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Thu 4th Feb 2021 - Propel Thursday News Briefing

Story of the Day:

Sector forking out £542m a month to support furlough, says S4labour: The hospitality sector is forking out £542m a month in support of the furlough scheme, according to analysis from S4labour, the online labour-scheduling management system from Catton Hospitality. While the scheme has eased mass redundancies and retained jobs in the industry, “it is clear furlough is not the free lunch it is sometimes portrayed as”, S4labour said. Operators using the scheme benefit from a grant that covers up to 80% of their employee’s average earnings. However, for the employer, the ability to be able to keep teams employed “comes with a cost and it is no insignificant amount”, S4labour said. Employers have to continue paying national insurance contributions, holiday is still accrued, and pension costs are not included in the grant. The total figure for average extra employment costs per month per site, over and above government furlough support, comes to £3,738, which means the monthly furlough bill for hospitality comes to £542m. S4labour stated: “On top of employment costs, operators have rent to pay, utilities and insurance payments. Government grants based on rateable value are available and are aimed at offsetting a large sum of bills, yet leave operators constantly out of pocket. There are also variable costs to using the furlough scheme, such as cash flow costs owing to the fact the scheme pays in arrears – operators are seeing the money leave their businesses, before being able to claim it back. For most businesses that have little or no expectations of trading profitably for the first four to six months of 2021, funding is becoming more and more critical.” Revolution Bars Group chief executive Rob Pitcher said the scheme, while welcome, has cost the business £1m at a time it has seen revenue vanish. S4labour chief customer officer Sam Wignell added: “With the current levels of government support, businesses are going to run out of cash before they get the opportunity to reopen. The true cost of furlough is much higher than one might imagine.”
S4labour is a Propel BeatTheVirus campaign member

Industry News:

Reilley – reopening hospitality into tiers would be a disaster: Loungers chairman Alex Reilley has called on the government to allow the hospitality sector to reopen as it did in July and provide businesses with a clear roadmap to when they can eventually trade “normally”, as he believes reopening hospitality into tiers “would be a disaster”. Reilley said: “Feels like an appropriate time to remind the government that when hospitality reopened in July we did so with some of the most extensive covid-secure measures in the world. Hospitality invested heavily to comply with social distancing, comprehensively train our teams and ensure our venues were safe and covid-compliant. Hospitality venues looked and operated very differently to the pre-pandemic ‘normal’ but the sector pulled out all the stops in order to be allowed to trade. Despite all of the changes made, further restrictions were introduced (most of which were complete nonsense and often with very little notice), which just further eroded the sectors ability to trade profitably or trade at all. Reopening hospitality into tiers would be a disaster. Allow us to reopen as we did in July and provide us with a clear roadmap to when we can eventually trade ‘normally’. As a business we invested £500,000 ahead of the 4 July reopening in making our venues safe, including removing and storing £1m worth of furniture. Boris Johnson, Kwasi Kwarteng and Paul Scully please give hospitality a chance, abandon the tiers, and reopen the sector without measures that tie one hand behind our back. We did a cracking job of what was asked of us last summer and while not ideal, we made it work – please don’t forget that.”

BBPA relaunches platform to legally allow destruction of out of date beer and reclaim duty: The British Beer & Pub Association (BBPA) has relaunched its free cross-industry platform to enable brewers and operators to manage the destruction of beer and reclaim duty for out of date beer as a result of the latest lockdown. Licensees at pubs, bars, hotels and other businesses can re-register to use the platform at The scheme was used extensively following the first lockdown. Under the latest restrictions, while some pubs outside of England may operate for takeaway and delivery purposes, many will not be able to operate until restrictions are lifted or eased. So it is “necessary to consider how to handle beer that will be out of date and unsaleable once pubs are able to reopen” and to claim back the duty paid on beer, the BBPA said. Chief executive Emma McClarkin said: “The platform provides guidance and instructions necessary to destroy beer, as well as crucially recording that destruction to enable duty to be claimed back on it. This cross-industry platform should help businesses of all shapes and sizes that serve draught beer as they restock and refresh ahead of reopening.” Many of the brand owners that used the platform in 2020 will once again be available. Licensees who used the scheme previously must re-register for a new claim. Once permission has been obtained from the brand owner to destroy beer, the platform is also used to verify the extent of stock and to provide the necessary evidence of destruction. After permission is obtained from the brand owner to destroy waste beer it is then necessary to apply for permission to dispose the waste beer through your wholesaler or sewerage provider. While some wholesalers have agreed to reinstate the fee-free, simplified approach for applications to destroy beer, as used after the first lockdown, this is not the case for all wholesalers. 
Deadline extended for £1,000 Christmas grant for wet-led pubs: The deadline for applications for the Christmas Support Payment (CSP) grant of £1,000 for wet-led pubs that lost out on trade during the festive period has been extended. Businesses that trade on a predominantly drinks-first basis now have until Sunday, 28 February to apply for the one-off payment, which is in addition to any other existing grant schemes. CSP is available to pubs that were in tiers two and three, which were forced to reduce their operations as a result of the covid-19 restrictions. The new money is in addition to the furlough scheme and the business rates holiday, which run until May. Pubs eligible for the CSP are invited to apply through their local authority, which will be responsible for distributing the grants.

