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Morning Briefing for pub, restaurant and food wervice operators

Wed 11th Jul 2012 - Pub People Company, Starbucks and Caprice Group

Story of the day:

Pub People Company extends Downing relationship; plans £300,000 co-investment with Punch Taverns: Pub People Company, the 48-strong East Midlands company headed by Kevin Sammons, is to extend its relationship with Downing Corporate Finance to add five freeholds to the estate – they have acquired two pubs to date, a pub from the Greene King estate and one from the Punch Taverns disposal estate. Pub People Company runs seven Downing-owned pubs under management contract and a further five in joint ownership. Meanwhile, Pub People will close Punch’s The Bridge in Nottingham’s Sandiacre area next Monday for a four-week refurbishment to turn the pub into a value-dining community pub aimed at the family market. The company has already enjoyed considerable success in developing family value dining offers at a number of its pubs – The Dukeries in Edinstowe, Sherwood Forest, has hit weekly turnover of around the £18,000 mark despite a poor summer. Operations director Andy Crawford told Morning Briefing: “We’ve done a lot of research on this part of the market in the past couple of years, looking at all the good work done at Flaming Grill, Hungry Horse and Sizzling Pub Company. We’ve put our own twist on it.” A few weeks ago, Pub People completed a £150,000 co-investment with Trust Inns at The Green Dragon in Hucknall, a pub the company has run for six years. The investment also saw the introduction of a value-food and a reinforcement of its community pub credentials. 

Industry news:

Starbucks unveils innovative “breakthrough” beverage: Starbucks has unveiled a new beverage line, Starbucks Refreshers, that it claims delivers a new take on thirst-quenching refreshment while providing a natural boost of energy from green coffee extract and real fruit juice. Customers are to be offered Very Berry Hibiscus and Cool Lime flavours at sites in 17 markets, including the UK. The green coffee extract used in Starbucks Refreshers beverages is made from unroasted 100 per cent Arabica beans, providing low calorie refreshment with a boost of natural energy from caffeine. The flavour is “nothing like traditional brewed coffee”. “Innovation is at the core of everything we do. As the coffee category continues to evolve, our customers expect more and we are committed to bringing uniquely relevant products to market,” said Cliff Burrows, president Starbucks Americas. “The introduction of Starbucks Refreshers beverage platform, featuring green coffee extract, is an innovative extension of the coffee market and is the perfect solution for customers looking for a boost of natural energy and thirst-quenching, delicious refreshment.”

Most Brits overestimate beer calories: Most Brits overestimate the number of calories in beer, with women more likely to do so than men, according to new research by ComRes on behalf of the British Beer & Pub Association. The survey found that one in five people (19 per cent) correctly estimated the calorie content of beer – fewer than for wine, where a quarter (25 per cent) got it right. However when questioned, women are significantly more likely to overestimate the calorie content of drinks (wine, beer, orange juice). The gap in understanding between the sexes is then most noticeable when it comes to beer, with a surprising 74 per cent of women overestimating its calorie content compared with 60 per cent of men. Beer is less calorific than wine; a half pint (284ml) of 2.8 per cent ABV bitter (80 calories); a 175ml glass of 12.5 per cent red wine (119 calories).

Licensee launches “unhappy hour”: North Yorkshire publican Andy Smith has introduced an unhappy hour at his pub, Buck Inn, at Wrelton, near Pickering. He has launched a competition every Friday night between 5pm and 7pm, where a free drink is offered to the person he deems to be the champion of unhappy hour – the customer who had the worst week. He plans to sell “I’m BuckInn Miserable” T-shirts alongside the promotion. Smith said: “The idea has been well received. We have had nearly 1,000 hits on the website in a few weeks.”

Quiznos switches from value to quality strategy: Quiznos, a US sandwich chain that has suffered a disastrous five years with sales falling 49.6 per cent from $2.1bn to £1.02bn, has changed strategy from competing on price to stressing quality. The company, which has lost market share to Subway and a host of new sandwich shop arrivals, has switched to stressing high quality ingredients with ten per cent higher prices than rivals. Deli meats and cheeses have been upgraded. Cookies are now made with butter rather than shortening, there’s more fresh vegetables — green peppers, cucumbers, red onions and seasonal lettuces — available as sandwich toppings. Meat portions on some sandwiches have been increased by 25 per cent.

Lynx Purchasing – chance to lock in cheap utility prices; inflation due to affect food items: The latest lower-than-expected inflation figures are an opportunity for hospitality businesses to lock-in price deals with their utility suppliers, says buying specialist Lynx Purchasing. The window of opportunity is highlighted in the summer edition of the ‘Lynx Purchasing Market Forecast’, an overview of market and pricing trends for hospitality operators. The UK Retail Price Index stood at 3.1 per cent in May 2012, down from 3.5 per cent in April and the lowest since December 2009. Lynx is also warning that caterers face higher costs for menu staples such as burgers and sausages. Managing director John Pinder said: “Behind the headline inflation figures, there are key products such as meat which are still seeing sharp price increases. Along with prime cuts, the cost of beef and pork trim used for products such as sausages, burgers and pies has been going up steadily. When the key suppliers publish their autumn price lists, many operators will face the stark choice of raising prices or taking a hit on margins.”

