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Morning Briefing Strap Line
Thu 17th Jan 2013 - Individual Restaurants, McDonald’s and Wetherspoon

Story of the day:

1,000 capacity Mood nightclub forced to quit Edinburgh premises after Aviva Investors recruits buffet restaurant operator: Aviva Investors has served notice on the 1,000 capacity Mood nightclub in the Omni Centre, Edinburgh after recruiting a Chinese buffet operator Cosmo to open a 300-seat restaurant on the site. The move has caused controversy because it appears that the nightclub owner was kept in the dark about the move until the last minute. Gareth Hughes, Mood general manager, said the company believed it had signed a long-term lease and was stunned when told a decision had been made to terminate it. Aviva is keen to re-shape the Omni centre as food-focused and has turned down a suggestion from Mood owners to move to a former Walkabout site on the other side of the centre. A message on the Mood website states: “It is with great sadness that we are having to advise our customers that with effect of the 26 January Mood Nightclub at the Omni Centre will be closing its doors for the last time. The reason behind this is simple, the owners of the Omni Centre have, unknown to us, been seeking interests from other businesses for the past 12 months and have been advised recently that a business has taken up the option of locating their business to the Mood site at the Omni Centre and that we would have to vacate the premises. We have fought this as far as we can and there is no option left for us as a company to challenge this decision. The owners of the Omni Centre are looking to make the centre a food-led centre and we have no control or influence over this decision.” Mood owners are to look for a new premises in Edinburgh. 

Bookings for Spring edition of Propel Quarterly: The Spring 2013 edition of Propel Quarterly is now open for advertising bookings. Contact either or to book space.

Propel Multi-Club conference: The first Propel Multi-Club conference takes place at One Moorgate Place, London EC2R 6EA on Tuesday 19 March and multi-site companies can book two free places each on a first come, first serve basis - more than 100 places have already been booked so far. The speaker list will be unveiled later this month. E-mail to book places.

Industry news:

Leading juice company Frobishers joins the ALMR: Frobishers Juices, the producer of premium juices, smoothies and blended juice drinks that has seen double digit growth for the past three years, has joined the Association of Licensed Multiple Retailers (ALMR). Sales and marketing director Steve Carter said: “We have a superior product that is proving popular with independent and small, multiple operators across the country. We’re working with some excellent retailers but we want to spread our net wider as we continue to grow the brand. Joining the ALMR not only enables us to support the work of a well-respected industry body, but it gives us the opportunity to introduce our juices to a new audience. Consumers are increasingly health conscious when it comes to food; they’re more clued up about ingredients and they’re prepared to pay more for brands that deliver quality, taste and variety. This trend is set to continue in 2013 and beyond and we’re here to provide operators with a product that meets the demands of their customers as well as working well on an operational level and delivering good GPs.” Frobishers will be sponsoring the ALMR Spring Conference in April.

Llandudno B&B wins TripAdvisor best hotel award: A bed and breakfast in Llandudno has won 650,000 other hotels in the world to win sixth place in the listings for the best bargain hotel in the world. The Lauriston Court Hotel charges £35 a night and has had 400 visitors rate it “excellent” since it opened two years go. Owner Carol-Lynn Robbins said: “We are available 24 hours a day and seven days a week for whatever our guests want. We don’t look upon it as a job – it’s a way of life.”

John Vincent – high street could face a golden age: John Vincent, co-founder of Leon Restaurants, has argued on Newsnight that the high street “could face a golden age if the market is allowed to work”. Vincent argued that landlords and banks need to “take a haircut” on property values and rents to allow new independent retailers to take the place of the large chains that are struggling on the high street. He called for deregulation of the high street to allow an influx of small traders. “There are only structural things getting in the way,” he said.

Chipotle in the US expands into off-site catering market: Mexican restaurant chain Chipotle is to expand into catering from groups off-site from 21 January. Sites in Colorado will begin offering the catering program on the date before it’s expanded to all 1,350 US units. Steve Ells, Chipotle’s founder, chair and co-chief executive, said: “With catering, we can now better serve our customers by allowing them to bring Chipotle into their homes, offices and schools, where they can conveniently and effortlessly share the food that they love with large groups of people,” he added. Designed for groups of 20 to 200, the offer will include a taco and burrito bowl spread that can be ordered with two or three meats, such as grilled chicken or steak, shredded barbacoa, or carnitas.

