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Morning Briefing for pub, restaurant and food wervice operators

Fri 8th Jun 2012 - BrewDog, ETM Group and Friday Opinion

Story of the day:

London’s Covent Garden is the new “Soho” for restaurants: The London Evening Standard has argued that the Covent Garden area of London is fast starting to rival Soho in its choice of restaurants. The area has seen a slew of quality openings in the past year – with more scheduled for later this year. Recent openings have included Brasserie Blanc in the Opera Terrace, The Delaunay “grand café” in Aldwych at the start of the year and Russell Norman’s Jewish deli Mishkins at the end of last year. Harden’s restaurant guide co-founder Richard Harden said the area “is fast becoming the new Soho” in contrast to its former “trashy reputation”. Landlords like Capco and Shaftesbury have made a concerted effort to bring in a quality mixture of shops and restaurants – the latter’s Martin Courtyard development is a case in point. The much-anticipated opening of New York’s Balthazar, a joint venture between New York restaurateur Keith McNally and Richard Caring, Balthazar, is slated for a December opening. Celebrity chef Jamie Oliver is due to open a branch of Union Jack’s in the north hall of the market building next month – he already operates a Jamie’s Italian next to a Bill’s Produce and Grocery store in St Martin’s Courtyard. Restaurateur Jeremy King told the Evening Standard that the Covent Garden area had emerged as a “fulcrum for London bridging the gap between the City and West End”. The overspill into Covent Garden is linked to the Soho area reaching saturation point in recent years.

Industry news:

Operator reports capital allowances win: A well-known multi-site pub operator, who has asked not to be named, has advised fellow operators to get expert advice on capital allowances after a review by an expert resulted in a significant gain. The company was facing a Corporation Tax Bill of £116,000 and was prompted by an e-mail from an industry body to check its capital allowances claim. The operator told Morning Briefing: “I badgered our accountant who eventually called an expert in. The list of items that can be claimed is staggering – and almost never-ending. Our specialist has submitted a claim that will wipe out the Corporation Tax Bill completely – and we have two years of further claims to submit.” Last week, Morning Briefing reported that St Austell Brewery had reclaimed £1.7m in Corporation Tax from HMRC after a detailed review of capital allowances on property purchased by the company – this meant the tax charge on profits was reduced to £297,000 in the year to December 31 2011 compared to £3.04m the year before.

Company news:

Orchid boss in tax plea: Orchid Pub company chief executive Rufus Hall has made an impassioned plea to government to treat licensed retail with the same sympathy offered to Greggs over the so-called pasty tax. In his blog, Hall said: “The bloke from Greggs pipes up and gets the VAT knocked off pastries, pies and sausage rolls. How come Osborne and Cameron listen to him but not us? Our pubs have been getting hammered with VAT and duty for years with no support from the government? Are we just a £40 billion industry that the government is milking? Greggs is a great business but pubs are great businesses too and at the heart of British communities. Support for pies, pastries and sausage roll makers but not pubs at the core of communities doesn’t seem right.”

Marston’s breaks silence on decision to leave the All Party Parliamentary Beer Group: Midlands-based Marston’s has broken its silence on the decision to withdraw support for the All Party Parliamentary Beer Group, which saves the company £5,000 per annum. Chief operating officer Alastair Darby told The Burton Mail: “We have got nothing to hide but it is one of those situations where we would prefer not to say too much. It was a straightforward commercial decision, which we needed to make. We have been a supporter for many years but we are at a particular point where we need to make decisions about what we do and don’t support.”

Pub shareholder to open micro brewery: Duncan Woodhead, who owns a stake in Carshalton community pub The Hope, and partner Victoria Barlow have launched the Clarence and Fredericks Brewing Company. The couple have launched the brewery after creating a range of beers in a nano brewery in the kitchen of their Sutton home. Woodhead has been learning how to brew at WJ King in Horsham.

New Southend restaurant features singing waiters: A new £2m restaurant in Southend, Feelgoods, serving pizza and pasta, features waiters and waitresses who sing for customers. Every 20 minutes staff treat customers to live performances of songs ranging from ballads previously sung by Eva Cassidy through to soul hits by Beyonce. James Gibbs, co-founder and head of catering, said: “The idea has been kicking about for some time after a visit to New York, where out-of-work Broadway stars work in restaurants when they’re not in shows, singing and performing.”

