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Morning Briefing for pub, restaurant and food wervice operators

Fri 22nd Mar 2013 - Dishoom, Strada and YO! Sushi

Story of the day:

Technomic – 500 largest US chains grew sales by 4.9% in 2012: The 500 largest US restaurant chains saw a 4.9% annual sales increase in 2012, a marked improvement over 3.5% the prior year. According to data released by insights firm Technomic sales for the Top 500 chains grew to an estimated $254 billion in 2012, up more than $12 billion over 2011. “It is certainly encouraging to see overall industry growth rates return to levels not seen since 2007,” said Ron Paul, president of Technomic. “On a chain-by-chain basis, however, performance still varies substantially as organisations continue adapting their value proposition to meet consumer demands, and refining operations to meet various industry challenges.” Among limited-service restaurants, the highest growth came from the Asian, Bakery Café and Mexican categories. Segment leaders were Panda Express (19.8% sales growth), Panera Bread (12.3%, est.) and Taco Bell (8.3%, est.). McDonald’s, the largest US restaurant chain, boosted sales 4.2% in 2012, with total annual sales of $35.6 billion. Subway continues as the second largest restaurant chain in the US, followed by Starbucks, Wendy’s and Burger King. As a whole, limited-service restaurants saw a sales increase of 5.6%. Chicken chains, which grew 8.8%, represented another limited-service sub-segment with above-average sales growth. Within this group, Chick-fil-A grew 14.1% with 2012 sales of $4.6 billion. Fast casual chains also contributed to stronger 2012 performance. A standout in the fast casual Mexican segment was Chipotle Mexican Grill with sales growth of 20.2%. Full-service restaurants experienced a 2.9% sales increase in 2012, a marginal increase over 2.8% seen in 2011. The full-service steak and seafood categories continued to show healthy growth, with increases of 5.9 and 4.5%, respectively. Gains in the steak category were driven by Texas Roadhouse (12.4%) and LongHorn Steakhouse (12.1%). Among seafood chains, the category leader, Red Lobster, met the average 4.5%.

Industry news:

Land Securities unveils its ‘vision of future retailing’ in Leeds: Land Securities has opened its vision of the future of retail - Trinity Leeds shopping centre. The retail developer says Trinity Leeds will mark “the beginning of the next generation of shopping centres” as “the UK’s most digitally enabled mall” where online meets the bricks-and-mortar store. The new centre, the only major retail and leisure development on course to launch in Western Europe this year, offers an “all-digital experience”. Features include personalised shopper communications through a new website that features an embedded CRM system, a mobile app, a network of digital screens, free Wi-Fi, Google Product Search and a service team equipped with iPads and a service app to help retailers and shoppers alike get the most from customer visits to the centre. Brands include: two D&D Restaurants openings, Café Rouge, Carluccio’s, Costa Coffee, Crepeaffaire, Giraffe, Handmade Burger Company, Juice, Lavazza, Mr Pretzels, Nando’s, Snog, Starbucks and TGI Friday’s. 

Tesco success with Giraffe depends on coping with greater complexity: Professor Chris Edger, who was director of human resources at Mitchells & Butlers and is now director of multi-unit leadership at Birmingham City University, has argued that Tesco’s success in owning and operating Giraffe will depend on how well it copes with greater complexity in its business model. Writing for today Propel Friday Opinion, he states: “(The) dramatic increase in variety in supermarket retailing threatens to disrupt the very factors that led to organisational success in the first place – huge volumes underpinned by lean supply and service systems. Going beyond the simplicity of volume and value, means encountering (and dealing with) the complexity of variety and ensuring quality over a range of unfamiliar products and services.” (See the separate Propel Friday Opinion e-mail for the full article)

Kate Oppenheim to become new editor of BII Business: Kate Oppenheim is to become the new editor of BII Business, the magazine for members of the British Institute of Innkeeping. She was selected from a short-list of four candidates to succeed Andrew Pring, who has edited the magazine for three-and-a-half years. BII chief executive Tim Hulme said: “We are absolutely delighted to welcome Kate as editor of BII Business. She is a tremendously experienced editor and we are supremely confident she will do a fantastic job in creating a must-read magazine that delivers business critical information as well as reflecting everything that is great about both BII and our industry. I would also like to take this opportunity to thank Andrew Pring for his considerable contribution to the magazine and to BII, and wish him the best in his future endeavours.” Oppenheim has edited a string of business publications including the Publican, Retail Week and Off-Licence News – and is also a former publisher of business publications at British Sky Broadcasting and launch editor of The Pub Channel. Her first edition will be published in May.

