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Morning Briefing for pub, restaurant and food wervice operators

Fri 24th Aug 2012 - Pizza Hut, Brasserie Blanc and minimum pricing

Story of the Day:

Tesco lodges multiple applications to convert pubs to convenience stores: Tesco has stepped up efforts to expand its convenience store network with a focus on converting pub sites. Propel Info has tracked an unprecedented number of applications by Tesco to convert pubs into its Tesco Express or Tesco Extra convenience store formats. Pubs are particularly attractive to Tesco because they are already licensed to sell food and alcohol and so do not require an application to councils for a change of use – although a minor alterations application is often required. Pubs often also have car parks that make them even more attractive for switching to a convenience store. Among the many pubs where Tesco has lodged applications are The Swan and Sugar Load in Croydon, The Grove Tavern in Merton and The George IV in Lambeth. Outside of London, Tesco has plans to convert The Duke of Wellington in Forsbrook, Staffordshire, The Cross Keys pub in Winterton and The Three Elms in Windsor. Many of the plans have met with stiff resistance from local residents. In Weston-super-Mare, a 1,600-name petition has been handed into the council in opposition to Tesco converting Enterprise Inns’ Bristol House Inn to a Tesco Express. In other pub conversions, Tesco has re-developed the plot and sold off surplus land, which has required patience and planning consent. In south Oxford, Tesco has won consent to demolish The Fox and Hounds, build a store with flats above and sell a fifth of an acre of surplus land, a process that’s taken four years.

Industry News:

Best Place Inns joins the ALMR: Best Place Inns, the five-strong London operator of pubs and hostels led by Ben Stackhouse, has joined the Association of Licensed Multiple Retailers (ALMR). Best Place Inns combines the operation of high-quality and atmospheric classic London pubs with a backpacker hostel above sites. ALMR chief executive Nick Bish said: “We’re delighted to welcome Best Place Inns to the membership. Ben has created an innovative company that has captured its own market position by offering the best of pub ambience and service together with high quality hostel accommodation, all in the same building.” Stackhouse said: So many big names in the industry that I admire are members of the ALMR. When Nick Bish briefed me on the tremendous work the ALMR is doing on behalf of pub and restaurant operators I wanted to be part of it too.”
Majority of New Yorkers are opposed to giant soda ban: Six in ten residents of New York who took part in a survey are opposed to Mayor Michael Blomberg’s plan to ban 16oz fizzy drinks - 36 per cent called it a good idea. The proposal is expected to be approved on 13 September. Those opposed to the ban argued that consumers should have the freedom to make a personal choice.

Two Cambridge pubs saved by new planning protection: Plans to demolish two pubs in Cambridge, the Rosemary Branch in Cherry Hinton and the former Dog and Pheasant in Chesterton, have been rejected after councillors decided they qualified for a newly introduced protection from development afforded to pubs. The Dog & Pheasant was saved by a single vote - it has traded as a Vietnamese restaurant called Saigon City for a number of years.

Company News:

Pizza Hut UK losses widen; brand relaunch now created like-for-like sales growth: Pizza Hut UK, the brand owned by Yum! Brands currently on the market, has reported pre-tax losses widened to £24,178,000 in the period to 4 December 2011 (2010: £20,588,000) on turnover down by 0.7 per cent to £437,685,000. The 690-site company said trading on the high street has “continued to be tough compounded by intense levels of discounting from a number of competitors”. Pizza Hut reported it was delivering like-for-like sales growth now after changes implemented in May 2011 - improved products and value offers, including free salad and the extension of kids eat free. A total of 16 sites were opened and 30 were closed in the year, which created an exceptional item of £10,031,000. A total of £35m of new share capital was issued in July 2011 to strengthen the balance sheet. Pizza Hut’s workforce dropped to 13,670 from 16,247 the year before. The company earned a total of £9.7m in franchise-related income. Yum!Brands is in talks to sell the UK arm to Leeds-based private equity firm Endless.

St Austell buys five Enterprise pubs: St Austell Brewery has bought five Enterprise Inns pubs for an undisclosed price. But if they are in line with previous top-end disposals by Enterprise, the price will be around £6m – other disposals by Enterprise have averaged around £1.2m each. The pubs are: The Albion in Bristol, the Blue Ball Inn in Exeter, the George Hotel in Plympton, the Rose & Crown in Yealmpton near Plymouth and the Cornish Arms in Tavistock, bringing the St Austell portfolio to 173 across the south west. The deal follows a successful year for the family brewery - volumes at St Austell Brewery have continued to rise compared to a six per cent decline in industry volumes. Estate director Adam Luck said: “Bristol is a particularly exciting area for us. The Albion will be our first pub in the city and it’s an area that presents a great opportunity to develop both our beer sales in the pub estate and the free trade business following the appointment of an area sales manager in Bristol, earlier in the year.”

