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Morning Briefing for pub, restaurant and food wervice operators

Wed 28th Mar 2012 - Seafood Pub Company, Enterprise Inns and Rick Stein

Story of the day:

CGA - small steps by operators could transform bottom line: Jon Collins, chief executive of on-trade information specialist CGA, has stated that operators need only make a few changes that would allow profit “to fly through to the bottom line”. Collins, speaking at the Numis Securities leisure conference, said that the company has advised a well-known retailer that its standard lager pricing was too low compared to the marketplace and, after a price-change, the operator had seen £2m of extra sales over 13 weeks. He argued that premium brands provide a “significant value sales opportunity” with £1 in every £3 spent on gin within the premium range - Hendricks with cucumber sold in JD Wetherspoon is an example of “consumers moving up”. He reported that 300,000 litres of free water are given away by one company to customers each year. Trading up one in ten customers to bottled water would equate to £175,000 of sales a year. Collins also argued that cocktails are no longer just a solution for style bars and dedicated venues – they fall into the “affordable treat” category. Lastly, Collins claimed that wine pricing needs reviewing. “Wine remains a tremendous opportunity for retailers – there’s greater profit to be had from a re-engineered wine list,” he said. Collins also argued that brand owners are wasting “a massive amount of money trying to engage retailers in the wrong way”. He told the Numis Securities leisure conference that outlets receive a kit activity every six weeks but that they were often “massively inappropriate”. One brand owner sent out free nail varnish but among the recipients were the Polish Institute in Croydon and a number of working mens’ clubs. One promotion kit aimed at wet-led venues was sent to a group of outlets only 30 per cent of which were wet-led venues. The sales uplift for the brand at wet-led sites thanks to the kit activity was 176 per cent, but only five per cent at the food-led pubs included. “Think about the kind of money spent on the kind of activity across the trade,” said Collins. Retailers need to work with suppliers to identify the right kits for the right outlets, he added.

Industry news:

Department of Health undertakes drinking advice review: The Department of Health will lead the first review of drinking advice in 15 years amid concerns that the existing advice suggests drinking daily is healthy. The review has been prompted by a report from the Commons science and technology committee that argued existing advice is confusing. The plan is to draw up guidelines that are less easily misinterpreted. Advice could include a recommendation to abstain from alcohol two days a week, guidance about occasions where people drink heavily and advice for older people.

Trips to pubs and restaurants still a priority: A “Priority Report” produced by Skipton Financial Services has found that once Britons pay for essentials – such as bills, rent and mortgage payments – spare cash it more likely to go on satellite TV subscriptions, meals out and haircuts than putting it towards a pension. However, 20 per cent of those surveyed have felt the squeeze and either cut down or completely ditched takeaways or meals out at restaurants. A quarter have reduced trips to clothes shops, trips to the pub and one in five don’t go on as many city breaks or trips away. When quizzed on thinking about the distant future, one in five said they worry more about what’s happening next week than several years down the line.

Chocolate keeps you thin: Research published in science journal Archives of Internal Medicine has found that calories in chocolate are not like normal calories. The ingredients in chocolate, according to the research, appear to make the metabolism work harder, making chocolate calorie-neutral. Study leader Dr Beatrice Golomb said: “Our findings appears to add to a body of information suggesting that the composition of calories, not just the number of them, matters for determining their ultimate impact on weight.” 

Technomic - soup and salad grows in popularity with US consumers: A survey of 1,000 consumers by US market research firm Technomic has found a big jump in the popularity of soup and salad as customers seek more healthy dishes. A total of 62 per cent of consumers choose soup at least occasionally compared to 43 per cent in the same study two years ago – consumers occasionally choosing salad jumped from 66 per cent to 76 per cent. Sara Monnette, Technomic’s director of consumer research, said: “Operators are revamping their menus in response to consumer demand for soup and salad as a standalone entrée, side substitution, appetizer or a component of a combo meal.”

Cheltenham adopts CAMRA plan to save pubs: Councillors in Cheltenham have voted to adopt the CAMRA Public House Viability Test, which provides a framework for deciding whether a pub is viable. Planning bosses have to take into account the population and visitor potential, as well as other factors like the site’s parking, public transport links and possible links with other facilities like shops and libraries.

Two beers a day help the heart: US researchers have found that two alcoholic drinks a day gave heart attack survivors a 42 per cent lower risk of dying from heart disease compared to non-drinkers. Benefits were only seen with moderate drinking – the equivalent of two 125ml glasses of wine, two cans of beer or one shot of spirits. The study found that men who drank alcohol moderately before a heart attack and who consumed the same level afterwards also had better long term health.