Starbucks extends loyalty scheme to grocery stores: Starbucks in the US is to extend its loyalty card scheme in May to customers who buy a bag of Starbucks whole bean or ground packaged coffee at the supermarket. By autumn, the company hopes to expand the scheme to other Starbucks grocery products. In a reference to the ability to register loyalty points through grocery purchases, founder Howard Shultz said: “Over the past two years, we’ve been witness to a seismic change in consumer behavior due to technology. As a result of that, we’ve been able to do things almost no other consumer brand has done before.” The three-year-old My Starbucks Rewards loyalty card scheme currently has six million members and is adding about 80,000 new members a week, reported Adam Brotman, chief digital officer at Starbucks.

Technomic – UK operators have scope to build on popularity of bacon: Research and insights form Technomic has argued that the popularity of bacon offers scope to provide imaginative menu items. A recent poll by the BBC’s Olive magazine found more than half of respondents named the bacon butty as their favourite snack. (cheese-on-toast took second place.) Technomic’s David Wilkinson said: “More than three-quarters of UK consumers (78%) surveyed in a Technomic poll said they buy a sandwich away from home at least once every two months, and the number of limited-service restaurant chains offering breakfast sandwiches—where bacon is an obvious protein choice—doubled in just two years, from nine chains in 2009 to 18 in 2011.The simple bacon butty on white bread holds a special place in the heart of not a few UK diners. But playing on that bacon affinity by pairing bacon with out-of-the-ordinary flavour partners (avocado salsa, for example) or equally comforting, crave-worthy components (such as gooey, melted cheese) can elevate sandwich selections from worth considering to worthy of repeat visits.”

Company news:

Former Mitchells & Butlers executive opens Brighton ‘café’ today: Former Mitchells & Butlers executive Mike Palmer, who has consulted on some of London’s most innovative openings including Flat Iron and John Salt, is to open his own business in Brighton today. His new venture Lucky Beach is situated facing Brighton beach between the two piers. Palmer told Propel: “It’s an upscale concept but very accessible, centred around local food and drink with great 35-day aged beef from a local conservation project, local roast coffee and Darkstar beer - value is key. Our furniture is from the Royal Festival Hall, we have decked it out with reclaimed wood from Brighton docks, and used the same designer who oversaw Flat Iron, John Salt and Bramwell Pub Company’s The Long Room.” Palmer added that the venue has a number of pop-ups booked to add interest in a series called “Dirty Weekend” that will feature some of London’s best chefs, including former John Salt chef Ben Spalding.

YO! Sushi appoints new consumer agency: YO! Sushi has appointed LightBrigade to handle consumer PR as it embarks on an UK expansion push. The account includes experiential and social media projects as well as operating a full-service press office and supporting its restaurant opening programme. The company is looking to open eight restaurants this year, to add to its existing 64 branches. The account moves from Roche Communications, which has worked with the brand for around 12 years. YO! Sushi head of marketing Graham Hawkey-Smith said: “The overall strategy they pitched was on a different level in terms of understanding how important social media is to a brand such as YO! Sushi.” The agency will create a campaign for a product launch the brand has planned for June this year. 

Strada celebrates pizza milestone with customer offer: Italian restaurant chain Strada has now sold over 5,555,555 pizzas to customers since it was founded - and is celebrating with an offer to thank customers for their loyalty. Launched yesterday, Strada is rewarding the public by giving them a gift code for a third off their food bill on their next visit. The special gift code is available at and is valid between 5pm on Sunday to close of business Friday, between 21 March 2013 and 14 April, 2013. “We wanted to thank the British public for choosing our pizzas,” said Strada managing director Nick White. “The entire Strada team is incredibly proud to have reached such a milestone. Having beaten the five million mark, we’re all keen to push for ten as soon as possible!”

Landmark hotel owes creditors more than £9 million: A landmark hotel in Brighton went into administration with debts of more than £9 million. The Lansdowne Place Hotel in Hove collapsed into administration in January. Among creditors are customers who booked functions owed £16,000 and £10,000 owed to people who had bought gift vouchers. The hotel owed its bank, Santander UK, around £9 million. Administrator KPMG said it was called in after the taxman issued a seven day warning letter in respect of unpaid PAYE and national insurance contributions amounting to £205,864. Jane Moriarty, from KPMG said: “We are expecting to bring the property to market shortly, and hope that a buyer will be found, at which point we can assess the likely return to the secured creditors. As we have indicated in our creditors report, we do not, at this stage, expect to be making a distribution to unsecured creditors.”