St Neots licensee goes multi-site: Licensee John Nunn is going multi-site with the opening of the Hog ‘n’ Partridge, a Batemans pub formerly known as the Lord John Russell pub, will open to punters by the first week of September. The pub in Russell Street is being transformed by licensee John Nunn after he was given the go-ahead by owners Batemans Brewery. Nunn, who also runs the Pig ‘n’ Falcon in St Neots town centre, said: “It is designed as an upmarket place to drink with many fine beers available. We changed the title of the pub to keep the brand from the Pig ‘n’ Falcon going.” Batemans Brewery also submitted a planning application this week to Huntingdonshire District Council for a dwelling behind the pub.

Spirit to convert Tyneside pub to Taylor Walker brand: Spirit Pub Company is to spend £170,000 converting its Crows Nest pub on Percy Street in Newcastle to its Taylor Walker brand. The pub will close its doors on Monday, 3 September and open again on 17 September. Nicola Marsh, general manager for the Crows Nest, said: “This is a fantastic new era for the pub. To receive the Taylor Walker stamp of quality is an acknowledgement of the fantastic look of our pub.” Spirit has around 110 Taylor Walker site and think it can double that number. Food mix is 27 per cent of turnover with an average 500 covers a week and an average spend-per-head of £10.40.

Riddle and Finns owners open Asian restaurant: The owners of Brighton seafood restaurant Riddle and Finns have opened a second restaurant focused on Pan Asian cuisine, YumYum Ninja, on the site of the former Tootsies restaurant – both sites are in Brighton’s South Lanes. Ron Shenton, who also owns Due South, and business partner Adam Brain opened a second Riddle & Finns in Hove four years ago but were forced to close the business about a year later.

Stonegate pub gets 7am start subject to warning posters: A Stonegate Pub Company site in Coventry, The Litten Tree, has been allowed to open at 7am on condition that it display two A4 posters advising customers on sensible drinking guidelines. Pub manager Julian Dymock said it was aimed at people who wanted "a hearty breakfast" and soft drinks before work. He added: "We are targeting the diner who wants a hearty breakfast before work or cup of tea or hot chocolate or cup of coffee. But unfortunately it comes under the [licensing] umbrella. We can serve alcohol if someone wants to have alcohol, it's allowed."

Former All Bar One operations director confirms second site opening date: Alastair Scott, who was previously the operations director for Mitchells & Butlers’ All Bar One bar chain, will open his second Punch Taverns pub, The Square and Compass, near Harrogate on Friday 14 September . The venue will open after a £200,000 investment by Scott’s Malvern Inns business, which he runs with former Mitchells & Butlers colleague David Roffe. He told Morning Briefing: “We will be installing a smokehouse – we feel the market is missing a quality meat offer.” The new site comes just over 12 months after Scott re-opened The George at Backwell, near Bristol, in a £360,000 joint investment with Punch. The Square and Compass will carry a Village Pub and Dining sub-head and is located between two Premium Country Dining venues run by Mitchells & Butlers. 

Nando’s set to double up in Bath: Chicken specialist Nando’s looks set to take a second site in Bath after submitting plans to occupy one of six restaurant sites available in the £12m Vaults scheme next to Bath Spa railway station.The Vault, which will be a new food quarter, is due to be fully open before Christmas. Nando's already has a restaurant at the Kingsmead Leisure Complex in James Street West in the city. 

