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Tue 23rd Feb 2021 - Propel Tuesday News Briefing

Story of the Day:

Government has ‘nine days to save thousands of businesses and hundreds of thousands of jobs’, warns UKHospitality: The government has “nine days to save thousands of businesses and hundreds of thousands of jobs that simply will not be there without a substantial package of compensation”, UKHospitality chief executive Kate Nicholls has warned. Prime minister Boris Johnson said pubs and restaurants in England could be allowed to reopen outdoors from 12 April “at the earliest” as part of the government’s “cautious but irreversible” roadmap out of lockdown, with indoor operation not returning to at least mid-May. Nicholls said: “From the start of November, the sector will have been closed for almost 200 days, with just a couple of weeks of heavily restricted trading in December. A major package of financial support is imperative if hospitality is to survive. This delay in reopening will make the job of survival all the more difficult for businesses only just clinging on to existence. It is much more than just an inconvenience for many employers in our sector, it is another delay they cannot afford and, for too many, will not be able to survive. Only 40% of hospitality businesses have an outdoor area and, in some cases, this is little more than a table and a couple of chairs. The chancellor has just nine days to save thousands of businesses and hundreds of thousands of jobs that simply will not be there without a substantial package of compensation. An extension of the VAT cut and business rates holiday must be confirmed along with a targeted extension of the furlough scheme. We must also have an extension of the rent moratorium, with loan repayments and HM Revenue & Customs debt delayed in order to give businesses some breathing room from the ruinous mountain of debt that has built up for too many.” Meanwhile, the British Beer & Pub Association has said the “cautious” reopening roadmap will cost the industry £1.5bn. Chief executive Emma McClarkin said: “Outdoor service only from 12 April will likely mean three-in-five in pubs across the UK will remain closed. That’s 29,000 pubs still not able to open either because they don’t have any outdoor space or simply because they will not be commercially sustainable. It will mean just 17% of our pubs’ capacity will open from April. That will cost our sector £1.5bn. The government must now plug that £1.5bn hole for our sector with vital support in the Budget next week if thousands of pubs are now to survive. The government must also stick to 21 June as the end date for social distancing restrictions. This will increased pubs’ economic viability in being able to make good trade for the rest of the year and give the hospitality sector some much needed certainty. Last year we saw almost 2,000 pubs close for good – that’s five pubs every day closed forever. We cannot let this happen again in 2021.” Scottish Hospitality Group spokesman Stephen Montgomery said: “It’s vital we see the Scottish government take a similar evidence-based approach as these encouraging plans. Anything less would be an incredible betrayal of those people whose livelihoods have been under threat for so long.”

Industry News:

Honest Burgers operations director Brian Gillan to feature in ‘A Focus on Operations’ video: In a new series of Propel lockdown videos in conjunction with guest experience management experts Yumpingo, we focus on the role of operations directors. We speak to operations directors from leading sector businesses about how their priorities have changed during the crisis, how they have adapted, the biggest challenges they have faced, how their relationships with their teams have changed, and how they see the consumer experience evolving. In the latest video of the series, Ann Elliott talks to Brian Gillan, operations director at Honest Burgers. The video will be released at 9am on Tuesday (23 February).

Backman – it seems the real drivers of virtual brands are the delivery companies: Sector analyst Peter Backman has argued the real drivers of virtual brands are the delivery companies, as it allowed them to move further into the value chain. Backman said: “Virtual brands appear to be of interest to two types of operator. The first consists of operators who actually have a bricks and mortar brand (maybe more than one). The second group is operators who only have a virtual brand. The motivations for both of these groups are broadly the same, but with slight tweaks. For example, a virtual brand from a bricks and mortar operator allows it to drive greater volumes through its existing kitchen space (and thereby reduce unit costs and increase profitability). But for both types of business, the main purpose seems to be to build revenue – probably more so in the case of a virtual brand that has no bricks and mortar presence. This confers the (currently theoretical) benefit of the potential opportunity to build a brand that can ultimately have a very large geographical reach – even international. But the important question for builders of virtual brands is are you in it primarily (or only) for the income – or to build a brand? And, as I have said quite often before, it is very difficult to build a brand when your exposure is limited to being viewed on an app and then as a meal in a bag. It seems the real drivers of virtual brands are the delivery companies. Put simply, it allows them to move further into the value chain. They already exert huge influence over meal ordering (via an app rather than via the ‘traditional’ in-store ordering experience) and meal delivery (replacing wait staff with a rider). They also exert control over communication between the ‘order taker’ and the kitchen – and control over the priorities, and speed of operation, in restaurant kitchens. Deliverers, through their marketplace apps know what customers order, when and how much – and this knowledge allows deliverers to identify what should be offered on their apps – and puts them in a powerful position to influence operators to create virtual brands to exploit that knowledge. In turn, this allows deliverers to exert ‘ownership’ over the brand and by having this control, the deliverer is in a position to switch the virtual brand from one operator to another, with the benefit of increased commission rates such control bestows on the deliverer.”