Pieminister opens first bistro style bar and deli café: Bristol-based Pieminister has opened its first bistro style bar and all-day café, a £200,000 investment, at its original site in Stokes Croft, which also now houses its administrative headquarters. The company, which was launched in 2003, was one of the first to move into the rundown area of Bristol when it opened its first pie and mash shop. The company is now on the verge of a major expansion and is planning to open up more shops in the coming months. The new bar and deli, which will serve beer and cider, is due to open its doors for the first time this weekend. Spokesperson for the firm Romany Simon said: “This is a very exciting venture for us because we are going in a completely new direction.”

Slug & Lettuce updates website: Slug & Lettuce has re-launched its website,, with a fresh look and added features. The 71-strong concept, which is owned by Stonegate Pub Company, asked digital agency Clock to design and implement the new website, which now has a new and improved booking system feature with greater simpler and functionality. It is expected that the upgraded booking system will handle more than 3,400 reservations a month from the 125,000 website visitors during the same period. In addition to standard features such as finding your nearest site, checking menus and the latest in-bar promotions, other features include a click-through to each bar’s own pages where readers can get up-to-date information on what’s on in each location, contact details and photos from recent events and nights at the bar.

Kate Moss designs sushi box for French chain: Supermodel Kate Moss has designed a sushi box for French chain Sushi Shop, which is opening its first UK site in South Kensington next month. The box carried 40 pieces of sushi and is covered in sequins and bears the supermodel’s name. “We are opening our first London location next month (the chain’s 100th restaurant) so it felt natural to collaborate with her,” a spokeswoman said.

Historic pub in Somerset to be turned into a cider house: Businessman Paul Wrigglesworth is expanding by turning an historic pub on Wincanton’s High Street into a cider house in line with Somerset’s traditional roots. Uncle Tom’s Cabin, which closed on 3 March, with also house a cider museum and shop. Wrigglesworth has already turned The Red Lion in the town into a sports bar. He said: “I’m a big fan of giving pubs a bit of a niche. There’s no point in trying to compete with others in the town. I can’t find a traditional cider house in the whole of Somerset. I’m hoping that the doors will be open in the next two weeks.”

The original Walkabout in Covent Garden to close next week: The first Walkabout in London will close its doors on Saturday 30 March with an ‘End of the World Party’. The venue had a passing rent of £400,000 although a new lease is understood be structured with some turnover element. Rates payable are £124,880 per annum. An Intertain spokesman said last year: “We surrendered the lease voluntarily (last) year in return for a very significant premium in our favour. We have been trading on a short-term lease since then on a minimal rent. We have used the proceeds to help finance the refurbishment programme on our larger venues. Covent Garden is a very small site and we took the view that it does not really fit the mould now.” The site is to be converted to the second Sticks ‘n’ Sushi opening after its launch in Wimbledon.

Orchid Pub Company plays with hot dogs idea at Pizza Kitchen and Bar: Orchid Pub Company is “playing with the idea” of introducing dough dogs to its Pizza Kitchen and Bar brand. Orchid operates ten Pizza Kitchen and Bars and plans to add as many as 20 this year. Chief executive Rufus Hall has described the brand as a ‘genre-buster’ with sites converted to the brand adding 38% to sales on average – the most recent opening was in Fleet, Hampshire. A picture of the “dough dog” – a customised hot dog appeared on Facebook this week. A spokeswoman said: “It’s just an idea at this stage.”

Whitbread to open Brewers Fayre with spirit of the community competition: Whitbread will open a new Brewers Fayre and Premier Inn hotel next Monday with a community-minded promotion. The new site at Marsh Leys, Kempston, is a £6m investment. The company is searching for the area’s most talented photographer. Locals are invited to submit photographs taken in the area which best represent the ‘Spirit of the Community’ and can win a £200 voucher.

