National newspapers give VAT campaign coverage boost: A host of national newspapers have given the campaign, led by Jacques Borel, to reduce the VAT rate in the sector from 20% to 5% extensive coverage in the wake of JD Wetherspoon’s results on Friday. The Daily Telegraph and The Sun both led their business coverage on Saturday with news of the campaign. The broadsheet reported: “In the run-up to the Budget, the Chancellor has come under attack from operators, including JD Wetherspoon, Punch Taverns and Heineken for the high rate of VAT, beer duty and other “stealth” taxes.” Tim Martin, founder of Wetherspoon, led the charge by warning that pubs are being unfairly disadvantaged compared with supermarkets, which pay “virtually no VAT” on food sales, allowing them to sell alcohol at “extremely low prices”. The Telegraph comment column stated: “Pub groups point out that supermarkets, unlike pubs, don’t have to pay 20% VAT on the vast majority of food they sell. That cost saving allows them to offer alcohol to customers at dramatically lower prices than at the pub. Reducing the VAT “disparity” between pubs and supermarkets is not straightforward, but one easy way to ensure the burden doesn’t get increased is by freezing the beer duty escalator in (the) Budget.” The Sun’s business page lead story reported Tim Martin’s call to “slash VAT on bar meals”. He told The Sun: “The underlying tax disparity between supermarket and pubs is the problem.” The Independent reported Tim Martin’s argument that the tax disparity is more keenly felt in the regions. “It can be ignored in Chelsea, but not in Wolverhampton,” the Wetherspoon boss told the newspaper. The Financial Times focused on Wetherspoon’s argument that a VAT level playing field would encourage a “migration back into pubs that would help address binge-drinking”. Meanwhile, in The Times, columnist David Wighton noted: “Pubs have to put 20% VAT on the food they sell, while supermarkets charge virtually no VAT on food. Martin is a strong backer of the campaign to reduce VAT on the hospitality industry to help its competitiveness and boost employment. In normal times, there would be a powerful argument for such a move.” The Daily Mail noted that Wetherspoon paid £40m more tax than if it was a supermarket. “VAT is levied at 20% on food sold in pubs, but supermarkets are exempt from the duty,” it reported.

Propel Opinion: There are many in the sector who remain sceptical about whether the government can ever be persuaded to reduce VAT. Nobody ever claimed the battle will be won quickly. But by making our argument over and over again the sector will convince more and more people that there is a fundamental unfairness here that allows supermarkets to subsidise cheap alcohol. This weekend’s Press coverage seems like a watershed moment – many national newspapers set out of the unfairness of this tax disparity. These newspapers also carried opinion pieces on the subject. It is significant that no newspaper could find any kind of flaw in the logic of the sector’s argument on this.

Rent reviews are resulting in nil increases: Chief executive John Hutson reported that the majority of its five-yearly rent reviews are resulting in nil increases. Wetherspoon’s leases provide five-year periods of flat rent with a review that has, historically, meant increases to catch up with inflation. Nil rent increases mean the company’s rent bill is reducing in real terms. Hutson said: “Generally, rents have gone up by more than inflation (in the past) – that hasn’t happened in the last few years.” The flat rent environment is a result of a lack of demand for sites from competitors, Hutson said. “There’s no demand for sites from people doing what we are doing,” he said.

Landlords insurance reductions followed by others: JD Wetherspoon has reduced its landlords’ insurance bill by £1m per annum after comparing quotes with open market rates. Hutson reported that the reductions stemmed from Wetherspoon’s track record of running very safe pubs. “Landlords have been very co-operative,” he said. The company had been telephoned by Sainsbury’s for advice on reducing premiums, Hutson added. 

