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Morning Briefing for pub, restaurant and food wervice operators

Wed 10th Feb 2021 - Propel Wednesday News Briefing

Story of the Day:

Pub bosses publish recovery roadmap and press government on reopening date as beer sales plummet 56% in 2020: Pub sector bosses and the British Beer & Pub Association (BBPA) have urged the government to give a clear timeline and date for when pubs can reopen as figures revealed sales of beer plummeted 56% in 2020 – down by £7.8bn. Given the severity of the impact trading restrictions and lockdowns have had on the sector, the BBPA and business leaders have published a recovery roadmap to reopen pubs fully after the current lockdown. The roadmap states post vaccination of the most vulnerable, pubs must reopen when non-essential retail and other parts of the hospitality sector reopen. It also said mandatory trading restrictions – such as alcoholic drinks served only with a substantial meal, no mixed households and the 10pm curfew – must be removed when pubs reopen in a timely way. Upon the reopening of the sector, the BBPA also said the government would need to continue to provide financial support, including an extension to the VAT cut and business rates as well as a significant beer duty cut. Without such a plan to reopen, the BBPA said thousands of local pubs will fail due to their unsustainable debt and cash burn levels. In the second quarter of 2020, which incorporated the first full lockdown, pub beer sales dropped 96%. In the fourth quarter of 2020, when severe time trading and tier restrictions were placed on pubs, as well as a second full lockdown, pub beer sales dropped 77% in comparison to last year. Despite being able to open under less restrictions in the third quarter, a temporary VAT cut on food and soft drinks and the Eat Out To Help Out scheme, pub beer sales were still down 27%. BBPA chairman Philip Whitehead said: “This is not sustainable for our sector. We cannot continue to hold out under these circumstances.” Greene King chief executive Nick Mackenzie added: “2020 was a write-off for pubs and the industry needs a clear plan for reopening as soon as it is safe to do so, without complex and unjustified restrictions that would make it unviable to open.” St Austell Brewery chief executive Kevin Georgel said: “Since March, we’ve worked tirelessly and collaboratively to support the battle against covid-19. Despite these efforts, hospitality continues to suffer more than any other industry.” Mark Davies, chief executive of Hawthorn, the community pub arm of NewRiver, added: “I cannot empathise enough how important it is the government recognises the role that pubs play in so many communities around the UK and pubs are part of the fabric of our society.” William Lees-Jones, managing director of JW Lees, said: “We estimate the current level of government grants and furlough support have reduced our losses by 50% but, like many breweries, 99% of all JW Lees beer is sold in pubs and more than half through our own 150 pubs in the north west.” He added: “We need to learn how to live with the virus as we reopen the country.”

Industry News: 

UK branded coffee shop market sees seven years of growth wiped out by pandemic as sales decline 39%: The £3bn UK branded coffee shop market has suffered a 39% sales decline, which wiped £2bn from its market value, during the past 12 months, according to World Coffee Portal findings. Its Project Cafe UK 2021 report showed the UK branded segment posted negative sales and outlet growth for the first time in 20 years. The sales decline also marked a return to sales that are the equivalent of those in 2013. Meanwhile, the total branded market now comprises 9,159 outlets, a net decrease of 182 stores (1.9%) during the period. World Coffee Portal forecasted a return to pre-pandemic levels will take three years. Project Cafe UK 2021 cited ongoing covid-19 restrictions, “leading to temporary store closures and takeaway-only trading” as a factor in the sharp sales decline while “a steep reduction in daily commuting has decimated footfall at travel hubs and city centres” but neighbourhood outlets have benefited from increased levels of home working. Research found London has 2,330 branded coffee shops – down 1.9% on 2019 – but it still accounts for more than one quarter of all UK branded cafes. Some 59% of industry leaders surveyed by World Coffee Portal reported a year-on-year loss exceeding 5% during the past 12 months with the average negative financial impact being £27,650 per store, per month. A growing number of operators have responded by introducing hot beverage delivery, with 26% of UK consumers surveyed indicating they would regularly use this service if more readily available. Drive-thru has also proved fruitful to coffee brands. Allegra group founder and chief executive Jeffrey Young said: “With the market suffering a near 40% sales decline in 2020, it will take at least three years before the segment returns to pre-pandemic levels. Recovery will require significant innovation, discipline and leadership. Unfortunately, we anticipate further casualties over the next 12 to 18 months and further government assistance may well be required to ensure the short-term viability of many coffee shops and the wider hospitality industry.”

