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Morning Briefing for pub, restaurant and food wervice operators

Fri 18th Sep 2020 - Propel Friday News Briefing

Story of the Day:

MOD Pizza UK in administration: The future of MOD Pizza UK, which is backed by Sir Charles Dunstone, has been thrown into doubt, after the company behind the business was placed into administration. Propel understands insolvency firm Campbell Crossley & Davis is handling the administration process for MOD Pizza UK. It is thought the nine-strong pizza concept was placed into administration earlier this month, and circa 250 members of staff have also been made redundant. Dunstone’s Freston Ventures vehicle declined to comment. The group’s nine sites have been closed since March, with no indication as yet of when they will reopen. It has already exited its site in Borehamwood, while its site near Leicester Square was placed on the market last year. Propel revealed earlier this year, Dunstone, the backer of Five Guys UK, had taken full control of MOD Pizza in the UK. The brand launched in the UK in Leeds in 2016 as a joint venture between Freston Ventures and MOD’s founders Scott and Ally Svenson. The Svensons were leaving the UK business to concentrate on the continued growth of the brand in the US and Canada. A MOD Pizza spokesman told Propel at the time: “As the fastest-growing restaurant chain in America for the past four years, MOD has expanded significantly to 473 locations, system-wide, across the US, UK and Canada. For our next stage of growth, we plan to concentrate our efforts in North America to focus our resources on the most significant opportunities. Therefore, effective immediately, we will be transitioning full operational control of the ten MOD locations in the UK to our local partner, Freston Ventures. As we continue to write the story of MOD as a pioneer in fast casual pizza sector and a leader in using business as a force for good, we are excited for the road ahead and to impact the communities we serve by spreading ‘MODness’.” Propel understands the move would have seen MOD sites in the UK evolve their offer by introducing fresh pasta alongside pizza. MOD had been trialling pasta in its site in The Pinnacle in Leeds under a new concept with the working title of Pazza. It was thought that Freston Ventures would have looked at gradually introducing pasta to the other MOD UK sites. It is unclear whether Freston Ventures will retain any of the MOD UK sites to continue with this strategy. 

Industry News:

Mark Wingett to look at whether sector’s various CVAs go far enough in latest Premium column: Propel insights editor Mark Wingett asks what’s the long-term plan as more companies go through and contemplate company voluntary arrangements, and whether some are cutting deep enough or sufficiently changed their thinking, in the latest Premium Opinion, which will be sent to subscribers on Friday (18 September). There will also be the latest sector rumblings from Premium Diary. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,600 businesses. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email
BBPA renews calls for extended furlough and VAT cut as pubs and restaurants in north east subject to 10pm curfew and table-only service: The British Beer & Pub Association has renewed its calls for an extension to the furlough scheme and the VAT cut as pubs and restaurants in north east England were subjected to a 10pm curfew and table-only service as part of new local restrictions being introduced in the region. Health secretary Matt Hancock confirmed the measures in a statement to the House of Commons following government talks with north east councils and local MPs. They will come into force from Friday (18 September) in Northumberland, North Tyneside, South Tyneside, Newcastle-upon-Tyne, Gateshead, Sunderland and County Durham. BBPA chief executive Emma McClarkin said: “Pubs and brewers have worked tirelessly to get pubs safely open and stocked since July so this latest announcement is another significant blow. Our data suggests that a third of pubs are still struggling to even break even, which indicates we are at a very delicate moment in our sector’s recovery. Consumer confidence is already very fragile and extra restrictions will inevitably have a further cooling effect on that, not only in the regions where they are in effect, but also nationally. We are calling on the government to immediately put in place a sector-specific furlough scheme beyond October, extend the VAT cut and business rates holiday and make a substantial cut to the punitively high rate of beer duty in the autumn Budget. These measures will help brewers and pubs work towards a safe and sustainable recovery.”
