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Morning Briefing for pub, restaurant and food wervice operators

Thu 5th Jul 2012 - June trading, Giraffe and Propel Diary

Story of the day:

Operators – trade in June was disappointing: Operators have reported that very wet weather in June took the shine off what should be one of the year’s best trading months. However, food-led operators have reported that trade has been reasonably resilient. Chris Bulaitis, of 12-strong pub and restaurant operator Ever So Sensible, said the incremental drink sales to be expected from good weather this time of year “hasn’t happened”. “Trade has been disappointing for anyone with outside areas,” he said. “But our food-led businesses have been resilient and held up well.” Gary Mallen, of GC Mallen, which operates seven sites, said June had been “below par and budget”. He said: “The first week and the last week were good – the two weeks in the middle were below average.” Mallen also said he had expected that the double bank holiday at the start of June would have provided better trading. “This weather can’t continue – we need good weather for the Olympics,” he said. Head of Steam boss Tony Brookes, whose company has eight sites where wet sales average 90 per cent of turnover, said: “It was very fractionally better than May which was dreadful and April was even worse. Trade is getting harder to come by and more competitive. We’re taking less and less margin each year to stay competitive.” Head of Steam installed extra televisions across the estate ahead of the 2012 Euro championships. “It did attract some extra customers but I’m not sure it was worth the cost.” Heartstone Inns, the operator of nine freehold food-led pubs, led by James Birch, said the company’s food-led estate had performed well with trading “holding up pretty well overall”. He added: “Trade was about where I expected it to be – we have some pubs that benefit from good weather and some pubs that benefit from the weather being wet and cold. But if the sun had been shining we would have done better.” Six-strong Oakman Inns boss Peter Borg-Neal said weather had affected its single destination site, The Red Lion. But his two town centre sites are marginally ahead. “We’re having to work really hard to get results. We’re still in like-for-like growth but weekday evenings seem to have weakened.” Some landlocked operators have benefited from the inclement weather. London operator Draft House, headed by Charlie McVeigh, said the Royal river pageant has provided his two pubs close to the Thames a £10,000 boost each on the day. More generally, like-for-likes are up a double digit number because “it was so sunny last year” - Draft House sites do not have much outside space. Mark Arrol, managing director of two-strong Osbourne Leisure, said: “With only a small food trade and little or no outside space the weather may actually have had a positive impact in driving trade indoors. Both our units experienced double-digit sales growth against 2011.” The best reported performance outside of London came from Anglian Country Inns, which reported a 12 per cent increase in like-for-like sales, boosted by five weekends in the month and a series of events. Managing director James Nye said: “We had our busiest ever day at The Jolly Sailors in Brancaster, Norfolk and we beat that by 20 per cent later in the month with a beer festival, which has gained momentum over the three years it’s been held.”

Industry news:

Lib Dem MP plans bill to provide pubs with more protection: Cambridge Liberal Democrat MP Julian Huppert plans to propose a new law to provide pubs with more protection from developers. Under the proposals, planning permission would be required before a pub or local independent shop could be demolished – compared to the current situation where bulldozers can move in so long as the building is not in a conservation area. Consent would also be required before any premises could be used as a supermarket, whereas at the moment this is not required for properties already in retail use. Huppert has been chosen to propose a new law under the so-called 10-minute rule.

Late Night Levy could be introduced by April 2013 – restaurants could be included: The government plans to have the Late Night Levy and Early Morning Restriction Orders on the statute book by October this year. Solicitor John Gaunt said: “(It) may still prove to be ambitious given the requirement for secondary legislation, but we have seen the Home Office working to a tight deadline before. The supporting factsheets also suggest that the Home Office estimates the earliest date a licensing authority could introduce a levy would be April 2013. For EMROs the anticipation of the earliest date for one to be actually introduced is March 2013.” Pubs in a village of fewer than 3,000 people would be exempt from paying the late-night levy, which is expected to range from £299 to £1,493 per premises, if it is the only pub in the village. The Late Night Levy will apply to virtually all classes of premises open after midnight, but local authorities have discretion to exempt certain categories, such as bingo halls and theatres. A reduction of up to 30 per cent is possible if premises comply with best practice and premises that operate within a Business Improvement District could be exempt. The guidance suggests that street cleaning could be paid for out of funds raised by the Late Night Levy.