Retail rankings reveal importance of hospitality to high streets: The importance of hospitality business to the health of the nation’s high streets has been highlighted in new research looking at the best performing retail locations in Britain. The 2021 Vitality Rankings, collated by retail property consultancy Harper Dennis Hobbs, is an analysis of 1,000 retail centres in Britain and determines the health of high streets and shopping centres according to several factors, including the change in residents’ movement, vacancy rates and suitability to the demands of local consumers. The rankings showed retail destinations where floorspace, dominated by takeaways and cafes, have remained open during national lockdowns have seen a strong performance compared with other areas. For example, Wimbledon Village and Norbury in south London, where non-restricted hospitality comprises 23% and 12% of total floorspace respectively, saw significant improvements to their rankings. Wimbledon Village climbed into the top five retail centres in the country and Norbury rose 305 places on its 2019 ranking. On the other hand, the health of high streets or retail centres dominated by restricted hospitality venues, such as large restaurants, bars and nightclubs, which have had limits on trading for much of the pandemic, was seen to have fallen throughout 2020. Sheffield’s Devonshire Quarter, part of the restricted hospitality venues, which account for 56% of total floorspace, saw a drop of more than 500 places in the Vitality Rankings to be rated as the 967th most “healthy” retail destination. Overall, Beaconsfield in Buckinghamshire came out on top having risen 63 places. It was followed by Henley-on-Thames in Oxfordshire and Tenterden in Kent. Simon Carson, head of leisure at Harper Dennis Hobbs, said while retail centres with a high proportion of large restaurants, bars and nightclubs have suffered from major restrictions to trading, they are expected to bounce back as “the fundamental factors behind these areas’ success in previous years remain”.

Government agrees to meet hospitality minister petitioners: Business minister Paul Scully will meet with petitioners calling for a minister for hospitality. The meeting was agreed after chair of the petitions committee, Catherine McKinnell, wrote to prime minister Boris Johnson urging him to engage with the hospitality sector after raising the issue at the latest session of the liaison committee. A debate on this petition, which was signed by more than 208,000 people, was held last month, where members across the House called for a dedicated minister for the sector. Scully is now expected to meet with petitioners, including publisher Claire Bosi, chefs Tom Kerridge and Angela Hartnett, and hotelier Robin Hutson. McKinnell said: “While I welcome the prime minister's decision to agree to our call for the government to meet with petitioners and hear their concerns about the need for greater support for the hospitality sector, I hope the prime minister himself will consider their request he creates a minister for hospitality to oversee government delivery for this crucial diverse sector.” During the debate McKinnell highlighted hospitality was caught between “two crowded departments” – the Department for Business, Energy and Industrial Strategy and the Department for Digital, Culture, Media & Sport – that “creates an incentive for passing the buck between departments, which reinforces the case for a minister for hospitality”.

Last chance to take part in haysmacintyre snapshot survey of sector: This is the last chance to take part in hospitality specialist haysmacintyre’s snapshot survey of the sector as it moves through 2021 and beyond. The survey consists of six key questions – five of which are multiple choice – covering future prospects, new innovations and changes to the sector and only takes a few minutes to complete. Operators can choose whether to remain anonymous or submit their details. Results will be shared with participants alongside expert commentary from haysmacintyre’s specialist team. To complete the survey click here.
haysmacintyre is a Propel BeatTheVirus campaign member