Commercial property landlords slam ban on business evictions extension: Commercial property landlords could be left with unpaid rent bills totalling £4.5bn this year, the industry warned as it slammed a ban on business evictions being extended to the end of the year. The British Property Federation (BPF) told the Evening Standard, it estimates total rent unpaid for UK commercial property between late March and the end of December, will be around £4.5bn. That covers all commercial property, including offices and warehouses, but the vast majority of the rent unpaid will be from the retail and hospitality sectors. While some tenants agreed rent holidays with landlords or other deals, many had not and were worried they would not be able to pay the outstanding rent, after suffering three months of closure in lock-down. But landlords claim some firms refusing to pay are big and profitable, and are taking advantage of the crisis. Bill Hughes, head of real assets at investor Legal & General, said: “The moratorium continues to be misguided. It has encouraged tenants to ignore their obligations and, in many cases, occupiers have chosen to avoid any sort of dialogue with owners. There are many occupiers that are well-capitalised and trading from property where they could easily pay rent and service charge but are actively choosing not to do so. This has created unwarranted uncertainty around real estate as an asset class that could, ultimately, undermine its attraction to long-term investors.” A spokesman for the Ministry of Housing, Communities and Local Government said: “The measures we’ve announced will protect jobs in businesses facing uncertainty following the period of closure earlier in the year, but this is not a rent holiday. Rent is still owed, and where tenants can afford to pay in full they should do so. If they cannot pay in full now, they should pay what they can. This extension provides landlords and tenants with an opportunity to come together to reach agreements on any outstanding commercial rent that work for both parties, using the principles set out in the Code of Practice published earlier this year.”
New York City Council passes bill allowing restaurants to add voluntary covid-19 surcharge of up to 10%: New York City Council has passed a bill allowing restaurants to add covid-19 surcharges of up to 10% on to a customer’s bill, for up to 90 days after full-capacity indoor dining resumes. The measure is fully voluntary, and was passed the same week city governor Andrew Cuomo announced the city could resume indoor dining at 25% capacity on Wednesday, 30 September. “The passage of the covid-19 recovery bill will help struggling restaurants generate additional revenue to help pay for expenses such as personal protective equipment for their employees, outdoor dining set-ups, rent, labour and other expenses to give them a fighting chance of survival,” the New York City Hospitality Alliance said in a statement. Restaurants that choose to implement the surcharge will have to make it explicitly clear before a customer places an order by informing customers of the charge on the bottom of each menu page and only labelling it as a covid-19 surcharge. Covid-19 surcharges have been showing up sporadically at restaurants around the country since May. 
PUB21 to share three-day show with seven other events in bid to energise sector recovery: PUB21, the only dedicated show for the UK pub industry, has announced it will take place over three days from 22-24 March 2021 at ExCeL London. The event will join forces with Hotel, Restaurant & Catering (HRC, and formally Hotelympia), International Food & Drink Event (IFE), IFE Manufacturing Solutions (IMS), London Produce Show, European Coffee, Tea & Soft Drinks Expo and Festival of Enterprise. These co-located events will be the first large-scale gathering for the community following the covid-19 pandemic, bringing the food, drink and hospitality industry together and to help play a part in helping galvanise it for the recovery ahead. PUB21 event manager Harry Keeble said: “The pub industry has, and continues to be, severely affected by covid-19. By co-locating PUB21 alongside seven additional events, publicans will have the best opportunity to sample and source products and services that meet the multiple needs of their business from all areas of the supply chain. This, combined with the chance to learn from industry experts, share ideas and discover the latest industry trends, means publicans will be in the best place possible to prepare for the year ahead and exceed expectations.”
Boxpark and Mowgli among winners at Fast Track 100 awards: Boxpark, the Roger Wade-led business, and Indian street food concept Mowgli were among the winners at the 23rd annual Sunday Times Virgin Atlantic Fast Track 100 awards. Boxpark, which has turned unused land at three London locations into retail, bar and street food sites, making £3m profits last year, won the effective use of capital award, sponsored by BGF. At the same time, the Foresight-backed, Nisha Katona-led Mowgli won the emerging brand award, sponsored by The Sunday Times.
Job of the day: COREcruitment is looking to speak to operations directors or operations managers from the quick service/fast casual food sector who are keen to join an ambitious small business. This senior position will support a business with six restaurants, which has investment to start a roll-out plan. The executive team is hoping to speak to passionate senior leaders who have excellent knowledge of implementing systems and procedures, brand development and structure, and have strong openings experience. The ideal individual will love the London food scene, have great quick service food experience and a combination of large company knowledge and small growth brand experience. The position is London-based and a salary between £60,000 and £90,000 will be considered. Anyone interested can email
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Deal for GBK would see at least nine sites close: A group of nine sites has been earmarked for closure by the current management team of Gourmet Burger Kitchen (GBK) if a successful deal for the 67-strong business is completed, Propel understands. Propel revealed earlier this week, the brand’s current owners – Famous Brands – had pushed the button on a sale process for the better burger chain. First-round bids for the business were due on Wednesday (16 September), and Propel understands a mixture of trade players and investment groups has shown an interest in GBK, including Calveton UK, which recently acquired rival Byron via a pre-pack administration. Deloitte, which has been advising the business on its options since April, is carrying out an accelerated sale process, with second-round bids due next Friday (25 September). It is believed, unless a solvent sale can be concluded, a deal via pre-pack administration will be explored. Propel understands the sites earmarked for closure are in Aylesbury, Angel, Clink Street, Maidstone, Cardiff Library, Sheffield, Southampton, Glasgow and Edinburgh. The business is thought to have performed well in the full year to 23 February 202, with the group generating £69m of revenue, £7.1m of restaurant Ebitda and £1.6m of Ebitda. It is currently trading from 40 sites across dine-in and delivery in the UK.