Confusion over “complex” pasty tax: Rules released by the Treasury has revealed the complexities of the plan to charge VAT on hot take-out food. Under the plans, a hot pasty allowed to cool would not attract the 20 per cent charge, while one that remains hot would. A lukewarm pasty would not attract the tax because it would be the same temperature at the shop. But the same pasty could attract VAT in the winter because it would be warmer than the shop. The VAT charge on hot takeaway food is due to come into force on 1 October.

Whisky producers – minimum pricing could hit exports: Whisky producers have warned that minimum pricing could wipe £500m a year off the Scotch export market, which is worth £4.23bn per annum. The Scotch Whisky Association fears that minimum unit pricing could give the green light to protectionist economies such as India to discriminate against Scotch.

Company news:

Adnams reports buoyant 2011: Suffolk brewer and retailer Adnams has reported a seven per cent increase in beer volumes for the year to 31 December 2011. The company reported sales of £54.6m and a £3.3m operating profit (before exceptional items). The company also revealed 13 per cent increase in like-for-like turnover in its Cellar & Kitchen business. Chairman Jonathan Adnams noted that economic uncertainty is greater now than at any recent time, but said that the business would not be distracted from its long-term goals and would continue to invest for the future. He added: “The Adnams business enjoyed a good year in 2011, in continuing difficult economic circumstances. I am pleased to say that we increased our pre-exceptional operating profit by 2.8 per cent from £3,188,000 to £3,277,000 and on the back of this we are proposing an increase in our dividend for 2011.”

Domino’s Pizza reports sales up by 3.5 per cent: Domino’s Pizza has reported “a good start to the year” with system sales rising by nine per cent to £144.2m driven by a combination of new store openings and like-for-like sales growth of 3.5 per cent. E-commerce sales accounted for 50.6 per cent of UK delivered sales (2011: 39.3 per cent) in the 13-week period to 25 March 2012. Total online sales for the period were up 44.5 per cent to £59.3m (2011: £41.3m) and, of this, 16.4 per cent was taken through one of Domino’s mobile platforms. In a first for the company, during the period over £1million in sales were taken through its mobile platforms in a single week. In addition, Domino’s now has over 520,000 Facebook fans in the UK, and 22,000 followers on Twitter.

Jamie Rollo – Enterprise Inns investment case is binary: Morgan Stanley analyst Jamie Rollo has issued a note claiming that the investment case for Enterprise Inns is binary. He said: “Enterprise’s future is highly dependent on its ability to prepay Unique’s fixed rate notes. If it succeeds, it facilitates an early bank refinance and the shares could double. If not, Enterprise would lose Unique’s dividend and need to inject cash to prevent default, making it hard for Enterprise to refinance its bank debts. “We think the ETI investment case is very binary right now. We see a 100p bull case if the company can prepay, and a 5p bear case if not. We would put a 75 per cent chance of the bull case and 25 per cent of the bear case, getting us to our 75p price target. The share price seems to be pricing in around a 50 per cent chance of success already.”

JD Wetherspoon to focus on one pub in St Albans: JD Wethersoon is selling its Cross Keys pub in St Albans to focus on a single site, The Waterend Barn, a much larger Lloyds Number One venue. The Cross Keys opened in April 1996 and St Albans town centre has seen the arrival of numerous restaurant brands in recent years, including a Jamie’s Italian. A spokesman for JD Wetherspoon told Morning Briefing: “The Waterend Barn is a much bigger space with a much bigger kitchen – the Cross Keys has gone as far as it can go.” It is understood the Cross Keys has been sold to another pub operator.  

Seafood Pub Company opens second site: The Seafood Pub Company has opened its second venue, The Assheton Arms in Downham in the Ribble Valley after a £400,000 refurbishment. The pub now has four dining rooms plus private dining areas where customers can personalise their own lighting and iPod sound systems. The new kitchen, has a modern Robata charcoal grill used for preparing Japanese food. The pub will be run by managing director Joycelyn Neve and executive chef Anthony Shirley, who also operate the Oyster and Otter gastro pub at Feniscowles, Blackburn. The Neve family has run a Fleetwood-based wholesale fish supply business for more than 130 years. Anthony was previously a sous chef at Harvey Nichols in London’s Knightsbridge, head chef at Panacea in Manchester and at Raffles in the West Indies.