Scottish Hospitality Group calls for permanent reduction in VAT, challenges politicians to sign pledge: The Scottish Hospitality Group (SHG) has called on the Scottish parliament to make the VAT reduction on foodservice and accommodation a permanent fixture and to convert two types of covid loans into grants. SHG is making the demands in its manifesto as Holyrood gears up for elections in May and has also urged members of Scottish parliament hopefuls to sign up to a pledge that backs the hospitality trade. The pledge card challenges aspiring MSPs to add their name to five commitments aimed at reviving pubs, hotels and restaurants. These include acknowledging the vital role the hospitality sector plays in the economy; recognising the huge impact services and finances that would result from a devastated hospitality sector; appreciating the measures taken by hospitality businesses to implement government safety rules; visiting a hospitality business when permitted to see the measures in place; and supporting an industry or government working group on a plan to bounce back stronger. SHG spokesman Stephen Montgomery said: “These are simple non-political requests and if a candidate isn’t prepared to support them then it suggests voters might like to ask them some serious questions about their views on this vital industry. Hospitality is worth £10.6bn to the Scottish economy annually and employs 285,000 people, many of whom are young Scots under 25.” As well as the permanent VAT cut, the manifesto demands also include converting Bounce Back Loans and Coronavirus Business Interruption Loans into grants for the hardest hit sectors; and directing support to areas of the industry most in need, such as drink-led venues and nightclubs. Montgomery added: “Our manifesto outlines a clear plan for how the SHG can work with the government to ensure our industry survives. It is of paramount importance the Scottish government continues to liaise with the hospitality sector to ensure we receive the support we need. People’s livelihoods depend on it.”

Job of the day: COREcruitment is supporting a co-working space as it looks to appoint a brand manager. The brand manager will report to the head of growth while working closely with the broader team. They will be responsible for organising, collaborating, and executing multi-channel marketing strategies that deliver key messages to a business and consumer audience. They may assist in the management of various agencies, such as PR, social media, creative, and/or digital media. The brand manager will ensure the reach and brand equity continue to grow, establishing the business as the leader of the premium flexible workspace market. The ideal individual will have experience with managing or working within external agencies, co-ordinating premium service-led brand marketing, and supporting newly growing or start-up businesses. The position is based in London paying up to £70,000. Anyone interested can email with their CV.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Goodbody – open offer puts M&B ‘on the front foot’, may be ‘start of a full privatisation’: Goodbody leisure analyst Paul Ruddy has argued the confirmation of Mitchells & Butlers (M&B) open offer will see the business begin recovery operations “on the front foot” yet controlling group, Odyzean, will increase its shareholding and “this may be the start of a full privatisation”. Ruddy said: “M&B confirmed [on Monday, 22 February] terms of its pre-emptive open offer and gave an operational update. The Odyzean Group will be the controlling holder, and, as per the release last week, it will take up its entitlements under the open offer and subscribe for additional shares that come available under the Excess Application Facility. The statement notes it will work with management to ensure the strategy and structure of the business are appropriate to optimise its long-term success and will include consideration of the speed and nature of the existing Ignite investment programme and opportunities for acquisitions and partnerships. To this end, it notes it may need to raise additional capital through the issue of new shares at least 12 months after the date of this announcement. The Odyzean Group states it would prefer the company prioritises debt repayment and investment ahead of dividend payment for the foreseeable future. The open offer is something of a mixed blessing in many regards. It will see the equity survive for now, despite the significant challenges caused by effective closure of the estate. It will also put the group on the front foot operationally during the recovery phase and allow it to continue to invest and, potentially, acquire. However, it seems likely Odyzean’s holding will increase in the open offer process given it has committed to acquiring the unsubscribed shares. This would leave the other shareholders as a significant minority holder, which will dilute their influence in decision making. Given the comment that ‘The Odyzean Group has also indicated the time and cost devoted by the senior management team to public company matters should be reduced’, this may be the start of a full privatisation.” 

