Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Propel's LinkedIn LinkPaul's Twitter Link Paul's X Link

Kronenberg Banner
Morning Briefing for pub, restaurant and food wervice operators

Fri 18th May 2012 - M&B, Orchid and Friday Opinion

Story of the day:

Mitchells & Butlers like-for-likes up 2.7 per cent – no chief executive yet: Mitchells & Butlers has reported like-for-like sales growth of 2.7 per cent and “progress” with finding a new chief executive. The company stated this morning that its business transformation programme is underway, simplifying its support functions and sharpening focus on guest service throughout all areas of the business. IT infrastructure has been upgraded, laying the foundation for technological enhancements including wi-fi rollout and a faster menu development cycle. Service quality has been enhanced through increased investment in site-level operations. Executive chairman Bob Ivell said: “We have remained firmly on the front foot with a relentless focus on actions that will drive the medium and long term success of the business. We are continuing to deliver a resilient operating performance, maintaining the roll-out of our industry-leading brands and progressing our major business change programme. I am pleased with the progress being made to appoint a new chief executive and further non-executive directors and look forward to being able to make an announcement at the appropriate time. Despite challenging trading conditions, we remain confident that we can deliver a full year result in line with expectations.” Profit before tax was down £1m to £42m in the 27 weeks ended 7 April. Net operating margin is down 0.7 per cent because of inflationary cost increases in energy and food. It opened 35 news sites in the period and converted seven pubs to drive brands.

Propel Opinion by Paul Charity: And so the wait continues. A total of 14 months have now passed since Mitchells & Butlers had a permanent chief executive. Back in January, executive chairman Bob Ivell told City analysts that the company was making “good progress” in appointing a chief executive. A third of a year later it appears that nothing has changed. The Times reports this morning that the need to get approval from the leading shareholders is delaying the process. Certainly, Joe Lewis has not been shy in using his power to block, vetoing, for example, the move to sell M&B’s franchise division a year or so ago. It’s certainly true that Lewis has very firm views on the type of chief executive that M&B should have in place – a top-notch retailer. But a number of the sector’s best retailers seem to regard the current M&B log-jam as too much of a poisoned chalice to consider. The lack of a chief executive does not seem to be hurting M&B operationally, but at board level there appears to be stasis.

Free Report: Paul Charity has written a report on menu trends, the drivers of US dining occasions, the franchise business model and other key areas of the US foodservice market and their significance to the UK market. The report, based on a visit to the National Restaurant Association show in Chicago, is produced in conjunction with the Association of Licensed Multiple Retailers and sponsored by CPL Training. It is free and is available by e-mailing Paul Charity on

Company news:

More than half Orchid sites using social media: More than half of the pubs in managed pub company Orchid’s estate are using Facebook and Twitter. Across the 157 Facebook profiles maintained by them, they have a total of 69,642 “likes” and friends. This means an average of 443 direct connections for each of the 157 pubs, bars and restaurants using the social media channel. “Facebook and Twitter are not only great tools for keeping up-to-date with friends, we know they can also be vital for our businesses,” says Orchid Group head of marketing Adam Bowers. “To establish a direct connection with tens of thousands of people is incredible and it gives us a quick and easy way to stay in touch with customers. Better still, social networking is a medium that they are used to and that fits in with their lifestyle, which makes people more likely to get on board.”

Loungers set for English Riviera: Loungers, the café bar brand headed by Alex Reilley, has added Torquay to its opening pipeline. The company, which will open its 24th site in Wylde Green, Birmingham next week, is expected to open its Torquay site later this year.

York Roast and Co opens third site: Hot hog roast carvery sandwich company York Roast & Co has opened a third site – in Chester. The company, which has two sites in York, stations its raised carvery by the window to entice passing customers – it serves both takeaway and eat in food. Customers actually queued up outside the brand’s new site in Chester’s Bridge Street prior to opening.

Union Jacks to open in Winchester at the end of the month: Celebrity chef Jamie Oliver will open the first branch of Union Jacks outside of London in Winchester on Monday 28 May. Two branches of the new Union Jacks chain have opened in London within the past six months. Union Jacks will occupy the site of a former Pizza Hut outlet in the High Street.