Luke Johnson – the founder’s sale of a small business can mean something is lost: Serial sector investor Luke Johnson has used his Financial Times column to argue that smaller companies can often lose their quirkiness when they are sold to larger companies. He wrote: “Usually the change is centred around ownership. If a founder sells a business to a large company, often something dies. The creator’s passion, pride and eye for detail fade. The loyalty and quirks which made the company special melt away. I have watched the sad decline of Strada, a restaurant chain I started and owned with partners, after it was sold to a much bigger group. It feels as if the magic is no longer there but no doubt my view is prejudiced.”

Top chief executives abandon Twitter: A survey by Weber Shandwick has found top chief executives moving away from using Twitter because it is deemed too risky. Only 2% of chief executives from the top 50 companies listed in Fortune Magazine’s 2012 Global 500 rankings have a visible presence on Twitter, compared with 8% in 2010.

The Sun – tens of thousands of pubs and restaurants may be serving horsemeat burgers: The Sun has claimed that tens of thousands of pubs, restaurants and takeaways may be serving horsemeat burgers. The claim was made after cash and carry firm Makro — which wholesales to 130,000 caterers — withdrew16 beefburger brands it bought from firms caught up in the scandal. Makro insisted the move was just a “precautionary measure”.

Company news:

Sir Terry’s Wogan’s son Mark to open pizza restaurant in Neal’s Yard: Mark Wogan, the son of Sir Terry Wogan, is to open Homeslice Pizza at 13 Neal’s Yard in March.  The restaurant opening comes after Homeslice Pizza established itself in a pop-up context. One blogger states: “Homeslice Pizza has created somewhat of a cult following over the past six months. Since starting, they have been at King’s Boulevard in King’s Cross (weekly), Netil Market in Hackney (now sharing the space every Saturday with Lucky Chip), the opening of London Fields Brewery and Browns of Brockley. The simplicity of the pizza is transformed by the half a tonne of homemade oven, built by the guys themselves, and hauled around to their various locations with great effort.” Terry Wogan’s daughter Katherine Cripps-Wogan runs the three-strong Tally Ho Inns with her husband Henry.

Individual Restaurants named as first occupier of new Chester dining district: Individual Restaurants, is set to open a Restaurant Bar and Grill in the proposed Chester dining district at the former Habitat building in Pepper Street. Developers have declined to reveal the names of the three other restaurants due to move into the centre. Individual Restaurants also operates a Piccolino opposite the proposed development and currently has 32 restaurants nationwide. The new centre is expected to be open in less than a year’s time.

Redeveloped Marquis of Granby in Cambridge Circus comes on the market: The redeveloped Marquis of Granby on London’s Cambridge Circus has come on the market through agent  AG&G. “This is a new shell unit that amalgamates the old pub and adjoining accommodation in West Street to offer a total of just over 5,000 square feet from basement through to first floor, with more than 2,000 square feet on the ground floor,” said David Gooderham, of AG&G, which is offering a new lease on the property. “The licence from the Marquis of Granby has been protected so it can be passed on to the incoming operator and although the rear of the property in West Street does not have a licence, planning permission is in place for A3/A4 use. Given the fantastic position and footfall, with tourists, shoppers, theatre-goers and guests at nearby luxury hotels, the potential is enormous.”

McDonald’s takes over YouTube masthead as part of McBites activity: McDonald’s UK has released an online game and is set for a YouTube takeover today as part of the campaign to promote its new Chicken McBites from its Little Tasters Menu. Running until 10 February, the McBites Maze Promotion activity, devised by Razorfish London, will include a desktop game on the McDonald’s UK website, a mobile game that can be accessed through mobile adverts, a masthead takeover to run on YouTube and supporting activity for the McDonald’s UK Facebook page. The YouTube masthead takeover will take place throughout today (Thursday 17 January).