Bone Daddies to launch ‘pop-up’ wings-based sister concept, opens Putney site: Bone Daddies Group, which comprises the eponymous ramen restaurants, Shack-Fuyu and Flesh & Buns, is to launch “pop-up” wings-based sister concept, Wing Daddies. Initially launching in Kentish Town on Monday, 1 March, Wing Daddies will operate as a pop-up delivery brand, popping up in virtual kitchens across the capital over the coming months. As well as operating from dark kitchens, the concept is looking towards opening a bricks and mortar site, or entering the street food market with the launch of a Wing Daddies truck that can trade across London on a flexible basis. The menu is centred around the twists on the chicken wings for which the group is known – such as Korean fried wings with gochujang and sesame as well as new sticky teriyaki and buffalo fire recipes. Meanwhile, Bone Daddies has opened a site in Putney, south west London. As revealed by Propel earlier this month, Bone Daddies has launched in the former Byron site in Putney High Street. Operating initially as a delivery-only kitchen, post-lockdown the Putney restaurant marks the seventh bricks and mortar opening for the group, which also has outlets in Bond Street, Bermondsey, Soho, Old Street, Richmond and Victoria. Bone Daddies also operates six dark kitchens across the capital. Operations director Steve Hill said: “The industry has been through hell over this past year and we are so grateful to our fans enabling us to stay strong as a business bringing much needed energy to all our teams and collaborators. Putney is a great location where we know we have many supporters and being on their doorstep makes perfect sense. We look forward to the year ahead making the most of the many opportunities that are coming our way.”

PureGym ‘burning through £500,000 a day’: Lockdown has been costing budget gym operator PureGym about £500,000 a day, the company's boss has said. Humphrey Cobbold told the BBC's Today programme it has meant about £120m of costs with no revenue for his 275 gyms. He said: “We are burning about £500,000 a day and that's the average over eight months of closure. It's been brutally tough.” While the government furlough scheme has been paying a portion of staff salaries, he said his business has still been paying some staff costs such as pension contributions and has amassed sizeable rent arrears. Cobbold said he has been able to raise funds from investors, which has helped the business survive, and he insists his business is ready to reopen safely. “The sooner the better within safe operating procedures for us,” he said. “We can make a massive contribution to the health of the nation.”

Rossopomodoro to make dark kitchens move: Rossopomodoro, the Italian restaurant chain backed by Change Capital, is to make its dark kitchens move with an opening in London’s Streatham, Propel understands. The five-strong, London-based, restaurant group is set to open a unit in the Foodstars kitchen in Mitcham Lane, which launched at the end of last year. Greek concept Yiayia's Boy, which operates a site in Shoreditch, is also delivering out of the Mitcham Lane kitchen. 
Boom: Battle Bar lodges plans for Aberdeen site: Boom: Battle Bar, the adventure bar concept from the team behind trampoline park business Flip Out, is targeting a site in Aberdeen. AGD Two has submitted plans to the city council for a section of the former Aberdeen Market building off Market Street. As well as having a bar and kitchen area serving food and drink in the lower areas of the market building, there will be an area dedicated to adventure games. It’s proposed the Aberdeen site will include axe throwing, smart darts, shuffleboard, table tennis, pool, mini golf, marble tarble and synthetic curling lanes. According to planning documents, it is hoped the site will be open by summer, reports the Evening Express. A statement in support of the application stated: “Now the Aberdeen Market has ceased trading, the intention is to extend the Flip Out operation to the rest of the property (across level two). The change of use will activate a currently disused space, which will add to the range of activities that are available for visitors to the city centre.” Last month, Boom: Battle Bar co-owner Richard Beese said the business had 15 sites in the pipeline. It operates venues in Cardiff, Lakeside in Essex, Liverpool, Norwich and Oxford while work has started on outlets at The O2 and Aldgate East in London as well as Eastbourne.

Itsu makes TV debut on back of 59% increase in grocery sales: Itsu, the healthy Asian food chain, created by Julian Metcalfe, is making its TV debut with a multichannel campaign designed to support its supermarket range of frozen gyoza and broths, sales of which climbed by 59% in 2020. Expected to reach 16 million households, the campaign features TV chef and stylist Gok Wan cooking easy Asian-fusion meals in his kitchen using Itsu products. Spanning TV, video-on-demand, PR, social and outdoor, the campaign heroes Itsu’s frozen gyoza range, one bag of which was sold in supermarkets every ten seconds in 2020, according to the company. The campaign will be complemented by in-store activities and promotions. Metcalfe said: “Gok has been a regular in our restaurants for years, so last year we finally invited him to Itsu headquarters to try our gyoza and ‘brilliant’broth’ – he was totally blown away (his words, not ours!). A few weeks later we were filming an advert for them in his kitchen! Launching our first TV advert marks an exciting new chapter for our grocery range, and Gok is the perfect partner for it – he has a genuine passion for Asian cooking, who better to bring our ‘eat beautiful’ mantra to life? With January marking our biggest month ever of Itsu supermarket sales, and brilliant’broth launching on to our restaurant menu, it feels like now is the time to go big with our amazing frozen gyoza and broth ranges.”

