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Morning Briefing for pub, restaurant and food wervice operators

Mon 30th Jul 2012 - Eclectic, Novus and SAB Miller

Story of the day:

Change of management for Premium Bars and Restaurants: The banks that own the 33-strong Premium Bars and Restaurants (PBR) business, operator of The Living Room brand and the former Ultimate Leisure nightclub business, have appointed Eclectic Bars, which operates the former Po Na Na nightclub business, on a 12 month contract to manage it. The move comes after Orchid Pub Company ran the business for three years. Eclectic Bars is 60 per cent owned by Avanti Capital, which is a listed company. Orchid chief executive Rufus Hall told staff this week: “We’ve taken the decision to concentrate all of our efforts solely on our core Orchid pub business and the PBR business, which has been with us for the last three years, will move on to pastures new. A big thank you to all of our great friends at the Living Room and Ultimate Leisure who joined us on the Orchid journey in 2009. Great people, great businesses and some great hangovers!” PBR had turnover of £44,881,000 and made a loss of £35,906,000 in the 14 months to January 2011, including a write-down of £11.3m on property value. In January, Deutsche Bank swapped debt for equity at Orchid in a move that saw it took sole control of the company and the departure of private equity firm GI Partners and fellow lender Lloyds. Eclectic had turnover of £10m and pre-tax profits of £1.1m in the final six months of 2011. David Myers, chairman of PBR, said: “Whilst it is generally recognised that the last few years have been very difficult for the UK hospitality sector, now is the right time to bring in the Eclectic team which has the specific expertise to drive both The Living Room and the Ultimate Leisure businesses forward.” Reuben Harley, chief executive of Eclectic, said: “We are delighted to be taking on this business which will bring the total number of sites we operate across the UK to almost fifty. We see great opportunities in bringing our brand development expertise and service culture to the PBR group and look forward to working alongside many excellent people within the current PBR team.”

Propel Opinion: The banks that own PBR hope the company will benefit from management with late-night experience while Orchid’s owner Deutsche Bank hope its performance will be improved by a tighter focus on its core pubs business. Arguably, the greatest challenge for Eclectic management will be the upscale Living Room brand, which is a little removed from its core skill set and closer to Orchid’s. The splitting away of PBR management may also be laying the foundations of a later sale of the business to Avanti Capital.

Industry news:

SAB Miller hires Bell Pottinger to battle minimum pricing: Brewer SAB Miller has hired Bell Pottinger to help it negotiate with the government over its plan to introduce minimum pricing for alcohol, which it believes will harm the brand’s status as a premium drinks firm, according to PR Week. The brewer, which owns brands Peroni, Grolsch and Pilsner Urquell, is fighting the plans as it believes minimum pricing legislation could force the firm to increase its own prices alongside those of cheaper beer brands. The brief calls on the agency to focus on the UK’s alcohol regulatory environment, specifically mentioning ‘excise tax, beer duty escalator and minimum pricing’ as key concerns. The agency is expected to lobby key members of Commons committees such as the home affairs and health select committees against the plans. Bell Pottinger managing director Stephen Lotinga said: “There is an enormous amount going on in the brewing sector and we’re determined to ensure that SAB Miller’s voice is heard.” SAB Miller UK government relations manager Christine Thompson said: “Bell Pottinger impressed us with their strategic, detailed and well-informed response to our brief.”

Ten local authorities given a £10,000 mocktail grant: Ten local authorities have been awarded a £10,000 mocktail grant by the government. Youngsters will learn how to make non-alcoholic mocktails as part of an initiative aimed at curbing binge-drinking. In Horsham, West Sussex, the money will be used for a “Dragon’s Den Mocktail Project”, whereby youngsters will work with businesses and other stakeholders in the community to address drinking in their neighbourhoods.

Cheesecake Factory reports 15 per cent profit increase: Cheesecake Factory, the US brand with $10m dollars of sales per site and which is looking for its first site in the UK, has reported an almost 15 per cent increase in second quarter profit. The company has seen ten consecutive quarters of positive like-for-like sales.

Starbucks begins US roll-out of French bakery goods: Starbucks has begun the process of rolling out French-baked food to US stores. The new bakery choices will make their debut in the San Francisco Bay area. Starbucks chief executive Howard Schultz described the move as one that would bring “the romance of the Italian espresso bar to many North American coffee consumers.” More locations will soon offer the expanded menu, he said.

Company news:

Novus Leisure bought for £100m: Novus Leisure, the operator of 52 primarily London based premium bars and restaurants, has been acquired by new joint owners, LGV Capital and Hutton Collins. LGV and Hutton Collins have backed the existing management team, led by chief executive Steve Richards, in a deal worth £100m. John Kelly will remain as non-executive chairman. The transaction has provided an exit for the incumbent majority shareholders Barclays Ventures and RBS Strategic Investment Group. Richards will stay on as chief executive, putting paid to rumours that he is set to become chief executive of Mitchells & Butlers.

