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Morning Briefing for pub, restaurant and food wervice operators

Tue 19th Feb 2013 - Costa, Jamie’s Italian and Spirit

Story of the day:

Jamie Rollo – 2,000-2,200 sites might be Costa Coffee’s upper UK limit: The UK saturation point for Costa Coffee may be 2,000-2,200 sites, Morgan Stanley analyst Jamie Rollo has argued. He said: “We think 2,000 outlets might be Costa’s natural limit. Costa has more UK outlets than McDonald’s, and nearly as many outlets as the second coffee retailer Starbucks. It is not far from UK leading branded catering retailer Greggs, and is bigger than Subway. There is a natural limit to any brand, and a couple of indicators suggest this might be around 2,000 for Costa. Starbucks USA, its densest market, has 11,100 stores, which is one outlet per 28,000 people. This compares to Costa UK at one outlet per 41,000 people. On Starbucks USA’s penetration, Costa UK could get to around 2,200 outlets. Another guide might be Subway’s UK target of 2,000 outlets, which is very close to Costa’s 2016 UK target of 1,900 stores. Our current forecast for Costa is 2,100 by 2017. In addition, the number of Costas is arguably already much larger than 1,500, given it has 2,000 machines and 4,000 wholesale outlets.” Rollo also argued that Costa “can do more with its existing shops”. He added: “Costa is looking at selling more food, adding new products, looking at ways to innovate and expand its range. We think it could consider unit sales as a new target, rather than outlets alone. One way of avoiding the pervasive brand issue and increasing penetration in towns where it already has high density could be to create a second brand, perhaps under a softer, more local name. However, this could risk tacit admission that the Costa brand has reached critical mass, or even saturation, and that it might be cannibalised by the new brand.”

Industry news:

SIBA unveils speaker programme for conference: A diverse line up of speakers including a TV chef, an American craft brewer and leading figures from the government and opposition will address BeerX, the celebration of British beer to be staged by the Society of Independent Brewers (SIBA) next month. The speakers will all talk at BeerX, in Sheffield, on Friday, 15 March before an anticipated audience of SIBA brewers, licensees, suppliers and others from the brewing industry, as well as interested members of the public. The speakers include: SIBA chief executive Julian Grocock, Garrett Oliver, brewer at Brooklyn Brewery and leading figure in the US craft brewing scene, Toby Perkins, Shadow Minister for Small Business, Simon Rimmer who is a chef, beer enthusiast and stars in Channel 4’s Sunday Brunch and Brandon Lewis, Community Pubs Minister. Julian Grocock said: “All of our speakers will be setting out their vision for British brewing. Given their very different backgrounds, we are expecting a diverse set of speeches, which will nonetheless share a passion for our national drink.”

Ralph Findlay – Cameron does understand the pub trade: Marston’s chief executive Ralph Findlay has hosted PM David Cameron at the company’s Wychwood Brewery. Findlay said: “We were delighted to welcome the PM to Wychwood. We discussed a number of industry related issues. He has a good understanding of the key issues which affect pubs and breweries and he is passionate about the role of the pub in the community. We discussed the pressure on pubs from regulation, investment in the sector and the role of the leisure sector employing young people.” Other topics for discussion included employment creation and the tax burden on the industry. Findlay added: “The meeting was productive and relaxed. The PM does understand our industry and values the pub in the community.”

Burger King has Twitter feed hacked: Burger King’s Twitter feed was hacked yesterday with its branding changed to rival McDonald’s. For a while, Burger King’s account contained racial slurs, references to drug use and obscenities. A spokesman for Burger King said: “We apologise to our followers who have been receiving erroneous rewets about other members of our industry and additional inappropriate topics.”

Own label frozen burger sales drop by 40%: Figures from Nielsen show that supermarket sales of own label frozen burgers have dropped by 40% in the wake of the horsemeat scandal, with the sale of branded burgers increasing. The figures have been impacted by the withdrawal of a number of products by retailers.

Camra – 1,000 pubs set to shut this year: Campaign group Camra has warned that 1,000 pubs are set to close this year – with a hundred pubs closed so far in 2013. It has urged George Osborne to scrap the beer duty escalator, which has pushed the price of a pint to £5 in some areas. More than 108,000 people have so far signed an online petition backing the call. Jonathan Mail, of Camra, said: “The government must axe plans to impose above inflation hikes in the cost of beer in this year’s Budget. Pub closures cost jobs and harm communities.” Jeremy Mitchell, who shut The Owl in Little Cheverell, Wiltshire, on 9 February, 20 months after it opened, said: “VAT is killing the pub trade.”