BrewDog forecasts turnover to jump to £12m this year: BrewDog, Scotland’s largest independent brewery, has forecast turnover will increase from the current £6m to £12m this year – it has three new openings planned in the next three months to add to its existing eight sites. James Watt, co-founder of BrewDog, said: “Five years ago, BrewDog was Martin Dickie, myself, some second hand equipment and Bracken the dog. Now we’re Scotland’s largest independent brewery, selling our craft beer in 27 different countries and owning eight amazing craft beer bars across the country. We’re opening three more bars in three months adding 40 new members of staff, yet all we hear about in the media is redundancies, downturns and Lady Gaga.”

Pub operator takes over All Creatures Great and Small pub: A North Yorkshire businessman who runs two coaching inns has taken over The King’s Arms, Askrigg, the pub that found fame in the 1970s as the local of James Herriot in the BBC series All Creatures Great and Small. Cody, who already owns and operates the 19-bedroom Charles Bathurst Inn in Arkengarthdale and the 11-bedroom Punch Bowl Inn in Swaledale, will operate the pub and restaurant on behalf of owner, the Holiday Property Bond Management Ltd.

Peel Hotels reports “toughest year in company history”: Peel Hotels has reported that its most recent full year up to 5 February was the “toughest in its history”. Turnover was down four per cent to £14,647,126 (2011: £15,263,682). Profit before interest was down 54 per cent to £598,396 (2011: £1,298,676) and loss before tax was £227,802. Chairman Robert Peel said: “2011/2012 was the toughest encountered in the company’s history with sales down, margins under pressure and energy costs rising rapidly. In spite of the weak results net debt decreased £600,163. In the first quarter of 2012/2013 we have been encouraged by sales growth of 5.1 per cent but continue the struggle of containing costs against inflationary pressure.”

Luminar buyers involved in Swindon opening: Two of the three key figures in the move to buy Luminar out of administration last December are understood to be behind a move to open a new nightclub in Swindon, Tiger Bills. The venue will occupy the former Studio nightclub in the historic Belmont Brewery building in the town. The backers behind the new club are understood to be leisure industry veterans Alex Geffert and Joe Heanen, together with local man James Lever. Clubbers are promised a selection of bars, a VIP mezzanine and a Miami-inspired roof terrace.

Enterprise Inns plans re-launch for York pub: Enterprise Inns wants to re-launch a closed pub in York, The Little John, as The Blue Boar. The name refers to the inn where highwayman Dick Turpin’s body was taken after he was hanged at Knavesmire in 1739. The company’s application for a licence will be discussed at a City of York Council licensing and gambling hearing next Monday. The pub closed after its former landlord was caught twice with cocaine in his flat. 

Ever So Sensible starts work on twelfth site: Nottingham-based operator Ever So Sensible, led by former Mitchells & Butlers executive Chris Bulaitis, has begun work on its latest site, The Globe, which is due to re-open in the last week of July. Refurbishment of the pub, which is in Leicester city centre, is being funded jointly by owner Everards and Ever So Sensible and is the second joint venture between the two companies. It is the East Midlands’ operator’s twelfth site. Managing director Chris Bulaitis said: “It will be run as a traditional pub specialising in food, ale and wine.” The company also runs four bistros, which are branded Le Mistral, together with three high-street bars. The venue follows on from the opening of the company’s first Everards site, The Marquis Wellington on Leicester’s London Road, two years ago. Barrelage at the first Everards site has trebled thanks to a refurbishment that reinstated the right “colours, lights and furniture”.

McDonald's franchisee to open Northern Ireland’s first dual drive-thru: A McDonald’s franchise in the Sprucefield area of Belfast is to invest £750,000 to create Northern Ireland's first ever dual drive thru. The move will increase the drive thru capability from 100 customers an hour to 150. Local franchisee John McCollum said: “McDonald's is a modern and progressive company and we are really excited to have opened Northern Ireland's first dual drive thru restaurant.” The investment will create 50 jobs bringing total employment at the site to 140 full-time and part-time staff.

