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Mon 11th May 2020 - Propel Monday News Briefing

Story of the Day: 

Chopstix exploring dark kitchen franchise model: Jon Lake, managing director of Chopstix, has said the pan-Asian quick service restaurant concept is exploring the opportunity of launching a dark kitchen franchise model. Speaking as part of Propel’s “navigating the coronavirus” series, Lake said: “In terms of franchising we are looking at a number of different areas. There is an argument to say if you have a simple business model is there a dark kitchen franchise opportunity, as much as there is a storefront, four-wall one? I think there is and we will explore that because the capital intensiveness is much lower and I think there are ways people will embrace that further. I think we can look at a business model that almost focuses on dark kitchens only, rather than anything else. There are providers we can work with, but also there are a lot of people with redundant kitchen space right now and our model is such we can squeeze it into a fairly small space and either enhance existing revenues or replace some revenues, with a model that is quick, easy and deliverable. We are also looking at meal kits because that is a facet of having a simple model to be able to do that. But the longer-term thing for me though is looking at whether we can just pivot our franchise model a little bit more to take advantage of the delivery side of things.” Shake Shack and Tortilla are among the brands to have made, or are set to make, their delivery kitchen debuts. At the end of last month, Chopstix reopened six sites for delivery, and, in some locations, takeaway. Lake said: “We have been reasonably pleasantly surprised. Customer interaction, customer feedback and customer engagement have been tremendous, which probably goes to show the level of pent-up demand when you are there and people are saying ‘please open’. Some stores have performed better than others, but generally speaking, we have probably been about 40% to 50% ahead of where we thought we were going to be, but I absolutely emphasise we had really modest expectations. We are thinking about what next in terms of more openings, but there is a natural hiatus where we look to understand what the government measures in terms of lifting the lock-down might look like and being measured about where we go from there. I can see us looking to open another six to eight sites over the next couple of weeks, and then see where we get to after that.” Lake will share more of his thoughts in the video, which will be released on Monday (11 May). Meanwhile, readers can support independent sector journalism and get their news 12 hours early (at 7pm each night) with a Propel Premium subscription. It costs £395 plus VAT per annum for operators and £495 plus VAT for suppliers. Email to sign up.

Industry News:

Sponsored message – Eagle Eye Solutions offers AIR platform for free, so hospitality operators can run supplier-funded activation campaigns: To help operators recover from covid-19, Eagle Eye is waiving the set-up and run rate fees for its AIR digital marketing platform. By joining the network of thousands of pubs and restaurants already in place, operators will get access to supplier-funded activation campaigns. Eagle Eye powers campaigns for brands including Carlsberg, Bacardi and Diageo where consumers receive promotional vouchers that can be redeemed at participating venues. Eagle Eye has a variety of easy-to-deploy POS solutions to enable redemption. Al Henderson, chief sales officer at Eagle Eye, said: “The effect of covid-19 has been devastating for the hospitality sector, so we want to do our bit to help operators bounce back once they can start trading again. This initiative gives operators the opportunity to participate in supplier-funded campaigns that enable them to receive a full paying guest into a venue without eroding margin or giving a discount. We want to help operators rebuild their businesses for the long-term, which is why this initiative is free on an ongoing basis and not just a short-term offer.” To find out more, please contact If you have information you would like to feature in a sponsored message, email