Alcohol may prevent arthritis: Women who consume moderate amounts of alcohol reduce their risk of developing rheumatoid arthritis. A study of 34,000 Swedish women found that drinking more than three glasses of wine a week for at least a decade halves the risk of rheumatoid arthritis – the danger among those who drank was 52 per cent lower than those who abstained completely from alcohol.

Company news:

JD Wetherspoon posts 6.6 per cent like-for-like sales surge: Managed operator JD Wetherspoon has reported a 6.6 per cent like-for-like sales increase for the 11 weeks to 8 July, with total sales up by 11.9 per cent. The company said there had been particularly strong trading around the fortnight of the Jubilee celebrations and during the Euro 2012 championships. In the year to date, like-for-like sales are up by three per cent, and overall company sales increased by 9.2 per cent. Operating margin (before exceptional items) for the second half of this financial year is expected to be circa 8.5 per cent. Since the start of the financial year, the company has opened 40 new pubs and closed three pubs. It plans to open approximately 20 to 30 pubs in the next financial year. The company has bought back 5.6 million shares, at a total cost of £22.7 million, in the current financial year. Tim Martin told Morning Briefing that the company had benefited from the dire weather. “Maybe (our like-for-like increase) was down to customers needing to use boats to go to suburban and country pubs.” He also argued that pubs are seeing a “little bit of a sales rebound” from the smoking ban - studies of countries around the world had shown it takes a while for sales to fully recover after bans. The company now has the sound up on its televisions during Home Countries football matches, which was helping sales during major football tournaments – a reverse from the historic trend when Wetherspoon had no televisions in its pubs.

Greene King gets go-ahead for Farnborough Hungry Horse: Suffolk-based brewer and retailer Greene King has been given permission to open a new-build Hungry Horse pub and restaurant on vacant land in O’Gorman Avenue, near Farnborough’s business park. The local authority granted the application despite opposition of Farnborough residents, who voiced fears of noise and disruption.

Multi-site Salisbury operator re-opens fire-hit pub as a bistro: David Ashley, who operates The Ox Row inn and Cloisters in Salisbury has re-opened The Market Inn which was gutted by fire 15 months ago. The historic pub reopened on Sunday with a fresh new look and the building, menus and wine lists have been completely transformed. Ashley said: “Having been forced by circumstances to completely renovate, we decided to bring it into the 21st century. It is now a completely different style of operation. It’s not what most people think of as a pub, it’s more of a bistro.”

Britvic increases estimate of faulty cap cost to in the range of £15m to £25m: Britvic has increased its estimate for the cost of its faulty cap recall on Robinson Fruit Shoots to between £15m and £25m – up from the original estimate of £5m. The company stated: “Despite our ongoing investigations, we have been unable to speedily resolve the issues regarding the new design cap. Therefore we have decided to re-supply with an alternative in-market proven sports cap, in the short term. As a result we will start to re-supply customers in six weeks, with a gradual increase to enable us to meet historic levels of demand within six months. It is difficult to be precise as to the full financial implications given the developing situation. In addition to the previously guided cost of the consumer recall, the now extended period of absence from the market along with a restriction on available cap production capacity of up to six months results in a material financial change.”

Top London restaurant closes because of dismal weather: A top London restaurant with a large outdoor terrace has closed, blaming the dismal weather this year. Le Bouchon Breton in Spitalfields Market, which opened in 2008 and is backed by Michel Roux Jr, has closed. It used the terrace to stage barbecue events and outdoor events. In a statement, the restaurant’s directors said: “A combination of the rain and the double dip recession are to blame as trading since March has been the worst in the restaurant’s history.”

Orchid to introduce the “O” Burger: Managed pub company Orchid, which operates 300 pubs, has started trailing a new menu item – the “O” Burger – on Facebook. The “O” Burger, with a double pattie, is priced at £12.95 and is described as a “Feast for Four”. The tagline accompanying the Facebook picture asks: “Are you up for the challenge?”. It is thought the “O” Burger will be a time-limited menu addition. 

Enterpise Inns to re-position lap-dancing pub: Enterprise Inns has promised to re-position a South Woodford pub as food-led after a previous tenant hosted lap-dancing at the site. “Sexy live pole shows and intimate private dancing” was advertised as part of a fundraising event for a children’s charity at The Napier Arms in Woodford New Road by landlord Cameron Russell in May. The pub risked losing its alcohol licence after Redbridge Council’s enforcement team called for its review. Enterprise Inns’ solicitor Richard Taylor, of Gosschalks solicitors, said the company had terminated the previous licensee’s contract and planned to change the troubled venue’s image. “We’re prepared to give up live music. We’re seeking to run a food-led establishment.”

French – Young’s first quarter stronger than expected: Simon French, leisure analyst at Panmure Gordon, has re-iterated a “Buy” recommendation on Young’s shares after a stronger than expected first quarter. He said: “Young’s has reported a strong first quarter performance with like-for-like sales in managed pubs up four per cent (implying an eleven per cent increase in the last six weeks). We reiterate our Buy recommendation and 804p Target Price, implying circa 31 per cent potential upside.”