BT and Sky vie to buy ESPN sports rights: BT and Sky are in competition to buy football rights from sports broadcaster ESPN as the Disney-owned channel explores an exit from the UK, the Financial Times has reported. BT plans to roll out as many as three sports channels to broadcast football, rugby and other sports content it has already acquired for almost £1bn. The ESPN programming up-for-sale includes broadcast rights to matches from the German Bundesliga, the Europa League and the English FA Cup. Although the cost of acquiring rights has been escalating, analysts estimate that acquiring the three sets of rights together would cost about £20m annually. But they noted how increased interest in sports rights from pay TV operators had driven up costs for content. Last summer, BT paid £738m for the rights to 32 Premier League football games per season for three years in a move that put it in direct competition for sports rights with BSkyB. It has since acquired the rights to broadcast live Premiership rugby matches and WTA live tennis.

Yorkshire pub named best rural start-up business in the county: The Queen’s Arms in Litton in the Yorkshire Dales, re-opened in May last year, has won an award for the country’s best rural start-up. Mark and Heather Hancock bought the pub and undertook a major restoration, leading to winning the ‘best rural start-up business’ in Yorkshire in The Countryside Alliance’s annual Rural Awards. Landlady Emily Cowan said: “We are absolutely thrilled and it is amazing to have won the award. You often hear a lot of doom and gloom about village pubs closing, but The Queen’s Arms proves they can be a success. We have worked really hard for this to be something the whole village can be proud of and the award is recognition of what we are trying to achieve.” Two new bedrooms will be ready next month to let alongside an existing four rooms, while a micro-brewery is being launched in April.

Healthy lobby group - fizzy drinks should be taxed and fast food outlets near schools limited: The Academy of Medical Royal Colleges (AMRC) has published a list of ten recommendations to stop the UK being regarded as “the fat man of Europe”. These include: taxes of 20% on sugary drinks for at least a year, banning the advertising of foods high in saturated fat, sugar and salt before 9pm and giving local authorities the power to limit the number of fast food outlets near schools and leisure centres. The AMRC, which represents nearly every one of Britain’s 220,000 doctors, is pressing ministers, councils, the NHS and food organisations for action on what it calls “the greatest public health crisis affecting the UK”.

Horsemeat burger scores second highest in FT taste test: The Financial Times has reported that a burger made knowingly from horsemeat has taken second place in a “Taste Test” of ten similar food products. The frozen horse burgers were judged to have a “grown-up taste with a mild, gratifying flavour of liver” by one of the three gourmet diners. The blind tasting took place at the west London home of Sir Peter Bazalgette, chairman of the Arts Council and regular host of the column. His guests knew that one of the burgers was made of horse but not which one. A hand-pressed Aberdeen Angus Steak Burger from Waitrose came top. One taster thought the horse burger was “meaty, heavily seasoned, with nutmeg to the fore” while another found it “substantial with an authentic whiff of offal”.

Boris Johnson – minimum pricing is regressive: London Mayor Boris Johnson has called minimum pricing a “regressive” measure. The Mayor claimed that the poorest would be hit hardest by the proposals. Johnson told the London Evening Standard: “I think there are better ways of dealing with this. It’s very regressive. It hits poorest people hardest.” He said alcohol ban zones on some of London’s busiest high streets had worked “very well”.

Company news:

Revere Pub Company plans premium room offer: Revere Pub Company, the project by Marston’s to develop ten pubs in the estate to create an independent, premium feel, is to be extended to include 88 bedrooms across ten sites. The company has already re-opened three pubs under the Revere banner – and the next four sites will include the development of a premium offer at 40 bedrooms. It is understood that Revere has been working with design company Concorde BGW on developing the premium bedroom offer in keeping with the upgraded food and drink offer at Revere sites. Revere Pub Company managing director Colin Sadler told Morning Briefing: “Across the ten Revere pubs, we have 88 bedrooms. The challenge is to ensure these bedrooms meet the expectation level created by the premium offer downstairs. That has taken a while to work through and I am pretty confident we have got it right.” The first Revere site to open with a premium bedroom offer is The Angel in Lymington, Hampshire, which will be re-named The Angel & Blue Pig – it is due to re-open in mid-March. Each room will provide ‘stylish, contemporary décor, bespoke furniture and textured fabrics’ with each bedroom having ‘luxury bed linen, flat screen TVs, spacious bathrooms with walk in showers, complimentary Wi-Fi and a homemade welcome basket come as standard’. The first three pubs under the Revere banner are The Libertine in Westbourne, Bournemouth, The Lost and Found in Bennett Hill, Birmingham, and Ye Olde Saracen’s Head at Balsall Common, west Midlands, which were all opened before Christmas. Sadler added: “The first three are performing in line with forecasts.”

