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Morning Briefing Strap Line
Fri 9th Mar 2012 - Pie & Pint, JDW and Redcomb

Story of The Day:

Pie & Pint Inns founder turns down £8m investment: Gary Downham, the founder of Pie & Pint Inns, operator of the Hare at Roxwell, Chelmsford, has turned down a proposed £8m investment that would have seen the company grow to 27 sites. Downham is looking for an investor to help him roll out the concept after the Punch Taverns pub turned over £1m in its first year. Downham acquired the lease of the Punch pub for £50,000 and spent £350,000 on a refurbishment of the site, which offers “very traditional, freshly prepared British fayre”. An unnamed investor offered to inject £8m into a roll-out that would have seen nine Pie & Pint country pubs, nine Pie & Pint town pubs and the creation of nine Café Crust sites, which is a town centre café concept based loosely on the American Panera Bread format but with Italian influences. It is thought that Downham turned down the investment on the basis that it would have left him with too small a share of the company. The businessman has spent many years studying the American foodservice market and has applied a few ideas from the US to his first venture. These include a Handmade Cake Servery offering between 25 and 30 types of homemade cheesecake a week, an idea adapted from the Cheesecake Factory chain in the US. The pub sells 20 complete cheesecakes during the summer. Other US-inspired ideas Downham has applied include soup and salad combinations and hot bread sliced on a breadboard at the table. The entrepreneur has also commissioned his own ale, Golden Crust, which is selling well in Essex supermarkets. Of the Café Crust concept, Downham said: “It would be a stylish high street café with coffee, great beer and food – a step on from the Starbucks offer.”

Company news:

Wetherspoon cuts 2012 opening plan by ten pubs: JD Wetherspoon, the 841-strong managed group, is to shave its new openings plan by ten pubs to 40 this year. The company reported that like-for-like sales dropped by 0.7 per cent in the six weeks to 4 March. Tim Martin, chairman of Wetherspoon, said: “The company is concerned by the absolute levels of taxes and their continuing increases, especially since supermarkets pay virtually no VAT in respect of food purchases, while pubs pay 20 per cent, in effect creating an enormous tax boost for supermarkets, enabling them to cross-subsidise drinks prices. Since VAT was increased from eight per cent to 15 per cent over 30 years ago, and following more recent increases to 20 per cent, the pub industry has increasingly struggled to compete. Over that period, pubs have lost approximately half of their beer sales to supermarkets. This tax, and hence, price disparity has been felt most acutely in less-well-off areas of Britain, where price disparities matter more - and the number of closed pubs in these locations in clearly evident.” Profit before tax was £35.8m on sales of £569.4m for the 26 weeks ended 22 January 2012 - like-for-like sales were up 2.1 per cent in that period.

Punch Taverns on target to hit profit forecasts: Punch Taverns has reported that average net income per pub increased by 0.8 per cent over its first half year to 3 March 2012 thanks to its disposal programme. It sold 214 pubs in the first 28 weeks for proceeds of £62m, slightly ahead of book value. Sold pubs generated £3.1m of Ebitda over the past 12 months, equating to a disposal multiple of 20 times. Chief executive Roger Whiteside said: “Profitability in the first 28 weeks of the financial year has been broadly in line with management expectations. While we remain cautious on the near-term consumer environment, we have strong plans in place and expect to benefit from the Queen’s Diamond Jubilee, the UEFA European football championship and the Olympic Games in the second half of the year.”

Scott & Quaff acquires seventh pub: Scott & Quaff Holdings, the West Country multiple led by Brian Hulme, Nick Mossop and Steve Ballard, has picked up its seventh site – the Crown and Sandys in Ombersley, near Droitwich. The pub will re-open on Monday 19 March. The pub and a second site, Brown’s in Quay Street, Worcester, closed after owner Evertons of Ombersley went under with debts of £1 million. Pubs that Scoff & Quaff Holdings also operate include the Fleet at Twyning, near Tewkesbury, the Leopard in Leamington Spa and the Ewe and Lamb in Bromsgrove.