Regulation of short-term lets in Scotland moves closer: Regulation of short-term lets in Scotland has moved a step closer. The Scottish parliament’s local government and communities committee has voted in favour of pushing ahead with legislation. UKHospitality Scotland executive director Willie Macleod said: “There are further parliamentary stages to be gone through before the statutory instruments can be finalised, but this should result in a more even-handed competitive position with the heavily regulated hotel industry. Regulation of short-term lets is long overdue, so it is encouraging to see the Scottish government pushing ahead with legislation that will benefit consumers and assist with awareness of, and compliance with, relevant regulations. The past few years has seen a boom in short-term letting, which has brought with it a host of issues for residents and customers, and highlighted serious issues around fairness. This is not about stifling innovation. Regulation is necessary in order to ensure customers are protected and there is a level playing field for businesses.”

Deliveroo expands ‘Signature’ service: Deliveroo has announced a major global expansion of its “Signature” service for restaurant partners across the UK and international markets. Signature enables customers to order via restaurants’ own websites and apps, “while allowing them to benefit from Deliveroo’s knowledge in logistics and food delivery”. A selection of restaurants are now live with Signature including Nando’s, PizzaExpress, Wagamama and Patty & Bun. Deliveroo aims to have 50 new restaurant partners signed up to Signature by the end of the month. Deliveroo has developed two products under the Signature service – a logistics and customer service solution where Deliveroo completes food delivery orders made through restaurants’ own channels, and a full-stack end-to-end solution that also includes website design and support from Deliveroo. Deliveroo said Signature would help restaurants reach new customers, build relationships with customers directly and grow their online business. Stephen Goldstein, European vice-president for restaurants at Deliveroo, said: “Enabling customers to order delivery via restaurants’ own channels is a compelling proposition for our partners and deepens our relationships with these partners.”

Company News:

Casual Dining Group administrators anticipate lease assignment process to be completed by July: AlixPartners, the administrators of Casual Dining Group, has said it anticipates the lease assignment process of 154 sites will be completed by July. Last summer, private equity company Epiris paid £18m to buy the bulk of Casual Dining Group, operator of the Bella Italia, Café Rouge and Las Iguanas brands, out of administration, paying £9m up front with a further £9m deferred until assignment of its leasehold portfolio. In an administrators report update, 32 individual leases and 12 sites based at various Center Parcs with a total consideration of £5.7m have so far been assigned successfully. The report stated: “The deferred consideration is not yet payable however the administrators anticipate this process will be completed by the anniversary of the administrations.” As part of the sale, the administrators granted a Licence to Occupy (LTO) for 154 sites while Epiris and the newly formed The Big Table group negotiated ongoing occupation arrangements with the relevant landlords. Of the remaining LTO properties to be assigned, 86 are at advanced negotiation stage with an aggregate value of more than £8m and assignments are expected imminently. Heads of terms are still being agreed in relation to 22 LTO properties. As previously reported, 97 sites were exited prior to the sale of the business and assets, which are being marketed by AG&G. The report states: “To date, the administrators have completed in-situ sales of assets in exit sites totalling £313,500.” Propel revealed last summer Epiris was set to commit £43m of funding for The Big Table. That figure would include significant levels of cash commitment for the next 12 months to manage the impact covid-19 continues to have on footfall and revenue, and then to support and grow the group by refurbishing sites.