Like-for-likes surge not driven by additional discounting: John Hutson denied that the large like-for-like sales increases achieved since last summer had been created through additional discounting. “There is no magic (discounting) tap we can turn on – if there was we’d be drinking from it all the time,” he said. Like-for-like sales increases had, instead, resulted from making the most of major events last year, mounting strong food and drink promotions and “upgrading the business in every way we can think of”. He added: “Costs are rising by more than inflation. The way to square the circle is to grow sales by more than inflation.” Hutson said, however, that the company is not expecting like-for-likes to “carry on at the same rate in 2013”, forecasting increases of around 3%. Finance director Kirk Davis reported that the company’s like-for-like increases of 6.9% in the 26 weeks to 27 January would have been even better but for two weeks of snow in January when sales across the estate were flat. 

Hutson – our customer base matches the towns we trade in: John Hutson reported that research had shown that JD Wetherspoon’s customer demographics match the demographics of each town it trades in. “We try and have a broad appeal for the markets in which we trade. The demographics are the same inside our pubs as outside our pubs, “ he said. “We’re mass market but we get more ABC1 customers than PizzaExpress in towns where we both trade.”

Ten percent point increase in food sales in ten years: Finance director Kirk Davis reported that food sales had increased from 23.2% of sales in 2003 to 32.5% this year. Two-thirds of total sales are now driven by a food occasion. Bar sales have dropped from 71.6% of total sales in 2003 to 63.1% of sales this year.

Urban and Country Leisure subsidiary in voluntary liquidation: A single site subsidiary company of Urban and Country Leisure, led by Ross Sanders, has gone into voluntary liquidation. Urban and Country Leisure (Old Auctioneer) ran Star Pubs and Bars’ Old Auctioneer pub in Parsons Street, Banbury which is currently closed. The company is expected to leave a deficiency of £727,986 with trade creditors owed £203,657 – unpaid HMRC VAT and tax amounts to £51,000 and Star Pubs and Bars is owed £101,000. There is an outstanding investment loan of £375,000. The Banbury pub is one of two Star Pubs and Bars sites Urban and Country Leisure has been looking to sell so it can focus on expanding its Lazy Cow brand – the other site is The Plough in Cobham, Surrey. The company is understood to have been approached by a managed operator, a brewer and a private fund keen to expand The Lazy Cow. UCL operates four Lazy Cow sites, two of which, Stratford and Solihull, opened before Christmas.

Thali Café acquires sixth site: Thali Café, the Bristol operator of five restaurants, has acquired a sixth site, Teohs restaurant at The Tobacco Factory in Bedminster. The brand opened its first site in Bristol in 1999 following the success of a pop-up restaurant. The company has expanded to five sites and also attends major national music festivals including Glastonbury, The Big Chill and Secret Garden Party. This Bristol restaurant group is as well-known for its unique identity – which it describes as ‘kitsch colonial’ – as it is for its famous thalis and tiffins. The Tobacco Factory was built in 1910 by the Wills family and now prides itself on raising the profile of independent businesses that directly benefit the local economy. It has been transformed into a multi-use building housing a creative industry work space, loft apartments, animation and performing arts schools and a small theatre venue. Teohs has traded in The Tobacco Factory for 12 years – its 4,110 square foot site will be the largest Thali Cafe operates.

Parliamentary EDM condemns McDonald’s purchase of pubs: MPs led by Greg Mulholland have condemned McDonald’s for buying up pubs and converting them into fast-food outlets. The company offers £20,000 for anyone who suggests a suitable site for a new restaurant, and lists pubs among desirable locations on its website. McDonald’s wants to open 30 new ‘drive-thru’ restaurants every year. A spokesman for the company said: “Like many businesses, we look to identify possible development opportunities in a number of locations, some of which include sites of former pubs. In order to convert a pub, we require a change of use and therefore must apply for planning consent and we always conduct consultation before and during the planning application procedure.”