Analyst – “incredibly impressed” by Starbuck’s Evolution fruit juice concept: Analyst Mark Kalinowski of Janney Capital Markets has reported he was “incredibly impressed” by Starbucks first Evolution Fresh in Bellevue, Seattle. Located in an upmarket shopping center next to a Starbucks unit, the Evolution Fresh in Bellevue offers bottled juices, but also juices “on tap” that can be custom-blended. He described an area devoted to “customised” food as similar to Chipotle Mexican Grill. Kalinowski noted a large bottled juice display that advertised “Juicing Made Easy”, with various packages for those following trendy juice cleanse diets. The section also included grab-and-go food offerings, such as wraps, sandwiches and other treats. “We would note that the juices are much higher quality than any juices currently sold by Starbucks, and we view the Evolution Fresh brand as well-positioned to grab market share in the health-and-wellness segment,” he continued.

Yummy Pub Company begins viral marketing campaign: Yummy Pub Company, the four-strong pub company headed by Anthony Pender and Tim Foster, has begun a viral marketing campaign for its much-anticipated Ssshh Supper Club. The Club is located in London but has been cloaked in secrecy. The Facebook page for the Ssshh Supper Club reports: “Word is starting to get out and members of our community are spreading the word. Remember before you spread the word, like-minded people only!” Another posting states: “The invites to the secret opening are now winding their way to the first guest and they will be the first to learn what lies behind the bookshelf. Watch this space to find out more in the coming days!” The Ssshh Supper Club is understood to launch early next month. 

Pubs and restaurants enjoy strong first month King’s Cross sales: Pubs and restaurants have had a very strong first month of trading at the new Western Concourse development at King’s Cross, according to Eat Out magazine. The 22 outlets, which include Fuller's flagship pub The Parcel Yard, have recorded average sales of £600,000 per week, which is almost double the sales achieved last year. Network Rail forecasts that retail sales at King's Cross will reach over £34 million by the end of 12 months trading, representing an increase of £15.6 million from the previous year. 

Marco Pierre White buys Cotswold coaching inn: Celebrity chef Marco Pierre White has bought a coaching inn in the Cotswolds for an undisclosed price. His latest acquisition is the 28-bedroom Frogmill Inn near Andovers. The chef will be opening a Wheelers of St James' restaurant on the site later in the year.

YO! Sushi removes endangered eel from Selfridges menu: Sushi chain YO! Sushi, headed by Robin Rowland, is partnering Selfridges ‘Project Ocean’ campaign to highlight overfishing. The commitment to the partnership saw the immediate removal of eel and hamachi from the Selfridges’ restaurant menu, as questions were raised about over-fishing and farming practices following eel’s placement on the endangered species list. The company has also adopted improved sustainability guidelines across all 61 of its UK restaurants, serving only sustainably caught fish to its 3.5 million customers every year.

CPLe-learning launches new website: Hospitality sector online training provider CPLe-learning, part of the international CPL Training Group, has launched a new website to reflect its growing portfolio of clients, software and learning solutions. Provider of compliance and soft skills courses such as Manual Handling, Bar Excellence and Customer Service, to the hospitality sector, its client list includes some of the sector’s biggest names, including Stonegate Pub Company. Managing director David Dasher said: “Being a company that is renowned for its use of technology and interactive learning we needed a website that reflected this.”

Douglas Jack: Restaurant Group only a “hold”: Douglas Jack, leisure analyst at Numis Securities rates the Restaurant Group, which reported four per cent sales growth yesterday, as a share worth “holding”, with a preference for Marston’s, Spirit and Domino’s Pizza. He also reports that the average drink price at Restaurant Group has risen by 27 per cent from £2.38 to £3.03. He said: “Yes, it rained, driving custom into leisure and retail parks. Given this, some hefty drinks price increases, a soft like-for-like sales comparative of just 0.5 per cent, the four per cent rise in like-for-like sales is unsurprising (Cineworld achieved 8.3 per cent LFL on box office). We are holding our forecasts. In addition to an increasingly competitive environment, Restaurant Group now faces a like-for-like comparative of four per cent for the rest of the year. With the shares in line with our target price, we are moving our stance to Hold (from Reduce).”

Marston’s – focus on upselling: Midlands-based brewer and retailer Marston’s has reported that it’s now selling an annualised 27.5 million meals a year, an increase of 11 per cent. The company’s training has focused on upselling skills that has contributed to increased sales of starters, desserts and coffee, all of which have achieved double digit growth. The company has also reported that increased food sales has led to a growth in premium drink sales. Premium cask has grown by 13 per cent, premium lager is up six per cent and wine now accounts for around 20 per cent of drinks volumes. The company added: “Importantly, the majority of the growth in food sales has been achieved through higher sales volume rather than through price increases.”