Joe Allen passes away: Joe Allen, founder of the eponymous theatre district restaurants in London, Paris and New York, has passed away at the age of 87. Allen opened his first restaurant in 1965 just off Broadway, which soon became a haven for budding actors who would often be found waiting the tables between treading the boards. In 1977 Allen opened his restaurant in Covent Garden, London. The restaurant was fondly dubbed “the West-End’s canteen” due to the fact it drew in large numbers of theatregoers, actors, celebrities and even royalty, who flocked to the venue known for its classic American cuisine in a New York-style setting. Tim Healy and Lawrence Hartley, co-owners of Joe Allen, said: “Joe was such an unassuming, generous man and he knew bars and restaurants through and through. He would always be sat at the worst table at Joe’s to leave the best ones to customers, that’s how he was. He will be sorely missed by all of us; we raise a glass to him.” 

Company News:

RedCat Pub Company continues to strengthen head office team, including new MD: RedCat Pub Company, the new investment vehicle from ex-Greene King chief executive Rooney Anand, has continued to strengthen its head office team, including the appointment of Kamran Aziz, formerly of Wessex Taverns and Oxford Hotels & Inns, as its new managing director, Propel has learned. Aziz has been in the hospitality industry for more than 30 years. He entered the pub industry in 1996 with Wessex Taverns and then embarked on a 25-year period in pubs and hospitality. RedCat, which on Tuesday (9 February) announced the appointment of Chris Hill, the former head of New World Trading Company, as chief executive, has made a further four appointments alongside that of Aziz. Donald Stevenson, former group property director at Greene King, becomes RedCat’s property director, while David Brown, who spent 18 years at Greene King, including time as its corporate finance director as well as interim group finance director, becomes the new vehicle’s investment advisor. The business has appointed a further two advisors, with David Pearson, who was a partner for more than 20 years at Clifford Chance, the international law firm, taking the role of general counsel; and sector analyst Geof Collyer, who was formerly managing director head of the Deutsche Bank pan-European travel and leisure equity research team, is named RedCat’s business planning advisor. RedCat has also appointed to its senior leadership team Sharon Badelek, formerly of Novus, as chief financial officer; Richard Croft, executive chairman of M7 Real Estate, as a non-executive director; and Sir Charles Bowman, PwC adviser and former lord mayor of London, as a non-executive director. RedCat was founded by Anand to invest in the UK pub sector and announced it had successfully completed fundraising, backed by Oaktree, last week. RedCat said its objective is to “partner with talented licensees, publicans and entrepreneurs to support the recovery of the pub sector”. It will look to acquire “quality retail and tenanted pubs across the UK but with a focus in the east, south east, and south of the UK”. RedCat said its approach is “highly flexible and size agnostic, allowing it to acquire single assets, all the way through to larger-scale organisations”.

Rosa’s Thai Cafe founders acquire Lupita brand, secure new site for Andina: Rosa’s Thai Cafe founders Alex and Saiphin Moore have acquired the Mexican restaurant brand Lupita, with its former site in London’s Spitalfields becoming a new home for their Andina concept, Propel has learned. The Moores, which sold a majority stake in Rosa’s to private equity firm TriSpan, acquired the original Ceviche site in Frith Street in Soho, Andina in Shoreditch and Casita Andina in Great Windmill Street, also in Soho, in November 2019. They had to move out of the site in Shoreditch after failing to come to an agreement with the property’s landlord. The site on the corner of Redchurch Street has subsequently been taken by Bao, the JKS Restaurants-backed business, for what will be its sixth opening in the capital. The Moores have acquired the former Lupita site in nearby Commercial Street for an opening for Andina later this spring. They have also acquired the Lupita brand to use as a virtual delivery brand. It will use the Commercial Street site as the base for the first delivery kitchen and is understood to be in talks on a further kitchen site in Chelsea. Lupita previously ran three restaurants in the capital, but fell into administration in 2019. A deal to acquire the business and two of its sites by its managing director Armando Gomez de Orozco fell through at the end of that same year. Last September, the Moores announced plans to relaunch vegan restaurant and dry bar concept Redemption, after investing in the business and taking on its site in Seven Dials. Shelley Sandzer acted for Andina on the Commercial Street deal.