Bill’s to reopen another batch of sites: Bill’s, the Richard Caring-backed restaurant group, is to reopen another batch of sites, after seemingly making a U-turn on a decision to close some of them. In August, Propel revealed Bill’s was set to close parts of its estate. One industry source suggested the number of closures could be more than 20, including Glasgow – the group’s only site in Scotland – Worcester and some in central London. The company has so far reopened 52 sites across the UK, with a further four set to reopen this month. However, it had yet to put a date on when it would open the doors on its remaining 22 sites. According to the Worcester News, staff at the Bill’s in Worcester were told, in July, the restaurant was to close within the next month after the coronavirus crisis impacted the chain’s income. However, the Worcester site is one of the seven that is now set to reopen on 1 October. It also includes the company’s site in Glasgow, which was also understood to be earmarked for permanent closure, plus restaurants in Ealing, Putney, Watford, Cheltenham and Leicester. It still leaves sites in locations including High Street Kensington, Plymouth, Taunton and Oxford still closed. Earlier this month, Propel revealed Bill’s had begun working with adviser KPMG on the future shape of its estate. It is thought KPMG’s work with the 78-strong business is at a very early stage and is examining discussions with the company’s landlords about the group’s future rental terms. However, the fact that it is working with advisers will add to speculation the group will look to shed some of its existing estate.
McManus predicts sales of just 77% of pre-covid level for upcoming year: McManus Pub Group predicts it will be trading at 77% of its pre-coronavirus levels during the next 12 months. The Northampton-based pub company, which was forced to shut 15 Northampton sites and two in Leigh-on-Sea during lock-down, gave the stark statistic in its latest filed documents for its financial year ending 27 July 2019. The signed-off company statement read: “Business is expected to operate at below pre-covid close-down capacity for 10 months before returning to more normal trading levels. Over the next 12 months, it is forecast to trade at 77% of the pre-covid capacity.” It also stated it has delayed a £285,000 VAT payment that was due in April until 31 March next year; that 100% of pub staff were furloughed from 22 March; it secured £1m loan funding through the Coronavirus Business Interruption Loan Scheme and drew a further £250,000 from an HSBC credit facility; and received £160,000 in grant funds. The business’ turnover had dropped from £4,012,259 in 2018 to £3,994,768 while profit before tax had fallen by 29.3% from £458,920 (2018) to £324,157.
Bone Daddies to replace Byron in Richmond: Bone Daddies Group, which comprises the eponymous ramen restaurants, Shack-Fuyu and Flesh & Buns, is to open a site in Richmond, Surrey, Propel has learned. The eight-strong, London-based company is understood to have secured the former Byron site at 26 Hill Street for its eponymous brand. The company has secured a new lease on the site, with an opening planned for mid-October. It will become the sixth site to open under the Bone Daddies brand and the group’s ninth site overall. The company also operates two delivery-only units in Wandsworth and Kentish Town. In March, Ross Shonhan, founder of Japanese ramen bar concept Bone Daddies, announced he was leaving the business. Shonhan stepped away to “pursue other interests”, with business partner Demetri Tomazos continuing to lead the group. Shelley Sandzer and the Etch Group acted on the Richmond deal. 
Barkby Group adds Oxfordshire village pub with rooms to portfolio: Premium gastro-pub operator Barkby Group has acquired The Harcourt Arms, in the village of Stanton Harcourt in Oxfordshire. The company has entered into a new six-year leasehold agreement for the 17th century village pub that holds two AA Rosettes and five AA Gold Stars. Following a four-year transformation project, the pub features nine letting rooms and one master suite. The pub and dining rooms offer a total of 125 covers. In addition, the pub also owns The Harcourt Stores, a delicatessen and local shop. Barkby Group stated: “The addition of The Harcourt Arms is in line with the group’s strategy to expand its portfolio of top-quality pubs with accommodation to take advantage of the trend away from branded pubs and large hotels and the demand for quality food and local produce. Barkby Pubs’ portfolio now consists of seven premises with a total of 67 rooms.” Executive chairman Charles Dickson added: “The pub offers visitors the ultimate village pub experience with excellent food and service. It perfectly fits our proposition and very much welcome it into The Barkby Group.”