Senior to extend offer at Fat Buddha, Newcastle: The recently-opened Fat Buddha restaurant in Newcastle, the second opened by former Ultimate Leisure chief executive Bob Senior, is to have its kitchen extended to allow Asian tapas to be served in its 280-capacity downstairs area. Senior invested £1m of his own money in the new opening, which occupies a site previously operated as Bar 55 and Linekar’s. Fat Buddha, which has a sister site in Durham, offers 125 covers in its upstairs dining area. Senior told Morning Briefing: “Our upstairs dining area is so popular that we’re getting ready to stretch the kitchen so we can offer Asian tapas downstairs – we’re getting a lot of corporate enquiries for the weekend when we’re full.” Fat Buddha Newcastle is operated and owned outside of Utopoian Leisure, Senior’s main business, which operates four nightclubs and restaurants, including the original Fat Buddha in Durham.
Wet weather drives families to Orchid funhouses: Managed operator Orchid has reported that wet weather has produced a sales boost at its Free House Dining Pubs with a Fuzzy Ed’s Funhouse attached – up two per cent year-on-year. Bella Kirkton, marketing executive for Free House Dining, said: “In general, pubs with Funhouses are seeing an upwards sales trend, but this has become even more prominent during the wet summer holidays so far.”  The Bobbin Mill in Renfrewshire has seen year-on-year sales soar by 21.3 per cent over the summer holidays, with some 200 youngsters heading to the funhouse in a single week. It’s a similar story at Perdiswell in Worcester, where sales have increased 21 per cent compared to last year’s summer holidays, and a whopping 400 families visited the pub during the first week in August. A new promotion entitled ‘Tuesday Family Days’ has helped to push sales still further. The deal allows kids to eat for just £1 and also gives them free entry to Fuzzy Ed’s Funhouse. Pubs now take an average 11.4 per cent of their weekly trade on a Tuesday thanks to the offer, which is helping to drive parents in and increase spend.
Wetherspoon targets Burslem: Managed operator JD Wetherspoon is looking at a site in the Staffordshire town of Burslem, which has a population of 21,400. Local media suggest that the company is looking at taking over the former Mark One unit in Queen Street, which has stood empty since 2007.

Brasserie Blanc opens in St Albans: Brasserie Blanc has opened its eighteenth site in St Albans. The company now has seven sites in London and 11 outside. Its latest opening is located on Verulam Road, occupying two previously vacant shop units. 
Totnes MP joins Costa Coffee rumpus: MP Sarah Wollaston has called on Costa Coffee to ditch plans to open in Totnes constituency where 7,500 people have signed a petition opposing the opening. Meanwhile, Costa has beaten oppositon in another genteel town – franchisee South West Coffee has won planning consent to convert the Sanders greengrocers in the High Street.

Marston’s to open in Holyhead in December: Marston’s will open a new-build pub in Holyhead in December.  The venue, on the Penrhos Retail Estate, is part of the Marston’s strategy to build 25 new pubs a year.

Ooberstock signs deal with iTradeNetwork: Ooberstock, the recently launched ‘intelligent wholesale’ business for the licensed hospitality sector, has signed a five year ecommerce contract with iTradeNetwork (ITN). The new venture is set to revolutionise online drinks trading. Ooberstock has partnered with ITN to take advantage of its unique Supplier Storefront solution: a fully integrated online ordering system that offers its business customers the chance to place online orders at their convenience, 24/7. A new bespoke online portal at has been created that will help Ooberstock to deliver sales growth, improve customer communication, retain customers and increase average order values through proactive online marketing campaigns. The site will deliver greater transparency, lower prices, improved customer choice and more flexibility on delivery times.

Leisure veteran Hemmings opens Isle of Man hotel: Leisure veteran Trevor Hemmings, who owns 600-strong Trust Inns, has opened a hotel in The Isle of Man town of Ramsay, The Ramsay Park Hotel. The hotel is the first major development in the town for 40 years. Hemmings, a former major shareholder in Scottish & Newcastle, owns more than 100 racehorses - one of which, Ballabriggs, won the Grand National in 2011.

Simon French – Restaurant Group best in class: Simon French, leisure analyst at Panmure Gordon, has increased his Target Price for Restaurant Group shares from 327p to 375p. He said: “Restaurant Group’s first half results should highlight continued strong growth in sales and earnings leading to a circa 15 per cent dividend increase.  Unit profits and group returns (are) best in class. We forecast unit EBITDAR of £363,00 per site in 2012 compared to a peer group average of £249,000. Unemployment is falling, household disposable income – as per the Asda Income Tracker - has shown marginal improvement for the first time in 20 months and food input cost inflation is at its lowest since September 2010. Against this backdrop the group has a robust openings programme (helped by Coast to Coast and Brunning & Price) and has previously signposted a return of capital once economic conditions stabilise.