Prince Charles to make pub visit next week: Prince Charles, who is patron of Pub is the Hub, is to call in on The Greyhound Inn in Feinfoel next week when he makes an official visit to Wales. Landlady Eileen Dew said: “He wants to see it as the pub is — we are a small village pub.”

Leon restaurant founders asked to look at school food: Henry Dimbleby and John Vincent have been asked by the government to build an action plan to improve school food. Education Secretary Michael Gove said: “Henry Dimbleby and John Vincent bring a wealth of practical experience in delivering good food on a budget.” John Vincent said: “We have a mission at Leon to make it easy for everybody to eat good food. We do it commercially with Leon, and so we are energised by the chance to do so with school food.” Henry Dimbleby said: “There is so much good work being done to improve school food by people in schools around the country. Our job is to find out which schools are doing well and why. This is a great opportunity to work with those people to set out in, a systematic way, what needs to be done to nurture and accelerate those improvements.”

Pubs urged to have their say on dealing with local authorities: The government is urging anyone involved in running a pub, particularly a community pub, to feed in their experiences, good and bad, of dealing with local authorities and other regulators as part of the Focus on Enforcement campaign. Mark Prisk, Business and Enterprise Minister, said: “Pubs are the beating heart of our communities. They are essential for people to relax and enjoy the company of their friends in villages, towns and cities all over the UK. But pubs are businesses too and, as enterprises, they can be held back by poor enforcement of regulation.” Pubs, which is the fourth review theme to be launched, is now live on the Focus on Enforcement website and can be found at:

Company news:

Giraffe reports swing into profit: Casual dining concept Giraffe, which operates 47 sites, five of which are franchised, has reported pre-tax profit of £571,000 on turnover up 18 per cent to £40.47m in the year to 25 March this year – it opened six sites in the year. Ebitda has increased by 17 per cent to £3.9m in a year the company invested £5.5m. Last year, the company reported a loss of £2.52m on a turnover of £34.44m. Two more sites are scheduled to open this year and Giraffe has signed a franchise deal to take the brands to the United Arab Emirites. The company stated: “After four years of depressed economic times, what remains clear is that regular eating out is now very much part of the UK’s consumer’s psyche.” Giraffe has unutilised bank facilities of £6m. New openings in the past year have been: Bath, Soho, Westfield, Chelmsford, Sheffield Meadowhall and Kings Cross.

British Country Inns outsources management; non-executive chairman Anthony Miller steps down: British Country Inns, the Enterprise Investment Scheme company that owns 27 freehold pubs acquired at the top of the market between 2005 and 2007, has reported an improvement in performance, after the company’s management was re-structured and some pubs were let to tenants. The company tested the market last year for one of its EIS stand-alone companies, British Country Inns 1, but reported a ‘disappointing’ response. The company’s shareholders voted to continue trading in the hope the market would improve rather than liquidate its assets. The company has now reported significant improvement with a very small loss at the operating level of £18,000. It cut overheads by outsourcing management to Country Inns Management Limited (CIML), a company headed by existing management team of Peter Mathews and Tim Udell, who were behind English Country Inns, which was sold to Marston's in 2005. CIML is paid on a results only basis earning fees as a share of house trading profit, which means they are “strongly incentivised to maximise the trading performance of the pubs in the portfolio”. Martin Sherwood, a current non-executive director, is to replace Anthony Miller as non-executive chairman.

CPL Training partners Venners to launch online stock management: CPL Training online division CPL Online has teamed up with stocktaking and audit experts Venners to launch a stock management e-learning course. Using the material of Venners face-to-face stock management training, CPL Online has added animations, graphics and programmed the course to create an interactive, fun online course for those involved in managing hospitality retail outlet stock. David Dasher, managing director of CPL Online, said: “We realise that stock management is a huge responsibility and so have developed Venners stock management training into a readily available e-learning course accessible from any PC with internet access, at any time of the day or night.”

Wetherspoon opens in Cheadle, Staffordshire: JD Wetherspoon has opened a site in Cheadle, which has a population of 12,158. The company has invested £1.4m in converting the former Wheatsheaf Hotel in Cheadle, a Grade II-listed building, which had stood empty for five years.