Imad’s Syrian Kitchen eyes permanent site in London’s Soho: Imad’s Syrian Kitchen, the brainchild of chef Imad Alarnab, who used to own two restaurants and several juice bars and cafes in Damascus, is planning to open its first permanent site in London’s Soho. Propel understands the business, which has operated a number of pop-up residencies across the capital during the past three years, is believed to be set to take the site that was formerly occupied by Darjeeling Express in Kingly Court. Indian restaurant concept Darjeeling Express, which closed its debut permanent site in Kingly Court earlier this year, has recently reopened in Covent Garden. The brainchild of self-taught cook Asma Khan, the concept secured the former Carluccio’s flagship site in Garrick Street for the opening of an all-day deli.
Absurd Bird owner raises £12m to expand ‘host kitchen’ start-up Kbox: “Host kitchen” start-up Kbox has raised £12m to expand its food delivery concept. The round, which follows a £5m raise in July, was led by London-based venture firm Balderton Capital. Founded in 2019 by Salima Vellani, also owns Absurd Bird, the five-strong chicken concept Kbox operates more than 30 delivery-only restaurant brands. It licenses these brands, along with a technology stack, to restaurants and other foodservice operations looking for incremental revenue to add to their businesses. Restaurants cook and fulfil the orders themselves, with their existing staff, while Kbox’s technology stack integrates with third-party delivery services that handle the last mile of the delivery. Kbox said it is on track to have 2,000 of these kitchens in the UK before the end of 2021, and is also eyeing an international expansion. The company has franchise agreements in Australia and India, and said operations will launch in another eight countries at some point next year. The new capital from Balderton will support this expansion, as well as help Kbox establish a presence in the US in early 2021. Vellani said: “We are at the very early stages of a massive shift in not only the restaurant industry but in the foodservice and hospitality industry as a whole. Covid has simply accelerated a shift we were already seeing but it has also highlighted a very pertinent issue – these industries are running on razor-thin margins that are not sustainable and only Kbox is really focused on enabling existing food operators to move into the delivery-first era without incurring large costs by utilising what they already have.”
Starbucks says sales almost back to normal in China as it sets out three key initiatives to aid US recovery: Starbucks has said its sales are almost back to normal in China but a “longer road lies ahead” in the US, where the business has set out three key initiatives to aid recovery. Speaking at the JP Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum, Starbucks chief financial officer Patrick Grismer said sales in China year-on-year were flat in August against minus 10% in July. But Grismer predicted it would take six more months to completely recover. Sales incrementally improved from minus 14% in July to minus 11% in August as the company continues to reopen dine-in areas. He said about 3% of its stores remain closed, and about half of those open have seating available. Grismer noted drive-thrus — which represent about 60% of the company’s portfolio — have boosted sales significantly at a time when visits are still low. “We’ve seen that as we’ve progressively opened our ordering and sales channels, from drive-thru to entry way pick-up to in-store ordering and seating, sales have improved and they’re continuing on that path,” Grismer said. He added three key initiatives would fuel its future recovery in the US – the deployment of handheld POS at the drive-thru to collect orders sooner in the queue; the roll-out of kerbside pick-up; and the launch of Stars for Everyone for its Rewards members, which allows customers to pay with practically any physical or digital payment, instead of a preloaded card. Kerbside pick-up is available in 800 stores, but Grismer said the company plans to double that number in the next few months. In China, Starbucks is expanding its store footprint by 500-plus units in the current financial year, particularly through new store formats such as the grab-and-go Starbucks Now stores.
Wetherspoon to host Tax Equality Day by slashing 7.5% off food and drink: JD Wetherspoon will cut the price of all food and drinks in its pubs when it hosts a Tax Equality Day on Thursday, 24 September. The initiative is to highlight the benefit of a permanent VAT reduction in the hospitality industry. Wetherspoon founder and chairman Tim Martin said: “Pubs have been under fantastic pressure for decades due to the tax disadvantages they have with supermarkets. We’re very grateful to the chancellor for reducing the tax disparity between supermarkets and pubs to 5% on 15 July. We are urging the chancellor to create tax equality between pubs and supermarkets by making the current VAT regime for pub food and soft drinks permanent. It will make pubs, cafes, coffee shops and restaurants more competitive against supermarkets. It will result in far more investment in high streets throughout the land and it will bring in more tax for the government.” The scheme will operate in England, Scotland, Wales and Northern Ireland but alcoholic drinks will not be included in the deal in Scotland.