Chipotle plans to move UK business forward: Brian Niccol, chairman and chief executive of US brand Chipotle, has said the company is ready to move forward with its UK business. Speaking after the company’s fourth-quarter update, Niccol said: “We've got some plans in place for places that we already have our foot in the door. So, think of the UK, France specifically. And so you're going to see us starting to really use kind of our stage-gate process to move those markets along.” Propel understands Chipotle, which operates more than 2,600 sites across the globe, is close to taking a site in Battersea and in talks on the former Freshii unit on the corner of Chancery Lane. Chipotle is also believed to be looking at an opportunity in Greenwich. The business, which is led in Europe by ex-Costa Coffee managing director Jim Slater, opened its second City of London restaurant at the start of 2019 – its first UK opening in three years. That opening took the brand, which made its debut in the UK in London Wall in 2015, to nine sites in the capital. 

Camm & Hooper undergoes restructure: Imbiba-backed events and hospitality group Camm & Hooper has completed a business restructure and a company voluntary arrangement (CVA), Propel has learned. The company, which operates eight sites across the capital including Six Storeys in Soho, Tanner & Co in Bermondsey and Banking Hall in the City, said as an events-focused business it had been severely impacted by the impact of the covid outbreak and the restrictions put in place over the past 12 months. As a result, it has completed a business restructure with full shareholder agreement. It also completed a CVA on Monday (1 February) with 99.3% of creditors voting in favour. Managing director Sam Lee, who also oversees the Imbiba-backed Temper concept, told Propel: “As a business that has successfully transformed some of London’s most beautiful buildings into stunning event venues we have taken the necessary steps to survive. We had to respond to the impact of the pandemic over the past 12 months and we are confident in the future.”

Whitbread undergoes debt refinancing: Whitbread has announced the successful pricing of two green bonds, the extension of its revolving credit facility (RCF) and its intention to repay private placement notes. Whitbread said the refinancing maintains the group's strong balance sheet and financial flexibility, while at the same time extending the maturity of its debt. The company stated: “The impact on the group's combined gross debt and available facilities as a result of the £550m new green bonds, is largely offset by a step down in the RCF of £225m in September 2022, and the proposed repayment of approximately £284m of private placement notes. Whitbread has priced the issue of £300m 2.375% green bonds due May 2027 and £250m 3.0% green bonds due May 2031. The bonds are being issued in connection with Whitbread's new Green Bond Framework. An amount equal to the proceeds of the bonds will be used to finance or refinance eligible green projects, as set out in the framework. Whitbread has also reached an agreement with its banks to extend the final maturity date of its RCF from September 2022 to September 2023. The facility size, which is currently £950m, will step down to £850m at 29 December 2021 and to £725m at 7 September 2022. As part of this agreement, the covenant waiver period has been extended by 12 months. The group has approximately £284m of private placement notes that mature in 2021, 2022 and 2027. The group intends to repay the 2021 and 2022 notes (£25m and $93.5m respectively) on their scheduled maturity dates of 6 September 2021 and 26 January 2022 respectively, and to repay the other notes (£200m) in the near future.” 

Judge refuses to dismiss McDonald’s lawsuit against former chief executive Steve Easterbrook: A bid by former McDonald’s chief executive Steve Easterbrook to dismiss a lawsuit that seeks to recoup millions of dollars in severance pay over an alleged cover-up of improper sexual relationships with employees has been rejected by a court. McDonald’s knew Easterbrook had engaged in one, non-physical consensual relationship with an employee when the company agreed to a severance package estimated to be $41.8m in November 2019, both sides agreed. However, Easterbrook argued in his motion to dismiss the lawsuit to vice-chancellor Joseph Slights of the Court of Chancery in Delaware that McDonald’s had evidence of his other sexual relationships with employees on its computer system so should have been aware of them. Slights said McDonald’s was justified in relying on Easterbrook’s statements that he had only a single inappropriate relationship when the company ousted him. McDonald’s said it looked forward to proving Easterbrook's misconduct. In a statement, McDonald’s said: “He violated the company’s policies, disrespected its values and abused the trust of his co-workers, the board, our franchisees and our shareholders.” After he was fired, it emerged Easterbrook had previously escaped censure for another alleged office romance. It later came to light Easterbrook had reportedly dated Denise Paleothodoros when she was assigned to the McDonald’s account by her PR firm. She said she reported the relationship to managers and was moved to another account. McDonald’s sued Easterbrook in August, nine months after reaching the severance package, claiming he never gave directors a complete picture of his relationships with employees. It said after Easterbrook had been dismissed, an anonymous tip led to the discovery of dozens of nude or sexually explicit photos of women, including three employees, that Easterbrook sent to his personal email account from his company account. Although it is claimed Easterbrook deleted the emails before his departure, they remained on a company server. Slights wrote: “This active concealment makes it, at least reasonably conceivable, the company had no way of knowing the full extent of Easterbrook’s misconduct.”