Social distancing is a threat to future of bars, events and nightclubs: Trade body The Night Time Industries Association (NTIA) and its members have argued social distancing threatens the future of the bar, nightclub and events sector. Peter Marks, chief executive of The Deltic Group, said: “Socialising in most town centre hospitality venues does not work with social distancing. It won’t work practically, or economically. Think standing areas, toilets, corridors, staff, and what would happen to the fire capacity? It is the same for pubs, bars, clubs, live music venues as well as most restaurants. It is not for us to determine when we should return to normal albeit most of our customers and staff are in the low-risk categories. But what we need to know is we have a long-term support package that includes furlough payments and a rent deal mechanism for forgiveness, not just building up debt to become a zombie company later. That way we can all be ready to give people the social life that is important to so many, whatever their preference for escapism, enjoyment and a night out. Without hospitality we merely live to work rather than work to live.” Paul Daly, owner of Roadtrip and The Workshop Zigfrid, London, added: “We operate in a very over-rented property in Shoreditch and this rent has evolved on the basis loads of people come together, tightly together, and let off steam to amazing British and global music. My venue does not have the room to have only 50% or 30% of the customers in and survive the huge costs involved in keeping the lights on. I’m vastly experienced at what I do and automatically know that if the government throws us under the bus and demands that we open in the middle of this pandemic we will not survive.” NTIA chief executive Michael Kill said: "While the sector recognises the scale of the problems faced, it must be realised some business models simply cannot adapt to some of the expected government measures. The balance between the required measures to safeguard public health against securing the protection of the economy is a hard line to draw. This goes beyond the current crisis – we must go further and use this experience to future-proof businesses, bringing about a new normal, ensuring the economy is protected if this were to happen again. Lessons must be learned, and steps are taken to safeguard the future of the sector.”

BBPA warns 40% of pubs won’t survive beyond September without more government support: The British Beer & Pub Association (BBPA) has warned 40% of Britain’s 47,000 pubs won’t survive beyond September, unless they get more support from government to get them through the lock-down. The findings mean almost 19,000 pubs could stay closed permanently, resulting in the loss of 320,000 jobs in regions across the UK. As the government begins to unveil its lock-down plans, the BBPA is urgently calling on it to give pubs all the support they need to get through their prolonged lock-down. It is also calling on the government to recognise pubs will need additional specific support to survive as they are allowed to reopen too, ensuring their businesses are commercially viable while they have to operate under social distancing restrictions that will inevitably reduce revenues significantly. To achieve this, the BBPA said the grant support programme has to be extended for pub businesses throughout their period of lock-down and the early stages of reopening; and the threshold for the scheme raised above the £51,000 rateable value, so 10,000 more pubs can access grants. It is also calling for an extension of the Coronavirus Job Retention Scheme for pubs beyond June and throughout their lock-down, as well as operate a specific “back to work scheme” for pubs and breweries, to help protect 900,000 jobs. The BBPA said the government also had to start considering the fiscal measures needed for longer-term sustainability, such as reduced VAT rates for the hospitality sector and further support on beer duty. BBPA chief executive Emma McClarkin said: “Pubs are losing cash fast. The government must understand the current financial support it is giving, although welcome, does not go anywhere near enough to help pubs in an extended lock-down or when they can reopen under social distancing restrictions.”

Country pub sells £25,000 of gift cards in lock-down with Toggle support: Regulars at Derbyshire village pub the Devonshire Arms have spent £25,000 on gift cards to support the pub during the lock-down. The pub in Middle Handley has worked with Toggle, the gift card and experience platform by CRM agency Airship, to encourage customers to buy cards that can be redeemed on food and drink once the pub can reopen. The business took advantage of Toggle's decision to makes its service free once the coronavirus lock-down began in March. The pub had previously sold paper gift vouchers and offers through Groupon, but working with Toggle has enabled it to bring all its offers in-house and sell online. Cards are available in £10, £20 and £50 values, and can be redeemed by customers across the bar when the pub reopens. Hospitality businesses can now access Toggle at to quickly set up a bespoke, branded gift card webshop free of charge. Some 700 pubs, bars and restaurants are live on Toggle, 300 of them coming on board since lock-down was announced. Airship chief executive Dan Brookman said: “Businesses such as the Devonshire Arms are the lifeblood of their communities. By making Toggle free for the duration of the shutdown, we're helping operators and their customers ensure there's a thriving hospitality sector when we come out the other side.”
Airship is a Propel BeatTheVirus campaign member

Government – drive-thrus made for social distancing: Drive-thru restaurants such as McDonald's are “made for social distancing”, environment secretary George Eustice has said. At the Downing Street press conference on Friday (8 May), Eustice said it was safe for takeaway food shops to reopen. When asked about fast food stores reopening, he said: “I think our view is that probably a McDonald's drive-thru is made for the social distancing situation we are in, in that people do not leave their car, they place their order and someone passes a bag of food to them at the end through a kiosk.”