Bella Italia partners with La Tua Pasta to offer Bella at Home kits: Bella Italia, The Big Table Group-owned brand, has partnered with artisan pasta producer La Tua Pasta to offer Bella at Home – nationwide delivery of a range of premium fresh pasta kits, Propel has learned. It is understood Bella Italia has developed Bella at Home in response to the increase in consumer demand for restaurant-quality food and meal kits at home. The strategy is to provide the “always special” Bella Italia experience at home, allowing people to spend “quality time with loved ones with easy to make kits, using quality ingredients”. Ranging from four to eight servings for two to four people, the kits include “everything consumers need to create meat-filled or vegetarian pasta dishes, along with plenty of fresh Italian cheese and a bottle of Via Vai Prosecco”. Fresh pasta includes pappardelle, mafalde, and ravioli and artisan sauces include wild boar; beef shin; pomodoro and sage butter. Bella Italia is also set to tap into celebratory occasions and launch limited-edition Bella at Home kits. Bella at Home is available nationwide for next working day delivery. Founded in 2006, La Tua Pasta trades out of Borough Market, making fresh pasta from scratch.

The British Honey Company acquires Union Distillers in £8m deal: Leicestershire-based Union Distillers has been acquired by The British Honey Company (BHC) for an initial £8m through cash and shares. The acquisition is conditional on the successful completion of a £6.2m placing from BHC. BHC is intending to raise funding through the issue of up to 4,175,455 new ordinary shares at an issue price of 110p per share and a new £1.63m unsecured convertible loan facility. The proceeds of the fundraising will be used, in part, to satisfy the cash consideration element of the purchase with the remaining net proceeds being used for working capital purposes and to further strengthen the company’s balance sheet. Following completion of the acquisition, Union’s joint owner and chief executive Mark Gamble will join the board of BHC as an executive director. The strategy of the enlarged group is to develop a multi-category brand portfolio worldwide through organic and acquisitive growth. Union Distillers produces gin, vodka and absinthe through its Two Birds Spirits portfolio while BHC is noted for its Keepr’s spirits range. FinnCap is acting as an adviser on the deal, as well as a joint broker on the placing with Stanford Capital Partners.

Edinburgh-based Thai restaurant concept gets go-ahead for third site with Glasgow opening: Edinburgh-based Thai restaurant concept Ting Thai Caravan has been given the go-ahead to open its third site, in Glasgow. Founders Ting and Ae Tapparat have been granted permission by the city council to convert the former Patisserie Valerie unit in West Nile Street, reports Glasgow Live. The Tapparats launched the concept having returned to their love of street food after working in Bangkok's restaurants and five-star hotels. In the summer of 2019, Glasgow City Council rejected Ting Thai Caravan's proposal to move into the former Fopp unit in Byres Road. Ting Thai Caravan operates restaurants in Edinburgh’s Lothian Road and Teriot Place.
Liverpool-based operator opens dessert restaurant for second site: Liverpool-based operator Sara Darra Zafra has launched a dessert restaurant for her second site in the city. Zafra, who owns Mediterranean concept Fattoush in Hatton Garden in the city centre, has opened Cocoa Desserts a few doors away. The outlet, in the former Barley and Beans cafe premises, is serving crepes with various toppings, cookie dough and waffles, with dishes currently available for delivery only due to the coronavirus restrictions. As well as sweet treats, the restaurant also serves up burgers including peri-peri chicken burger and an halloumi burger as well as sides including fries and milkshakes. Zafra told the Liverpool Echo: “We saw this as an opportunity even in the pandemic.”
Travelodge targets Welsh locations, plans to reopen Nottingham hotel despite housing plan: Budget hotel brand Travelodge is targeting new hotels in Wales to help add 20,000 bedrooms to its portfolio by 2025. In north Wales, it is interested in new sites in Pwllheli and Wrexham, with planning already secured by a developer for the former, according to Business Live. In mid-Wales, Aberystwyth is believed to be a target with also Welshpool or Newtown in its sights. It also wants two hotels in Pembrokeshire. Meanwhile the operator is believed to be planning to reopen its Nottingham city centre when restrictions are lifted – despite plans lodged with Nottingham City Council to turn the building into student flats, reports The Business Desk. Nottingham Hotel Assets is said to want to turn the building into 121 studio apartments. However, Travelodge said it is planning to reopen, once conditions allow. A Travelodge spokesman said: “The hotel is closed at the moment due to the restrictions but we are looking forward to opening it up again once allowed.”
Plans revealed for F&B shipping container development in Preston: Plans to create a food and drink destination in Preston out of shipping containers have been revealed. The scheme is lined up for a site in Moor Lane, reports Insider Media. Proposed is a two-storey development with each outlet being based in its own container. The project has been designed to “improve the kerb appeal of the site” and it would also generate footfall into the area, the application said.
RBH saves four hotels shut by Bespoke Hotels: Hotel management company RBH has saved four hotels closed by Bespoke Hotels earlier this month. The grade II-listed Duke of Cornwall hotel in Plymouth; The Lyndene and St Chads, both in Blackpool; and The Townhouse in Manchester, were all shut on 3 February by hotel management company Bespoke Hotels but the group that owns all four hotels – Singapore-based The Fragrance Group – struck a deal with RBH and will reopen and re-employ a number of its former staff members at all sites. RBH divisional director Steven Foster said: “We have moved swiftly to re-employ the general managers to ensure the hotels are ready to reopen as soon as we’re allowed to do so.” The Fragrance Group’s UK representative Martin Rogers added: “Since discovering Bespoke Hotels had effectively closed four of our hotels by making all staff redundant without warning on 3 February, we have had an intense fortnight of discussions, culminating in an agreement with RBH. We have every confidence the four Fragrance hotels will thrive under [RBH’s] professional management.” London-based RBH manages 45 hotels already in the UK.

