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Morning Briefing for pub, restaurant and food wervice operators

Wed 14th Mar 2012 - Stonegate, Chipotle and Amber Taverns

Story of the day:

Stonegate Pub Company installs cask ale in re-launched Scream: Stonegate Pub Company, the 550-strong managed operator led by Toby Smith, has installed cask ale in its evolved version of the Scream student bar. The company has completed seven refurbishments out of the 50 Scream sites it acquired as part of the deal to buy Mitchells & Butlers’ wet-led estate in 2010. Chairman Ian Payne told Morning Briefing that the company would return to undertake further refurbishments after Easter in the wake of success at the early sites. The first seven sites – two in Birmingham and Bristol, one in Leeds, Derby and Aberdeen – have been evolved to provide a better food and drink offer. Pizza ovens, using fresh dough, are being installed at sites where space allows under the direction of head of food Perry Huntley. The new-look Screams have also seen the introduction of cask ale – two or three handpulls at each site – and an improved cider offer. Chairman Ian Payne added: “I’m very pleased with the new Scream concept – it was the brand that was in the worst state by far. “We’ve put quite a lot of work into deciding what to do with it.” The brand has enjoyed success in recent months running an “Invent a Flavour” competition in partnership with Brothers Cider – the winning flavour was Rhubarb and Custard. “It tastes just like Rhubarb & Custard,” said Payne.

Industry news:

Pub sector in need of hundreds of millions of catch-up capital: Private equity investor Luke Johnson, whose Risk Capital Partners took a stake in craft beer concept Draft House last year, has claimed that the pub sector has suffered “too much financial engineering” in recent years. He told the Sapient Corporate Finance Breakfast Briefing that the result was that “hundreds of millions of catch-up capital” is needed.

Hollywood threatens Hobbit pub: Hollywood lawyers have ordered a pub called The Hobbit in Southampton to change its name and to stop serving cocktails called Gandalf, Bilbo and Frodo. The lawyers claim the Southampton pub, owned by Punch Taverns, is breaching its licensing rights to the JRR Tolkein series. The pub, which has been called The Hobbit for 20 years, has launched a Facebook campaign describing it as a war between the “Hobbits and the orcs”.

Champagne consumption drops: Britons drank nearly a million fewer bottles of champagne in 2011 compared to the year before in a further sign that consumers are cutting back. Official figures show that 34.5 million bottles were shipped to Britain from France in 2011 – down by 955,000 bottles.

Food prices could soar: Drought conditions in southern counties could send food prices soaring, farmers have warned. If the dry conditions persist, the price of a loaf of bread and a pint of beer could rise sharply.

North-South jobs divide widens: The North-South jobs divide is now at its widest on record. The number of unemployed people in the North rose by 15 per cent over the past year compared with eight per cent nationally.

Company news:

Wolverhampton Oceana closes: The Oceana in Wolverhampton, opened in 2006 at a cost of £5m, closed at the weekend. Morning Briefing understands the closure came after the new owners of Oceana operator Luminar were unable to negotiate a rent reduction with the landlord. Manager Mark Hickey, in a message on social networking website Facebook, said: “I can hand on heart say that this decision was not taken lightly and since going into administration we have done everything possible to keep the club alive and evidence of this was amazing growth in our nights over the last few months.” The five worst-performing Oceanas were rumoured to be losing around £500,000 per annum when Luminar was bought out of administration by former Brook Leisure chief executive Peter Marks, Ice Planet’s Alex Geffert and nightclub owner Joe Heanen in December in a deal worth around £45m.

Amber Taverns set for 80 sites later in 2012: Amber Taverns, the company backed by LGV Capital that won the Most Impressive Growth category in the MA250 awards last year, has three more openings lined up. It has a site in Chester-Le-Street acquired from Dukedom currently undergoing a £250,000 refurbishment and due to open at the end of the month. The second pub is the George & Dragon in Leigh acquired from TCG and undergoing a £300,000 refurbishment, with an opening planned for St George’s Day. It has also bought a site in Halifax town centre from Enterprise Inns that will open late summer after a £300,000 investment. The company has also exchanged on a Punch Taverns disposal estate pub in Horwich that will open late summer following a refurbishment. Terms have been agreed on further sites in West Yorkshire and Leyland. “We hope to get to 80 sites later this year,” chief executive James Baer told Morning Briefing.

Former Mitchells & Butlers executive lines up second Punch site: Malvern Inns, the company led by former Mitchells & Butlers executive Alastair Scott, is lining up his second Punch Taverns site after success with the first. Scott re-opened the George at Fretwell, near Bristol, last June – and is now eyeing a second unnamed Punch site. He said: “It took us eight weeks after opening to get to profit. The pub has also made money every week so far this year. We are averaging £13,000-a-week net of VAT – we’re planning to do 250 covers on Mother’s Day this coming Sunday. We’re currently just planning a menu to allow us to turn over £20,000-a-week during the summer. It will hinge on a well-executed barbecue offer – we have around 90 covers outside compared to 80 inside.” Scott also runs Catton Hospitality, which provides a pub diagnostics and labour scheduling service for pubs. He is currently signing up 50 pubs a month to use his labour system. Catton Consulting also provides a newsletter service for individual pubs to allow them to communicate with their customers. He added: “With the pub diagnostics we work out what’s wrong with a particular pub and put it right. We have got to have different benchmarks in the pub industry. Too often you hear licensees talk about moving into profit within six months of running a pub – it should be much earlier.” Scott, who invested £180,000 in the George alongside a £180,000 investment from Punch, said the secret of the George’s success generally was to place the pub at the centre of the community. “ A community pub doesn’t have to be down-market,” he said.