New study examines lifting of pub, restaurant and nightclub restrictions: A new University of Stirling study is seeking to understand how the easing of restrictions on licensed premises can be effectively managed to protect emergency services. The project – funded under the Scottish government’s Rapid Research in Covid-19 programme – will examine policy options for reopening pubs, nightclubs and restaurants to minimise the impact on ambulance services, and to protect customers and staff from the virus. The team will investigate how the reopening of premises could be phased in over time, and whether and how licence holders could minimise infection risks. The study will consider the way in which consumers and venues might respond to any easing of restrictions – in terms of alcohol consumption, intoxication, violence, sales and promotions. Professor Niamh Fitzgerald, of the Institute for Social Marketing and Health at Stirling University, who is leading the project, said: “We will consult with a wide range of businesses, staff, policymakers and experts. One option could be to ease restrictions partially, or in a staggered way, potentially with measures remaining in place around sales, opening hours or venue capacities to minimise harm and impact on the emergency services.”

US restaurant employment drops to lowest level since 1989, loses six million jobs: The US restaurant industry has lost more than three decades of jobs in the past two months, according to National Restaurant Association analysis of preliminary data released by the Bureau of Labour Statistics. Eating and drinking outlets lost 5.5 million jobs in April, on a seasonally-adjusted basis, which follows a net decline of almost half a million jobs in March. This is almost three times more jobs than any other industry. “In February, there were more than 12 million people on the payrolls of eating and drinking places across this country, but today more than six million restaurant workers are home without a job – and that number is going to grow," said Sean Kennedy, executive vice-president of public affairs for the association. “It is critical Congress provides targeted relief for the restaurant industry and its employees.”
Job of the day: COREcruitment is working with a dynamic and diverse business that is going through a period of change and transformation. To support this project, it is looking to appoint a hands-on, dedicated and adaptable operations manager to lead change and growth. Ideally the individual will have previous experience in a high-revenue hospitality business, with a large team of reports and be looking to join a business long-term. Ideally they will be located near the M1 corridor. The salary is circa £60,000 plus benefits and bonus. Anyone interested can email with their CV or profile.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