Di Maggio’s Group sees £4m turnover hit as pandemic leads to restaurant closures: Scottish restaurant operator Di Maggio’s Group has reported turnover was down to £32.3m for the year ending 28 April 2020, compared with £36.5m the previous year after all its sites were shut in late March because of the coronavirus pandemic. Pre-tax profit fell to £1.9m from £3.9m the year before. Gross profit margin improved to 72.4% from 71.8% the previous year. In their report accompanying the accounts, the directors stated: “The directors are satisfied with the financial performance during the period with the turnover decrease as a result of all outlets being closed in late March by covid-19. At the period end shareholders’ funds totalled £16.8m, compared with £16.4m the year before. The directors continue to look for suitable restaurant sites to expand the group’s business. While the trading environment is expected to remain very challenging in the immediate future, the directors believe in the long-term viability and resilience of the hospitality sector.” The company operates 18 restaurants.

Tortilla secures Exeter site: Tortilla, the Quilvest-backed fast casual Mexican concept, has further strengthened its opening pipeline, after securing a site in Exeter, Propel has learned. The Richard Morris-led group is understood to have secured the former Jigsaw site in the city’s High Street and at the front of the Guildhall Shopping Centre, for an opening later this spring. Propel revealed last month Tortilla had signed on its second site in Scotland. The company, which already operates a site in Glasgow’s Silverburn scheme, has taken a site in the Edinburgh St James development for an opening later this spring. It is thought Tortilla, which opened its latest site in November in Reading, hopes to secure a further two sites for openings later this year. Tortilla is currently operating takeaway and delivery in 34 of its 43 restaurants across the country, including three delivery-only kitchens. 

Whitbread eyes six Welsh locations for Premier Inn hotels: Whitbread is targeting six locations in Wales for its Premier Inn hotels brand. Tourism locations such as The Mumbles near Swansea and Betws-y-Coed in Conwy have been earmarked for new hotels. In mid-Wales, the brand is eyeing Newtown while its other target locations are in south and west Wales – Carmarthen, Milford Haven and Newport. Whitbread head of acquisitions Derek Griffin said of Premier Inn’s strategy going forward: “Covid-19 has impacted the hospitality industry in the short term but our long-term strategy remains to grow, to be ambitious about securing the best sites in strategic locations, and to identify outstanding opportunities where we know there will be demand for our bedrooms.” Meanwhile, Whitbread has been given the go-ahead for a new Premier Inn hotel in York. The company has been granted permission by the city council for the development on the former Carpetright site in Layerthorpe. The 188-bedroom hotel will also feature a bar, restaurant and 43 parking spaces, reports The Business Desk. Premier Inn already has a hotel in York, in Blossom Street, but the business has previously said there is more demand in York that cannot be met by its existing hotel, which runs close to capacity.

Shake Shack founder's Spac files for $250m IPO: USHG Acquisition Corp, a blank-check company led by Shake Shack founder Danny Meyer, has announced plans to raise $250m (£180m) in an initial public offering, as it plans to target “culture-driven businesses”. The new vehicle intends to focus on industries including technology, e-commerce, food and beverage, health and retail and consumer goods. Meyer will be chairman of the special purpose acquisition company (Spac), while Clarence Otis, former chief executive of Olive Garden parent Darden Restaurants, will sit on its advisory board. 

Fireaway to open Shrewsbury site next week: Fast pizza brand Fireaway is to open a site in Shrewsbury next week. The outlet will open in Castle Gates on Monday (15 February), reports the Shropshire Star. Fireaway, which has about 50 restaurants currently in the UK, serves Italian pizzas cooked in 180 seconds and also offers gluten and vegan menu options and a selection of starters and deserts. The brand was launched in 2016 by Mario Aleppo, whose grandmother came to the UK from the Amalfi Coast in Italy in the 1950s, and brought with her Fireaway's pizza recipe. The concept offers 25 toppings for diners to customise their pizza.