Propel Opinion: In March, Novus chief executive Steve Richards revealed that the company was set to finish its financial year last month with turnover of £146m and profit of £18m. The three-year plan is to drive turnover to £250m and profit to £35m by expanding its presence in London. Novus already claims West End and City of London dominance with 66 per cent and 61 per cent of the bar market. Facts and figures surrounding the Novus business are impressive, not least its strong web presence, upscale market position and powerful customer data capture. It has a 1.5 million strong database of customers, with 73 per cent of these female. And its web portal receives more than four million hits a year. It has 147 people in its sales force and sells champagne volumes it estimates to be the equivalent of 1,700 managed pubs. The 2015 plan is to “finish central London and drive into the suburbs”. It wants to have 75-80 bars operating in its three drive formats: Lewis & Clarke, Jewel bars and Landmark – it has 36 of these at the moment. Richards has forecast that the company will look to repeat its successful acquisition of The Balls Brothers business in 2010. “More of that will happen,” he said in March. Single site acquisitions will also take place – Richard has reported that the company, which doesn’t buy freeholds, is often the only bidder for super-sized 10,000 square foot sites.

Brewdog – the £6.5m brewery is nearly complete: Brewdog co-founder James Watt has reported that the company’s new-build brewery is nearly finished. He said: “The main part of the brewery is now completely finished with the construction team now working on the external landscaping and putting the finishing touches to our offices.” The new brewery is at Balmacassie and will create 25 jobs.

Hotel Chocolat to open fine dining restaurant: Hotel Chocolat is to open a fine-dining restaurant, Boucan, in the basement of its Kensington site, according to The Times. The venue, which will open in November, will be modelled on The Boucan in St Lucia, the restaurant the company opened on its cocoa estate in the West Indies. The company will also launch in own line of beauty products in November.

Punch Taverns seeks tenant for hotel where a £300,000 investment is planned: Punch Taverns is looking for a high quality tenant for The Ythan Hotel, located in the village of Newburgh, just 15 minutes from Aberdeen and close to the new Donald Trump golf resort. Subject to finding the right tenant, the company Taverns has approved an investment of circa £300,000 to refurbish The Ythan into a boutique country house style hotel, with 11 en-suite bedrooms – it has six at the moment. The hotel currently has a restaurant with 80 covers and a function room for 100 plus people plus 40 car parking spaces.

Innis & Gunn plans pub retail estate after opening a pop-up: Innis & Gunn plans to develop a pub estate after opening a pop-up venue for the summer festivals, run by 56 North. Founder Douglas Sharp said: “We’d love to go into retail at some stage. We don’t yet know exactly what form that will take but certainly our learning so far from our pop-up bar is that we have very loyal consumers who want to drink in an Innis & Gunn outlet.” Innis & Gunn brew beer aged in whisky casks. The company has made a push into exporting to the US - its turnover set to double to £2m this year after signing up 80 distributors.

Plan to knock down Spirit pub gets go-ahead: A planning application to demolish a Spirit Pub Company site Birmingham pub to make way for a Co-operative supermarket looks likely to be given the go ahead. The proposals to knock down The Navigation Inn in Kings Norton, which is owned by Spirit Pub Company, and replace it with a 10,000 square foot food store has been recommended for approval by planning officers at Birmingham City Council.

Hard Rock Café boss – room for 100 more cafés globally: The chief executive of casino, hotel and restaurant operator Hard Rock, Hamish Dodds, has told The Times that he thinks there is room for another 100 cafés around the world on top of the existing 140. Six more hotels are currently planned around the world – the company has 16 hotels and casinos at the moment.

SSP to open seven more Starbucks at airports: Food travel company SSP will open seven more Starbucks at UK airports. The move will take the total number of Starbucks operated in the UK by SSP to 31 – the seven new stores will add £10m to sales. SSP operates a further 16 Starbucks outside of the UK. Kris Engskov, UK managing director of Starbucks, said: “Starbucks has been working with SSP for many years in the UK and Europe and it's clear that their expertise in travel locations puts them in the best position to grow the Starbucks business in these airport stores.”

Sunday Times – Endless granted exclusivity over Pizza Hut: The Leeds-based turnaround firm Endless has won exclusivity in relation to the Pizza Hut sale process, according to The Sunday Times. The 340-strong brand is being sold by Yum Brands six year after the US-based firm took control of the business. It paid £112m to buy the 50 per cent stake owned by Whitbread. The business has increased sales by three per cent in the past six months but has lost money for four years. The Sunday Times stated: “It is understood that the sale of the business hinges on whether it can come to an agreement with Yum on royalty payments.” Endless has invested in discount bookstore chain The Works, school uniform manufacturer Trutex and builders’ merchant Wolseley. 

