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Morning Briefing for pub, restaurant and food wervice operators

Tue 17th Jul 2012 - Stonegate, Papa John and Nathan Outlaw

Story of the day:

Allsop reports strongest auction of the year: Allsop's July commercial auction, which featured a number of pubs and restaurants, was the biggest sale of the year and raised £56.3 million, with a 72 per cent success rate. A spokesman said: “There were positive signs for the market as the room remained crowded throughout the day and bidding was extremely competitive. High quality, well-let property continued to attract strong interest as did multi-let properties that offer the opportunity to spread risk and add value. The regions attracted strong competition across all sectors and over £23m was raised. London and the south east also remained popular. Distressed assets were well received, with 33 of the 43 receivership lots on offer selling, raising £22m.” Enterprise Inns sold The Sugar Hut nightclub in Brentwood for £1.3m and the company also sold The Tantric Blue nightclub in Colnbrook, Berkshire, let for £70,000 per annum, for an undisclosed price after the auction. The freehold of a pub let to JD Wetherspoon pub, in Wanstead, London, The George, sold prior to the auction for an undisclosed sum – Wetherspoon pays £150,840 per annum on the site and has a lease until 2034. The only major leisure freehold unsold was a site on Richmond’s King Street let to Ask Restaurants. It’s available for £1.4m and Ask pays a rent of £93,500 per annum.

Industry news:

Midlands MP condemns booze culture in the House of Commons: MP Aidan Burley has called for an end to the “boozing, alcoholic culture” of the House of Commons. He claimed excessive drinking was encouraged by late working hours that meant MPs had to sit around waiting to take part in votes. He told The Commons: “We have a problem: the late-night, boozing, alcoholic culture of this place. That is something that is made worse by having to wait around until ten o’clock to vote.”

Propel Opinion: It’s an irony that Health Select Committee MPs are set to condemn progress by the alcohol industry in reducing excessive drinking when there’s clearly such a problem with excessive drinking among MPs themselves. Perhaps this has blinded them to the realty – drinking is reducing year-by-year in the UK but cultural norms, including a tendency to rapid drinking in this country, take a long time to re-shape, not least among middle class types working long hours in Westminster.

BBPA – tax stamps would cost industry £100m: Controversial plans for the introduction of tax stamps on every bottle and can of British beer would land Britain’s brewing industry with a £100 million annual bill, and shut hundreds of beer brands out of the UK beer market. This is the blunt message from UK brewers that is being delivered by the British Beer & Pub Association (BBPA) in its submission to the current HMRC consultation on the issue. The BBPA submission says that the proposals “fail in terms of proportionality, effectiveness, fairness and almost certainly legality and therefore should not be taken forward”. Instead, HMRC should step up its enforcement and apprehend the criminal gangs responsible for duty fraud, with intelligence and support from the industry, says the submission. The BBPA has also presented a legal opinion from global lawyer DLA Piper, which concludes that the government’s current plans would be inconsistent with EU law, putting Whitehall on a collision course with Brussels over the issue. DLA Piper describes the current plans as “fundamentally flawed” and “wholly disproportionate”, saying that fiscal marks could be “replicated by fraudsters with great ease”.

Tim Hortons – we will be bigger at lunchtime than McDonald’s: Canadian restaurant giant Tim Hortons, second to McDonald’s in the Canadian market, has set a target of eclipsing McDonald’s lunchtime trade in the country within five years. The company already serves eight out of ten of all coffees served in Canada and plans to introduce new menu items to build lunchtime sales – a new line of grilled paninis goes live in the autumn.

McDonald’s ups the ante on transparency: McDonald’s has moved to up the ante on transparency by answering customer questions about its food online. McDonald’s in Canada has released several videos on its Twitter feed in response to customer questions. The video receiving the most attention features McDonald’s executive chef Dan Coudreaut, answering the question: “What is in the sauce that is in the Big Mac?” In response, Coudreaut makes the sauce in a home kitchen from seven supermarket bought ingredients and assembled a homemade version of the Big Mac. “Quite honestly, the ingredients have been available in the restaurant or on the internet for many years, so it’s not really a secret,” Coudreaut said in the video. The video has been watched more than 1.2 million times on YouTube.

Islington – we will use the late-night levy: Islington council is keen to adopt the late-night levy to pay for more late-night policing. Paul Convery, the council’s executive member for community safety, told The London Evening Standard: “We’re a borough with blood on our streets because of people getting drunk and committing acts of violence, and we have got to stop that. Every really horrendous crime in our borough has involved excessive alcohol. It’s been right in the middle of the last five or six murders. We absolutely will be using the late-night levy, because we want to maximise the level of policing.” Islington believes as much as £500,000 could be raised, which could pay for 15 police officers or 20 community support officers. Council leader Catherine West said the council will consult local people before it acts. “We are holding an alcohol summit in the autumn to discuss the disproportionate cost heavy drinking is causing to local services like the NHS and police. The levy could pay for more police officers and community support officers so that Islington’s police resources and our local NHS services can be spent on the local population and not used disproportionately for those who enjoy the 24-hour economy.”

