McDonald’s Archways To Opportunity programme, which helps restaurant staff earn a high-school diploma and receive college tuition assistance up front. McDonald’s global chief learning officer Rob Lauber told Nation’s Restaurant News: “McDonald’s workforce has immeasurable talent to offer. We are proud to continue to invest in and create more opportunity for those who work here.”

Starbucks revises environmental plan including more plant-based food and drinks on the menu: Starbucks has launched five strategies to cut its carbon emissions and waste by 2030 as part of a revised environmental plan that includes adding more plant-based food and drinks to its menus. The company said it would look to add more plant-based food on its breakfast menu, while it would shift from single use to reusable packaging; invest in regenerative agricultural practices; find better ways to manage waste; and develop more eco-friendly stores, operations, manufacturing and delivery. Starbucks said it would also launch customer incentives to encourage more use of reusable containers to encourage a circular economy. Chief executive Kevin Johnson has set a 2030 target for hitting 50% cuts in carbon emissions in direct operations and supply chain, and waste sent to landfills from stores and manufacturing. He told Nation’s Restaurant News: “We are exploring meat alternatives for our breakfast menu and customers around the world can expect to see more plant-based options from us this year and beyond.” Earlier this month the brand introduced plant-based milk alternatives to its menus.

Levy UK launches Premier League’s first fully vegan kiosk: Catering company Levy UK has launched the first fully vegan kiosk at a Premier League stadium as part of its partnership with Chelsea Football Club. The move is part of a four-year contract extension between Levy UK and Chelsea FC. The kiosk debuted at the club’s game against Arsenal at Stamford Bridge stadium on Tuesday (21 January), offering vegan alternatives to pizza and doner kebabs alongside buffalo cauliflower wings and a halloumi and falafel wrap. The move is part of Levy UK’s commitment to deliver a 50% reduction in beef consumption, cut 30% of sugars from menus, and reduce food waste by 20% by the end of 2020. Levy UK managing director Jon Davies said: “There is a demand for football stadiums to follow consumer requests for more sustainable, responsible and diverse food and drink. The launch of the vegan kiosk with Chelsea FC is testament to both parties’ commitment to tackle issues surrounding more sustainable menu options.” Levy UK operates at a number of other London stadiums including Twickenham. In October the company was announced as catering partner for Brentford FC’s new stadium, which will open in the summer.

Colombian coffee roastery and all-day dining concept to launch in Belgravia: Sisters Juliana and Valentina Beleno are set to launch Colombian coffee roastery and all-day dining concept Morena in Belgravia, central London. Morena will open at the Eccleston Yards development in April offering coffee roasted in-house alongside Latin American-inspired dishes and cocktails. The venue will open from 8am, roasting beans hand-selected from small Colombian farms. Brunch and dinner menus will feature signature dishes such as cassava waffles and mango ceviche with bloody mary salsa, while tropical-inspired cocktails such as kombucha margarita and passionfruit mojito will be on offer in the evening.

Douglas Jack – expect good outcome for Fuller’s in third-quarter trading update: Peel Hunt leisure analyst Douglas Jack has said he expects a good outcome for Fuller’s in its third-quarter trading update next Thursday (30 January) given the strong trading environment in the wet-led London market in December. Issuing an ‘Add’ note on the shares with a target price of 1,050p, Jack said: “Fuller’s has a track record for outperforming its benchmark based on applying its market positioning to the Coffer Peach Business Tracker. After a weak November that lost the autumn rugby internationals, the London pub and bar market performed well in December, despite the rail strikes. Overall, managed like-for-like sales grew 2.7% in the first half versus a 4.1% comparable against a backdrop of poor weather. The company faces tough comparables of 5.6% and 5.9% in the third and fourth quarters respectively. Our full-year forecast assumes like-for-like sales will grow 2%, in comparison to which they were up 2.1% after 36 weeks. Cost pressure isn’t abating, although this is more of an issue for 2021E due to April’s 6.2% increase in the National Living Wage. For 2020E, our full-year forecast assumes managed Ebit margins fall 100 basis points, in line with the first half. Tenanted like-for-like profits fell 3% in the first half due to a very tough 4% comparable and increased spending on general maintenance. An increasing number of tenants are buying food through Fuller’s and engaging in the company’s training programme. These trends indicate the first-half decline in profitability should be temporary. We forecast net debt being £160m at the year end, equivalent to 2.8 times net debt/Ebitda. In our view there should be upside to like-for-like sales and margin forecasts over the next two years, as well as expansion if Fuller’s chooses to use its £120m to £150m of financial firepower.”