Hakkasan set to open in New York: Hakkasan, the Michelin-starred restaurant founded by Alan Yau, is set to open its New York outlet next month. The restaurant chain already has sites in Miami, Abu Dhabi, Dubai and India. Chef Ho Chee Boon, who has spent 24 years working in the kitchens of renowned Asian restaurants around the world, is moving to New York to help develop the new menu, which will feature a number of new recipes using locally sourced ingredients, a spokeswoman said. The 250-cover restaurant, due to open on 3 April, received opposition from one resident who thought it would be a detriment to the neighborhood, drawing noise and crowds. Hakkasan’s chief operating officer Didier Souillat argued that the restaurant could actually improve conditions on the block, as it did when it opened on Hanway Place in London.

Spirit to convert the Narborough Arms to John Barras brand: Managed pub company Spirit is to invest £180,000 to convert the Narborough Arms, in Coventry Road, Narborough, which also has nine hotel bedrooms, to its John Barras brand. Leigh Johnson, who manages the Narborough Arms, said: “The changes will allow us to enhance our offering and the guest experience, while still retaining the community hub aspect that makes our pub so special.” The pub will re-open on 4 April.

Brakspear – others should follow our lead: Brakspear boss Tom Davies has argued that the industry could force a debate in the House of Commons on the duty escalator if other followed its lead. The company staged a Tax Free Beer Duty day at ten pubs in Henley that involved knocking £1.30 off the price of a pint. The pubs collected nearly 1,000 signatures from customers calling for a freeze on beer duty. He said: “If Brakspear on its own can generate this level of support, imagine how much more could be achieved if other brewers and pub companies ran similar campaigns. “We’d certainly be able to raise the 100,000 signatures needed to force a debate on beer tax in the Commons, which would be a great result for pubs and pubgoers.” Davies argued the beer duty escalator has reached a tipping point. “The increases on beer duty in the Budget, on top of the already crippling levels, will drive more people out of pubs, leading to further closures and job losses. “Something has to be done — our industry simply cannot take much more punishment and survive.” 

Bar, club and restaurant opens in Wolverhampton after £500,000 refit: Entrepreneurs Ryan McGillicuddy and Richard Bourne are set to re-open the once run-down Prince Albert as a new bar, club and restaurant venue. Bourne said: “We will serve food based around sharing and light bites, such as tapas, burritos, and sharing platters, as well as some more traditional stuff like steak and chips – only it will be served on chunky wooden boards. “We want it to have a real Mediterranean feel.” The opening of the former hotel is set for 6 April and comes just three weeks after the closure of Oceania in the city. We were pretty confident we could be a main attraction for the city even when Oceana was here,” said McGillicuddy.

Punch trials 2.8 per cent abv brews: Punch Taverns is trialing a scheme that allows licensees to stock lower alcohol cask ales, which qualify for a 50 per cent reduction in beer duty. Licensees that receive their beers from depots in Croydon, south London and Tingley, near Leeds in West Yorkshire are the first to be targeted. The Croydon depot is offering Green King’s Tolly English Ale, while the Tingley depot will be trialing Caledonian’s 2.8 per cent. A third ale, Adnams’ Sole Star, will be available via all depots under Punch’s Finest Cask rotational beer programme, but only the 1,000 pubs signed up to Finest Cask will be eligible. Sole Star and 2.8 per cent will be supplied in firkins (nine gallons). Tolly English Ale will come in pins (4.5 gallons). The beers were chosen by staff during a tasting session at Punch’s Burton-on-Trent head office followed by presentations by the breweries on the potential for the 2.8 per cent ale category, prospective customers, and the level of support they would give to promote their brand.

Chef Rick Stein extends Padstow empire: Celebrity chef Rick Stein has expanded his Padstow business interests by buying the fishmongers on the town’s South Quay. Rick and wife have taken over the former Padstow Fisheries after its previous owner announced his retirement. Rupert Wilson, general manager of the couples’ Seafood Restaurant, said: “We said, ‘let’s take this on’ so that it is preserved as a fish supplier for the town rather than it becoming a café or just another shop.” The company operates a total of five restaurants, a pub, holiday accommodation totalling 40 bedrooms, four retail outlets and a cookery school in the Padstow area.

Marstons wins pub go-ahead in Bourne, Lincolnshire: Wolverhampton-based brewer and retailer Marston’s has won planning consent for a new-build pub restaurant in Bourne Lincolnshire. The consent, which ends a six-year planning process, will allow a pub to be built on land off South Road, opposite the Elsea Park estate.

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