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Wed 3rd Jun 2020 - Propel Wednesday News Briefing

Story of the Day: 

Investors seeing investment world in ‘three buckets’: Darrel Connell, partner at sector investor Imbiba, which backs operators including Farmer J, Vagabond and Darwin & Wallace, has said the company is seeing the investment world in “three buckets” – distressed, good businesses that went into lock-down with slightly stretched balance sheets, and those that want to capitalise on opportunities. Talking as part of Propel’s insight series of videos, Connell said: “Firstly, there is the distressed stuff such as Carluccio’s and Byron. They are distressed processes and the highest bidder wins, where multiples of Ebitda are not a relevant thing – it’s about risk. Then there are good businesses which went into lock-down with slightly stretched balance sheets and not that much cash, that are going to need cash to get through this, to not go bust potentially. There is a value for that business. And then the third one is businesses that were really good going into the lock-down, had cash on their balance sheets, but want to capitalise on the market opportunity there will inevitably be out of this. So there is three different buckets and therefore three different valuation approaches. There is still some great business out there but as an investor you are going to have to take a gulp. The absolute cardinal sin from our point of view is if you do a deal, next month or next week, and that company goes bust in seven months because there is a second lock-down and it runs out of money that is almost unforgiveable from our investor’s perspective.” On the valuation point, Ali Aneizi, founder of leading advisory firm Tamweel, said: “The ingredients that go into pricing a business or applying a valuation to a business is a sustainable earnings stream and risk. And as things currently stand the perception of risk has gone up and we don’t have P&Ls to work from in the industry. Until things start to normalise and we can start pointing towards some more normalised financial performance, to an earnings stream that we can hang our hat on in terms of valuations, that topic is going to be very tricky. And even then, my expectation is there will be a price gap. There will be a gap in price expectations between founders, entrepreneurs and management teams on what they think their businesses are worth, and what investors thinks those businesses are worth. Going forward for those wanting to be doing deals in a difficult backdrop, people need to be thinking creatively about how to bridge that gap.”

Industry News:

Footfall in London eclipses pre-lock-down levels: Footfall in London is now higher than the day before the country went into lock-down, according to the latest data from Wi-Fi solutions provider Wireless Social. The analysis, which took an aggregated look at footfall in more than 800 venues nationally and focused mainly on major cities, showed footfall in the capital on Sunday (31 May) was down 62.2% compared with the average in February. On 22 March – the day prior to prime minister Boris Johnson ordering people to stay at home – footfall in London was down 62.6% against the February average. Wireless Social said this was significant, as it was an early indicator consumers were starting to return to pre-covid-19 behaviour. Footfall has continued to gradually increase in most major cities, although Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle and York are all still down more than 80% compared with the February average. Footfall in Cardiff grew and is also now down about 80% compared with the February average, with Edinburgh now down about 85%. In Glasgow, footfall remained down about 90% compared with the February average.
Wireless Social is a Propel BeatTheVirus campaign member

Three quarters of UK consumers eager to dine out, 60% expect to pay slightly more: Almost three-quarters (73%) of UK consumers have said they will dine out within days or weeks of the sector reopening and 60% expect to pay slightly more for their meal, according to new research by restaurant intelligence platform Yumpingo. A third (34%) of consumers said they will try to visit outside of peak times, which Yumpingo said could help operators even out spikes and troughs in demand across the week. More than half (57%) of consumers said they would happily visit restaurants and bars as long as social distancing measures are being observed. Only a small minority of diners (7%) plan to forego eating out until a vaccine is available. Diners expect a narrower range of menu options to be offered, which Yumpingo said indicated menu optimisation efforts would be readily accepted. Diners expect to be served by fewer waiting staff while 60% expect to pay slightly higher prices, perhaps in acknowledgement of the financial difficulties publicised in the industry, Yumpingo said. Although diners are keen to return to venues, health and safety is a top priority. Almost half (47%) said one of their key criteria for choosing where to dine will be a restaurant’s social distancing policies exceeding the legal requirements. To that end, almost all (92%) would consider using their own device to view menus, order and pay to counter their concerns over traditional restaurant contact-points such as cash (49%) and touching menus (40%). Consumers were less concerned about interactions with staff (23%) or servers handling tableware (36%). Yumpingo founder and chief executive Gary Goodman said: “It is welcome news for the hospitality sector diners in the main aren’t going to put off eating out, even though they will exercise some caution in their approach. Traffic will move from peak dayparts to a broader spread across the day as guests socially distance on their own terms. This coupled with a general acceptance of a pared-back menu should help restaurants transition to a lower operating model as they reopen.” 
Yumpingo is a Propel BeatTheVirus campaign member