BISL calls for Budget support for sector: Business in Sport and Leisure (BISL) has called on the Chancellor to undertake a number of measures in the Budget in order that the sport and leisure industries can continue their important and significant contribution to economic growth. BISL is the strategic body representing business and organisations operating in the sports and leisure industries. Its chairman, Chris Bell, has written to the Chancellor outlining the benefits of the sport and leisure industries to the economy, highlighting the fact that the industries generate more than £200 billion of annual income, employ more than 2.6 million people and contribute £32 billion in annual tax revenues. Bell said: “Our members believe that the leisure industry can continue to deliver significant economic and employment growth and is keen to be a constructive partner to government and industry stakeholders in the pursuit of this aim. We have offered a number of recommendations to the Chancellor, which we believe will be of benefit to the jobs market and the economy.” BISL’s recommendations cover a number of areas; taxation, employment, planning, licensing, gambling, local government procurement and sport. These include; a long-term examination of a reduced VAT rate for suitable leisure industry sectors, including visitor attractions, pubs and restaurants and gambling. Additionally, the introduction of a new employment measure that would see an exemption from employer National Insurance for a period of one year, for any business employing 16-25 year olds and NEETs.

Tavistock Leisure expands administration team to cope with demand at craft brewery: North east leisure operator Tavistock Leisure has expanded its administration team to cope with demand for beer produced at its Sonnet 43 Brew House, at Coxhoe, County Durham, launched six months ago. The brewery, which opened its doors in Autumn 2012, sells craft ales and beers and to over 100 pubs across the region. Tavistock director Mark Hird, owner of Sonnet 43 Brew House, said: “We always knew that the craft beer market offered great opportunities across the UK but have been overwhelmed by the positive response Sonnet 43 Brew House has generated in such a short space of time. The expansion of our administrative team and its offices was essential to keep up with ever-increasing demand and I fully expect further growth will become necessary in the months ahead.”

Condé Nast opens Dubai café: Magazine publisher Condé Nast, owner of Vogue and GQ, has opened Café Vogue in Dubai, situated within the Dubai Mall, a luxury shopping centre dedicated to upmarket shopping brands. “Vogue Café Dubai is our first step into the Middle East market, and together with the GQ Bar, forms an integral part of Condé Nast International’s strategy to expand its media brands into restaurants and bars around the world,” he said. Other Condé Nast openings in the pipeline this year include Singapore and Bangkok, while GQ Bar Istanbul and Vogue Café Kiev were opened recently.

Award-winning Marlow restaurateur recruited to set up jumbo jet curry house: Restaurateur Abdul Rob, who owns award-winning Tiger Garden and Tiger Cub in Marlow, has been recruited to help set up a 300 cover curry house on an out-of-service jumbo jet. Rob is working with pilot and entrepreneur Mustafa Azim whose company Imperial Air Salvage buys and strips out aeroplanes before putting their shells to alternative use. Rob won recognition as most outstanding restaurateur at the Federation of Bangladeshi Caterers Awards in 2010. A Boeing 747, formerly owned by Saudi Airlines, has been bought by Mustafa for £55,000 and is located in Manston Airport in Kent prior to a fit-out. A prototype restaurant on a 100-seater jet in Leicester is being worked on before starting on the main project.

York restaurant plans edible wall: A York city centre restaurant is to grow an ‘‘edible garden’’ up its front wall. The owners of El Piano, in Grape Lane, want to grow herbs and vegetables on the building’s exterior, fulfilling their aim of using locally grown food. Founding director Magdalena Chavez said the Incredible Edible Walls (IEW) project was a positive attempt to overcome the issues of growing food in an urban environment by using vertical systems for food production. “It’s challenging but fabulously exciting,” she said. “We see it as a natural progression for both our business and the city of York, embracing sustainable thinking and education alongside food growth, community involvement and national profile.”