Hoste Arms, Burnham Market reports £491,904 profit: The iconic Hoste Arms in Burnham Market, which was sold last month two years after the death of owner Paul Whittome, reported a pre-tax profit of £491,904 in the year to 1 May 2011. This was a decline from £565,122 the year before. Turnover was £4,715,300 compared to £4,669,822 the year prior. A Companies House filing stated: “The improvement in turnover arises from the development of a new spa in the period and also reflects an increase in the level and quality of accommodation in recent years. The gross profit, down to £1,893,000 from £2,046,000 the year before, has been affected by increases in food prices and the establishment of the spa. The directors anticipate that the gross margin will return to levels experienced in prior periods as the economy recovers.”

Wetherspoon has the lowest EBITA margin: A list produced by Geof Collyer, leisure analyst at Deutsche Bank, shows that JD Wetherspoon is working to the lowest EBITA margin of nine major managed operators. The list of margins in ascending order is: JD Wetherspoon (13.3 per cent); Spirit Pub Company (14.1 per cent); Tragus (16.6 per cent); Whitbread (16.8 per cent); Gondola (19.9 per cent); Mitchells & Butlers (21.4 per cent); Marston’s (22.1 per cent); Greene King (23.3 per cent) and Restaurant Group (25 per cent).

Wadworth buys The Hadley Bowling Green Inn, Worcester: Brewer and retailer Wadworth has bought The Hadley Bowling Green Inn for a price believed to be around £400,000. The closed venue featured in a fraud trial involving Wilmslow accountant Malcolm Carle who helped launder money for cannabis importer Walter Callinan. Money from drug dealing was used to buy The Hadley Bowling Green Inn for £1.2m. In a fraud trial in December, a jury heard police found messages from Carle to Callinan about the hotel, which stated it had been purchased with ‘dirty money’ and was meant to be a ‘hidden and long-term investment’.

Streathem pub opens crab shack: The Manor Arms in Mitcham Lane, Streathem, has opened its own crab shack, decorated in seaside deckchair stripes, in the courtyard garden. The pub’s website states: “Our beautiful walled garden provides a simply stunning area for al-fresco dining, drinking and relaxing during the warmer months and even the colder ones, with our sheltered and heated section.” Owner Richard Coltart said: “What is on offer each week depends solely on what the boats bring in. All our seafood is caught in British waters around the Channel Islands and delivered to us live.” The pub has a sister venue, The Abinger Hatch in Dorking.

Friday Opinion:

Subjects: Chicago versus London, VAT campaigning
Authors: Ann Elliott, John Hutson

How does London foodservice compare with Chicago by Ann Elliot: I love going to the States to understand what’s happening in terms of food and drink trends. It’s always exhilarating to see new restaurant and bar concepts and it’s just as instructive to explore how existing concepts are increasing their covers and driving spend per head. I often learn new marketing and PR ideas I can put into practice with clients. So I headed off to the NRA in Chicago a few weeks ago with a spring in my step and dollars in my hand to see what was going on. Paul Charity had planned a great trip with a mixture of fantastic characters who threatened to (and did) make the trip, one to remember. Since returning I have had to visit a huge range of restaurant and bar concepts on behalf of a client of ours and have walked with a high degree of purpose around Soho, Covent Garden, Borough Market, Spitalfields, Westfield and Leadenhall eating, drinking and taking photographs in a variety of establishments. It’s been really interesting to contrast the eating out environment in Chicago with that of London. In London I have really been struck by Yalla Yalla, The Jugged Hare, Bumpkin, Pho, Brindisa, Polpo (as ever), The Parcel Yard, Barrafina, The Cow and Princi. In fact there are almost too many fantastic places to mention. The ambiance in all of the pubs was friendly, warm, female friendly and inclusive – much of Howard Saunder’s presentation at the ALMR conference (and his concept of TWWWW) makes absolute sense in the context of these three pubs in particular. They make you feel like the ‘pub’ has moved on yet stayed close to its roots - quite a challenge but they have achieved it in spades. Yalla Yalla and its ilk have just managed to deliver what most of us really want, particularly at lunchtime, small portions packed with flavour that deliver every time. I know tapas is probably the right term for this sort of food but it doesn’t really do it justice somehow. The rise of the restaurant entrepreneur in the centre of London is something Tracey Mills from DCL has picked up and transferred to Westfield very successfully. Everywhere I went, but everywhere (especially at Bumpkin), I experienced outstanding hospitality not just competent service. People were genuine, natural, welcoming and interested. They talked, they listened and they were flexible- they made me feel better walking out than I had when I walked in. I think London service has improved in leaps and bounds just in the last 12 months and I would be proud to take anyone to the restaurants and pubs I visited (and lots more). In contrast, Chicago service was much more brusque, not over friendly and much more forced. Yes we got the ‘have a nice day’ touch but that paled into insignificance compared to the personalised service in London. In fact most service elements felt more standardised and more processed than in the UK. We did have some great meals and there were some awesome concepts (see but we also had some pretty awful experiences including seeing really dirty kitchens, nearly falling on slippery front of house flooring and watching dreadful cooking processes at a dim sum takeaway. Perhaps the most telling of all was our experience at Chicago Chop House (see Trip Advisor for here dated 9th May) where we were upsold outrageously priced starters without being offered the menu until we had ordered them. No doubt an increase in spend per head for the restaurant but achieved at the expense of customer satisfaction, recommendation and revisit. London vs Chicago? London wins hands down for me.
Ann Elliott is managing director of Elliott Marketing & PR