Orchid – weather good for trade except in the City of London: Managed pub company Orchid has reported warm weather provided a boost for sites last week. Chief executive Rufus Hall said his blog: “Sales across the business are flying and maybe the Olympics and some sunshine will be the good news we need to lift Britain’s spirits and kickstart the economy.” However, sites in the City of London fared less well. “Restaurants in the City of London are very quiet as all the bankers have been told to work from home whilst the Olympics are on.”

Coca-Cola stresses its British credentials: Coca-Cola has taken a full-page advert in The Times to stress its “more British than you think”. It states: “97.5 per cent of the products we sell in Great Britain are made in Great Britain. We make them at six sites nationwide, from Sidcup in Kent to East Kilbride in Scotland. We employ 4,700 people and our activities support 46,000 British jobs.”

Young’s to launch £3m hotel: Pub and hotel operator Young’s is set to launch a new 17-bedroom boutique-style hotel complete with pub and dining room in the Surrey village of Claygate. Launching this October, following an investment of £3m, The Foley builds on the success of The Alma Wandsworth - a modern day coaching inn offering eating, drinking and sleeping all under one roof. Patrick Dardis, Young’s retail director, said: “The considerable investment in The Foley illustrates our commitment to adding value to and growing our hotel estate. The coaching inn concept is a natural evolution for the brand, allowing us to offer quality food, drink and accommodation under one roof, always retaining the pub’s identity within its community.”

Isis take minority stake in Pho: Private equity firm Isis Equity Partners has paid £5.2m to take a minority stake in Vietnamese noodles chain Pho, founded by Stephen and Juliette Wall, according to The Sunday Times. The company, which has six sites in London and one in Brighton, will use the money to expand in London and affluent regional cities like Oxford and Cambridge.

Cobra founder is settling debts: Lord Karan Bilimoria reports that he is settling the debts that were left when his Cobra Beer business went into administration with £71m owed. Lord Bilimoria owns 49 per cent of Cobra Beer Partnership, the business that emerged from the administration in which Molson Coors has a 51 per cent stake. According to The Mail on Sunday, he is in talks with other unsecured creditors such as Wells and Youngs about settling a portion of outstanding debts. Cobra Beer Partnership made a pre-tax profit of £4.5m on £50.1m turnover in the year to last December.

Faucet Inn launches giant pop-up bar: Faucet Inn has launched The Podium Bar, a pop-up located on the edge of Westfield overlooking the Olympic Park. Open until 19 September, the 18,000 square foot open air ‘pop up’ bar will provide a quintessential English experience, with a classic pub garden look and feel and English style barbecue. Already proving popular with Olympic athletes, the prime location of The Podium Bar is set to make it a firm favourite for Games time visitors. With a capacity of 1,500, a giant TV screen and live evening entertainment, The Podium also offers those not fortunate enough to have event tickets a ringside seat. Food will be provided by Westfield Stratford City’s caterer Absolute Taste. Steve Cox, managing director of Faucet Inn, said: “We are delighted to have opened our latest concept adjacent to the Olympic Stadium. With the sun shining, the beer flowing and the excitement of the event of the century on our doorstep, we are looking forward to welcoming visitors from around the world into The Podium.” 

Hakkasan co-founder claims interest rate swap mis-selling: Sami Wasaf, co-founder of Hakkasan, has claimed The Royal Bank of Scotland mis-sold him an interest rate swap in 2004, attached to a £1.2m loan, that has cost him £176,706 so far, according to The Sunday Telegraph. The newspaper reports that pub owners and restaurateurs were among the key businesses targeted by interest rate swap teams at banks. 

Pubfolio pub bought by local multiple: Local multi-site pub operator Mark Dew has bought The Tan House, Shirenewton, Monmouthshire, Wales, for around £225,000. It was sold by Christie's and Co as part of the package of Pubfolio sites it is selling. The pub received six bids but was sold to Dew, who runs several pubs in the local area including The Chainbridge Inn at Kemeys Commander, near Usk.

Mustard-themed restaurant opens: A mustard-themed restaurant, Mrs Mustard, has opened in Durham close to the mill where mustard was first invented by a Mrs Clements, whose first name is unknown. The venue offers mustard with everything, including a Mrs Mustard cocktail containing Dijon mustard, lime cordial, lemon juice, creme de cassis and grenadine. Staff will be available to advise customers which type of mustard best suits their choice of dish. A spokesman said: “Although Mrs Clements is long gone, her legacy remains and a range of specially developed mustards have been created exclusively for the restaurant, made to compliment the food.”

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