S&P – PizzaExpress ‘highly likely’ to launch capital restructuring: Credit rating agency Standard & Poor has said the recent agreement of a new £70m loan facility by PizzaExpress is only an “additional step toward a likely broad restructuring of the group's capital structure”. In March the Hony Capital-backed PizzaExpress announced the issuance of a £70m super senior term loan facility, which has been fully drawn to redeem the £20m revolving credit facility and a £10m super senior loan, both due in August 2020. S&P stated: “Although, after close examination of the new debt documentation, we do not consider this transaction distressed – because the terms of the existing debt documentation have been respected – we believe the issuance of this new super senior debt is only an additional step toward a likely broad restructuring of the group's capital structure. We expect to revisit our ratings on PizzaExpress when the terms of the ongoing restructuring plan are defined and published, including the terms of any potential debt-for-equity swap, or other restructuring transactions.” PizzaExpress’ capital structure currently comprises the new £70m facility due March 2023, the £465m senior secured notes due August 2021, and the £200m senior unsecured notes due August 2022. The new super senior facility is set to mature at the earlier of May 2023 or two weeks before the maturity of any material indebtedness in the capital structure. S&P said: “The negative outlook reflects our view a restructuring of the company's capital structure in the short term is highly likely given PizzaExpress’ weak earnings prospects and the approaching maturity of the £465m senior secured notes. The outlook also incorporates the additional hurdles PizzaExpress is facing in turning around its weak operating performance amid an extremely challenging competitive environment exacerbated by the covid-19 pandemic. We could lower the rating on PizzaExpress if it entered a comprehensive debt restructuring, declared a conventional default, completed a transaction akin to a distressed exchange on any of its outstanding debt facilities, or if it entered into any scheme of arrangement. Although unlikely over the next six to 12 months, we could raise our ratings on PizzaExpress if its operating performance recovered rapidly and we saw signs of its standing in the credit markets sustainably improving. Any upgrade would depend on PizzaExpress' ability to refinance its maturing debt at par, decreasing the likelihood of a debt restructuring or repurchases below par in the future.”
Boparan Restaurant Group chair and CFO step down. in talks on circa 40 Carluccio’s sites: Laurie Mcilwee and Simon D’Cruz, chairman and chief financial officer respectively, have stepped down from Boparan Restaurant Group (BRG), Propel understands. Mcilwee, the former Tesco group chief financial officer, joined BRG – the Giraffe, Ed’s Easy Diner and Slim Chickens operator – in May 2017, while D’Cruz, the ex-head of financial planning at Domino’s, joined the business at the start of 2018. Earlier this year Tom Crowley stepped down as chief executive of BRG and was replaced by Satnam Leihal, who played a key role in the management team within the larger Boparan organisation. Propel understands despite the coronavirus pandemic, BRG remains in good shape and is “looking beyond the current situation, with the leadership team continuing to drive the business forward”. BRG is currently in exclusive talks to acquire the rump of the Carluccio’s business, which was placed into administration at the end of March. It is thought BRG fought off competition from Three Hills Capital, the backer of Byron, for Carluccio’s. However, it was unclear how much of the 71-strong Carluccio’s that BRG was in talks to acquire. Propel understands BRG is in talks for between 40 to 45 Carluccio’s sites and the brand, with others being marketed by Lambert Smith Hampton. It is thought of the sites BRG is not in talks to take, deals have been agreed on the majority, including a handful with Tesco for its Express format. Sites thought to be still available include the Carluccio’s in Bankside, Kingston and Gloucester Quays, with the former having an annual base rent of £204,000. It is thought BRG has between two to three weeks to complete a deal. Geoff Rowley and Phil Reynolds, partners at FRP Advisory, were appointed joint administrators of Carluccio’s at the end of March.
Individual Restaurants MD and FD step down: Vernon Lord and Peter McCulloch, managing director and finance director respectively, have stepped down from Individual Restaurants, which operates 30 sites under the Piccolino and Restaurant Bar & Grill brands, Propel understands. Lord, formerly of Inventive Leisure, joined Individual Restaurants in 2004 after Derek and Edwina Lilley, the couple who founded the Est Est Est chain, secured £18m backing to expand their latest two ventures, the Restaurant Bar & Grill and Piccolino, across the UK. In 2011, a consortium called W2D2 bought and delisted Individual Restaurants. W2D2 was led by Individual Restaurants founder Steven Walker and Iceland founder Malcolm Walker. Steven Walker remains chief executive of Individual Restaurants, which in 2015 entered into a joint venture with chef Gino D’Acampo, to launch new restaurant brand Gino D’Acampo – My Restaurant. McCulloch, the ex-director of finance at Revolution Bars Group, joined Individual Restaurants at the start of 2017.
Tortilla to reopen eight sites, including first delivery kitchen: Tortilla, the Quilvest-backed fast-casual Mexican concept, will reopen eight of its sites this week, including its first delivery kitchen unit, Propel has learned. The Richard Morris-led business shuttered its entire 42-strong estate on 23 March but will reopen its sites for delivery and collection in Brighton, Canary Wharf, Clapham, Hammersmith, Islington, Putney and Wimbledon on Tuesday (12 May). It will also open its first delivery kitchen in the Deliveroo Editions in Crouch End on the same day. The company is also looking at potentially reopening a further four sites the following week, in Finchley Road, Guildford, Southwark and Richmond. Speaking to Propel last month, Morris said: “We feel it’s time to get moving again, albeit in a few locations with strong delivery and takeaway trade. To reopen a hibernated business takes time and process so this will get us moving as the lock-down hopefully softens over the coming months. Employees and customers will be the priority, so we will be maintaining social distancing in all restaurants.”
Pure co-founder – landlords need to recognise they’ve played a part in creating problems: Spencer Craig, co-founder of healthy food-to-go concept Pure, said he hopes the current crisis acts as a catalyst for the redefinition of the tenant and landlord relationship. Craig said he hoped landlords recognised what the 21-strong Pure and its peers brought to the big officer developments in which – or near – where it trades. He told Propel: “We are in office locations, which means we are part of the reason people come back to the office, and recognition of that from landlords is needed. As tenants we have to accept the starting point here is if we get back to the old sales levels, old rent is due and landlords are businesses, and they have bills and staff to pay, I totally accept that – but so do we. Their income is rent, our income is sales, but we’ve got no sales. The landlords really need to start thinking about this as a partnership and they have played a part in creating some of these problems. Often on sites you are bidding against other operators and landlords are using that to not only get the highest rent on one site, but also where they have 20 sites nearby they can use that increase to press up the rents everywhere else. The other problem is they have accepted the terms of those companies in company voluntary arrangements or administrations. Therefore, you have got the weaker companies coming into this paying 30% of their rent next door to you and we are still paying 100%. So, the person next door, who was in trouble before, is now paying far less than us, who were strong.” Craig said landlords and operators have to “stop shouting at each other from the side lines”. He said: “We are in this together.”