Company news:

Wetherspoon makes renewed bid to opens in Wells: JD Wetherspoon is making a second attempt to open in Wells, Somerset, which has a population of 10,406. The company had its first bid turned down bid last September by 15 votes to two after councilors decided “there was no need for a Wetherspoon in the city, the new site would have a visual impact on the approach to Wells and that it would cause amenity issues for people nearby”. Another major stumbling block was proving there was a right-of-way to the premises. The company wants to convert the former bus station and Emporium shopping complex on Priory Road into a pub. 

Spirit opens latest John Barras site: Spirit Pub Company has spent £300,000 converting The Fiveways pub in Edwards Lane, Nottingham into a John Barras community pub. The company has just under 140 John Barras sites with a further 25 within the estate identified for conversion – Spirit believes there is an opportunity to grow the brand beyond 200 sites in the long-term. Food mix is 22 per cent of sales with an average 500 covers per week producing an average food spend-per-head of £6.

Legal case against St Austell dropped: A legal case against St Austell Brewery alleging the company broke health and safety rules in connection with the death of a woman outside one of its pubs has been dropped. 58-year-old Paula Deacon died after falling from a bridge into a river at The Copley Arms, Hessenford, south east Cornwall in November 2009. St Austell Brewery, which owns the pub, faced two charges of flouting legislation in a case brought by Cornwall Council and was due to stand trial last week. St Austell Brewery denied one count of failing to ensure a person not employed by the company was not exposed to the risk of tripping and or falling into the river and a second charge of not failing to ensure the means of access to or from the premises were safe and without risk to health had also been denied. The company received a caution from the local authority. 

Papa John sets target of 150 new UK sites: Pizza delivery firm Papa John’s, the third largest in the world, has set a target of opening 150 new sites in the UK in the next three years. Founder 'Papa' John Schnatter said: “We've been here in the UK for ten years now and we feel we have the infrastructure in place to start to make waves in the pizza industry. We recently invested £5 million in our own Quality Control Centre in Milton Keynes, this allows us direct control over manufacturing of our dough and distribution ensuring that our commitment to 'Better Ingredients, Better Pizza' and 100 per cent fresh dough can always be delivered. In addition this provided the capacity to allow us to expand further. In 2012, the importance of this investment becomes evident as we will break through the 200 store mark later in the year. However, none of us will be resting on our laurels. Papa John's is looking to open at least another 150 stores in the next three years across the UK. This will represent an investment of £30 million, and create around 2,200 new jobs, at a time when many businesses are cutting back.”

Costa Coffee franchisee receives 750 applications for jobs: A Costa Coffee franchisee, Purple World, has received about 750 applications for 12 jobs at the new Costa Coffee site it is opening in Ulverston, Cumbria. Purple World is converting the vacant former Halifax building in Market Street and already operates nine Costa shops in and around Cumbria. The new site will open at the end of September. Alan Rawling, area manager for Purple World, said: “We have had about 750 applications already, which is unprecedented for a coffee shop.” Meanwhile, Costa has re-submitted a plan to open in Southwold, Suffolk less than a month after it was rejected. Agent Savills has told the local authority that increased competition within the town, a reason for the plan’s rejection, is not a planning issue, and urged the council to reconsider or face an appeal.

Stonegate Pub Company launches modern day traditional pub: Managed company Stonegate has closed its Royal George on Mackintosh Place, Cardiff for a £170,000 transformation into a modern day traditional style pub. It re-opens this Friday, 20 July. New manager of The Royal George, Scott Richards said: “The investment of £170,000 will see a move towards a more traditional pub environment, with a greater emphasis on food and families with the introduction of new menus including one specifically for children. We’ll be opening with three cask ale hand pull pumps and will be serving locally brewed ales. Other changes include moving the bar area to give more space, introducing comfortable booth areas ideal for dining or drinks with friends, increasing the number of TV screens from nine to twelve and adding TVs to the beer garden so when the sun arrives we’ll be the perfect destination for sport watching. The change of layout in the bar means we can increase the number of covers from 130 to 170 and create specific zones throughout our V-shaped bar for dining, music, and sport watching.”

Kornicis to open ninth Jamies wine bar: Kornicis Group, headed by Nick Tamblyn, is to open its ninth Jamies wine bar. The latest venue will open towards the end of August in Alban Gate, London Wall. Kornicis chief executive Nick Tamblyn said: “We are positive we have the correct concept for our target market and continue to build a strong brand. The market is still challenging and the competition is fierce, but we are confident Jamies will continue to deliver.” Four more sites are planned for the next 12 months.