Stevens to bring Mamasan to Liverpool for second site: Mamasan, the south east Asian bar and brasserie concept from Pizza Punks founder Brad Stevens, is to open its second site, in Liverpool. Stevens, who was also behind Bar Soba, will open the 6,875 square foot venue at Liverpool ONE after agreeing a deal with landlord Grosvenor. In line with the Glasgow site that opened in March last year, the Mamasan bar and brasserie at Liverpool ONE will offer south east Asian-inspired food and cocktails, prepared fresh to order and using local produce. The restaurant, due to be unveiled once national lockdown restrictions are eased, will accommodate up to 200 covers. It will have a mezzanine floor and panoramic roof terrace. Stevens said: “With nationally-established names such as Bar Soba and Pizza Punks already under my belt, I am looking forward to now turning my attention to expanding the Mamasan concept. The gap in the market for this kind of experiential dining in Liverpool, combined with the discovery of this attractive and versatile space at Liverpool ONE, made this an opportunity too good to pass up.” Alison Clegg, managing director, asset management at Grosvenor Britain & Ireland, added: “We know Liverpool ONE’s consumers want a higher-end, multi-dimensional dining offer, where they can enjoy a range of experiences that cannot be found elsewhere. The signing of Mamasan fits the bill.” Metis and Savills acted for Liverpool ONE. Pudney Shuttleworth represented Mamasan.

WC Rowe reports ‘very robust’ start to current financial year: Cornish bakery WC Rowe, which has stores and supermarket concessions across the south west, has reported a “very robust” start to its current financial year. The company stated: “At the end of February 2020, the company was delivering record numbers, reporting turnover growth of 20% with operating profit tracking 52% up on the prior year. The emergence of covid-19 and subsequent national lockdown had an immediate and profound impact on the company, with the high street deserted and some supermarkets closing hot food counters well beyond the end of the lockdown period. Managing our cash position over the subsequent quarter proved challenging as we sought and secured financial support from both internal and external stakeholders as well as receiving all statutory government covid grants. It's a testament to all of our employees we finished the 2020 financial year in a strong financial position with all suppliers paid within term, operating within agreed stakeholder facilities and generating cash. There was £261,182 of restructure costs relating to the costs of a redundancy programme undertaken in our production departments and through the retail estate; we have realigned resource levels to meet new customer demands while further driving efficiencies. The programme was completed in mid-November 2020. The 2021 financial year has started very robustly as we see strong margin performance driven from an efficient labour base. The past couple of months has seen year-on-year bottom line growth and we remain on track to report record numbers in the current year.” WC Rowe reported turnover fell 3.6% to £21.8m for the year ending 27 June 2020, compared with £22.6m the previous year. Pre-tax profit fell to £169,000 from £681,000 the year before. Gross profit margin was down to 30.08% from 34.8% the previous year. WC Rowe was founded in 1949 and trades from 18 stores and five branded concessions in Asda and Tesco across the region.

Moose Coffee to open seventh site: Moose Coffee, the American diner-influenced cafe company, is set to launch a new site at Liverpool’s Princes Dock. Work in under way to fit out the 70-seater restaurant at the Plaza 1821 residential development, which will be located on the ground floor of the Regenda Group’s £21m waterfront project. The six-strong business will offer a range of American and Canadian-inspired breakfast dishes throughout the day. Moose Coffee director Nick Van Breemen said: “This is an exciting opportunity to bring our famous menu to a new neighbourhood in the city. We are delighted to launch our educational partnership with The Learning Foundry too, which will offer a programme of on-site accredited training to young people from across Liverpool.”
Vegan Chinese restaurant Mao Chow doubles up with Islington launch: Vegan Chinese restaurant Mao Chow has doubled up by opening a second site, in Islington. Founder Julian Denis has set up shop in the Nag's Head Market with a takeaway noodle bar. Mao Chow focuses on the Szechuan region and the menu includes Smacked Cucumber – salted cucumber, black vinegar, crushed garlic and sesame oil; and Wanza Noodles – spicy, garlicky wheat noodles, braised soy beans, mushroom mince and coriander. Mao Chow started as a pop-up in Dalston before opening a permanent site in Mare Street, Hackney, in April 2019.