Five Points Brewing Company launches cask beer training scheme for publicans: Hackney-based Five Points Brewing Company has launched a “care scheme” to provide better training and support for publicans who stock cask beer. Five Points said it grew cask sales to more than 26% of total volume in 2019 from 20% the previous year, compared with a 4.8% fall in overall sales seen in the UK industry. The brewer will run monthly cask-training sessions at its pub, The Pembury Tavern, focusing on cellar temperatures and all aspects of serving. Five Points managing director Ed Mason said: “There is still a massive market for cask beer in the UK and we’re committed to cask beer as a core part of our range.” Five Points has been brewing since 2013.

Former Ritz chef heads kitchen at new Chelsea restaurant and deli: Former Ritz chef Chris Hill is heading the kitchen at restaurant and deli Colette, which has launched in Chelsea, south west London. Colette has opened in Fulham Road offering a seasonal menu and featuring a walnut counter and terrazzo floor. Hill’s menu includes veal blanquette and chestnut gnocchi with glazed button onions, and twice-baked cheese soufflé with poached apricots and walnuts. Desserts include caramelised apple tart, while weekend specials include grilled lobster with Thai dressing. The deli offers more dishes to take away such as beef tartar and home-made scotch eggs, alongside charcuterie, smoked salmon, caviar, fresh truffles, wine, cheese and chocolates. Co-founder Dimitri Plaquet said: “With the outstanding mix of culinary leaders in Chelsea, Fulham Road was an obvious choice when choosing an area within which to make our international debut. We believe we are bringing something slightly different to the area, encompassing both gourmet deli and wine shop functionality, and look forward to becoming an entrenched part of the well-respected food-scene here in Chelsea.” Hannah Grievson, property director at Sloane Stanley, which owns the site, added: “We are thrilled to have signed a debut European brand, especially one carrying Chris Hill’s credentials, to our increasingly diversifying food and beverage portfolio. There has been high demand for a deli option on the estate, and the introduction of Colette fulfils this requirement whist adding an exciting new facet to our dining offer.” Miles Commercial and Savills represented Sloane Stanley. Cushman & Wakefield represented Colette.

Indian restaurant concept Raj expands to Islington for second site: Indian restaurant concept Raj has headed north of the Thames for its second London site. Founder Salim Sheikh has launched Raj of Islington off Upper Street. Similar to flagship venue Raj of Kensington, the 82-cover sister site focuses on home-cooked food from India’s regions. Signature dishes include two curries based on 100-year-old recipes. The drinks list includes wine by the glass, spirits, mocktails, cocktails and gin. Sheikh, who has a background in fine dining, founded Raj in 2016.

Sadler’s to close brewery as beer production moves to Cumbria: Black Country-based Sadler’s, which is majority owned by Halewood Wine and Spirits, is to close its brewery in Lye and shift production to Cumbria. A 30-day consultation has finished and production of Sadler’s beer will move to Hawkshead Brewery in Staveley, near Kenda, reports the Express & Star. Halewood, which bought a majority stake in Sadler’s in 2017, said: “After thorough consultation and extensive review, a decision has been made to close Sadler’s brewery at Lye in the West Midlands. The brewery equipment is to be transferred to southern Ireland, where it will be used to produce whiskey instead.” Sadler’s began as a family business in Oldbury in 1861. Two Sadler’s bars – the Taproom in Quinton and Brewer’s Social in Harborne – aren’t affected by the move and will continue trading. Earlier this month Halewood Wines and Spirits reported group revenue grew 26% to £335m for the year ending 29 June 2019, with adjusted Ebitda up 15% to £26.3m.

Halo Burger opens debut bricks and mortar site: Plant-based burger concept Halo Burger has launched its first bricks and mortar site, in Shoreditch, east London. The Ross Forder-led concept has opened at the former Selekt Chicken site in Great Eastern Street. Halo Burger, which claims to be the UK’s first brand to offer the Beyond Burger, a 100% plant-based bleeding burger, operated a site at Pop Brixton late last year. Beyond Burger is the creation of US food manufacturer Beyond Meat, which states the item is a “revolutionary plant-based burger that looks, cooks and satisfies like beef and contains no soy or gluten”. Beetroot juice provides the “bleeding” effect. CDG Leisure acted on the Shoreditch deal.

Tyne and Wear-based operator opens South Shields coffee shop for second site: Tyne and Wear-based operator Sue Freeman has opened a coffee shop in South Shields for her second site. Freeman launched Mamma Sue’s Kitchen in Jarrow in 2016. She has now opened Mamma Sue’s Eatery in Frederick Street, South Shields. Freeman told The Shields Gazette: “Mamma Sue’s Kitchen has done really well and I’ve always wanted a nice coffee shop. I’ve been trying to get into South Shields for a while. I feel like I belong and I know I can do well.”

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