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Morning Briefing for pub, restaurant and food wervice operators

Thu 14th Jun 2012 - Smashburger, Imbiba and Zizzi

Story of the day:

Smashburger in talks over move to the UK: Smashburger, the highly rated US better burger operator that has grown to almost 200 sites in five years, is in talks with a number of parties about franchising its concept in the UK – but is taking its time to find the right partner. Chief executive David Prokupek came on board after four sites were opened. He said recently: “The big idea for us was that burgers were America's favorite food, but at the same time they were pretty disappointed in most of the choices that were out there from the major players. Today, we have about 40 groups and they have committed to build 400 Smashburger restaurants over the next six years. No other restaurant that we know of has gotten from zero to 200 restaurants in five years.”  Of the company’s UK ambitions, Prokupek told Morning Briefing: “We are still having a few “dates” and really looking to find one great partner to get started. We have talked to many different people – the ideal background is someone with significant experience in fast casual, dining, pubs or certain quick service restaurant operations with a keen sense of brand building, operations, site selection and well capitalised. We have had lots of interest but have not signed anyone up. We are taking our time given our recent launch in Kuwait and Canada and later this year in central America.” Smashburger’s name is linked to its trademark preparation – it smashes burger patties on the griddle to create more flavour.

Industry news:

Wine and spirit prices rise by twice inflation: The price of wines and spirits has risen by more than twice the level of inflation according to the latest Wine and Spirits Trade Association (WSTA) Market Report, with consumers paying 6.5 per cent more than last year for wines and spirits - inflation for the year to end of April 2012 was three per cent. Yet against a backdrop of declining sales overall, sales at the upper end of the market continue to grow. Wine sales above £10 were up 32 per cent by volume in the off trade. This trend was also reflected in the on trade with sales of malt whisky up by 31 per cent in volume. Sales of wine dropped by eight per cent in volume in bars and restaurants for the year to March 2012 and sales of spirits were down one per cent. WSTA interim chief executive Gavin Partington said: “The above inflation increase in the prices of wines and spirits comes as consumers are feeling the pinch and being forced to cut back so it’s perhaps not surprising that volume sales overall are depressed.”

Sky and BT pay £3.018bn for Premier League television rights: Pubs will be fearing a large hike in Sky subscriptions after the broadcaster and BT paid 70 per cent more than the current fee to screen Premiership games for three years starting with the 2013-14 season. Sky’s bid of £2.28bn means it’s paying £6.6m for each match screened. The £3.018bn compares to £670m that Sky paid between 1997 and 2001. BT will launch a football-focused channel for its games.

Pubs and restaurants serving “excessively salty meals”: A survey by campaign group Consensus Action on Salt and Health has found pub and restaurant groups are serving meals with more salt than kids should consume in an entire day. The recommended daily intake is 4g but researchers found meals being served by JD Wetherspoon, Harvester and Nando’s with 4.8g, 4.3g and 5.3g of salt respectively – a second Wetherspoon dish was found to contain 4g of salt. Wetherspoon spokesperson Eddie Gershon said: “We are reviewing how we can reduce salt levels on the two meals indicated.”

Company news:

Orchid Group launches “own label” dishes for kids: Managed operator Orchid has launched its ‘own-label’ dishes aimed at tiny diners. Called ‘Simply Scrummy’, the range has been created to give children the same high quality food they would receive from their parents at home. ‘Simply Scrummy’ meals are dishes children love such as macaroni cheese and spaghetti bolognese with the added reassurance that they have no added salt or sugar. Sarah Thomas, head of food at Orchid, said: “Our goal in developing this range was to deliver food that children love and that parents are happy to feed them. The ‘Simply Scrummy’ dishes form part of a new children’s menu, which also includes toddler tapas, finger food for little people and mini-me’s – smaller portions of adult meals, for children with grown up tastes.”

Barracuda extends £1.99 breakfast offer – and adds items: Managed pub company Barracuda has added lighter options to an extended breakfast offer. The company will start using free-range eggs and naturally smoked bacon. Dishes on the new menu include: warm pancakes with raspberries, yogurt and oats, eggs Benedict and a breakfast wrap filled with naturally smoked bacon, grilled pork sausage, hash brown, cheddar and mozzarella cheese and a free range egg. Kate Eastwood, head of food at Barracuda, said: “At the start of the year we had a promotion where we offered our customers the perfect start to their day with a breakfast at £1.99. Due to the great success of this promotion we are extending it alongside the introduction of a menu that offers variety and quality to keep our customers interested.”

