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Morning Briefing for pub, restaurant and food wervice operators

Thu 29th Mar 2012 - Trust Inns, Eat and Flagstone

Story of the day:

Thomas picks up three Luminar sites: Former Luminar Leisure nightclub company boss Stephen Thomas has acquired three Luminar sites that have a common landlord – X Leisure. The sites are the first-ever Oceana in Milton Keynes, Project in Norwich and Liquid in Maidstone. Thomas, who will operate the sites as part of his “We are Dance” nightclub operating company, will re-brand the venues as Wonderworld, Wonderland and The Theatre. It is understood that the Milton Keynes sites is profitable at the moment, while the other two are not. X Leisure had a pre-emption clause in its leases with Luminar that allowed it to buy back its leases should Luminar go into administration. A spokesman for Luminar told Morning Briefing: “The landlord has been woo’d by the charm of Stephen Thomas.” Thomas said: “It’s quite a good deal for us. When Luminar went into administration, X Leisure approached me to say, ‘Are you interested?’ It’s quite an amicable thing. Oceana in Milton Keynes was refurbished in 2008 and we are keen to trade it as soon as possible.” Earlier this month, Thomas closed his Greene Room cabaret room in Milton Keynes and parts of the trading template will be moved to the Oceana venue. Sources report that a total of £88m was spent opening a dozen Oceana super-sized venues by Luminar over the course of a decade. Last year, the venues made a combined profit in the region of £5m. However, the bottom half of the Oceana estate was losing around £500,000 a year when Luminar was bought out of administration at the end of last year. Luminar has closed Oceana venues in Birmingham and Wolverhampton in recent months after negotiations with landlords over reduced rents failed. It is thought that the company is currently in negotiation with the landlord of one more Oceana in respect of rent levels.

Industry news:

Home Office concedes closure notice guidance “wrong”: Owners of a bar in Wakefield have been paid substantial damages and costs – understood by Morning Briefing to be close to a six figure sum in total - by the Home Office and West Yorkshire police after being unlawfully forced to shut their premises on five occasions. The payments come after the High Court ruled that Home Office guidance on closure notices was unlawful. The guidance was used by the police to justify the immediate closure of Bank in Wakefield for alleged breach of conditions on its licence. West Yorkshire Police mounted a series of five enforcement actions against Bank either accompanied by Home Office officials or pursuant to training given by the Home Office. The police served S19 closure notices and then immediately forced the claimant, through threats of arrest to the Designated Premises Supervisor, to close the bar, causing loss of profit on the night and subsequent nights. The owners of Bank sought a judicial review against both West Yorkshire Police and the Home Office, claiming that the guidance, and the police action based on it, was wrong in law. West Yorkshire Police and the Home Office conceded that the guidance was unlawful, and that the actions had been illegal and that it was liable to pay damages. The Home Office withdrew the online version of the guidance and wrote to all chief Constables pointing out the legal errors in it. Michael Kheng, of Kurnia Licensing Consultants, said: “This was a clear case of over-enforcement causing damage to the goodwill of a business, not to mention the intimidation felt by the licensee confronted by police officers requiring him to close there and then. My client and I felt it right to pursue this matter to a judgment, so that the legal position is clearly established, to protect future licensees from similar conduct.”

Bognor decides against late night levy: Councillors in Bognor have decided against imposing a late-night levy on pubs and clubs in the town. The decision follows a report from licensing officer Sarah Meertens who said the levy would cost businesses between £399 and £4,440 based on their rateable value. “When I am out and about working at night, visiting the premises, I am being told things are very quiet,” she said. “The feedback from these businesses is that a lot of them are saying this could be the straw that breaks their backs if there is an extra expense at the moment. “That might result in them curtailing their hours and that would stop the night-time economy.”

Michelle Mone is guest speaker at BII lunch: Businesswoman Michelle Mone, who founded Ultimo, is the guest speaker at this year’s BII annual lunch, which takes place on Tuesday 8 May at Grosvenor House in London. The BII Licensee of the Year will also be unveiled at the event. Tickets can booked on or call Claire Williamson on 01276 417823 or email

Family incomes see worst fall since 1977: Last year, family incomes were hit by the biggest tumble since 1977, according to the Office of National Statistics. The average family saw its disposable income drop by 1.2 per cent in 2011 compared to the year before, the largest annual drop for 35 years. This fall equates to each family having £430 less to spend than it did in 2010.