Feed It Back and Tipjar announce partnership to allow contactless tipping: Guest feedback service Feed It Back and Tipjar, the peer-to-peer tipping and tip-sharing concept, have announced a partnership and technical integration. It will allow consumers giving feedback via Feed It Back software to say thank you via a tip at the end should they wish. This integration will be available to all of Feed It Back’s customers free of charge, and Tipjar is providing the service for free until 2021 to anyone opting to enable it. Feed It Back chief executive Carlo Platia said: “With staff welfare and reward being very much in the forefront of our customers’ minds as they plan for reopening, contactless tipping will be key.” James Brown, Tipjar founder and retail director of Scottish brewer and retailer BrewDog, added: “As operators we strive for excellence – real-world tangible reward in the form of feedback – and tips really help with this quest. Just as they are connected in the real world, we are pleased to announce they are now connected in the digital world.” 
Feed It Back is a Propel BeatTheVirus campaign member

Housing minister – government 'determined' to retain two-metre distancing rule: Housing minister Simon Clarke has said the government intends to maintain a two-metre social distancing rule despite a World Health Organisation (WHO) study finding keeping one metre apart cuts the coronavirus risk by 80%. Speaking on the Kay Burley show on Sky News on Tuesday (2 June), Clarke said the government believed the two-metre rule minimised the coronavirus risk to the public, while also allowing people to get on with their daily lives. He said: “We're not doing this arbitrarily. We're doing it because that's the advice we've been given.” The new research, funded by the WHO, found people have just a 2.6% chance of catching coronavirus if they stand one metre away from an infected patient. Writing in Propel, Hugh Osmond, serial sector investor and current backer of Coppa Club, said those in the hospitality industry need to be brave and call out the “ridiculous and unjustified two-metre social distancing rule”. In a special opinion piece, which was published on Monday afternoon (1 June), the founder of Punch Taverns, wrote: “Maintaining lock-down or opening with ridiculous two-metre social distancing rules will kill retail and kill the hospitality industry.”

Bloomberg to continue rent and service charge holiday for rest of 2020: Landlord Bloomberg has written to its tenants in Bloomberg Arcade stating it has decided to continue the rent and service charge holiday it brought in at the end of March for the remainder of 2020, Propel has learned. In correspondence seen by Propel, the landlord states: “In response to the dire businesses environment we find ourselves in, I want to convey to you, and the other restaurants in Bloomberg Arcade, that at Bloomberg we value the vital impact small entrepreneurs make to our communities and we understand the extreme challenges your business faces. In response to these challenges, I am happy to be able to convey the company has decided to continue the rent and service charge holiday for the remainder of 2020. Including the March quarter, this will represent a total of nine months free of rent and service charge. For clarity, these charges are not to be recouped at a later date but rather they are intended purely as a Bloomberg's demonstration of support and understanding for small business owners struggling to keep their business together.” Restaurants that will benefit from Bloomberg’s decision include Kym’s, Brigadiers, Vinoteca, Homeslice, Bleecker Burger and Caravan.

Fourth launches in-app health survey for staff: Hospitality software provider Fourth has launched an in-app survey that enables operators to track the health of their employees to ensure all measures are taken to safely staff their sites when the industry reopens. The new feature, which is securely accessible for employees via the Fourth app, asks staff a series of questions on their current health so operators can establish if they are fit to work ahead of their shift. The questions will be asked daily and are in line with the latest NHS advice and government guidance on return to work protocol for the hospitality industry. Once in use, responses will feed in the Fourth scheduling solution, enabling managers to see which team members are fit to work that day. The system also highlights which team members are yet to complete the survey, as well as flagging any employees that are experiencing covid-19-related symptoms. Sebastien Sepierre, EMEA managing director at Fourth, said: “Not only does this enable the safety of team members and the containment of covid-19, but it will be essential in building consumer confidence. This will be a pivotal challenge we collectively need to overcome in order to give our industry the best possible chance of hitting the ground running when it reopens.” The function, which is currently in trial with a limited number of Fourth customers, will be available free of charge from 18 June to customers using Fourth’s workforce management solution. 