Town & Country Inns to add ten sites: Town & Country Inns, the multiple pub operator based in the north-west that already operates ten sites, is to add ten sites to its estate in the next month. The group was set up in 2010 by current managing director Ross Wallis. He said: “Over the last two months we have grown at a rate of knots and have now secured deals on a further ten sites including The Red Lion at Aspul, Wigan, a Punch site, formerly an Indian restaurant called Bombay Dream which we intend to re-model and re-name 'The Highgate', opening around July this year. We have also expanded our head operation moving to new 2,000 square foot offices in Nateby, Lancashire.” Of the ten additional pubs, six belong to Punch Taverns and four are from the Daniel Thwaites estate.

Former Punch Taverns and Marston’s executive takes top job at Find My Pub: Adam Smith, who previously headed recruitment at Punch Taverns and most recently worked at Marston’s, has taken the top job at, the specialist industry recruitment company, after acquiring a stake in the business. Smith told Morning Briefing: “It’s a profitable business that’s growing strongly, working with pub companies, brewers and agents. We’re already in discussions to grow the business into other areas to create multiple income streams and expand the services we provide to clients.” Helen Lees, founder of the business, said: “I'm delighted that Adam has joined us with his considerable experience and look forward to the further development of our business.”

Spirit will focus on driving performance in its fourth quarter: Spirit Pub Company is to put its investment programme in its managed estate on hold this quarter as it focuses on driving performance. The company completed 21 investments across the estate in its third quarter, bringing the total to 177 sites for the full year. Chief executive Mike Tye told City analysts the company is still out-performing the market with no material difference in the performance of invested sites in different parts of the country. “It suggests we have the right pubs in the right parts of the country.” The company stressed that like-for-like comparisons in the past 12 weeks had been skewed by no week being directly comparable to last year as the timing of major events and holidays had differed so markedly. 

New York steak brand opening in London: The One Group is set to open its New York steakhouse concept, STK, at London’s new ME hotel in Aldwych in September. STK London will offer diners a modern twist on the traditional steakhouse, with a “feminine interpretation” of the menu. The company is also opening The Heliot restaurant, lounge and bar at The Hippodrome Casino. One Group has a British founder Jonathan Segal who opened STK New York in Manhattan’s meatpacker district in 2007.

JW Bassett Pubs and Bars re-opens Cardiff pub as ale house: JD Bassett Pubs and Bars, the multiple headed by Jon Bassett, has re-opened The Four Elms pub in Roath, near Cardiff, as a traditional ale house. The pub has been acquired from Scottish & Newcastle - it was being eyed as a redevelopment site. 

Zizzi appoints Affiliate Window to drive digital visibility: Italian restaurant chain Zizzi has hired Affiliate Window to help increase its digital visibility. The “affiliate” company will target specific content sites around food and beverages, dining out, local listings and student portals in order to place relevant information for customers. Michelle Boxall, head of lead generation at Affiliate Window, told Drum marketing magazine: “We have demonstrated that with the right set-up in place, affiliate campaigns can work for restaurant brands to drive high proportions of new diners. It's interesting to see where the redemptions occur and mapping the hotspots nationally such as student portals driving footfall within Nottingham and Cambridge.”

Imbiba Bar and Restaurant Fund investment deadline extended until 24 July: The Imbiba Bar and Restaurant EIS Fund, which is headed by John Connell and City analyst Mark Brumby, has extended its deadline for investors from 31 May until 24 July. The new Imbiba fund is looking to raise £10m to invest in two new London bar and restaurant concepts. A series of events are being held to brief potential investors on the market vision for the concepts – the most recent was held at The Folly Bar, part of the five-strong Drake & Morgan business it owns that is currently achieving a 51 per cent return on investment. Over the last 15 years, the Imbiba partnership has achieved an average compound rate of return in excess of 35 per annum per annum for all EIS scheme projects.

Morning Briefing Diary:

Silence is less than golden: When it comes to on-site televisions JD Wetherspoon thinks it’s found a sensible compromise position after three decades in business – picture on, sound off. But occasionally it can get fraught. Take its Greyhound pub on Bromley High Street. There was a bit of a kerfuffle on the evening of the Diamond Jubilee concert when locals decided they wanted to turn the volume up to hear the Prince Charles speech. A manager, enforcing the company’s no volume policy, was eventually forced to turn the TV off at the mains after failing to work out how the volume dial worked. One local noted: “This was a pub covered in Union Flags, open for the Jubilee, banning its patrons from hearing their future king speak – what has this country come to?” Clearly, no-one had heard Cheryl Cole sing earlier – be enough to keep the sound off forever.