Bare Grills Smokehouse investor acquires Weston-super-Mare pub: Vas Kimitri, an investor in the three-strong, south west-based, Bare Grills Smokehouse concept, has acquired a pub in Weston-super-Mare. Kimitri has bought Scallys off an asking price of £325,000 from Dawn and Kevin Coupe in a deal brokered by agent Christie & Co. The wet-led pub in Carlton Street had been owned by the Coupes for 27 years and hosts regular live music nights, along with dart and pool competitions over the winter months. Kimitri said: “The venue will remain closed to undergo a vast refurbishment, bringing it in line with today’s market. It will remain as a bar while incorporating a new food offering in a cool and casual environment.”

Trio of fitness-focused operators sign for Elephant Park development: A trio of fitness-focused operators have signed for sites at Elephant Park, the £2.5bn regeneration project in south London being delivered by Lendlease and Southwark Council. Combat training fitness concept Fight City Gym has signed for a 5,459 square foot space in New Kent Road, complementing its existing sites in Balham and Moorgate. Fight City Gym specialises in boxing, mixed martial arts, muay Thai, Brazilian, jiu-jitsu, and judo. Yoga operator MoreYoga is set to open its 34th London studio, in New Lion Way, just off New Kent Road. Comprising 1,329 square foot, MoreYoga Elephant Park will provide yoga-fitness crossovers, specialist restorative classes and traditional branches of yoga with a twist. “Pilates to music” concept Tempo Pilates has signed for a 2,498 square foot space at Elephant Park’s Ash Avenue, adding a fourth unit to its existing sites in Hackney, Shoreditch and Covent Garden. Guy Thomas, head of retail at Lendlease, said: “The announcements for Fight City Gym, More Yoga and Tempo Pilates add to our offer for the local community and highlight our commitment to building a sustainable and balanced array of operators within Elephant Park.” Nash Bond, CF Commercial and Shelley Sandzer represented Lendlease.
Manchester-based beer, wine and spirit importer Morgenrot acquires Sussex-based brewer Wingtip: Manchester-based beer, wine and spirit importer Morgenrot has acquired Sussex-based brewer and distributor Wingtip Brewing Company for an undisclosed fee. The deal sees Morgenrot take full control of Wingtip’s operations, including its distribution hub, warehouse, vehicles and beer brand. Wingtip co-founders Chris and Simon Tripp, plus the rest of the team, are continuing in their roles. Morgenrot managing director Carl Plath said: “Our relationship with Wingtip in recent years has been hugely beneficial so we’re delighted to announce this deal that will further strengthen our sales and distribution in the south. Simon and Chris are amazing people, hugely respected in the trade and the sky is the limit when it comes to the Wingtip beer brand so it’s exciting to have them firmly as part of the Morgenrot family.” Wingtip Brewing Company was set up the Tripps in 2015 and is based in Ashurst, West Sussex. Simon Tripp said: “In order to take advantage of future opportunities, work more efficiently and spend more time driving growth for Wingtip beer, the offer from Carl was too good to turn down and we’re all looking forward to this next stage of the Wingtip journey.” 
PPHE appoints Jon Colley to acquisitions and developments role: PPHE Hotel Group, the international hospitality real estate group that develops, owns and operates hotels and resorts, has appointed Jon Colley as executive vice-president of acquisitions and development. Colley will lead the group’s acquisitions and development as it expands and capitalises on opportunities as the sector emerges from the pandemic. He has held leadership positions at Hilton Hotels, Barclays Bank, the Royal Bank of Scotland and, most recently, Intercontinental Hotels Group where he was head of development, UK and Ireland. Colley will report to Inbar Zilberman, chief corporate and legal officer.