Bramwell to add further bedrooms to its March, Cambridgeshire site: Bramwell Pub Company, formerly known as Barracuda, is to add bedrooms to its March site, the 16th century Ye Olde Griffin Hotel on the High Street. The Grade II Listed ancient coaching inn is currently a pub restaurant, hotel and nightclub with ten guest bedrooms. The proposal includes the refurbishment of first and second floor bedrooms and corridors and the conversion of an unused function room into four new bedrooms. Meanwhile, Bramwell is spending £76,000 on a refurbishment of The Redbridge pub in Andover, expanding the number of cask ales from three to six and investing £100,000 on its Bridge Path pub in Whickham, Gateshead, introducing wooden floors throughout and revamping the beer garden.

Spirit spends £300,000 on two John Barras conversions: Work was begun on a £300,000 facelift for two pubs in Baildon, north of Bradford in Yorkshire which will create up to 20 new jobs. The Malt Shovel will be closed until Monday, January 28, to allow a refurbishment, with The Angel following suit at the end of the month. Angel manager Rob Heir said: “Baildon is already a bit of a hotspot with good pubs and bars and has great potential. We’re both owned by Spirit Pub Company, which recently improved The Bull’s Head, and when we’ve finished Baildon really will be fantastic for wandering from pub to pub.” Both pubs will be redecorated in a traditional style and will run under the banner of the John Barras brand which aims to keep the local character of its properties. The Angel will close on Monday, 28 January and reopen on Thursday, 7 February.

Final victory for Budvar in UK trademark dispute: The latest ruling by the UK’s Supreme Court that both Budweiser Budvar and AB InBev can use the Budweiser name in the UK means final victory for the Czech brewery here as there is no further possibility of an appeal. The court rejected AB InBev’s extraordinary appeal against a Supreme Court ruling in July last year that dismissed the multinational’s request to invalidate the trademark of the much smaller Czech brewer. In 2011 Budvar sold 1.3 million hectolitres of beer worldwide against AB InBev’s 399.4 million hectolitres. Currently the two antagonists are engaged in legal actions in eight different jurisdictions. Commenting on the decision Budvar chief executive Jiri Bocek said: “This attempt to change the final decision of the court proves the long term interest of AB InBev in trying to gain exclusive rights for the Budweiser name at any cost”.

Viral campaign launched in support of Wagamama’s in Chichester: A viral campaign has been launched in Chichester after planners rejected a move to open a Wagamama in South Street. The application to change the site, currently occupied by Store Twenty One, into a Wagamama was refused as it would present more than 15m of non-retail frontage in the heart of the city. However, in response, a petition has been set up to bring the chain to the city with 555 signature already gathered. Helen Beal, who started the on-line petition, wrote to the council: “We don’t agree with your decision that this is an inappropriate location and, as residents and visitors in this community, we welcome this addition with open arms, hearts and mouths.”

The Restaurant Group plans two sites in Coventry: The Restaurant Group is planning to open two sites near the Ricoh Arena in Coventry. New Frankie & Benny’s and Chiquito openings have been earmarked for space on undeveloped land close to Arena Park shopping centre. Developers say the choice of location east of the A444 Phoenix Way will create about 60-80 jobs. An application has been sent to Coventry City Council by Spen Hill Developments on behalf of The Restaurant Group. Opening dates are scheduled for the end of 2013.

Donnie MacPhee takes second site: Scottish operator Donnie MacPhee has taken his second site Foxes Hotel, which is on Saltburn Road on the outskirts of Invergordon. MacPhee also owns the Shandwick Inn in Kildary, Invergordon. He will be completely refurbishing The Foxes Hotel and is planning to reopen the business later in the year. Ken Sim’s, director at Christie + Co’s Edinburgh Office, said: “Despite the business being closed there was strong interest in The Foxes Hotel, particularly from local buyers and for a variety of uses. It is good news for Invergordon that an experienced operator such as Donnie has purchased this business.” It was sold off an asking price of £275,000.