Brighton nightclub operator enters administration: Highprompt, which owns the 1,000 capacity Honey Club, in King’s Road Arches, Brighton, has gone into administration. Highprompt’s directors Steve Honeysett, of, Ovingdean, and Gary Turner, of St Ives, Cambridgeshire, also ran Central Entertainments, the previous owner of The Honey Club, which applied to go into liquidation in July 2008. Administrator is Baker Tilly.

Wear Inns buys nine TCG pubs: Wear Inns, the company led by John Weir and led by John Sands, has bought nine pubs from TCG Bars. This acquisition boosts Wear Inns’ managed pub estate to 24 sites. The acquisition comes two months after an injection of £10m in growth capital provided by NVM Private Equity and Business Growth Fund. The TCG pubs are: The Bedroom in Whitley Bay, Black Bull in Morpeth, Greens in Sunderland, Lambton Arms in Chester-le-Street, Ye Olde Lang Jack in Whickham, Ship and Royal in South Shields, Lloyds Arms in Grimsby, Porter Cottage in Sheffield and The White Bear in Barnsley.

Morning Briefing Diary:

JD Wetherspoon – warts and all: Much to be admired in the JD Wetherspoon approach to customer complaints and observations – publish them in the company’s in-pub magazine. This month, the company reports that customers have been complaining about dirty, sticky tables (“Still your biggest area of complaint. Rest assured, we are trying to clear up the issue”), hot food on cold pates (“Another repeat offence, but one which is very much improving”), chips with everything (“Seems you love the taste, but would like the choice of mash on more dishes”) and table numbers (“Lone diners can’t be in two places at once – holding their table and ordering their food”). And there’s plenty of dashes of trademark Tim Martin self-deprecating humour as well. He responds to a letter from a Mr Mullet from Lincolnshire complaining about the lack of cask ale choice at a particular pub with the following postscript: “How come my hairstyle is named after you?” 

Everard Project Artisan project takes shape: Much anticipation precedes funky Leicestershire brewer and retailer Everards evolution of its Project William micro brewer initiative – Project Artisan. The first site opens in Birmingham’s Stirchley high street and builders are now on site to build Loaf, which will focus on artisan baking - an opening is now scheduled for August. Rather improbably the bread Mecca will be overseen by well-known local artisan loaf producer Tom Baker. You couldn’t make it up.

Blowing hot and cold: PizzaExpress has declined to serve calzones in the past on account of the health and safety issues they raise – the potential for boiling hot content to spurt over customers, in the style of McDonald’s lava-hot apple pies, leading to litigation. Now the pizza specialist has relented and is trialing calzones at 14 sites. Diary presumes they’re being served lukewarm to guard against a potential lawyer-fest.

An adventure with Innventure: The Cross Keys in Saffron Walden, the newest opening from former Mitchells & Butlers executive Chris Gerard’s Innventure, breaks new ground in seamlessly integrating a high class coffee shop with a rounded pub, restaurant and accommodation offer. Perhaps no wonder executives from larger companies are piling in to have a look. Spotted so far are Tony Hughes, former head of pub restaurants at M&B and now non-executive at The Restaurant Group, Adrian Frid, brand director at Village Pub and Kitchen and Noel D’arcy, brand director of Premium Country Dining Group, visiting with a couple of colleagues. It’s impressive chaps, no? 

Weathering the weather: As wet sales decline in the on-trade, more and more operators are noting a fundamental shift in customers’ habits. Habitual pub users are being replaced, if you’re lucky, by customers who decide where to eat and drink based on a free-form response to the here-and-now, accentuated by a search for value. The latest company to comment on this is Thwaites, which noted: “Many of our pub customers are suffering declining real incomes which means that discretionary spend remains under pressure. As a result we are finding that they are becoming more event and weather sensitive.” One operator told Diary this week that expansion plans are on hold at the moment as weather produces wild swings in takings.

The wonder of Wonderworld: Former Luminar chief executive Steve Thomas sends Diary an invite to attend his new WonderWorld opening in Milton Keynes, a £1.7m investment to create a cutting edge nightclub experience. A letter of invitation from Thomas states: “We are inviting you to quite literally take one giant leap and enter a brave new world. WonderWorld is to become the new leap in the leisure industry. Predicting and understanding how or why WonderWorld came onto our shores far surpasses any debate on the theory of evolution but what we do know is this – the big bang happened again. Worlds’ collide and the party starts. I wish I could tell you more, but I fear I have already said too much.” It sounds irresistible, doesn’t it?

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