American restaurant chain focuses on breakfast, brunch and lunch: First Watch, a 94-strong Florida-based restaurant chain, has broken the model for restaurant chains by being focused on seven-and-half hours trading between 7am and 2.30pm. The company, voted best breakfast restaurant chain in a survey of 150,000 consumers, serves eggs Benedict, 11 styles of egg-white omelets, a line of signature pancakes, crepes and egg “Chickichangas” plus 13 sandwiches. Each restaurant serves a huge 73-item menu to about 500 customers in a little more than eight hours, half of them in a two-hour lunch rush. Waiters adhere to the company’s Ten Commandments of service: Each customer is greeted within a minute, usually by a store manager who directs the seating. Tables are reset within 41/2 minutes. Servers make contact within two minutes, check to see if diners like their food a few bites after it’s served, and the check arrives half-way through the meal. Chief executive Ken Pendery said: “Serving three meals a day dilutes what you deliver.”

Company news:

Sandwich chain Eat plans to double to 200 sites: Eat, the company that was founded 13 years ago by Faith and Niall MacArthur and sells soup, sandwiches, wraps, salads and sushi, plans to expand to 200 sites within five years – it has 110 sites at the moment. A new Companies House filing show the company’s sales grew 6.6 per cent to £87.4m in the year to 30 June 2011. Ebitda grew four per cent to £7.7m – it added nine new shops and has 86 in London and 24 outside. The company, which serves 500,000 customers each week, stated: “The sub-£10 meal category of the food and drink sector has shown itself to be relatively resilient.” A total of 100 new products were launched during the year. Pre-tax profit was £2.73m compared to £2.52m the year before. The company has a potential VAT liability of almost exactly £2m. During 2009 the company was told by HMRC that it was seeking to reverse a previous decision over the zero-rated VAT status of a “product category sold by the company”.

Whitbread shares jump amid takeover rumours: Rumours that Whitbread might be subject to a takeover bid from Starwood Capital pushed the shares up 39p to 1849p yesterday. Starwood amassed an eight per cent stake in Whitbread five years ago although some commentators think a fresh move on the company is unlikely. Another rumour was that Whitbread might demerge its Costa Coffee arm.

A new eye for design at Brakspear: Henley-based pub operator Brakspear has appointed Stephanie Dennett to the new role of interior designer, offering advice and practical help for tenants to make improvements to their pub’s decor. Dennett is working with new and existing tenants on design projects, which range from advice on making optimum use of the space in their pub to guidance on colour schemes and help with more complex refurbishments. Her advice is free of charge to tenants, who also benefit from company-wide discounts secured with a number of suppliers. Tom Davies, Brakspear’s chief executive, said: “The look and feel of a pub has such an impact on customers’ perceptions these days, that it’s hugely important to get it right.

Jamie Oliver unveils Edinburgh site: Celebrity chef Jamie Oliver will spend £2 million transforming part of the Assembly Rooms in Edinburgh into the latest Jamie’s Italian, offering 240 covers and open in mid-July. The new restaurant will form part of a festival hub in George Street.

Former Yates’s director re-opens third Punch site: A former senior managed pub company executive has re-opened her third Punch Taverns pub in the Leeds and Bradford area. Caroline Craik, formerly commercial director at Yates’s and group commercial director at Premium Bars and Restaurants, has re-opened the Princess in Rawdon, Leeds, which will trade largely as a community pub serving food, after a £200,000 joint investment with Punch. The pub is her second in partnership with Glen Shackleton. She also operates the Dog & Gun in Apperley Bridge, Bradford in partnership with Shackleton. Craik said: “The locals seem to love it – we’ve had lot of people through the door since we re-opened it.” The Dog & Gun also saw a £200,000 investment from Punch in February last year that doubled turnover. Craik and Shackleton invested £40,000 of their own money in the pub. She said: “The investment allowed major structural changes to the pub and the introduction of food, which has more than doubled the takings.” Her third and original Punch pub is the Royal Oak, in Eccleshill, Bradford, which she operates with her sister Suzanne Woods. Craik describes the pub as “doing well”. She added: ”We have a very good relationship with Punch and have a very good area manager – Andy Brady.”

Trust Inns re-opens Raikes Hall pub: Trust Inns, the operator of tenanted pubs with a small managed estate, has re-opened the historic Raikes Hall in Blackpool after a refurbishment. The pub closed two months ago. Built in 1750, the Grade II listed building was adapted as a hostelry in the early 1800s, but began to suffer when the recession struck and first closed in 2009. The pub, which has a unique enclosed bowling green, has installed Wi-fi internet and Sky television. The pub, which has the biggest beer garden in Blackpool, was among those purchased by Trust Inns from Mitchells and Butlers in 2006.

