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Morning Briefing for pub, restaurant and food wervice operators

Mon 16th Jul 2012 - Coast to Coast, Innbrighton and Britvic

Story of the day:

Hickman – Coast to Coast could be a 100 plus site brand: The Restaurant Group’s new concept Coast to Coast, which debuted in Brighton Marina, could be rolled out to more than 100 sites, Peel Hunt leisure analyst Paul Hickman has claimed. He said: “We went to Brighton last week to meet the management of the Coast to Coast concept and found them in a very bullish mood. Coast to Coast was created by the same team behind Frankie & Benny’s (led by managing director of leisure Danny Breithaupt, who spent two years developing the offering – much of it spent in the US). An American bar and grill concept, Coast to Coast is primarily aimed at the parents of the children that go to Frankie & Benny’s. As with Frankie & Benny’s, there is an extensive American menu, but there is an even greater focus on drink (currently circa 30 per cent of sales versus 20-25 per cent at Frankie & Benny’s). Average spend per head (including VAT) is circa £15-16. The idea is to create an environment where the customer isn’t rushed to and from a table in order to turn it quickly, but encouraged to arrive for pre meal drinks and enjoy the bar post meal – similar to the experience in the US.” Hickman reported that Coast to Coast has had excellent reviews on TripAdvisor thanks to its emphasis on high quality food and service. He added: “Since opening, Coast to Coast has become the biggest grossing restaurant on the strip in Brighton Marina (averaging circa £50,000 per week). Other brands on the strip include PizzaExpress, Cafe Rouge, Zizzi’s, Harvester, several independents and Frankie & Benny’s. Interestingly, Frankie & Benny’s was the largest grossing restaurant prior to Coast to Coast opening. However, the impact on the former’s sales has been just five per cent – much lower than management had anticipated. This is given the group confidence that Coast to Coast can operate alongside Frankie & Benny’s. The positive implications of this are significant. It is early stages, but Coast to Coast could be another 100+ roll-out brand. If this is the case, then it will enhance the business’s growth profile and, by presenting a third leisure/retail park brand. The next two sites are scheduled for opening in September/October, in Stevenage and Newcastle respectively. If these sites perform anything like Brighton, then we would expect the roll-out to ramp up significantly in 2013-14. Management has a proven track record of excellent execution in delivering a high volume roll-out.”

Industry news:

Commons committee – drinks industry is in the last chance saloon: A Commons Health select committee will conclude that the alcohol industry should face heavier regulation after failing to take meaningful action to discourage excessive drinking, according to The Sunday Telegraph. The newspaper claims that the committee will argue that alcohol companies have done little to foster responsible drinking – or reduce discounted drinking - despite signing up to the Responsibility Deal. MPs were dismissive of drinks industry claims of progress, citing one company that has claimed to reduce the strength of premium lager by 0.2 per cent.

NHS Cumbria proposes alcohol-only tills: NHS Cumbria has proposed that supermarkets should have alcohol-only tills to reduce the number of people who buy alcohol on a whim when they are shopping. Gavin Partington, of the Wine and Spirit Trade Association, said: “It’s not going to tackle problem drinking. It’s just going to annoy the vast majority of ordinary customers.”

Propel Opinion: The NHS Cumbria proposal seems a little hare-brained to say the least. Alcohol-only tills, effectively creating alcohol-purchase fast lanes, would serve to expedite the purchase of alcohol for those who are only buying booze. 

Wet weather is bad news for food prices: The wet weather this year is likely to lead to a rise in food prices as crops suffer. Strawberries, broccoli and cauliflower are among the crops that are in short supply after wet weather in the UK. The UK’s vineyards are also likely to see reduced levels of production this year after vines have failed to flower because of a lack of sunshine. Farmers have also lost up to 40 per cent of their potato crop, leading to chip shop owners raising their prices by an extra 10p as potato prices rise by £50 a tonne. 