Vegetarian restaurant chain takes over Southall pub: The vegetarian restaurant chain Saravanaa Bhavan is to open in the former Glassy Junction pub in Southall. The pub was established in 1994 as the first Asian pub in the UK and accepted rupees. Saravanaa Bhavan has a number of sites in London, including Tooting and East Ham.

Pebble Hotels hires Sheila McKenzie as managing director: Pebble Hotels, the two-strong hotel company owned by former Mill House Inns boss Ted Kennedy, has appointed leisure sector veteran Sheila McKenzie as its managing director. The move allows Kennedy to focus on the various assets he is overseeing on behalf of IBRC. McKenzie is the former chief executive of Slug & Lettuce and founding partner of Pitcher & Piano. Kennedy told Morning Briefing: “Sheila is great, an absolute joy to work with. We’re really chuffed with the like-for-likes in the business. She’s got the customer offer right – without that, it’s like pushing water uphill.” Pebble Hotels runs the Potters Heron in Hampshire and the White Swan in Arundel, West Sussex. Pebble Hotels co-founder Ziya Akguneyli has become a non-executive director of the company.

Little Chef sites up for grabs: A total of 47 roadside restaurants, mostly former Little Chef sites, are being let by agent Christie + Co. The move follows the closure of 67 sites around the UK. Christie + Co has been instructed by Travelodge to market the sites — the budget hotel operator was one of a number of landlords to whom Little Chef sites reverted following a pre-pack administration. The 48 properties are available to let on new leases (terms ranging from five to 17 years) and with annual rents in the region of £10,000 to £40,000. Simon Chaplin, director and head of restaurants for Christie + Co, says: “These former Little Chef sites offer operators the opportunity to create new restaurant, fast-food or retail outlets on busy roadside locations.

Ebullient TGI Friday’s reports surge in sales and profits: Restaurant chain TGI Friday’s has reported a jump in pre-tax profit to £11,182,000 in the year to 25 December 2011 from £7,349,000 the year before. Turnover at the company, led by Karen Forester, rose from £105,349,000 to £123,924,000. A Companies House filing stated that EBITDA (pre-exceptionals and impact of onerous lease unwind) and had grown to £16m compared to £11.7m the year before. Like-for-like sales grew 7.7 per cent compared to 3.7 per cent the year before. In an unusually ebullient declaration for a Companies House filing, the company added: “The directors are delighted with this performance in the current climate. During the year the company opened five sites which are all performing in excess of expectations and the company is actively seeking new sites.”

Manchester Confidential hails Living Ventures’ Oast House: Business information journal Manchester Confidential has hailed the Oast House, the pub that Living Ventures opened last October, as symbolic of the change in beer retailing. It stated: "For many years the ‘wholesome’ aspects of beer were lost in the popular British consciousness. Beer was the drink for men of middling ages, teachers, academics, a few mad journos and working-class fellas who no doubt favoured the flat-cap over the baseball. This has changed. In 2012 it is impossible to open, take over or manage a credible pub without a good range of cask ales and overseas beers. Quality beer, not wife-beater or gnat’s spit, is part of the food revolution.”

Redcomb Pubs founder reports consumers showing caution on Thursdays: Dan Shotton, the Mitchells & Butlers marketing executive who founded five-strong Redcomb Pubs, has claimed that Thursday trade is where consumer caution is most evident. Shotton, whose company opened Greene King’s The John Barleycorn, in Duxford, near Cambridge, two weeks ago, reports that February trade was “robust” with 5.5 per cent like-for-like growth. He said: “Weekend and early week trading are both very strong and I can see a few green shoots of recovery – the one symptom of the current economy is customer caution on Thursdays, which are generally much weaker.” Redcomb operates one Punch site, one Spirit site, one Enterprise venue and a free-of-tie lease.