ETM Group spends £500,000 on refurbishments: London-based ETM Group, the ten-strong gastro-operator headed by Ed and Tom Martin, has completed a £500,000 refurbishment of three sites – The Gun in Docklands, The White Swan on Fetter Lane and The Well in Clerkenwell - ahead of the summer Olympics. The Well was opened in 2000 as the company’s first pub – this year turnover is set to hit the £22.5m mark across ERM - another opening in Canary Wharf is planned within the next nine months.

Marston’s wins planning consent in Aberystwyth despite “Crossroads motel” criticism: Midlands-based Marston’s has won planning consent to build a new pub and 26-bedroom hotel in Aberystwyth. The scheme, expected to be open by 2013, got the backing of planning councilors despite Aberystwyth Coun Alun Williams dismissing the design as looking like “Crossroads motel” from the famous TV soap series, or “something you’d find on the outskirts of Miami”.

Friday Opinion:

Subjects: Alcohol statistics and joined up thinking.
Authors: Paul Chase and Ann Elliott
 
If statistics are the answer what was the question? by Paul Chase: Two significant events in respect of the alcohol and public health debate happened last week. One was the publication of the annual NHS Information Centre’s compendium of statistics on alcohol, and the other was a report from Oxford University researchers, published on the BMJ Open Access website entitled: “What is the optimal level of population alcohol consumption for chronic disease prevention in England?” This report made TV and newspaper headlines of the “Medical experts say only half a unit of alcohol a day is safe” variety. There’s an old saying: “If statistics are the answer, what was the question?” The NHSIC figures report an 11 per cent increase in the ‘broad measure’ of alcohol-related hospital admissions in 2010/11 as compared with 2009/10 – this is the number arrived at if you add up all the so-called ‘alcohol-attributable fractions’ in respect of all hospital admissions, whether for an alcohol-related reason or not. With regard to the ‘narrow measure’, whereby you only count it as an alcohol-related hospital admission if it actually is – this has increased rather more modestly by 2.1 per cent. At the same time we know that alcohol consumption has fallen by some 12 per cent overall, and by 17 per cent in pubs over the past six years. Indeed the NHSIC report confirms that the number of people who reported drinking in the week before they were surveyed fell by ten per cent for men and 8.5 per cent for women between 1998 and 2010. So, alcohol consumption down, the number of people drinking regularly down, but alcohol-related hospital admissions up. But the big claim of Medical Temperance is the opposite of that - a direct linkage between levels of consumption across the whole population and alcohol-related hospital admissions – a linear, cause-and-effect relationship, not an inverse one. So it should read alcohol consumption down, hospital admissions down. Which leads me to the BMJ report: This seeks to answer the following question: “At what level of alcohol consumption across the whole population is the prevention of chronic disease optimised?” This is my wording, not theirs, but I think I’ve got the basic idea! On the face of it, the obvious answer would appear to be: “None; zero”, because the World Health Organisation (WHO) now believes that in relation to certain diseases, such as some cancers, there is no safe level of alcohol consumption, any level constitutes a ‘risk factor’. But the Oxford researchers put the level at half a unit per day for both men and women. This, they say, takes into account that there is a very small health benefit, in terms of preventing heart disease, which arises from very low levels of alcohol consumption – about a third of a glass of red wine a day! So, forget three to four units a day for men and two to three for women, that level of consumption, say the authors, “may not be compatible with optimum protection of public health”. Embrace the lower limit – half a unit a day - and some 4,600 lives could be saved every year. But that’s 69 per cent of all the deaths currently attributed to alcohol (6,669 in 2010)! Again, the relationship suggested between median levels of alcohol consumption across the whole population and alcohol-related disease is a linear one. Alcohol consumption down, deaths and hospital admissions down. This is what their sophisticated mathematical model “proves”. But the NHSIC statistics don’t demonstrate that; they suggest that there is no simple cause-and-effect relationship between consumption across the whole population and alcohol-related admissions and deaths. Indeed, this variance between theory and reality demonstrates how unwise it is to assume that just because two figures are correlated, one caused the other. In the years when alcohol consumption per head was rising and so were alcohol-related hospital admissions, deaths etc., it seemed merely commonsense to imply that the one caused the other. But now that alcohol consumption is falling but alcohol-related deaths and hospital admissions continue to rise, that clearly cannot be the case. And neither can this discrepancy be explained by reference to ‘lagging indicators’. The idea that the downturn in alcohol-related hospital admissions and deaths will lag behind falling consumption is not assumed in the much-quoted Sheffield Report. On the contrary, the assumption there is that falling consumption will lead to immediate falls in hospital admissions. British Beer and Pub Association chief executive Brigid Simmonds made the same point to a parliamentary select committee when commenting on minimum pricing. She questioned whether whole population measures was the way to go – citing the need to have a targeted approach at people who really do have an unhealthy relationship with alcohol. The more we see the variance between what ideologically-inspired mathematical models predict and what is actually going on, the clearer that point becomes.
Paul Chase is director and head of UK compliance at CPL Training