The word on the Mitchells & Butlers grapevine: Latest speculation from Diary sources are torn on who might be the Mitchells & Butlers (M&B) “favoured candidate” for the chief executive’s job. One source tips Marston’s chief operating officer Alistair Darby. “There’s a family history with M&B and he’s already working in the area.” A second source bets his mortgage on Novus boss Steve Richards. “He’s worked with (executive chairman) Bob Ivell at Scottish & Newcastle Retail.” Another source takes a more sanguine view: “It’s like the Chelsea manager’s job – nobody expects to last long but the money is good.”

Sector VAT campaign gets Question Time airing: Diary is grateful to Whiting & Hammond boss Brian Whiting for his stamina is sitting all the way through last week’s edition of Question Time. He was rewarded by hearing a member of the audience asking the panel whether it was time to consider a VAT cut for the hospitality industry as a stimulus for job creation. The panel declined to discuss the issue, but it’s further proof of the Jacques Borel VAT campaign getting traction in terms of the public consciousness, isn’t it? 

Training for the Olympics: Mussolini famously received credit for making the trains run on time in Italy. Be nice to have the trains running at all come the Olympics. Diary found the Victoria line hopelessly slow last week after a train found it could not open its doors. Elsewhere, on the same day two million litres of water were spilling on to the Central line. Meanwhile, Fuller’s group managing director Simon Emeny and his family were forced to walk along the track to attend a Coldplay concert after their train gave up the ghost. Why is out train system so poor? It’s certainly not like they’re not charging us enough.

Lust for life: There’s nobody quite as evangelical as an American restaurant company boss with his dander up. Over at funky Panera Bread (where, admittedly, they’ve been pulling up trees of late), they’ve taken to calling the food development team the – wait for it – “lust” team. “Food is such a sensual experience,” says co-founder Ron Shaich. He reports that Panera's basic goal is to prod consumers to “fall in love” with the restaurant: “That's what I wake up first thing in the morning thinking. If you love this place, that's all that matters. Everything else will take care of itself.” God loves an enthusiast.

Yummy opening has the X-factor: Yummy Pub Company hosted industry friends and contacts for a series of dinners last week at its new and groovy Ssshh Supper Club, a series of private dining rooms above its Somers Town Coffee Shop venue near Euston. One guest was former BII Licensee of the Year Darren Lingley (who has just bought his second pub) and he brought along his long-standing chum and former X Factor winner Matt Cardle. The golden-throated chanteur started his career belting out a few tunes at Lingley’s Colne Engaine pub The Eight Bells. Cardle, despite moving on to slightly bigger and better things, hasn’t forgotten his roots, it turns out, and still pops in to perform the occasional set at The Eight Bells.

Domino’s UK arm mentioned in dispatches: Domino’s Pizza has 9,000 sites in 60 countries so gratifying for the UK to get a special mention from president of the US parent Patrick Doyle when he appeared on a US business programme last week. The company thinks there’s room for 3,000 more stores in its top ten markets and the most recent quarter saw sales outside the US top domestic revenue for the first time ever. Of the 60 overseas territories, Doyle reserved special mention for the Indian market (20 per cent growth in same store sales in each of the past five years), Turkey and, last but not least, the UK. “The UK continues along,” he said.

That’s the Spirit: Restoration of the performance of Spirit’s leased division may be 18 months away. But it looks like the company is building a squad with depth. The division recruited former Greene King executive Chris Welham to get to grips with its 530 leased pubs earlier this year. And now it’s added another high profile Greene King signing – former head of tenanted communications Elaine Beckett has come on board in a similar role at the Burton-based operator. 

It’s a heady cocktail: TGI Friday’s much-anticipated Manchester opening in the Exchange building will feature the longest bar ever installed by the company and provide a home for master mixologists on its mezzanine level. Boss Karen Forrester tells Diary the site will house the company’s “best of the best” in mixology terms and the company aims to set up cocktail classes for Mancs. “We want to bring cocktails to the masses,” she reports.

Analysing the analysts: How do you spot a decent City analyst? Much kudos rides on the annual Extel survey where City sector-watchers are ranked by companies who use their services. This year, Douglas Jack of Numis Securities rises a place from second to first in the UK Small and Mid Cap rankings, Simon French of Panmure Gordon drops back a place from first to second and Wyn Ellis, also of Numis, steams up from tenth to third. And in terms of brokerage firms, the one-to-three is Numis, Panmure Gordon and Peel Hunt.

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