Flagstone Cask & Grill takes first site: Flagstone Cask & Grill, the new Enterprise Investment Scheme (EIS) company headed by Ian Grundy and Gavin Drew, have taken its first site, the Apollo in London’s Marylebone. The move allows the company to start trading for EIS purposes and will allow the establishment of the brand. Grundy and Drew, who also run Foundation Inns and operate Close Imperial Pub Company sites under their management company Flagstone Inns, have been operating the premises for 18 months. The Flagstone EIS aims to raise £2m before 5 April with a view to acquiring four or five sites. The medium-term aim is to operate 15 to 20 pubs. Flagstone Cask & Grill sites will aim to host micro breweries, offer other craft ale and have stone-built pizza ovens where possible. 

Stonegate launches new menu at Goose with focus on sharing: Managed operator Stonegate has launched a new menu for its Goose pubs. Among the new dishes are sharing plates. The Fisherman Plate Sharer is a selection of hand-battered haddock goujons, calamari, whole-tail scampi and butterfly king prawns with a dipping sauce. Customers can also chose the Sausage Plate Sharer, which offers a selection of mini sausages from an award-winning butcher: Cumberland, pork and leek. Simon Lucas, of Stonegate, said: “We’ve been chatting to our customers and we’ve had lots of feedback about how people like to have a snack over a drink or two so we’ve introduced the new sharing plates to suit that occasion.”

28-50 Wine Workshop & Kitchen to open a second site in Marylebone: Xavier Rousset and Agnar Sverrisson, the restaurateurs behind the Michelin-starred Texture restaurant, has secured a second site for their 28-50 Wine Workshop and Kitchen concept. Leisure property advisors Davis Coffer Lyons advised the duo on the acquisition of the new property, located at landlord Howard de Walden’s ‘Triangle’ site, 17-19 Marylebone Lane in London. The shell unit comprises 2,200 sq ft at the new development, secured on a new 20-year lease and expected to open in early June 2012. It is a ground floor and basement unit and will include an open kitchen. Like its sister site on Fetter Lane, 28-50 Marylebone will offer a relaxed, wine-focused bar and restaurant offering over thirty wines by the glass, carafe and bottle at exceptional prices and a French bistro-style menu.

Starbucks aims to repeat US turnaround in Europe: Starbucks European boss Michelle Gass is looking to more than double its margin in Europe where the company admits it has under performed. Europe, the Middle East and Asia – all one trading region – accounts for ten per cent of Starbucks revenues but just two per cent of company operating profit. The region produces twice as much revenue as Asia but less operating profit because rent, labour and other costs are higher. The goal is to increase operating margin to 15 per cent compared to 6.5 per cent in the most recent quarter. Gass told the company’s shareholder meeting last week: “Our business in Europe today is quite reminiscent of what we went through in the US back in 2008 - a tough economy, record unemployment, fierce competition and our own self-induced mistakes,” When Gass arrived in London about six months ago, she found a consensus about weak coffee and excessively milky lattes. “Europe is espresso territory. To compete, we must absolutely deliver the best latte on the High Street.” Food will be more localised with the introduction of “bacon butties” in the UK and foie gras sandwiches in France. Gass told Reuters. “We’ve broken the cycle in the U.S. and I’m convinced we’ll break the cycle as well in Europe.” It was revealed in January that Starbucks plans to invest £8m to revamp 70 London stores ahead of the Olympics in a bid to cash in on increased visitor numbers to London.

Morning Briefing diary:

What goes around, comes around: JD Wetherspoon is selling its pub in St Albans to industry veteran Andrew Marler. It’s a nice circular property transaction since it was Marler that sold Wetherspoon founder Tim Martin his very first pub, Marler’s, a 500 square foots free-of-tie site in Muswell Hill back in 1979.

Martin has sticky problem closer to home: A perennial problem is exercising staff at JD Wetherspoon. A customer has written to complain that tables at the chain remain sticky. The customer reports that staff claim the stickiness is caused by a cleaning agent reacting with varnish on the tables. Boss Tim Martin admits that the problem is driving him to distraction. He tells the customer (through the medium of Wetherspoon News): “You’re right in your criticism and this problem is driving me nuts. “We’ve changed the cleaning agent so that should help and we’re now asking our groovy staff to wear an apron so that they can carry a cleaning bottle and clothe at all times. In the past the cloth has been kept behind the bar so that tables haven’t always been cleaned when glasses and plates are removed.” Diary wonders about the bigger problem whereby tables and glasses aren’t always removed promptly.