New £1.5m nightclub opens in Tyrone, Cookstown: A £1.5 investment will see Time nightclub open in Cookstown, Northern Ireland. The venue, which can hold up to 950 people, houses a bar and bistro, a two-floor nightclub with three VIP rooms, five bars including cocktail bars and a split level outdoor bar and terrace.

Whitbread to open Premier Inn and Brewer’s Fayre in Glastonbury: Whitbread has begun work on a Premier Inn and Brewers Fayre dual site on Glastonbury’s Morlands Enterprise Park. The two venues are set to be open for business in spring 2013 in advance of the next Glastonbury Festival.

Douglas Jack – Fuller’s making good progress on numerous fronts: Douglas Jack, leisure analyst at Numis Securities, has forecast like-for-like trading at Fuller’s is likely to have been undermined by dire weather when the company reports on its first quarter next Wednesday (18 July). He added: “Yet we still expect managed pub like-for-like sales to be flattish and trading in acquired sites to be up strongly. Overall, we expect to hold our forecasts. Fuller's is making good progress on numerous fronts, which, combined with expansion, should unlock margin upside. As usual, the shares trade at a premium to the rest of the licensed retail sector, which is justified by Fuller's low leverage, above-average track record and the high quality of its asset base (circa 90 per cent freehold; orientated to London and south-east England). Growth should accelerate in 2013 and further expansion should maintain momentum into 2014.”

San Carlo group to open two sites: The San Carlo restaurant chain, owned by Birmingham-based Harnbury Holdings, is opening two new restaurants thanks to £1.7m of funding from The Royal Bank of Scotland Corporate & Institutional Banking. The first of these restaurants, Fumo, opened in early June next to the existing San Carlo restaurant on Temple Street in Birmingham’s city centre featuring a bar and Italian style tapas small plate dishes. The second venue, a San Carlo Chicchetti, is due to open in July in Piccadilly, London. The two new openings will bring the total number of restaurants run by the family to 11. The company also runs The Signor Sassi, Chicchetti and Fumo restaurants and has sites in Bristol, Leeds, Leicester, Liverpool, London and Manchester.

Thorley Taverns quits café site; Indian restaurateur to take over: Thorley Taverns, the Kent multiple headed by Frank and Phil Thorley, has given up its Thorley Café site on Herne Bay Bandstand. The site will be taken over by former investment banker and award-winning restaurateur Rokib Ali who will invest £200,000 creating an upmarket Indian dining restaurant called Malabar Bay. Ali already runs the award-winning Spice Lounge Restaurant in Faversham and he oversees the annual Asian Restaurant Awards. Phil Thorley told This is Kent: “We are always sorry to leave any pub but it was time to move on. We wish Mr Ali all the best with his plans, which sound great.”

Loungers to open Salisbury Cosy Club next month: Loungers will open its Salisbury Cosy Club, at the former arts college, on 23 August after a £600,000 investment. Cosy Club has been described as “gentlemen’s club meets village hall with a twist of cricket pavilion thrown in for good measure”. Paul Alexander, operations manager at Loungers, said: “College Chambers is a perfect site for our Cosy Club concept. Customers these days increasingly seek more of an ‘experience’ when socialising so we tend to operate out of interesting, characterful spaces which enhance this.”

Domino’s Pizza releases online tool for the catering market: Domino's Pizza has produced an online tool to help customers place large orders easily and in a cost effective way. Domino's online marketing director Michael Gillespie said: “Customers just select the number of people that they are catering for and the system provides a range of discounted packages to suit. The packages vary from including only value and traditional range pizzas all the way through to options including premium pizza with drinks, sides and desserts, and pricing is given per head to make budgeting and planning easier.” The system can even select the most popular pizza combinations, Gillespie said.

Mitchells & Butlers lines up second new-build pub for Peterborough: Managed operator has started work on its second new-build restaurant in Peterborough. Earlier this year, the company opened its 200th Harvester at a site in the city. Now it is building a Toby Carvery in Hampton, Peterborough, which will open in October this year. A new-build Kentucky Fried Chicken will also be built at the development just off the A15 London Road roundabout junction with The Serpentine has started this week.

Caprice Group angers Mayfair residents with restaurant expansion plan: Richard Caring, Caprice Group, the London restaurant group that owns The Ivy, Le Caprice and Scott’s, has applied for planning consent to expand its steak restaurant in Mayfair, 34, from 108 covers to 168. Residents have claimed that the company promised a valet system would operate at the restaurant and the company has exploited a planning loophole by getting consent for a smaller restaurant and then quickly applying to expand it.

Pret A Manger doubles Union Square, New York presence: Sandwich chain Pret A Manager has lined up two more sites in New York to take its estate in the city to 37. It will open on Eighth Avenue in Midtown West, and at the northwest corner of 12th Street in Union Square. “These two new locations are the ideal next steps for the brand’s growth plan,” said Joshau Strauss of letting agent RKF. “Both are significant corners with great frontage - Pret will double its Union Square presence and establish its first West-side location on Eighth Avenue.”

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