Keep making the case for tax change by John Hutson: This government is proving as adept as the last at slipping through big tax increases for the pub industry in the small print. The “broadly neutral” change to the taxation of fruit machines will cost pubs many millions of pounds. The late night levy (levy – noun; an imposing or collecting, as of a tax, by authority or force) will cost many millions of pounds. These two taxes disadvantage pubs and erode further their ability to compete with supermarkets. Then we have the duty escalator, which has increased an existing tax by over 40 per cent in four years. We keep on taking the punches. Unlike Muhammad Ali, who was adept at ‘rope-a-doping’, the pub industry will eventually go down if we don’t put up a better fight. Ian Payne, speaking at the recent ALMR Conference, said that the industry had got no chance of receiving a VAT cut from the government. Why not? They have reduced it for Scottish ski resorts, which is a tiny sign that pragmatism can win through. Why shouldn’t the government cut VAT for pubs? It makes economic sense, as the evidence from Jacques Borel demonstrates. In France, within a year of reducing VAT for bars, restaurants and hotels, the government was collecting approximately the same amount back in increased employment and corporation taxes from the very same guys it gave the tax break to. Last week, the Irish government announced an extension of their VAT reduction for pubs because it, too, recognises the benefits it brings. Assessing the evidence of VAT cuts all over Europe, Jacques Borel estimates that up to 310,000 new jobs will be created by reducing VAT. Joining Jacques Borel’s ‘VAT Club’ will give company’s in our industry the best chance of persuading the government of the need to reassess their stance on VAT. Because of VAT, there is a blatant economic inequality between pubs and supermarkets. Nobody is arguing that point in principle, and there is every chance of convincing people of the merits of reducing VAT in pubs. In fact, according to research released last week by Fourth Hospitality, the majority of the British public want the government to do more to support pubs by granting tax breaks, with 67 per cent supporting a French style reduction in VAT. The public are with us and Mr Cameron, in his letter to the ALMR, said how highly regards the British pub. A VAT cut will not reduce revenue for government. It will generate jobs, employment taxes, and higher corporation taxes. Scrapping the duty escalator will not reduce revenue for government. It will help to slow, or even stop, the drift from on-trade to off-trade consumption, thereby increasing revenues gained from VAT, employment taxes and corporation taxes from pubs. These are strong ‘common sense’ and economic points that the Fourth Hospitality survey indicates would also be popular with the public. 76 per cent of those 2,000 adults who were surveyed see pubs in a positive light. Combined with the benefits that come as a result of more people consuming alcohol in a supervised environment, why shouldn’t the government listen? 
John Hutson is chief executive of JD Wetherspoon

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Pepper Banner
Butcombe Banner
Jameson Banner
UCC Coffee Banner
Heinz Banner
Alcumus Banner
St Austell Brewery Banner
Sideways Banner
Nory Banner
Solo Coffee Banner
Heinz Banner
Small Beer Banner
Meaningful Vision Banner
Mccain Banner
Pringles Banner
Quorn Pro Banner
Propel Banner
Access Banner
Propel Banner
Christie & Co Banner
Kurve Banner
CACI Banner
Airship – Toggle Banner
Wireless Social Banner
Payments Managed Banner
Deliverect Banner
Zonal Banner
HGEM Banner
Venners Banner
Zonal Banner
Kronenberg Banner