The Mail on Sunday launches Tastecard promotion: The Mail on Sunday has launched a Tastecard promotion. The promotion provides readers with three months free on the £79.95 cost of buying a Tastecard, which provides 50 per cent discount off the total food bill, or two for one across starters, mains and desserts at more than 6,000 restaurants, including Cafe Rouge, Prezzo, Zizzi, PizzaExpress, Ask, Bella Italia, Strada and Gourmet Burger Kitchen. The promotion saves readers £19.98 in the free three-month trial. Tastecard already has 650,000 members.

Alcohol packaging should carry graphic message: Bottles of beer, wine and spirits should include cigarette-style graphic health warnings to make clear that alcohol is linked to cancer, infertility and violence, doctors have argued. The UK Faculty of Public Health (FPH) says harmful drinking has become so common that “no nonsense” warnings displayed in a prominent place on alcohol products are needed to overcome widespread public ignorance about the dozens of medical conditions excessive consumption can cause. Graphic images, such as a liver after years of alcohol-related cirrhosis or a victim of violence, could make drinkers face up to the risks they take with their health, says the FPH, which represents 3,300 public health specialists working in the NHS. 

Free pizza offer breaks sales records with Pizza por favor campaign: Nation’s Restaurant News has reported that a 104 strong pizza chain in the US, Pizza Patron, gave away 80,000 pizzas in a promotion that simply required customers to ask for a pizza in Spanish. The promotion prompted 25 per cent of the chain’s sites to beat their sales record the week before and the week of the promotion. In a recent promotion the company agreed to accept pesos as payment for a month, causing like-for-like sales to jump 50 per cent in the month. 

Licensees blame business rates on decision to quit: Licensees Martyn and Beth Tweddle have handed in their notice at Trust Inns’ The Wild Duck at Branthwaite near Workington blaming soaring business rates. Business rates have shot up by £20,000 during the nine years they had been based there. Beth said: “When the business rates was reassessed two or three years ago they went from £8,000 to nearly £28,000 because we had been doing quite well and it is based on turnover. We have taken The Wild Duck as far as we can and we can’t generate any more income from it to pay the extra rates bill. We are busy so can’t make up the extra money. The only way we could do it would be by reducing the staff – we currently employ 14 – but there is only so many hours in the day you can work.” The couple will move to another pub in the area in February 2013.

Most Britons resent tipping: A survey has shown that 62 per cent of British people resent tipping restaurant staff. The survey by found that 55 per cent of those polled used tipping as a way of getting rid of loose change. A spokesman said: “The US model is based on tips supplementing the low wages of service workers. But in the UK with our minimum wage, it appears many consumers believe that average service does not deserve any further reward.”

TripAdvisor finds Olympic area room rates have increased by 69 per cent: A survey by TripAdvisor has discovered that hotel bedrooms in London postal district E, which covers the Olympics venue in Stratford, are 69 per cent more expensive during the Games. Prices in district N have risen by 60 per cent while in the SW area room rates have risen by 19 per cent. The EC district, covering the City of London, has seen a 40 per cent increase in room rates for the Olympics. TripAdvisor spokesperson Emma Shaw said: “London hotel prices are generally higher during July and August in any year. But with London gearing up for such a significant influx of visitors this summer, some may not be surprised to see spikes as high as 69 per cent.”

Company news:

Innbrighton adds third London site: Innbrighton, the Brighton-based multiple headed by Gavin George and Gary Pettet and backed by Graphite Capital, has acquired its third London site. The company has taken on the free-of-tie lease of a site in Newington Green, The Clarendon, which for many years was called The Nobody Inn - the pub is located on the south east edge of the famous green. Chief executive Gavin George said: “This is a very exciting opportunity for us, in a fascinating part of London. The building is beautiful and is located in a village with a vibrant history of non-conformism and radical thinking - the perfect setting for an Innbrighton pub.” The Clarendon follows the acquisition earlier in the year of The Crystal Palace Tavern in East Dulwich, which the company re-launched as The Great Exhibition, and The Britannia in Victoria Park, which was acquired last year. Of these, George said: “The first two have exceeded expectations.” Commenting on the expansion programme, chairman Gary Pettet said: “We are building up a pipeline of sites to acquire in areas of London where we believe pubs with our type of attitude will be well received. After refurbishing and repositioning The Clarendon, we expect to follow with a fourth in the near future.” Chris Bickle, of Davis Coffer Lyons, acted for the landlord on The Clarendon purchase. He said: “This is the third pub deal we have brokered with Innbrighton as the purchasing party, after they secured sites in Hackney and Dulwich. The Clarendon offers Innbrighton a firm foothold in the North London market. Newington Green is regarded as an increasingly sought after area which has also benefitted from the rapid rise of neighbouring Stoke Newington.”