Ilkley Brewery appoints female brewer: Ilkley Brewery has appointed its first female brewer - Harriet Marks. Marks said: “Having worked in viticulture on Australian vineyards prior to this post, I was keen to pursue a career in the drinks industry when I returned home to Yorkshire last year. Here, craft beer is undergoing an exciting revolution and I love being involved in the entire brewing process.”

Homemade café bistro opens second site: Homemade, the award-winning café bistro, has opened a new site in Sherwood, which will run alongside the original Homemade Café on Pelham Street in the Hockley area of Nottingham city centre, which was established in 2005. The venue was named as regional winner and national runner-up in the ‘Best Cheap Eats’ category as part of The Observer Food Monthly Awards for the second time last year.

Sainsbury’s set to open in former Greene King pub in Norwich as Tesco’s opens in a second pub: Sainsbury’s is to open a Sainsbury’s on the site of The Golden Key pub in Woodbridge Road, Norwich, a former Greene King pub. Greene King applied for permission to build an extension to the building to turn it into a supermarket in 2011. The application was eventually rejected by Ipswich council planners – but was allowed on appeal last summer. The store is expected to open during the summer, just as Tesco is preparing to open a new store on the site of The Emperor pub in Norwich Road on the other side of the town.

Signature Living buys Liverpool nightclub site: Hotel company Signature Living have announced the acquisition of a former nightclub and hotel on Stanley Street. Plans have been unveiled for a multi-million pound project that will see the building transformed into contemporary luxury hotel. There will also be an upmarket restaurant, members only bar and nightclub.

Gordon Ramsay eyes two sites in Dubai: Chef Gordon Ramsay is set to return to Dubai after revealing he is looking at two sites. “We are looking at two locations now and it’s only a matter of time.” Ramsay opened his first restaurant outside the UK in Dubai in partnership with Hilton Dubai Creek, where his restaurant Verre was for more than a decade before he ended the relationship in 2011.

Costa mounts strong defence of opening in Bakewell: Costa Coffee has offered a strong defence of its plan to open in Bakewell as locals mount an attempt to mobilise people power against the chain in the style of Totnes, Devon. The coffee chain won the right to open on appeal but locals have gathered 2,000 signatures on an online petition that argues the uniqueness of Bakewell will be jeopardised by the move. But a spokesperson for Costa has mounted a spirited defence of the move: “We feel the vibrancy of Bakewell and the sense of community spirit lends itself well to a Costa coffee shop. We strongly believe that coffee shops like Costa have a role to play in local investment and employment. Costa employs over 11,000 people in the UK and this year alone will be creating an additional 1,500 jobs. A typical Costa store employs between six and ten people and this will be the case in Bakewell. We appreciate that this can be a highly emotive issue for some people. We honestly do not think that anyone should see Costa as a threat. Our offering is very different to local independent coffee shops and we know from experience that people can and will use both, depending on their needs. We believe that the majority of people would rather see a disused building turned into a thriving business, employing local people, than remain vacant. We have received telephone calls and letters from various local residents who are in support of us opening.”

Tim Martin – like-for-like sales increases flow from “upping our tempo”: JD Wetherspoon founder Tim Martin has claimed that 8% like-for-like sale increases in the most recent quarter result from the company “upping the tempo”. He told Propel Morning Briefing: “I think it’s self-evident what’s going well – sales. We’ve just been trying to up the tempo a bit in what we do.” Martin said it was “hard to isolate” the precise reasons for the sales increase but the company has been offering coffee for £1.09 and matched the price of McDonald’s on its burger offer. Asked whether the new premium style of food presentation pioneered at airport and central London sites had helped food sales, he said: “I think it all helps. The airport sites have been useful over the years – they’re a good opportunity to try something different and if it works try it elsewhere.” The company reported margin down by 1.1% to 8.2%, linked to increased marketing costs, utilities, tax and food supplies. Martin reported the increased marketing costs were related to the introduction of a new menu in the period. “We had quite an expensive menu change a couple of months ago,” he said. Simon French, of Panmure Gordon, issued a Buy recommendation on the shares this morning with a 615p Target Price. He said: “Management is guiding towards 4-5% like-for-like sales growth for the full year and an Second Half EBIT margin of 8.0-8.6%. The unexpected downward pressure on margin expectations is from higher gas consumption and semi variable elements of its gas hedges working against them. This will result in the gas cost increase being £2.5-3.0m compared to previous expectations of circa £1m. Yesterday’s government proposal to increase the prize limit on Category C gaming machines (typically found in pubs) from £70 to £100 provides a further boost to the investment case (typically 5-10% sales increase) with implementation due in November 2013.” However, Douglas Jack, of Numis Securities, issued a Hold recommendation and a Target Price of 525p on the shares. He said: “Margins are continuing to disappoint, falling 40bps in Q1 and by circa 150bps in Q2. With the company facing tougher like-for-like sales comparatives and additional margin pressure in H2, we are cutting our 2013E forecast by 9%. We believe the valuation is full, with earnings expected to fall and debt to rise this year. We are cutting our 2013E PBT forecast by 9% as a result of the downside from weaker margins exceeding the upside from stronger like-for-like sales.”