Three restaurants set to open in Canary Wharf: Three restaurants are opening in Canary Wharf in the coming months. Fine dining Indian restaurant Manjal opened last week, taking over the space by Crossharbour DLR vacated by the popular tapas venue El Faro last year. Owner Anil Shetty said: “Once we’ve proved it’s profitable we want to expand across London, then the United States and France. By 2015 we could see considerable growth. There are many restaurants making money around here so if it can’t work in Canary Wharf it probably can’t work anywhere.” The opening follows the launch of shisha bar and Asian restaurant Temple Lounge at West India Quay last week. Tom’s Kitchen is due to launch at Westferry Circus in mid to late-May.

JD Wetherspoon buys Broughty Ferry pub – after £250,000 price-cut: JD Wetherspoon is to develop a pub in Broughty Ferry, on the east side of Dundee, after the freehold price dropped from £1.2m to £950,000. The company has bought the site two years after the family-owned hostelry was placed in administration. The property had been on the market with an asking price of £1.2 million for more than a year after trading company Tay Hotels closed the doors in summer 2011. Wetherspoon’s interest was re-ignited after the asking price fell to £950,000. The company will now invest a further £1m before re-opening it later this year.

Le Pain Quotidien reports turnover rise: Bakery chain Le Pain Quotidien has reported turnover rose by 12.3% to £29,660,195 in the year to 30 December 2012 after it expanded its UK store network from 18 to 22 sites. Profit before tax was £585,108 compared to £3,120,796 the year before when a loan from its Belgian parent company was waived. 

Jacca Leisure plans new opening: Jacca Leisure, which operates restaurants in Bothwell, is to open Nonna’s Kitchen in Kirkintilloch. The venue offers a restaurant, function suite and delicatessen at the former Eagle Inn in Cowgate. Jacca Leisure boss Peter Di Ciacca said: “We saw the new link road and housing development going into the area and thought from a commercial perspective the town centre in Kirkintilloch was a strategic location for our company’s continued growth.”

Administrator - Gregarious paid £1.2m for 12 Antic leasehold sites: Gregarious, the new company headed by former Antic company secretary Max Alderman and backed by fund manager Downing, paid £1.2m to buy 12 of 14 leasehold Antic sites out of administration, a report by administrator Chantrey Vellacott filed today reveals. Of this, £900,000 was paid on completion of the deal on 16 February, with the remaining £300,000 payable six months later. The bid by Gregarious was the highest of 21 received to buy assets in different permutations from 14 companies. There were 63 expressions of interest and 57 information packs sent out. Antic Limited owes unsecured creditors a total of £2.7m and a Company Voluntary Agreement was considered which would have meant creditors received between 10p and 15p in the pound. However, a number of landlords said expressly that they would not support a CVA. Chantrey Vellacott reported that Antic had been forced on several occasions to face winding up petitions in relation to unpaid VAT and PAYE. The company’s problems had arisen because of expansion from cashflow – it had an overdraft facility of £100,000 and a loan from Barclays Bank of £80,000. The company had “anticipated that Barclays would fund the company’s acquisition of additional sites by providing a further £300,000 to £400,000 by way of secured loans”. However, “acute restrictions on borrowing at the time meant that the offer of funding was withdrawn”. The administrator stated: “The company’s strategy was to become less reliant on bank debt by increasing the size of its portfolio and strengthening its position.” It added: “As a result of the above, the company has faced difficulties in paying its liabilities to HMRC. There have been four petitions presented against the company in the last three years. On each occasion, third party funding, often by means of a director’s loan or loan from a connected company, would be obtained to pay the debt in full. However, this would cause the company immediate cash flow restrictions which impacted upon the ability of the company to pay the most recently accruing tax liabilities. On 12 September 2012, HMRC presented a winding up petition for crown debts of £938,934 which related to three quarters of VAT returns and PAYE contributions.” Director Anthony Thomas arranged to pay £225,571 and attempted to agree a payment plan, which was not agreed – and on 18 December 2012 Antic contacted Chantrey Vellacott, which advised that the firm was insolvent. Post administration, director Anthony Thomas advised the administrator that he was prepared to inject £400,000 for an initial distribution to creditors – it was then that it became clear creditors would not support the CVA.