Greggs undertakes trial at small number of shops: Food-to-go retailer Greggs has reopened a small number of stores as it continues to trial safety measures. The Newcastle-based company is selling its products at an undisclosed number of shops in the Tyneside area. The gradual reopening process has followed a series of trials with staff testing working practices while remaining shut to customers. A Greggs spokesman said: “We are initially operating shop trials behind closed doors in order to test the effectiveness of our new operational safety measures. We will continue to review this and will invite walk-in customers into our shops only when we can do so in the controlled manner we intended.” Chief executive Roger Whiteside issued a statement on the company’s website, stressing the trials were in line with the government guidelines. He said: “These trials are being conducted across a number of channels, including delivery through Just Eat, click-and-collect and walk-in customers. Colleague and customer safety continue to be the primary focus of the decisions we take as we start to reopen our shops. Thank you for your patience while we work hard to play our part in getting the nation back up and running again and serving the communities in which we operate.”
Thornbridge repurposes pubs as bottle shops, online sales up more than 2,500%: Derbyshire-based Thornbridge Brewery has repurposed its pubs as bottle shops while it has seen more than a 2,500% increase in online sales as it diversifies the business. With the company “standing to lose 60% of its revenue overnight” as hospitality venues closed, its pubs have implemented call-and-collect options and a drive-thru beer collection available at those sites with car parks. Thornbridge has also focused its efforts on its online shop and packaged products, while ensuring staff health and safety. Online sales are up more than 2,500% following a direct focus to attract new and existing customers and diversifying its beer options to fit with the “at home” drinking market. Beer destined for cask has instead been produced as bottle conditioned beer. New beers destined mainly for keg have again been diverted to packaged product. To help support the community, Thornbridge designated its taproom and pubs as drop-off points for local food banks. Meanwhile, it is supporting front line staff with a 25% discount for all NHS workers for beer ordered via its online shop, brewing beer to support NHS Charities Together and is planning a number of parties to thank NHS staff when pubs reopen. Thornbridge co-founder and chief executive Simon Webster said: “Everyone has worked extremely hard to ensure the business continues. We have had the opportunity to drive sales in certain areas in order to achieve some quite incredible figures. I must extend our utmost gratitude to customers, both new and old, for supporting our online business, our trade and retail contacts for keeping supply chains open and our own suppliers for supporting us in so many ways. We hope when the wider industry returns we will be here to stand alongside fellow organisations and help strengthen business together.”

Pret to offer organic coffee products through Amazon: Pret A Manger, the JAB Holdings-owned business, has linked up with Amazon to offer consumers some of its organic coffee range. The company has made three flavours available – a light roast single-origin, its own classic blend and a dark roast. The company is reopening a further 71 shops from Monday (11 May) and adding more of its menu. The company will begin reopening sites outside London taking the total to more than 100. Another 55 shops are opening in central London along with outlets in Birmingham, Brighton, Bristol, Cambridge, Croydon, Edinburgh, Glasgow, Leeds, Manchester, Oxford, Reading, St Albans and Tunbridge Wells.

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