 
Where were the pub operators by Ann Elliott: Of the 500 people on the guest list at the British Hospital Association (BHA) Tourism Summit last Friday there were 21 restaurants or restaurant companies represented and two pub companies - Whiting & Hammond and Mitchells & Butlers. That was a bit of a surprise really as last time I looked pubs played quite an important role in the hospitality sector. Maybe pub companies weren’t invited or maybe they just didn’t think the conference was for them. The BHA very much focusses on hospitality, sport and tourism (I am sure I heard a speaker say that airlines should be invited to join the conference) and my sense is that restaurants, pubs and bars are not high on its agenda. I hope I am wrong. Robin Rowland was the sole speaker to represent the former and no pub or bar representative featured on any panel. Was this an opportunity missed for pub operators? Should they be part of the on going debate about tourism with the government particularly in relation to visas and VAT? Should they have been an integral part of this event? Undoubtedley, yes. So what was good about the summit?

1) Well it was free - in contrast to, say, the M&C tenanted conference at £495 per ticket.

2) They had some good speakers. Tourism minister John Penrose spoke passionately about the sector being undervalued and under promoted by government and he received a pretty good reception (perhaps for being the longest serving tourism minister in recent history). He was followed by one of Boris Johnson’s deputies and as Boris was one of the key reasons for going to the conference, I was pretty fed up at his no show. Kit Malthouse started off with a couple of quips, which won over the audience and helped us forget that Boris wasn’t there (almost).

3) The panel moderators were deliberately provocative and encouraged lively debate with some cracking contributions from the likes of Nick Varney, Alastair Storey, Simon Vincent, Patrick Dempsey, Chris John and Robin Rowland. The panel discussion topics were: i) As more and more destinations enter the global race for hospitality and tourism exports, demand, investment and jobs, the industry has become one of the world’s most competitive. What is everyone competing for? Do players (including policy managers and destination managers) understand the nature of the industry, the competition and the qualifiers for success?; ii) How can we grow ‘world-class competitors’ to create new futures and overcome hurdles to take great strides towards the winner’s podium? The key assets of hospitality and tourism businesses are people. As customer demands continually evolve, so vision, leadership and innovation are being taken to new heights. What are the recipes of the future-makers? What will be their differentiators of success?; iii) How can we create smarter outcomes through better links?; iv) How are leaders weaving values, environmental sustainability, purpose and responsibility into business?’ Enough to get anybody hot, bothered and opinionated.

4) There were some clear strands of thought throughout the day. Firstly, the sector seems to feel that the government are saying all the right things but are not actually doing much to help - not in terms of cash but in giving businesses a level playing field on VAT and a helping hand on improving the speed and efficiency of the Visa system which would generate increased tourism. Secondly, the sector (however it is defined) is not working together. The words ‘ joined up thinking’ were used ad nauseam to the point where I wanted to ask what, if anything, was being done by whom to ‘join up the thinking’ of over 100 different bodies in the sector. Thirdly, the sector has progressed significantly in a number of areas but there is still much to do.

5) Patrick Dempsey talked about The Big Conversation (a commitment to provide 20,000 structured work placements and 10,000 apprenticeships in the hospitality industry in order to reduce youth unemployment and part of Prince Charles’ Business in the Community charity) will be launched next month with the support of some 50 leading companies in the industry, including Guoman, Compass and ISS. Worth pub operators finding out more.

Generally good content, but I would just liked to have seen more pub operators there.
Ann Elliott is managing director of Elliott Marketing & PR

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