Domestic bookings could prove a silver lining for UK hotels, says HVS: The UK hotel sector’s traditionally strong domestic leisure demand bodes well for the sector’s recovery once lock-down measures from coronavirus are fully lifted, according to a new report from global hotel consultancy HVS. However, the report outlines hotels in the capital and other gateway cities, with heavier reliance on international travellers and corporate bookings, are likely to take longer to recover than those in the provinces, which have a more domestic, leisure-based guest profile. Many hotels outside London typically generate more than 50% of domestic room nights from holidaymakers. In the south west of England, for example, holidays account for 69% of domestic room nights, compared with London, where some 29% of hotel bookings come from domestic leisure bookings. Overall 60% of hotel demand in the UK comes from domestic sources, a similar proportion to France (63%), although not as high a proportion as Germany at 82%, where much of this demand is generated from trade fairs and events, which are likely to take longer to recover; and the Nordics, which averages at 71%. Much of southern Europe has a lower percentage of domestic tourism, with Portugal at 34% and Italy at 50%. Report author Stephen Collins, an associate director with HVS London, said: “One impact of lock-down is British tourists will be keen to travel, and unable to go abroad are likely to book holidays in the UK once it’s deemed safe to do so. This could prove a silver lining for UK hoteliers, holiday operators and campsites. We are cautiously optimistic about the UK hotel industry’s ability to recover at a reasonable pace compared with the rest of Europe, and to focus on domestic tourism until international demand returns. But it will not be smooth sailing and there could be casualties, particularly in areas reliant on international, corporate and meetings, conferences and exhibitions.”

Deliveroo reports 412% surge in ice-cream orders: Deliveroo has reported a 412% surge in ice-cream orders compared with last year as Brits look to cool off during lock-down. With temperatures hitting 28 degrees Celsius and the driest May for 176 years, orders have soared in the heat. While a rise in orders of ice-cream is fairly typical around the summer months, the company reported a 38% uplift in sales this time last year. Among the most popular ice-creams being ordered on the platform are Kaspa’s sort serve vanilla and vanilla ice-cream from Sundaes Gelato.

Job of the day: COREcruitment is working with a private members’ club that is looking to appoint a new general manager. This venue combines restaurant, bar and private hire in a stylish and modern space aimed at the creative industries. The food is fresh and seasonal and the drinks offering merges award-winning craftsman with local suppliers. The incoming general manager will need to have extensive previous experience in a fine dining, private members or events-led business. This position would suite an outgoing individual with a flair for great service and a passion for creating stylish, intimate hospitality destinations that are welcoming and engaging. A salary between £40,000 and £50,000 will be considered, depending on experience, plus bonus and benefits. Ideally the individual will be based in south London. The start date is between July and August. Anyone interested can email
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

McDonald’s reopens further 190 restaurants: McDonald’s has reopened a further 190 restaurants as it accelerates its reopening plans across the UK and Ireland. The company, which had so far reopened 44 outlets, reopened 168 drive-thru sites as well as 22 restaurants for delivery on Tuesday (2 June). Among the drive-thrus that have reopened in England are sites in Cornwall, County Durham and Lancashire as McDonald’s begins reopening outlets outside London and the Home Counties. Its first outlets in Scotland have also begun trading again. Meanwhile, restaurants in Exeter, Epsom and Uxbridge are among those that have reopened for delivery. McDonald’s will have reopened 1,019 outlets by the end of this week, including every one of its 924 drive-thrus. To manage the anticipated demand, McDonald’s said it would only release the locations of the restaurants reopening on the day. It comes after the company was forced to shut some drive-thrus last month due to overwhelming demand with huge queues “impacting local communities or the safety of our people or customers”. There is a £25 cap per vehicle on drive-thru orders as the business adjusts to smaller teams and social distancing in its kitchens. Perspex screens are fitted at drive-thru windows and all employees are wearing personal protective equipment. In car parks, dividers will be in place, while security teams will patrol zones to ensure visitors comply with safety laws.

Sophie’s Steakhouse boss – we need certainty on how sectors will fit together: Sophie Bathgate, chief executive of Sophie’s Steakhouse, has said there needs to be certainty on how each sector that impacts the hospitality industry will reopen and fit together. Speaking to Elliotts chief executive Ann Elliott as part of Propel’s “navigating the coronavirus” series, Bathgate said: “As a restaurant in central London we need theatres and tourists and all the elements to make it successful. It all fits and slots together, so how the government is going to reopen each sector becomes more relevant, especially in Soho, where that is a big worry. We can’t exist in isolation. Theatres are a huge part of our business, whether that is cast coming in after a show or audiences coming in before a show – it is all intertwined.” Bathgate said the company had modelled for 50% less sales until the end of the year, and then next year 20% less. She added: “This might be hopeful, and it is all linked with the rental equation. We are having good conversations with our landlords, and we are all in it together.” The group’s Chelsea venue is a more neighbourhood restaurant, while its Soho outlet is a destination site, “set up for that party atmosphere”. Bathgate said going forward “we will keep them along those lines but maybe exaggerate their differences a bit more”. Bathgate will share more of her thoughts in the video, which will be released on Wednesday (3 June). 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.