Drop Bear Beer Co receives £1.5m boost in bid to build alcohol-free brewery: Craft brewer Drop Bear Beer Co’s plans to build an alcohol-free brewery has been given a boost with a £1.5m investment from Admiral Group car insurance founder Henry Engelhardt. Drop Bear, which will build the brewery in south Wales, has raised £300,000 through a Crowdcube campaign that began on New Year’s Day, to give the business an “unbelievable start to 2021”. The alcohol-free brewery will be the first of its kind in Wales and only the second in the UK, and will span 20,000 square foot when complete. Drop Bear operations and finance director Sarah McNena said: “To have a businessman of Henry’s experience and reputation on board recognising the incredible work we’re doing with Drop Bear is absolutely fantastic. His investment, along with £300,000 that is coming from our Crowdcube campaign, enables us to increase production capacity further, create more jobs, and make even more of an impact on both the national and international stage.” Engelhardt said of Swansea-based Drop Bear, which was founded in 2019 by McNena and Joelle Drummond: “I read about Drop Bear in the paper so I bought a case. I tried it and I loved it. It is really on the right track to create a global brand for great-tasting non-alcoholic, low-calorie, gluten-free vegan beer.” A site is being considered for the brewery and is slated to open by October this year. The Drop Bear range currently consists of four beers – Tropical IPA, Yuzu Pale Ale, Bonfire Stout, and New World Lager. Drop Bear’s legal representative is Thompson Darwin.

Foodhub reports substantial growth as orders hit 47 million in 2020, working with 20,000 operators: Food delivery platform Foodhub has reported “substantial” growth in 2020, adding new partners across the UK and overseas to process a total of 47 million orders during the year. At the end of 2019, Foodhub was partnered with 12,000 food outlets. But now, in January 2021, that number has risen by 70% to more than 20,000 in total. As well as UK growth, the other factor in Foodhub’s performance in 2020 is a number of significant overseas expansions. In the space of a year, the brand began trading in the USA, Guatemala, Ireland, Australia and New Zealand. As well as these new territories, Foodhub also expanded existing operations in Mexico; Malaysia and Chennai, India. On Foodhub’s international expansions, chief operating officer Philip Mostyn said: “We’ve made fantastic progress in several overseas territories throughout the past year, and one of our big goals in 2021 will be to develop and expand our offering in each territory.” Foodhub is the only food aggregator that does not charge a commission per order, instead partners sign up to a flat-fee monthly subscription model. 

Preston-based operators to open second site: Preston-based operators Aneta and Ebrahim Paruk are to open their second site. The couple, who run Coco’s Soul Food in Friargate, have taken over the former Shawes Arms pub in London Road. Although they remain tight-lipped over what kind of food will be on offer, they say it will be “something special” for families to enjoy. Currently, the pub is under renovation, having been unoccupied for more than six years and falling into disrepair. Aneta Paruk told the Lancashire Post: “We have considered the local residents comments, which we saw on Facebook pages, and would love to give back to the community a place they have been missing. We are trying to restore their sentimental place and improve it too, so it will have old and modern touch at the same time. We are a family business and we value families and we would like them to feel cosy and comfortable when they visit us.” She said she could not give a timeline for the site to open because it was dependent on funds available.

Edition Capital invests in consultancy firm Vigour and Vice: Edition Capital, which backs Incipio Group, Watch House and Club Mexicana, has invested in Vigour and Vice, a management consultancy specialising in the food and beverage, bar and restaurant space. The investment will enable the company to “expand its reach at a critical time for the sector as it begins to come out of forced shutdown”. Vigour and Vice, which is led by Catherine Johnstone and Vaughn Williams, works with businesses in the UK and internationally, including, over the past few years, Soho House Group and Ben’s Canteen. 

Searcys wins Royal College of Surgeons of England catering contract: Searcys has been appointed the new catering partner for the Royal College of Surgeons of England (RCS). From May, Searcys will begin providing hospitality services for the RCS for the next seven years. Searcys will oversee all catering, event sales and marketing operations while also looking after the event spaces and meeting rooms as well as the cafe, library and members’ lounge. Dating to 1797, The RCS at Lincoln’s Inn Fields is home to more than 25,000 members, and has undergone many transformations over the years, with a new venue opening in May. The conference and events venue – The View – offers panoramic views of the London landscape and is set to be first events venue to launch in London this year. Searcys managing director Paul Jackson said: “The past 12 months have been incredibly challenging for the hospitality and events industries and this new win is a testament to the hard work and resilience of the team at Searcys.”

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