Britvic’s £100m safety cap recall prompted by six-year-old boy: The recall of Fruit Shoots by Britvic, which wiped £100m off its share value, was prompted by a six-year-old boy, according to The Sun. Alexander Farries began choking after a piece of the spill-proof cap lodged in his throat. His mother Shelley, a child minder, patted him on his back to dislodge the piece of plastic. Last week, Britvic admitted the recall could cost up to £25m in pre-tax profit, a disclosure that wiped £100m off its share price. Britvic offered the family a trip to a theme park as compensation.

Rollo – leased pubco model remains challenged: Jamie Rollo, leisure analyst at Morgan Stanley, has argued that the “leased pubco remains challenged” and he expects mixed news when Enterprise Inns reports on its third quarter on 9 August. He said: “With the prepayment of around half of Unique’s scheduled 2014 fixed rate note amortisation and the successful refinancing of the bank facility both complete, the focus will be on trading and disposal proceeds. “Comparables are a little tougher this quarter, and the weather has been poor (wettest April and June on record), though the company stated that second half trading had started well, and that it should see some boost from events such as the Diamond Jubilee and Euro 2012. While the imminent threat from tripping debt covenants has receded, group leverage remains very high (8x net debt/EBITDA) and the leased pubco model remains challenged, so we remain Equal-weight on the shares.”

Marco Pierre White acquires third Merchant Inns site: Celebrity chef Marco Pierre White has bought his third site out of the former Merchant Inns business that went into administration in 2009. White has acquired The Talbot Inn in Ripley, Surrey – he already runs The Carnarvon Arms in Newbury and The Black Boy Inn in Banbury, Oxfordshire. The Talbot Inn, which turns over £4m and has 200 wedding bookings going forward, was being run under a management contract by Bespoke Hotels. General manager Paul Dixon said: “Investment is likely within three to four months, in line with what he has done at his other properties. Over the last four days the phone has been ringing off the hook as people try to book weddings and Christmas parties here because of his association.”

Bath Ales to increase brewing capacity by 40 per cent: Independent south west brewer Bath Ales, which operates eight pubs, has taken delivery of two new fermenting vessels to increase its brewing capacity by almost 40 per cent. Each new vessel will produce around 30,000 extra pints of Bath Ales cask beers, including its flagship brand Gem, taking overall production to just over 25,000 brewers’ barrels a year. Bath Ales has also opened two new pubs - The Grapes in Oxford and Graze Bar, Brasserie and Chophouse in Cirencester in recent months, while Beerd, the brewer’s first craft beer bar launched this January in Bristol.

Simon French – we prefer Young’s to Fuller’s: Simon French, leisure analyst at Panmure Gordon, has reiterated his preference for Young’s stock over Fuller’s. He said: “Fuller’s will report its AGM trading update on 18 July and we forecast like-for-like sales growth of one per cent in the managed pub estate. The group’s recent analyst evening was well received and highlighted the impressive nature of recently acquired/opened assets. The group should trade well over the next two months meaning consensus forecasts of £32.2m profit before tax should be well underpinned. We reiterate our Hold recommendation and 735p Target Price and continue to prefer Young’s (Buy, 804p TP) for those seeking exposure to London and the south east.”