Year-round Cornish visitor attraction hits market for £2.5m: A year-round visitor attraction, restaurant and retail destination in Cornwall has been put up for sale with a guide price of £2.5m. Cornwall Gold and Tolgus Mill, spanning 18 acres, and located two miles from Redruth, is being marketed by Christie & Co on behalf of owner FS Group. Tolgus Mill is the last working example of a tin mine in Cornwall. Alongside the mill, the attraction offers a range of family activities including the chance to “pan for gold” and crazy golf. The on-site restaurant and cafe, the Cornish Pantry, offers a selection of locally sourced Cornish produce. Also featured on the property is a jewellery business, trading as Cornwall Gold & Cornwall Pearl, which is operated from the largest retail unit. The on-site workshop allows customers to design and customise their purchase, as well as upcycle old jewellery. FS Group has owned the property for more than 30 years and has decided to bring it to market to focus on other businesses in its portfolio. In addition to the retail and leisure offerings on site, three units are currently let to third-party operators on lease or licence agreements. These trade as a build-a-bear workshop, dance school and studio, and a pottery and painting studio. One further unit is currently vacant. 

Fuller’s launches at-home offer for Mother’s Day: Fuller’s has launched an at-home offer for Mother’s Day. Fuller's At Home Mother's Day Feast includes a three-course Sunday roast meal with British seasonal ingredients prepared by the pub company’s chefs and a bottle of Laverstoke Farm biodynamic 2015 sparkling wine. The box, which costs £120 for four people or £155 for six, comes with instructions and the whole meal is prepared and ready to just be heated and served. The company has also partnered with chef Brian Turner to bring his guide to cooking the “Feast”. The packs also include recipe cards for each dish and a full video tutorial on cooking each course as well as some personal top tips for mastering the roast. It will be delivered direct to a chosen address on 12 March, ahead of Mother's Day. 

Plans for £4m music venue in Plymouth start to take shape: Plans for a £4m music venue at the site of a former nightclub and cinema have started to take shape. The site, in Plymouth’s Union Street, was purchased by Nudge Community Builders, an organisation of local volunteers, and Eat Work Art, a business that revitalises redundant buildings, in October last year at a joint cost of £800,000. Both owning parties are set to invest a combined £4m and have begun talks with investors and potential commercial tenants. The building used to be home to Millennium nightclub and was also a cinema before proposals to turn the disused building into a 1,300-capacity music and entertainment venue, with bars and cafes around the edge of the ground floor. Work has already begun to shore up and revamp the building. Nudge, set up and run by people in the local Stonehouse community, has fixed the derelict building’s leaky roof and carried out other repairs. The owners aim to have some events take place inside the block in mid-2021 but there is no time-frame on the completed project. Nudge director Hannah Sloggett told Business Live: “We have an outline plan. But we don’t want to raise expectations. We need to work out which organisations and people will be part of bringing this building back to use. That will happen this year. We will also start a community share offer. That will inform how we get the funding and raise finance.” 

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