Court sets aside ten day to hear Luminar’s Oceania licence revocation appeal: Ten days of court time in May have been set aside at Wimbledon Magistrates Court to hear the appeal against the revocation of Luminar’s licence at its Oceania Kingston site – a pre-hearing will be held on 22 April. Meanwhile, Luminar has been told by a judge to hand over a list of crimes and incidents that had occurred at the venue. The ruling came from an appeal pre-case management hearing at Wimbledon Magistrates’ Court last Friday. The 2,000-person capacity nightclub was represented by Philip Kolvin QC, who argued against the release of the nightclub’s incident log. He said: “If we are going to spend days of this court’s time talking about Jane and Michael who lost their phones please help us.” He also described handing over the log as unlawful, outlandish and completely inconceivable outside of a criminal investigation. But James Rankin, representing the police, said: “This is not a fishing expedition. We are exercising our rights. This is not the first time there has been a complaint in the way the premises have been managed.” The club was able to fight off demands for medical logs and CCTV footage of its medical room to be handed over. The request was turned down as it was felt the medical information was likely to be sensitive and personal.

JD Wetherspoon to open hotel in Beccles next week with 20 bedrooms and visible cellar: Pub operator JD Wetherspoon is to open its new pub and hotel in Beccles, Suffolk (population: 9,746) next Tuesday (26 February), with the creation of 60 jobs. The company has spent £2.38 million re-developing the outlet, on the site of the former hotel/pub The King’s Head Hotel, in New Market. The Wetherspoon pub has retained the previous name, The King’s Head Hotel. It will be open from 7am until 12 midnight, Sunday to Thursday, and from 7am until 1am on Friday and Saturday. The new-look pub will feature one bar, as well as a pavement cafe-style area and beer garden. The hotel, which is on two floors above the pub, has 20 bedrooms, four family rooms, two twin rooms, one disabled room and 13 double bedrooms. The old garages have been converted into the modern reception and a new cellar has also been created, with a viewing window to see the cask ale tilting stillage in operation. Meanwhile, Wetherspoon opens its new £1.4m pub in Lymington, Hampshire (population: 14,300) this morning at 8am. It sparked one of the biggest planning battles the upmarket Hampshire town had ever seen. Permission for the scheme was finally granted in 2011 – almost a year to the day after the first application was rejected.

Marston’s plans waterfront new-build in Fleetwood: Midlands based brewer and retailer Marston’s has applied to build a new pub on waterfront land adjacent to Amounderness Way and Herring Arms in Fleetwood, Lancashire with the prospect of 45 new jobs (population: 27.077). If the scheme gets the go-ahead, the pub will be located close to the docks entrance. A spokesman for Marstons told the local newspaper: “The plans are for a family pub and restaurant, catering for up to 180 diners. There would be a total of 45 new jobs, including hospitality jobs bar work, chefs and management. It would also include ample parking and a children’s play area. Ideally we would like to start building in early summer, but of course that would be subject to us getting planning permission.”

Douglas Jack - Restaurant Group’s discounts during Skyfall were excessive: Numis Securities analyst Douglas Jack has issued a Hold note on Restaurant Group shares ahead of final results next week (27 February) with a Target Price of 360p. He said: “Recent trading should be strong, aided by an easy -2% comparative and high cinema attendance, but we expect to hold our forecasts. Like-for-like sales, up 4.5%, were good in 2012. Drink prices were broadly held in Quarter Four, resulting in drink price inflation slowing from 11% in H1 to 6% over the full year. Food promotions came and went, which is fine but offering “£10 off two main courses” in both Chiquito and Frankie & Benny’s during Skyfall, the most successful film in UK box office history, was excessive, in our opinion.”

No Saints licence review withdrawn: A licence review at the Sutton Wonderland nightclub operated by No Saints has been withdrawn, the company has reported. Police had asked for a review of Wonderland’s premises licence following concerns about irresponsible drinks promotions and drug use. The club, in Cheam Road, which has a capacity of more than 1,000 people, was opened in December 2011 after a £2.1m investment.

Carlisle nightclub closes doors: Carlisle nightclub Club Rock, off Bothergate, has closed. Club Rock, which opened in 2010, was put into liquidation after owner Dan Russell revealed it had run into debt. The Newcastle-based insolvency practitioner firm Robson Laidler is handling the insolvency process.