Subway ramps up burger trial: Sandwich specialist Subway has ramped up a low-key trial of burgers by offering the menu item at 1,236 US sites. It is selling a three-item line of Angus Melt sandwiches, which includes Classic Angus Melt, Monterey Cheddar Ranch Angus and Spicy Chipotle Angus Melt sandwiches.

M&B among pub groups targeting mums: Mitchells & Butlers (M&B) is among a number of pubs and pub chains targeting mums, reports The Financial Times. M&B’s Harvester chain partnered parenting advice Mumsnet in May to make its sites more family-friendly. Around 80 pubs in London have signed up to the “Breastfeeding Welcome Scheme” to create a welcoming environment for public breastfeeding. Around a dozen JD Wetherspoon pubs now offer parent and toddler groups with tea and coffee. Coffee and tea combined are now the company’s biggest drinks category. Research consultant BDRC Continental reports that consumers now rate pubs just behind restaurants in terms of how well they cater for kids – scoring 7.6 out of ten compared to the 7.7 out of 10 scored by restaurants. “Even just a few years ago we would have expected pubs to perform much worse on this metric as most paid little more than lip service to being child friendly,” Max Clapham, BDRC’s research director, told The Financial Times.

Norcross plans Leigh hotel and spa: Reality television star Mick Norcross, who operates The Sugar Hut in Brentwood, plans to revive Leigh’s Grand Hotel as a boutique hotel and spa. He wants to add a three-storey extension providing extra bedrooms and an expanded kitchen for the hotel. The Grade II-listed Grand, which was built in 1896, has been empty since it closed in December 2008.

Tokyo Industries to open in Hull: Tokyo Industries, the nightclub company headed by Aaron Mellor, is to open a new site in Hull on the August bank holiday weekend. The company, which currently runs 22 sites, will convert a Grade II listed cinema on Anlaby Road into Tokyo Hull.

Travelodge chairman steps down: Chairman of budget hotel chain Travelodge Keith Hamill has stepped down – three months after returning to the role. He had served seven years as chairman up until 2010. He came back to the job in April after a shake-up that saw chief executive Guy Parsons leave.

Experienced entrepreneurs step in to buy Greene King’s Windmill near Sevenaoks, Kent: Successful leisure sector entrepreneurs Mathew Rudd and partner Emma Cole have bought The Windmill pub, in Weald, near Sevenoaks from Greene King – the price is thought to be in the region of £400,000. The couple previously converted a mansion near Berwick-on-Tweed into a country house hotel and successfully ran The Stile Bridge Inn in Marden, Kent.

Duck and Waffle to become London’s first 24-hour restaurant: Duke and Waffle, due to be opened next month by Samba Brands in the Heron Tower, will become London’s first 24-hour restaurant. It will cater for bankers who work unsocial hours and people wanting to eat after a night on the town. Owners Samba Brands says it wanted to provide somewhere to go for people in a “city that never sleeps”, which has not been done before on this scale in London. The restaurant will offer breakfast, brunch, lunch, dinner and late night menus with food inspired by broad European and British influences. From 2am-6am the restaurant will offer a late-night menu, featuring, among other dishes, roasted Galloway veal marrow bones, with ox cheek marmalade, pickled girolles and parsley.

Caffé Nero takes first retail development site: Caffè Nero has opened its first site at a retail development - the Bluewater shopping centre in Kent. It has been designed to look like it is part of a traditional high street, with a brick effect façade complete with a timber-framed feature window. Ben Price, finance director at Caffè Nero, said: “Our preference is usually for traditional town and city-centre high streets, but Bluewater is a rare exception to the rule. It offers us everything we look for: great architecture, good service, and very large numbers of coffee lovers.”

New Travelodge for Lakeside: Capital Shopping Centres (CSC), owner of Lakeside Shopping centre, has submitted planning proposals for a £5 million hotel close to the shopping centre with views over Alexandra Lake. The development will also contain a restaurant offer, complementing the existing catering line up at The Boardwalk. Subject to planning, the hotel could open as soon as 2014.

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