Focus on submissions to the health select committee on minimum pricing: 

Scottish charity backs minimum pricing: Alcohol Focus Scotland said in its submission that: “Action is required at a number of different levels, but controls on affordability, availability and marketing are critical to reducing consumption and harm. Plans to introduce minimum unit pricing are particularly welcome as evidence shows a clear link between alcohol price, consumption and harm. Increasing the price of alcohol is one of the most effective and cost effective ways to reduce consumption and harm at a population level.” The charity also called on the government to significantly strengthen the strategy in relation to marketing to protect children and young people from exposure to alcohol marketing. In addition, it wants greater regulation of social media. It also criticised the drinks industry. “Alcohol Focus Scotland believes that the alcohol industry can be involved in the implementation of alcohol policy but should not be involved in the identification of public health goals given the obvious conflict of interest and the fact that their expertise is in producing and selling alcohol and not in protecting and improving public health.”
Alcohol strategy riddled with inaccuracies: Trade body Business in Sport and Leisure expressed disappointment that the strategy seeks “to use blunt instruments to deal with those few premises that do not abide by current legislation instead of ensuring that the legislation is properly applied”. BISL continued: “The strategy is riddled with inaccurate and, or out-of-date evidence—and continues to place almost total responsibility on the retailer. Whilst the strategy claims, and does, give greater power to the community, it does very little indeed to reinforce the concept of any ‘individual responsibility’.
Academics want new drinks assessed for impact on youngsters: The University of Sterling’s Institute of Social Marketing was critical of the strategy’s approach to lower alcoholic strength drinks in particular the role of the Drinkaware Trust, the Portman Group and the Advertising Standards Authority, which were cited as not being “independent” bodies. The institute said: “The strategy is silent on labeling and health warnings. Larger and clearer warning labels on bottles could provide drinkers with better information and contribute to changing drinking behaviour as is the case with warning labels on cigarette packaging, for example. More fundamentally it says nothing about the relative appeal of products and the need to control those that have a particular appeal for the young. In our view, there is no justification for a product that is more popular with children than adults. All new products should be subject to independent scrutiny to assess their appeal to young people and impact on public health before they are permitted onto the market. The strategy could have gone further in terms of proposals to ensure that sales in shops and supermarkets are limited to specific areas and specific times of the day, distinct from the sale of other products. For example, alcohol in supermarkets should be limited to particular areas where children are not permitted and that have separate entry points (i.e. turnstiles) and separate tills for purchases.”
Small shopkeepers not convinced on minimum pricing: The Association of Convenience Stores (ACS) represents 33,500 small stores in the UK and wants the rules governing minimum unit pricing (MUP) on alcohol to be “implemented in a way that is clear, consistent and legal”. However, it said: “ACS does not believe that evidence for MUP is conclusive. We are concerned about the view expressed in the alcohol strategy that MUP will have a significant impact on binge drinking and associated anti-social behaviour. Our understanding of the evidence employed by MUP advocates is that it is as a measure targeted at reducing alcohol consumption on a population-wide basis and as a consequence will bear down on the health harms associated with alcohol rather than anti-social behaviour issues primarily associated with 18 to 24-year-old binge drinkers in the night time economy. We are concerned that the introduction of MUP, especially if brought in at too high a cost, will have its biggest effect on the consumption behaviour of average responsible consumers. With alcohol less affordable, results are likely to be either: responsible drinkers may consume the same amount but spend a higher proportion of their disposable income; responsible consumers may buy less alcohol, which has a negative consequence for businesses and jobs in all parts of the alcohol industry.” ACS did suggest that MUP could help smaller stores compete with the discounting practices of the major supermarkets. “The introduction of MUP may have the potential to shift consumers from buying large quantities of alcohol infrequently from the supermarket to more frequent purchases of smaller quantities from smaller format stores.”
Major retailers call for education not minimum pricing: The British Retail Consortium said: “The majority of our members (with the exception of Tesco, Co-op, Waitrose and Spar) oppose the introduction of minimum pricing believing the more effective method is to change the culture of drinking through information and education, which would avoid penalising the vast majority of the population who drink within the Government’s health guidelines. Those other members listed above would be prepared to consider minimum pricing, alongside other measures if there was evidence to support its use. Minimum pricing could also lead to a shift in product choice. For example, it could have a significant impact on own brand products which could be removed from the market as they would be uncompetitive against established branded products. This reduces competition, affects own brand producers and less consumer choice. We believe clear information for consumers, combined with proven, targeted campaigns aimed at parents and drinkers will change the culture of alcohol. We acknowledge that consumption levels have been high but are encouraged that the trend in recent years is for falling consumption generally and a reduction in those exceeding health guidelines. We believe this trend will continue as education continues, particularly with parents and children, where the data on later take up and lower consumption of alcohol by children is encouraging.”