Economist hit by inflation: Chris Watling, boss of Longview Economics, was explaining how household debt deleveraging, a key part of deflating the ruinous credit bubble that caused our current economic malaise, was largely happening through inflation. But Watling, speaking at the Numis Securities leisure conference, admitted that inflation can even catch an economist by surprise. “Prices have gone up a lot. I paid £1.15 for a bar of chocolate last week. I thought they cost 50p – I nearly put it back.”

Earning a crust at Domino’s: Submariner turned Domino’s Pizza chief executive Lance Batchelor reports that stuffed crusts, launched last summer, have proven to be a major hit at Domino’s, accounting for 12 per cent of sales. Its gourmet range, launched in the autumn last year, are also doing the numbers –they now make up more than five per cent of sales. Of stuffed crusts, he told the Numis Securities leisure conference: “We should have gone into it sooner. They’ve really taken off – that number (12 per cent of sales) continues to go in the right direction.” And there’s much more innovation to come. Domino’s now has a “New Product Development” team in place tasked to continue to obtain 20 per cent of all sales from new products. 

The changing world of the tenanted trade: Things are changing in the pubco/tenanted relationship, according to Marston’s chief financial officer Andrew Andrea, who did a stint as chief operating officer in the company’s tenanted division. Said Andrea: “Licensing are coming to the pubco to ask for business-building advice – those enquiries were few and far between a few years ago.”

It’s a different world up north: Clive Preston, veteran chairman of Amber Taverns, points out that there’s life in the wet-led community pub sector. Witness the expansion of Amber with its 75 sites turning in an average of £100,000 of Ebitda each per annum. The Numis Securities leisure conference heard that £3.85 is an accepted price point for a pint in the south. Said Preston, whose company knocks out a pint of John Smith’s for £1.65: “We’d be lynched if we tried to sell a pint for £3.85.”

Piers Morgan and the pub trade: No-one seems entirely sure whether inveterate publicity magnet Piers Morgan’s tenure as a pub operator is over – not even his landlord. Morgan took over the Hansom Cab in Kensington a while back – and set about mentioning it at virtually ever opportunity. Now media reports suggest his brother Rupert, who ran the bar, has moved elsewhere and Morgan is no longer involved. The pub is owned by Convivial London Pubs and chief executive Kris Gumbrell admits he’s a little unsure himself since he tends to deal with Morgan’s business partner Tarquin Gorst. It is noticeable, though, that Morgan has stopped mentioning the Hanson Cab at every turn. Convivial has reported, though, that a refurbishment at the pub last autumn, partially funded by Convivial in return for a small uplift in rent, means that the pub is providing a “commercial return for shareholders”.

Humble boozer earns stateside recognition: It’s normally swanky gastro-pubs that get all the media attention, isn’t it? Nice, then, to see The Gowlett Arms in Peckham, a Punch Taverns pub, recognised as the best-off-the-beaten-track pub in London by no lesser organ than the New York Times. Writer Rosie Schaap notes: “Not long ago, I fell for an unassuming pub in Peckham called The Gowlett Arms. It had good, real English ale — they have Fuller’s London Pride on tap — in addition to a lavishly tattooed bartender, Betty, and regulars who were more than happy to talk to a stranger. After a few pints, I recalled that I was just steps away from Peckham Rye, where William Blake claimed to have had his first vision of angels. If I lived nearby, I’d be there every other night.” 

Life is good at Novus Leisure: Is there a more confident company than Novus Leisure in the sector at the moment? Chief executive Steve Richards attended last week’s Numis Securities leisure conference and had a sales and profits story to tell that left Domino’s Pizza chief executive Lance Batchelor a tad green around the gills. The company is a few weeks short of recording its eleventh consecutive quarter of like-for-like sales growth and notched up 16 per cent like-for-like growth in its first half – overall profits are set to leap by around 50 per cent for the year ending in June this year. Richards pointed to three strong USPs at Novus: its advanced booking model accounts for 60 per cent of revenue; it has a London dominance; and its venues have a long trading window (they start early, trade late, with food of growing importance). No wonder he didn’t want that Mitchells & Butlers job.

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