Moto to bring a further 130 food brand outlets back into operation: Moto, the UK’s biggest motorway service area operator, is reopening a further 130 of its food brand outlets. All 48 of the company’s sites have remained open throughout the coronavirus pandemic but it had to close the majority of its food and drink outlets. Now, in response to increasing traffic levels as restrictions ease , Moto is opening more of its foodservice brands across all its motorway and trunk road locations. By the end of the month an additional 60 Costa Coffee stores, 41 Greggs shops, 24 Burger King restaurants, five KFC sites and four Marks & Spencer food stores will be open. Measures have been put in place to ensure the continued safety of colleagues and customers, including hand sanitisers at every counter and social distancing measures. Moto chief executive Ken McMeikan said: “The accelerated reopening plans will support all of those using the UK motorway network. It’s fantastic we can also welcome back many of our furloughed colleagues who provide outstanding levels of service. The health and safety of our customers and colleagues remains of paramount importance as we reopen our food and drinks brands.”

Dishoom begins reopening sites for delivery: Indian restaurant concept Dishoom has begun reopening sites for delivery. The company has reopened its Kensington, King’s Cross and Shoreditch outlets, which are offering the service via Deliveroo daily between 11.30am and 10.30pm. The menu includes its vada pau, keema pau, chicken ruby and house black daal alongside cocktails such as Pallonji’s Raspberry Soda. Everyone who orders will also get a recipe in their delivery on how to make the Dishoom masala chai at home. Dishoom closed all seven of its restaurants in March. 

Billy Allingham realigning crazy golf venture to attract families, gets go-ahead for second site: Billy Allingham, managing director of Leicestershire-based Steamin’ Billy Brewing, has told Propel he is realigning his Caddyshackers crazy golf venue to accommodate and attract families post-lock-down – and has been given the go-ahead for a second site, in Nottingham. The existing venue in Leicester city centre was aimed at the 18 and over market, but Allingham is changing tact – at least temporarily – as he believes families will be “looking to get out and enjoy themselves in a safe and fun environment”. He added: “We are also creating a treasure hunt nature walk near to one of our pubs where families can claim a prize at the bar once the trail has been completed, transitioning to hopefully appeal to the new consumer before normality returns.” Meanwhile, Allingham has been granted permission by Nottingham City Council to convert the former Tales of Robin Hood building into a Caddyshackers. The 16,800 square foot unit, which was last used in 2009 and is owned by Tesco, will be transformed to house two indoor courses with different themes, using wall projections creating different zones; interactive darts; pool tables; air hockey and basketball machines; and a full cocktail and craft beer bar. Allingham said he would think “long and hard” about when to start the project, but hopes to begin work this year. Allingham launched the Caddyshackers venture along with bowling concept East Street Lanes at the end of 2018 with his children – Tabitha, Jessica and Kipp – to “capitalise on the rise of competitive socialising and experience-led drinking venues”.

Turtle Bay to reopen six further sites for delivery and collection: Turtle Bay, the Caribbean restaurant brand backed by Piper, has reopened six further sites for delivery and collection, Propel has learned. The 44-strong company reopened its outlets in Bristol’s Cheltenham Road, Crawley, Colchester and Nottingham last month. It has now added Southampton, Bristol Broad Quay, Cardiff, Ealing, Manchester Oxford Road, and Peterborough to that list for delivery, click-and-collect, and call-and-collect options. It shuttered all of its sites across the country in March.

Vianet already receiving orders and enquiries from pubs for Smart Zones system ahead of reopening, secures several key contract renewals: Vianet Group, the international provider of actionable data and business insight through devices connected to its Internet of Things platform, has reported it is already received orders and enquiries for its Smart Zones system as pubs look towards reopening. The company also said it has secured several key contract renewals, including Charles Wells, Greene King, Hawthorn, Hydes, JW Lees, and Punch. Vianet said despite continued pub disposals in the UK, its Smart Zones division saw adjusted operating profit increased to £4.57m for the year ending 31 March 2020, compared with £4.48m the year before, helped by its “technology refresh” programmes. Smart Zones recurring revenue per device increased 9.5% to £58.00, compared with £52.99 the previous year, reflecting the “higher quality recurring revenue streams that has resulted from customers' disposal of relatively lower performing pubs during their estate rationalisation programmes”. Smart Zones average adjusted operating profit per device increased circa 7.5% to £19.39, compared with £18.03 the year before, reflecting “sustained profitability against a lower estate size”. Vianet made Smart Zones technology upgrades in 2,518 pubs, compared with 1,901 pubs the previous year, with a further 900 in the pipeline for the new financial year. The company saw revenue overall increase 3.8% to £16.3m, compared with £15.7m the previous year. Pre-tax profit was down 11% to £2.4m, compared with £2.7m the year before. The board decided to withdraw its recommendation to pay a final dividend due to coronavirus, which would amount to about £1.16m. 