Subway in talks over school opening: Sandwich specialist Subway is in talks to open a counter at a comprehensive school in Didsbury, Greater Manchester. The school is talking to Subway about how the company’s healthier options could be incorporated into its own offer.

Richoux Group expects £400,000 profit: Richoux Group, which operates 12 restaurants, including Richoux in Knightsbridge, Mayfair, Piccadilly and St John's Wood, expects to report a profit of £400,000 for the 28 weeks ended 8 July 2012, the company reported this morning. The profit includes a net profit on disposal of approximately £130,000 following the sale of its freehold central kitchen and disposed sites. The company currently has cash of approximately £1,500,000.

Healthy Food Guide recognises operators: Healthy Food Guide, the healthy eating magazine, has recognised a host of operators offering healthy eating options. The winners were: Harvester (Best for those on a budget); Nando’s (Best online nutrition); La Tasca (Best for gluten free); Giraffe (Best for variety); YO! Sushi (Best for calorie counters); Wagamama (Best for busting hunger); Zizzi (Best for special diets) and PizzaExpress (Best healthy eating idea).

Seafood chef Nathan Outlaw plans third restaurant – in Looe: Celebrity seafood chef Nathan Outlaw, who has two Michelin stars, has applied to transform a fish processing plant at the Fish Market on Buller Quay in Looe into a new restaurant. Outlaw uses fish at his existing restaurants sourced exclusively from Looe. In a letter to the planning authority, Outlaw said: “I think a vibrant harbour-side 90-seat restaurant specialising in fish sourced from the market just yards away amidst the hubbub of a working fish quay would be a great success, while serving to further promote the fine quality of fish landed in Looe.” Outlaw currently operates two restaurants in St Enodoc Hotel in Rock: Nathan Outlaw Seafood and Grill and Restaurant Nathan Outlaw.

Norcross plan to revive Leigh hotel opposed by planners: An ambitious plan to revive Leigh’s Grand Hotel by Mick Norcross, who runs The Sugar Hut nightclub in Bentwood, looks likely to be voted down by planning councillors tomorrow (Wednesday). Norcross’s proposal to transform the landmark building into a boutique hotel and spa relies on securing planning permission for a three-storey extension to the hotel. Planning officers, though, are recommending the plan be rejected. Andrew Lewis, corporate director for enterprise, tourism and the environment, said: “While the refurbishment and extension of this key local landmark in Leigh is supported in principle, it should not be at the expense of the character and appearance of the existing building.”

Whitbread – McDonald’s near to our sites are a magnet for bad behaviour: Whitbread has written to West Norfolk Council to oppose a plan to open a McDonald’s close to its Premier Inn and Freebridge Far Brewers Fayre in Clenchwarton Road, West Lynn. McDonald’s want to take over a former Little Chef site. A letter, sent to the council via an agent, said: “Should this application receive consent unchecked it will have a serious and irreversible impact on my client’s business.” The letter claimed McDonald’s outlets close to other Whitbread sites lead to problems with noise and litter. It said the problem was worse at those allowed to remain open between 11pm and 7am.

York nightclub to change its name after £750,000 refurbishment: York nightclub Silks and The Gallery will change its name to Kuda after a £750,000 refurbishment is completed. The club is due to open at the end of August or beginning of September.

Covent Garden Walkabout trials glasses-free 3D: The Walkabout bar in Covent Garden, operated by Intertain, will show the Olympic Games in 3D without the need for glasses. Stream TV will convert the 3D feed from BBC and Sky/Eurosport and auto convert it into a multi-view auto-stereo format known as Ultra-D using an Ultra-D SeeCube box. The manager of the Covent Garden Walkabout Bar, Dal Jones, states that Ultra-D is “1000 per cent better than anything else I have seen in 3D without glasses. I am very pleased and truly excited to be the first UK bar to be able to offer this to our customers.”

Douglas Jack – Marston’s has potential profit upgrades: Leisure analyst Douglas Jack, of Numis Securities, who has a Buy recommendation on Martson’s shares with a Target Price of 130p a share, has argued that the company has the potential to provide profit upgrades in the next three years. Ahead of the company’s third quarter results on Wednesday 25 July, he said: “We expect minimal change in underlying trading in all divisions, resulting in no change to forecasts. In May, we upgraded our forecasts (which remain above-consensus) by five per cent. In our view, Marston’s should be a primary target for capital rotating back into sector, as inflation falls. We believe 2012 profit-before-tax forecasts (£88.0m; consensus £87.5m) are robust. The 2013 outlook is supported by costs being largely locked-in at levels that can be offset by a price rise of just 1.2 per cent in the managed estate. There is potentially £11.6m of profit before tax upgrades over three years if new build returns continue at recent levels.”

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