Geof Collyer – Wetherspoon 8% sales growth a “Pyrrhic victory”: Deutsche Bank leisure analyst Geof Collyer has argued that Wetherspoon’s recent 8% like-for-like sales growth is a “Pyrrhic victory”. He said: “Historically, the group has suggested that 2-3% like-for-likes growth was enough to maintain margins. However, the group, in our view, is struggling to pass through enough price increases (especially with regard to beer duty) to cover inflation so is seeking to cover higher costs by driving more cash turnover. In theory, this is fine if the cash margin improves, but that looks not to be the case here. So, unless this longer term strategy succeeds, it looks to us like a bit of a Pyrrhic victory for the group. We prefer Greene King (Buy, 658p), where like-for-likes growth remains robust and retail margins are rising (+89 bps, FY’13E).”

Booker reports like-for-likes up 3.1%: Wholesaler Booker has reported like-for-like sales rose 3.1% in the 16 weeks to 4 January 2013. Non-tobacco sales were 4.2% higher, while tobacco sales rose by 1.3%. The company stated: “We acquired Makro on July 4th 2012. The Competition Commission is reviewing the transaction and during its review we are required to hold the Makro business separate from the rest of Booker. Makro has been struggling for the past few years and its performance in the last quarter has continued to be challenging, but in line with our expectations. The senior management of Booker and Makro remain confident that, by working together, we will be able to improve choice, prices and service to the caterers, retailers and small and medium sized enterprises that we serve. We will be able to offer foods and non foods via the internet, delivery and cash and carry. This will help the customers of both Booker and Makro prosper.” Chief executive Charles Wilson said: “Amid the challenging economic environment Booker continues to improve choice, prices and service for our customers. The Booker Wholesale business is doing well and we are pleased to be rolling out Classic and Chef Direct. We are excited about the opportunities of Booker and Makro coming together with the continuing aim of helping independent businesses prosper in the UK.”

High street loses appeal for UK restaurant operators: The scarcity of new opportunities forced acquisitive restaurant operators to widen their search for new sites in 2012, but high streets are definitely losing their appeal – according to Christie + Co’s Business Outlook 2013. Despite falling high street rents, the leading operators are clearly deterred by the number of retail business failures and the volume of vacant space. In a stifled transactional marketplace, average sale prices for UK restaurants declined by a marginal 1.4 per cent. However, consumer appetite for eating out in 2012 remained undimmed, according to Simon Chaplin, director and head of restaurants at Christie + Co. He said: “Despite spending cutbacks and dips in retail sales, UK consumers have consciously chosen not to curb their eating out. Our enthusiasm for visiting pubs, restaurants and takeaways hasn’t diminished – in fact there’s plenty of evidence to suggest that the average number of dining experiences enjoyed outside the home will grow over the coming months. Dining outside the home is no longer prompted by special occasions, or the need to socialise – it is driven by our hectic lifestyles. A large number of UK consumers simply don’t have the desire, or the expertise, to prepare a meal from scratch – we eat out because it’s quick, convenient and affordable.”

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