Football star plans to convert toilets to a tapas restaurant: Former Rangers footballer Jorg Albertz plans to convert public toilets at Anniesland Cross in Glasgow to a tapas restaurant called La Pasionaria at a cost of £300,000. Albertz, who earned the nicknamed The Hammer in his football career, has teamed up with his business partner Dougie McKirkle for the new venture. The restaurant was inspired by the tapas bars Albertz visited in villages near Murcia. The building, on a traffic island, has been empty for 15 years. It dates back to 1938 but has been locked up since 1998 when Glasgow City Council cleansing department decided it was surplus to requirements.

Levi Roots looking for a restaurant partner: Reggae Reggae sauce creator Levi Roots has outlined plans to expand into restaurants. Roots has reported he is creating a Caribbean restaurant concept and wants a partner to help him develop the idea. He told Eat Out magazine: “Since the initial success on Dragons’ Den and the early days of Reggae Reggae sauce, I’ve wanted to bring a touch of the Caribbean to as many people as possible. Now that we have established a strong reputation for the Levi Roots brand, it feels like the right time to realise our restaurant vision.”

Devon licensee buys second pub: Devon licensee Paul Parnell, who runs the award-winning Jack in the Green Inn at Rockbeare, near Exeter has bought a second pub - The Five Bells Inn opened in Clyst Hydon. There had been concerns that it could be sold for re-development as a residential property – it was had been in receivership. The pub is currently open, but will close before re-launching in the summer after extensive refurbishment.

Istanbul Grill to open third site: Istanbul Grill is to open a second site having bought the former Primavera Restaurant on King Street, Knutsford. Agent Keith Stringer, associate director of Christie + Co, said: “This will be the second property we will have acquired for Istanbul Grill, following their refurbishment and opening of the former Weavers Bar in Cheadle during 2012. We feel confident that the group will have similar success with their latest restaurant, which is due to open during spring 2013.” Instanbul Grill also operates a site in Prestwich, Manchester.

Burger King reports positive sales in the UK in most recent quarter: Burger King like-for-like sales rose 2.7% across the world in the most recent quarter. It reported a 3.7% rise in like-for-likes in the US and Canada, dwarfing McDonald’s sales increase in the US which came in at 0.3%. Sales in the UK were ‘positive’ in the fourth quarter, and continue to be positive this year but the company does not provide separate numbers for the UK.

Stonegate to open its fourth Popworld on 1 March: Managed operator Stonegate will open its fourth Popworld nightclub on 1 March in Swansea, converting a former Mitchells & Butlers’ Reflex site at a cost of £120,000. Popworld manager Carly Sailsbury said: “It will be the first Popworld to open in Wales and we confident that it will be a fantastic success. The idea behind Popworld is that it is a late-night bar that celebrates and wholly embraces pop music, from the 1990s to the present day, as well as its trademark anthemic 1980s music, music that gets you singing and up on the dance floor.”

Jamie’s Italian opens third site in Scotland: Jamie Italian opened a site in Aberdeen yesterday (18 February). The venue was due to open in June 2012, but was delayed because of issues with the building work. The Aberdeen restaurant is the third in Scotland, following on from successful sites in Glasgow and Edinburgh.

Union Bar enjoys £51,000 drop in business rates: The Union Bar in Triton Place has seen a £51,000 drop in business rates to £80,000. The venue, one of three Union Bars in London, had business rates of £131,000 per annum. Anthony Elder, of agent AG&G, negotiated a substantial reduction. He said: “This is a new build in an office block north of Euston, which isn’t central London and should not command a central London premium.” He pointed out that the value and business potential of premises in the capital can change from street to street, even within the same borough, and argued that the valuation should be more in line with Camden than with prime areas nearby.

Spirit launches online ordering for lessees: Spirit Pub Company’s leased division has launched its own online ordering system, Spirit Direct to all its leased and tenanted pubs. Managing director of Spirit leased Chris Welham said: “We wanted to develop an ordering system which is one of the simplest in the sector and the most intuitive for our licensees. It needs to save them time and help them see what’s on offer. Our product portfolio is very extensive, especially our cask ale range, so making sure our licensees have easy access to what’s available for their guests, is vital.” A survey conducted on the trial pubs using the new system found 100% said it was easy to use. 

High profile hotel in Cheltenham goes into administration: A well-known Cheltenham’s hotel has gone into administration after cash flow problems. The 12-bedroom boutique Hotel, in the Pittville area of the town, was on the market with Colliers International for £2.6m at the end of last year. It is a member of Pride of Britain Hotels and Small Luxury Hotels of the World. Matt Bond and Ben Wiles of financial advisors Duff & Phelps, who have been appointed as joint administrators of HTLP, the parent company of The Hotel, intend to continue to trade the business as usual, whilst seeking a buyer for the property.

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