Greene King set to convert second pub to Realpubs style: Greene King is poised to convert a second pub from the estate to the trading style of Realpubs, the 14-strong London company that it acquired last April for £53.1m. The company converted the Maynard Arms in Crouch End last November. The next pub in the Greene King London estate to be converted will be the Black Lion in West Hampstead. It is likely to re-open at the end of April with work due to start in the coming weeks.

Hundreds oppose Wetherspoon opening in Maldon: Several hundred people have signed a petition opposing the opening of a Wetherspoon venue in Maldon. Gill Crawford, who has organised the petition, said: “Allowing large branded pubs into the town will eventually lead to less choice as they push out the smaller businesses.”

Greene King appoints North Star Advertising to £4m beer account: Greene King’s beer and brands division has appointed North Star Advertising to handle its beer advertising accounts, which are worth an estimated £4m, according to The Drum. Dom South, Greene King marketing director, said: “North Star has a proven track record on Belhaven Best, and I’m sure they will prove as successful for Greene King IPA and Old Speckled Hen.”

Watson and Bruce bag first pubs: Capital Pub Company founders David Bruce and Clive Watson have acquired their first three pubs – in Bath, Cambridge and Henley – as part of their new tax-efficient Enterprise Investment Scheme (EIS), according to The Times. The pair, who sold Capital for £93m to Greene King, spent £3.5m on the pubs – they have raised £4m from 100 investors. 

Marston’s reports robust trading: Marston’s has reported resilient trading over Christmas and New Year followed by more subdued conditions. Managed pubs saw like-for-like sales up 3.5 per cent compared to last year – food sales were up 3.9 per cent and wet sales were ahead by 3.4 per cent. In tenanted and franchised pubs, underlying profits continue to increase with profits estimated to be three per cent ahead of last year. Own brewed beer volumes are up two per cent versus last year. Ralph Findlay, chief executive, said: “We expect the consumer backdrop to remain weak in 2012, but with potential for better trading periods around Euro 2012 and the Queen’s Diamond Jubilee.” The results cover the 23 weeks ended 10 March.

News from overseas:

Chipotle to launch knowledge-based loyalty scheme: Healthy Mexican food chain Chipotle is planning to launch a novel loyalty scheme that rewards customer knowledge. Its Farm Team scheme will reward invite-only participants for correct answers to questions on sustainability, organic farming and humane food sourcing. Chief marketing officer Mark Crumpacker told Advertising Age: “The more knowledge customers acquire and share via social media – the more stuff (they) get. My hope is that this knowledge will help people connect with the brand because they feel like we’re a company that’s trying to do the right thing.”

Buffalo Wild Wings trials iPad menus: Buffalo Wild Wings is giving customers the option to use an iPad at their table to browse the menu, order food and drinks and pay for the meal (with a card-swiping device attached to the iPad). The trial restaurant, in Oakdale, Minnesota, has 25 iPads for about 60 tables. The restaurant group hope the iPads will boost sales by giving customers greater control over when they order food or a second round of drinks, as well as keep children entertained. It is also hoped that iPad use will free waiting staff up to spend more time talking to customers.

Rock star Gene Simmons opens restaurant: Rock singer Gene Simmons has opened a restaurant, just south of Los Angeles airport, called Rock & Brews, which has offers an “authentically themed backstage environment”, rock posters and rock art. The restaurant will serve rock musicians’ favourite food and craft beer selections that feature hundreds of artisanal breweries from around the world.

Heart Attack Grill boss claims real life customer heart attack “good for business”: The founder of Las Vegas restaurant Heart Attack Grill, which serves items like an 8,000 calorie quadruple bypass burger, has claimed a heart attack suffered by a customer on the premises is good for business. The restaurant, in which waiting staff dress as nurses to serve customers in hospital patient gowns, specialises in unhealthy food such as chips cooked in lard and milkshakes topped with butter fat. Footage of the customer being taken away from the restaurant went viral and prompted a media frenzy. Owner Jon Basso said: “I think it turned on as many customers as it turned off. There’s a bad boy element to it now.”

McDonald’s sees big jump in approval rating with healthy kids’ meals: The lead-up to the launch of McDonald’s healthier kids meals boosted brand equity among parents with young children. A spokesman for BrandIndex said an improvement in the parental buzz score of 10.3 on 10 February to the 26.5 figure recorded on 5 March was “well beyond statistically significant”. The brand equity company reports that any movement greater that four to five points is “meaningful”.

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