James Cochran launches virtual chicken brand: Great British Menu winner James Cochran has launched virtual chicken brand Around the Cluck, operating out of his Islington restaurant, 1251. Cochran said he had been using lock-down to develop his signature fried chicken, which has led to the launch of Around the Cluck, which is available daily via Deliveroo and UberEats within a 2.5-mile radius. The menu includes fried pieces and crispy wings paired with roast gravy mayonnaise as well as buttermilk fried pieces with blue cheese mousse. There are also seasonal salads and sides as well as a range of desserts. Cochran said: “Fried chicken is the ultimate accessible luxury; it brings that bite of comfort so many are after right now. Fried chicken has been a solid part of my culinary journey from winning me a Great British Menu dish to this exciting project we’re working on here.” Cochran launched 1251 in Islington in August 2018 after closing his two other restaurants nearby. He won the BBC’s Great British Menu in the same year.

Michelin-starred Peruvian restaurant Lima to offer two delivery options: Michelin-starred Peruvian restaurant Lima in London’s Fitzrovia is launching two delivery options. Lima at Home offers some of the restaurant’s signature dishes including sea bream, scallop ceviche, and slow-braised suckling pig with parsnip and sweet chilli sauce. In addition, there is a more casual version called Barranco by Lima, which is named after one of the districts of Lima in Peru. That menu features half or whole slow roast chicken with Peruvian sauces, and slow-braised pork brioche, reports Hot Dinners. Both options are available from Wednesday (3 June).

American Football club owner to open restaurant in Leicester: Guy Kersey, the owner of the Leicester Falcons American Football Club, is to open a restaurant in the former Queen Victoria Arts Club in the city. Orton’s Brasserie, named after famous city playwright Joe Orton, will open in Leicester’s Cultural Quarter when the government gives the go-ahead for restaurants to start trading. Until then, the new venue will focus on delivering a brunch-based menu from Saturday (6 June). Kersey told The Business Desk: “We are excited to be able to offer something a little different to the city’s food offering at this time. With many of our favourite eateries closed for business, and after lots of conversations with the people of Leicester, we discovered, of all the meals out that people were missing the most, brunch was by far the biggest.”

Thatchers reports turnover and profit boost following investments: Somerset-based cider-maker Thatchers has reported a boost in turnover and profit following a year when the family business made multimillion-pound investments. The company saw revenue increase 6% to £106.6m for the year ending 31 August 2019, compared with £100.7m the previous year. The rise was attributed to increased distribution and the popularity of its brands, including its Thatchers Gold, Thatchers Haze, Thatchers Katy and the introduction of Thatcher Rosé. Pre-tax profits rose to £11.8m, compared with £9.3m the previous year. During the year Thatchers invested £18m into its production and warehouse facilities, sustainability initiatives and marketing campaigns – up from £4m the previous year. Managing director Martin Thatcher said: “Investing in our brands is crucial for the continued success of the company. Our focus on keeping our cidermaking and packaging processes under one roof at Myrtle Farm means we are able to guarantee the quality of our cider. Furthermore, it puts us in a position to respond quickly and positively to outside influences, such as the 2018 carbon dioxide shortage, and increased demand from retailers this spring during the current coronavirus pandemic.”

Food bank launches in Covent Garden with Shaftesbury support: A new Covent Garden Community Centre (CGCC) food bank initiative has been launched, in collaboration with the Felix Project and Camden Council, to support vulnerable adults and families in the local area due to the effects of coronavirus. Shaftesbury has selected the Dragon Hall Trust and CGCC project as one of the many local charities and community groups in the West End it is supporting under a newly formed “Community Fund” initiative. The fund was established following the decision by its board to reduce their salaries and pension contributions by 20% for three months from 1 April. Shaftesbury’s non-executive directors have made a 20% reduction to their fees for the same period. The food bank is located within the Seven Dials Club in Earlham Street. The Dragon Hall Trust and CGCC joins other retailers from the Seven Dials community such as Tatty Devine, Deciem, Kiehl’s, and Neal’s Yard Remedies, which are supporting front line workers during this time by raising funds, offering significant discounts and providing personal protective equipment and products for NHS staff. Restaurant brands including 26 Grains, Homeslice and Shake Shack have been donating thousands of meals for local charities and front line workers. 

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