Foodhub snaps up Australian food delivery app in multimillion-pound deal: Food delivery platform Foodhub has acquired Australian food app Eat Appy in a multimillion-pound deal. The Stoke-on-Trent-based company has agreed the move as part of its plans for international growth. Foodhub was founded in 2017 by school friends Ardian Mula and Mohammed Shakil, and launched its platform in the US, Mexico, Guatemala, Ireland and New Zealand last year. Eat Appy was launched in 2016, and already operates a non-commissioned food delivery service – similar to Foodhub – across pick-up and delivery, table ordering and room service, making it one of Australia’s largest online ordering platforms. Mohamed Chaudry, chief financial officer at Foodhub, said: “The acquisition of Eat Appy significantly increases our global footprint, our number of delivery partners and our pool of hungry customers. This business move is the largest Foodhub acquisition to date and shows our commitment to international growth, despite a year of uncertainty for many.” The deal will help increase the combined businesses’ customer base in Australia while Foodhub will also be able to increase its selection of menus and takeaways. Foodhub has more than 20,000 restaurant partners across the UK with food orders increasing by more than 66% during the past 12 months versus pre-lockdown figures. Foodhub recently announced it is opening a contact centre at its Duke Street headquarters, in Fenton, in a move that will create 14 jobs.

London-based wine bar and shop concept Yield to open second site: London-based wine bar and shop concept Yield is to open a second site. The company, which operates a venue in Stoke Newington, is launching the new outlet in Islington. A former electronic shop in St Paul's Road is being refurbished ahead of the planned opening next month, reports Hot Dinners. Yield is a mixture of a wine bar and shop, which also sells charcuterie, bread and cheese. It focuses on natural and organic small wine producers and also sells craft beer from London brewers.
Gaucho launches at-home restaurant experience and burger delivery concept: Gaucho, which is owned by Rare Restaurants has launched an at-home restaurant experience and a burger delivery concept. The “Gaucho at Home” boxes feature different “finish at home” experiences with full instructions and are available for nationwide delivery. They are the Gaucho pie box, which features a selection of Gaucho-style pies alongside the choice of a starter and an Argentinian chocolate torte dessert; and the beef Wellington box, which also comes with a starter and the Argentinian chocolate torte dessert. There is also a one-off Valentine’s Day box offering a three-course meal with starters to share, a choice of mains such as slow-cooked Asado short ribs, all accompanied by honey-herb roast vegetables and gratin potatoes and finished with Tortitas Negras for dessert – Argentine profiteroles with dulce de leche cream and hot chocolate sauce. There is also a “fully prepared” version but only available for delivery in London or collection from its Sloane Avenue, Canary Wharf and Hampstead restaurants. The team is also planning to add Sunday roast beef with all the trimmings from Sunday (7 February) and a list of cocktails to the menu. Gaucho has also launched a new burger concept, Meat & Bun, which offers a menu inspired by the ingredients of the Pampas region and is available for delivery via Deliveroo in the capital.

Inception Group launches at-home Cahoots cocktail kit for Valentine’s: Inception Group, which owns and operates concepts including Cahoots and Mr Foggs, has launched an at home cocktail experience for Valentine’s Day. The Cahoots “Love Letters” kit includes two cocktails, with two servings of each, which can be ordered until Thursday, 11 February. The cocktail are The Metropolitan, consisting of Bombay Sapphire gin, Chambord Black Raspberry Liqueur, lemon thyme and rosemary infused Martini Rosato vermouth, pineapple, blueberry and blackcurrant cordial, orange bitters, grapefruit tonic and fresh lime; and La Petite Mort featuring Woodford Reserve bourbon whiskey, Amer Picon aperitif, DOM Benedictine liqueur, Lillet Blanc vermouth, chestnut liqueur and liquorice bitters. Each kit comes with garnishes and a QR code link to an instruction video.

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