Institute of Alcohol Studies wants a minimum of 50p/unit: In addition to calling for a minimum price per unit of 50p, the Institute wants other measures included. It said: “The commitments made in the strategy are a significant step forward in the battle to reduce problems caused by alcohol. However, in order to be meaningful, these commitments must be supported with measurable targets and indicators over established time periods. They must also be subject to robust monitoring and evaluation.” IAS also wants the drinks industry excluded from any policy decisions. “IAS believes it is not the role of the alcohol industry to define public health policy or to be responsible for the creation of public health information, as in many cases this is in direct conflict with their interests and responsibilities to shareholders and employees. To ensure policies relating to alcohol are developed and implemented with the maximum public health benefit, they must be subject to rigorous evaluation and monitoring, by agencies free from alcohol industry interests.”
Young people want to drink responsibly: Leading social policy research charity, the Joseph Rowntree Foundation, has not undertaken any research of alcohol pricing, but it did report: “Our research into peer group influences on drinking makes it clear that young people are actively trying to moderate their own drinking as well as that of their friends, and that taking out a limited amount of money is their primary tactic. This suggests that low price alcohol, as well as discounted offerings in the night time economy may be undermining young people’s attempts to drink more responsibly.”
Councils want more powers: The Local Government Association commented: “Minimum pricing is seen by some as a panacea or magic bullet. We know there is no simple solution to alcohol misuse, but tackling cheap drinks is only one part of the problem. While making alcohol less affordable should be seen as an important tool, it is not the entire toolkit available to tackling binge drinking. Focusing solely on making alcohol less affordable will fail to address the root causes of excessive drinking as well as the anti-social behaviour and risks to health it causes. National policies like minimum pricing and banning multi-buy discounts will only go so far in deterring excessive drinking and do not take into account the varying issues in town and city centres across the country. We need to see councils given the powers and flexibility to tackle problems locally. There is some detailed analysis to be done around minimum prices to ensure that it raises the price of alcohol to levels that discourage pre-loading drinking, and excessive consumption of cheap, high-strength drinks, yet does not unfairly penalise families who enjoy a responsible drink or inadvertently generate illicit trade.”
It is illegal say whisky firms: The Scotch Whisky Association warned the committee that “EU jurisprudence is clear, minimum pricing has invariably been ruled illegal. It is contrary to EU Single Market rules and international trade law”. The distillers’ trade body went on to report: “There is no strong evidence that minimum unit pricing as a policy will reduce alcohol-related harm. It will not reduce the number of hazardous and harmful drinkers. The focus of the Government’s alcohol strategy should be on reducing irresponsible drinking and the number of people drinking excessively. Alcohol policy requires an appropriate balance between regulatory, self–regulatory and non–regulatory measures. Industry is part of the solution to tackling alcohol-related harm. However, the importance of personal responsibility should be stressed in any strategy.”
No evidence that minimum pricing works: The Wine and Spirit Trade Association told the select committee: “There is no evidence that minimum unit pricing will reduce alcohol misuse. It will affect all consumers, regardless of whether they contribute to alcohol harm and a 40p minimum unit price will hit the poorest 30 per cent of households hardest. Minimum pricing is likely to be illegal. Alcohol consumption in the UK has declined and the majority of people drink responsibly. Alcohol policy should be targeted at the minority who misuse alcohol. Alcohol-related policy measures must be shown to be necessary, evidence-based and proportionate, with policy-making fully coordinated between different government departments. The alcohol industry has an important role to play in tackling alcohol misuse. Our commitment is demonstrated though pledges made through the Public Health Responsibility Deal. We want to see businesses able to offer a greater range of lower alcohol products and we welcome the Government’s intention to look at existing barriers to the promotion of lower strength alcohol products.”
Waitrose supports minimum price: Waitrose is only one of four major supermarkets to support minimum unit pricing (MUP). The others being Tesco, Spar, and the Co-op. The firm said, however, that MUP is “only part of the solution and not the ultimate answer to tackling irresponsible drinking. To be effective it needs to be combined with restrictions on promotional activity, for example a ban on heavy discounts such as 50 per cent off, and education to achieve the radical change the Government is setting out to achieve. We do not have sufficient evidence to make an informed view about the most effective minimum price point. However, it is important that it is high enough to eradicate the irresponsible pricing practice that the alcohol strategy highlights while maintaining a price that doesn’t penalise responsible drinkers. More evidence is essential in determining the most effective price point. We believe that restrictions on pricing and promotions will create a fairer and more sustainable market for the drinks industry. It will also help consumers to understand the true value of alcohol.”

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