M&B bids to convert former Sheffield bank into hotel and Miller & Carter restaurant: Mitchells & Butlers (M&B) is bidding to convert a former Halifax bank in Sheffield into a new hotel and restaurant, if acquisition plans are given the go-ahead. The company hopes to transform the property in Surrey Street, which is currently unoccupied, into a new 20-bedroom hotel and restaurant, to be operated as part of the Innkeeper’s Collection lodge brand. The restaurant will become a Miller & Carter steakhouse with 187 covers. M&B was originally granted planning permission for the scheme in March and hopes to complete the purchase of the site by the end of September. The £2.36m project at the historic building, which dates to 1893, would then begin, reports The Star.
Danieli Holdings renews licence for Stack container complex in Newcastle to stay until 2024: North east-based Danieli Holdings’ Stack container development in Newcastle will remain in the city until 2024 after extending its licence. The complex, which is home to food, drink and live music venues, has its licence approved for extension by Newcastle City Council. Danieli Holdings was supported by licensing adviser Sintons in its application to extend the licence. Stack will maintain its “fresh and exciting” offer with “competitive socialising” activities such as darts and shuffleboard being considered for the future. More than two million people have visited the venue since it opened in July 2018 on the site of a former Odeon cinema in Pilgrim Street. Sintons head of licensing Sarah Smith said: “Stack has become a firm favourite in Newcastle’s leisure scene and we are delighted it will be a fixture of the city centre until 2024 at least. It has become known for its wide variety of offering, which makes it a venue people can visit from day to night, and for the platform it provides for independent traders. It regenerated a disused area of the city and introduced something new and modern, which has helped to bring new footfall into the Pilgrim Street area.”
26 Grains reopens Borough Market site and introduces wine bar by night concept: 26 Grains, the cafe concept founded by Alex Hely-Hutchinson, has reopened its Borough Market site, which now transforms into a wine bar by night. In the evening, the Stoney Street site showcases a curated list of natural wine alongside a selection of small plates along with a range of classic cocktails. Available from Wednesday to Saturday, Stoney Street by Night continues to showcase Hely-Hutchinson’s provenance-led cooking style, with the concise menu of light bites paired with the wine. There is also a range of signature snacks. The Stoney Street site also continues to serve breakfast and daily changing lunch menu, while a new brunch offer is available on Sundays. Hely-Hutchinson opened the first permanent site for 26 Grains in Seven Dials in 2015 as the West End’s first grains-based cafe, focusing on porridge, muesli, granola, risotto and salad.
Bourbon bar Van Winkle to open second site, US dollars accepted: Bourbon bar Van Winkle is to open a second site on Thursday, 24 September. The business claims to have to the largest selection of US bourbons and plans to bring its signature American-style food and drink to the west end of Glasgow in Byres Road. The original site is located opposite Barrowland Ballroom in the city’s east end. Director Derek Mallon said: “Van Winkle is all about sharing a flavour of the US and we’re excited to be opening up our second bar. Our aim is to bring real quality products, delivered by genuine people, in an atmosphere that transports you to Kentucky. The past few months have been undoubtedly tough for the hospitality industry, so it feels very positive to be opening new premises, creating jobs and bringing something new to the food and drink scene in the west of the city. For anyone whose holiday to America has been cancelled this summer, we’re even accepting US dollars as a method of payment.” Visitors to the new bar will have more than 50 bourbons to choose from, as well as a wide selection of American whiskeys, cocktails, beers and wine. The menu offers a variety of “wee plates”, burgers, sandwiches, five-cheese macaroni and buffalo chicken wings. Van Winkle will extend the Eat Out To Help Out scheme through its own pockets until the end of October, giving people who have booked in advance a 50% discount of up to £10 per person between Monday and Wednesday. 
The Petersham to reopen on 1 October: Petersham Nurseries to set to reopen Italian-inspired restaurant The Petersham in Covent Garden on Thursday, 1 October. Diners can expect to see dishes including Haye Farm beef tartar with mustard carrots, girolles, toasted hazelnuts and baby watercress; baby beetroot salad with pomegranate, pistachios, spinach and goats’ cheese; Haye Farm egg yolk slowly cooked in olive oil with roasted porcini and smoked potato cream; and slow-cooked leg of lamb, Milanese cutlet with kale and cauliflower. The Petersham will also celebrate the advent of winter truffle season with an indulgent menu dedicated to the delicacy. Petersham Nurseries managing director Lara Boglione said: “We’re looking forward to opening the doors to The Petersham at the end of the month and welcoming guests, old and new, to the restaurant. This time of year is my favourite with all the beautiful autumn produce and the rich, earthy flavours. Our indulgent truffle menu is a fantastic way to celebrate the changing of seasons.” The Petersham will be open from Wednesdays to Sundays for lunch and dinner. 

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