ETM Group opens Jugged Hare: ETM Group, the highly regarded pub operator led by Tom and Ed Martin, opened its tenth pub last night – the Jugged Hare. It has been opened in conjunction with The Montcalm London City Hotel, located on the site of the former Whitbread Brewery in London’s Chiswell Street.

Industry news:

Simmonds urges lobby of MPs over duty escalator: All brewers, large and small, must work together to overturn the Government’s failed duty escalator policy – that was the message of BBPA chief executive Brigid Simmonds addressing the SIBA (Society of Independent Brewers) conference in Stratford-upon-Avon yesterday. She urged all brewers to use the next two weeks to lobby their MPs to make the case for a duty freeze for beer this year.

Middle-aged people more likely to drink daily: A survey of 6,000 people has revealed that middle-aged people are far more likely to have a daily drink than young people. While young adults are more prone to binge-drink, those over 45 are three times more likely than young people to drink alcohol almost every day, according to a survey by the National Office of Statistics.

Friday opinion:

Subjects: New-look Toby, minimum pricing & digital coupons
Authors: Paul Charity, Paul Chase, Darren Tristano

Retail park Toby Carvery is a bold jump by Paul Charity: A trip to Burton-on-Trent had us driving through the industrial estate on the edge of town. With time to kill before a meeting, there was a chance to visit one of Mitchells & Butlers’ (M&B) new flagship sites, opened as part of the push into new types of trading opportunities. The managed behemoth opened Toby Carvery and Harvester sites side-by-side and as close as close can be to the headquarters of rival managed company Spirit just before Christmas. In fact, the two venues work pretty well as a canteen for Spirit staff fed up with the on-site food. So we went into Toby Carvery for breakfast (as the Harvester hadn’t opened yet). Now, I’d seen web images of the new-look, up-dated Toby Carvery that’s been opened in Lincoln. But in the flesh, it’s still such a radical re-invention of Toby that you can’t help but be impressed by the bravery of the move. For a start, gone are the myriad layers of characterful clutter adorning every crevice in the old-style Toby. The post-modern version banishes tut completely. The only thing that survives is a respectful nod to the iconic Toby jug with six over-sized examples arranged in two groups of three at opposite ends of the restaurant. But the Toby figurines are artfully displayed like museum pieces. They are simply respectful nods to the past in an otherwise sleek, buttoned-down restaurant space. And there’s the rub. There’s no hedging of bets here. M&B has gone the whole hog and decided the new-look Toby Carvery can’t be mistaken for a pub. It’s a restaurant serving buffet-style food - it’s just that the buffet is a roast dinner and limitless vegetables. The styling of the venue shouts modern with its carpet-free floors and sleek design. Most telling of all is the bar area which has shrunk to the size of most folks’ spare bedroom. Staff explained that the venue simply doesn’t accommodate anyone who simply wants a drink. To underscore the point the draught beer served at the bar is unbadged, making it impossible to know what’s being served without asking. It’s a bold move really because M&B is clearly prepared to wave goodbye to lucrative drinkers in favour of making the family market feel even more comfortable. Serving breakfast from 8am, M&B clearly wants “New Toby” to grab much more early day part business. The traditional breakfast items – bacon, sausage, scrambled eggs et al – are laid out on the carvery rather than cooked to order. The degree to which this looks appetising depends on the volume of business clearing pre-cooked items regularly. It was a less than busy morning. Still, you can’t fault M&B for taking the size of this leap at Toby and it’s a pretty clever evolution.
Paul Charity is managing director of Propel Info

Minimum pricing is a bad idea by Paul Chase: Minimum pricing is outlawed by the 1998 Competition Act and doesn’t exist anywhere in Europe, because EU competition law also prohibits it. The Government can amend domestic law, but in recent years France, Italy, Greece, Ireland and Austria have all tried to introduce it in relation to tobacco sales – using ‘public health’ as justification. All these attempts were rejected by the European Court of Justice. I totally understand why people running pubs and bars want to see a more level playing field with the off-trade, but this is a bad idea for a number of reasons. The most important one is the ‘law of unintended consequences’. For example: a 75cl bottle of blended Scotch whisky retails in my local supermarket for £12. That’s 40 pence per unit - the minimum price level currently proposed by David Cameron. Introduce a minimum price of 50 pence and the cost rises to £15 a bottle. A big percentage increase from a low base, but not enough, I would suggest, to deter dependent drinkers, and not enough to tip people out of the living room and back into the taproom. So campaigners would gain little from this and the pub trade would concede an important principle, but gain nothing. The unintended consequence would be that supermarkets would see a jump in profits at a time when household incomes are being squeezed. This one will be a hard-sell to the electorate – a point Health Secretary Andrew Lansley has apparently been making. But suppose a higher minimum price was eventually introduced – one that really would bite – say 80 pence per unit. That would see our bottle of Scotch double in price to £24. That might well deter consumption and make drinkers think twice about where they buy drink, or do their drinking. But at £24 a bottle that’s the end of the Scotch whisky industry right there! No one is going to pay £24 for blended Scotch when they can buy a 12 year-old single malt for just a few pounds more. And only a minority of whisky drinkers can afford to do that. The same would apply to the affordability of other spirits. So this is the dilemma with minimum pricing: if you introduce it at a level where it won’t do much harm to the industry, it won’t achieve what campaigners want, but will raise prices at a time of economic hardship. If you introduce it at a level where it might impact on demand and persuade more people to drink in a supervised pub environment, it will also cause untold economic damage to the drinks’ producers and the jobs they support. This is the sort of mess we will get into if government price regulators put themselves in the middle of the buyer-seller relationship.
Paul Chase, Director and Head of UK Compliance, CPL Training

The age of digital couponing is here by Darren Tristano: As consumer dependency on technology surges, it is imperative that operators continually adapt their marketing strategies to meet current trends. Digital couponing is a service that has seen significant growth. Introducing online coupons to mobile platforms and certain social-media sites, such as Facebook or Twitter, not only saves money as compared to print coupons, but also signifies that a restaurant is current on the latest technology trends. Many operators are seeking help from companies specialising in digital forms of marketing to gain familiarity with new online platforms. As social media becomes increasingly important to consumers, operators are using it as an opportunity to gain a wider marketing distribution for their brands. Some companies have created their own online platforms to help operators successfully use this strategy. SocialTwist, a social referral marketing company, created its Tell-a-Friend system, which utilises the powerful impact of online “word-of-mouth” marketing. The platform allows users to share digital coupons with their friends through a variety of social-media websites, sometimes offering incentives such as increased savings. For example, through the platform’s coupons and promotions package, a chain may choose to introduce a $1-off coupon. The consumer might then be given the option of sharing through social media and earn an additional $1 off per friend with whom they share the offer. Another way of keeping up with the technological demands of consumers is through mobile digital coupons. Consumers are increasingly more reliant on the convenience of their mobile devices. Operators are benefiting from matching this dependency when it comes to the use of mobile coupons. A number of chains are introducing offers that can be accessed and redeemed via mobile phone to reach these tech-savvy customers. The ease and convenience of having coupons on you at all times is highly appealing to on-the-go diners. Modiv Media, a mobile marketing company, created its Modiv Social platform to allow users to access digital coupons through a mobile app and share them through Facebook. After receiving a coupon on their smartphone, a customer can then share that coupon through Facebook Mobile, earning a personalised offer as a reward. Once the coupon is shared among a few friends, those friends can then share the offer among more friends (depending on limits to the number of redeems the coupons have). Digital coupons are an opportunity for growth among operators looking to reach their more social, mobile customers. The days of flyers and paper coupons are slowly ending as younger consumers demand more efficient and accessible forms of promotion. To survive in this market, operators must keep up with the continuing technological advances that are influencing the digital age of couponing.
Darren Tristano is vice-president of US-based food service research firm Tristano

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