Pharmaceutical entrepreneur invests £2m in gastro-pub: A businessman who sold his pharmaceutical firm to enter the sector has invested almost £2m in creating a gastro-pub. Keverne Watts was managing director of Jaycare, the North Shields based specialist packaging company owned by venture capitalists 3i, when it was sold in a multi million-pound deal in 2004. Watts has spent 10 months on renovating the Grade-11 listed Croft Hotel, located outside Darlington, to create a gastropub and tea rooms. He aims to treble turnover to £2.25m per annum within three years. He said: “When we bought Croft, the turnover was just £750,000 but within three years we hope to treble that and hopefully more jobs will be created. We made a seven-figure investment in buying Croft and the refurbishment budget was closer to £2m than £1m because it cost twice as much as we thought.” Watts has already opened Horton Grange Country House Hotel in Ponteland, Northumberland.

UK-based SSP to open star-studded line-up at JFK airport in New York: UK-based transport hub catering specialist SSP is to open a star-studded line-up of 16 restaurants at JFK’s Terminal 4 as part of a $28 million development project. The openings are expected to generate more than $1 billion in sales over the term of the contract, which will run until 2026 - SSP will be the sole food and beverage operator at the terminal. Andrew Lynch, chief executive of SSP, said: “Our new bars and restaurants include concepts created by some of the brightest and best-known chefs from New York and across the country. They will serve as a showcase of outstanding American dining at one of the most important airports in the world.” The full line up of new restaurants is: Uptown Brasserie Street Food by Marcus Samuelsson, two Shake Shacks, Blue Smoke, On The Road, La Brea Bakery, Dunkin’ Donuts, Central Diner, Cake Tin, McDonald’s, Le Grand Comptoir Asobu, two Camden food Co sites, The Palm Bar & Grille and Buffalo Wild Wings. 

Dishoom works with Ogilvy One to increase engagement by ‘sharing stores’: Indian chain Dishoom has worked with agency OgilvyOne UK to create a campaign that aims to bring the rich cultural traditions of the old Irani cafés of Bombay that Dishoom is inspired by to its Shoreditch opening. OgilvyOne’s creative idea was based around the idea of sharing - as in the old Bombay cafés food and stories were shared around the table. The agency harvested the stories from the older generation in Bombay and the UK and by scouring the internet. The stories were then narrowed down to 80, which have now been designed and baked onto the plates used in the restaurant. Dishroom founder Shamil Thakrar said: “We love sharing stories at Dishoom – especially through design. What we most enjoyed about this idea is the way it literally bakes these unique and personal stories into Dishoom. It makes them into something that every guest can experience for themselves and encourages them to share stories of their own. In this way, the memories will live on.”

Brewdog plans nine new openings in 2013: Scottish brewer and retailer Brewdog is eyeing up nine new openings in the UK this year after its eleventh site opened in Leeds last week – it added five sites last year. Of the latest opening co-founder James Watt said: “2012 was a great year for us with bar openings in several major UK cities, and we see the Leeds bar as the harbinger of a new, assertive chapter in the craft beer revolution. The long fight it took to get it open only served to bolster our determination to continue to challenge the current understanding of beer in the UK. A West Yorkshire bar is a strategically important asset in this on going fight. Our location in the 250-year-old White Cloth Hall puts us in touch with the history of the city and we hope Brewdog Leeds is the beginning of a significant contribution to the cultural make-up of Leeds.” The Leeds site bar serves locally sourced food such as pork pies from The Little Yorkshire Pie Company and vegetarian scotch eggs from The Handmade Scotch Egg Co.

Douglas Jack - the budget was positive for three reasons: Numis Securities analyst Douglas Jack has argued the Budget was positive for pubs on the three counts: The 1p/pint reduction in beer duty from Sunday; termination of the flawed beer duty escalator; and further increases in income tax personal allowances. He said: “Last year, four billion pints of beer were sold in the on-trade. Of this, three billion pints were sold in pubs (on which the 1p/pint duty reduction would be worth £30m). Across the on and off-trade, £3,445m of excise duty was paid last year on 7,778m pints (51.8% on-trade; 48.2% off-trade), equivalent to 44p a pint. Brewers are still raising their wholesale prices by circa 3% and other costs are still rising. Stopping the beer duty escalator simply means beer prices do not have to increase as much. Stopping the beer duty escalator is a major positive. Beer duty has risen 13.1p to 43.3p for a 4% ABV pint since March 2008, the resilience and adaptability of the pub sector has been remarkable. If VAT was included, the tax rose 16.5p per pint. The scale of the burden created by the escalator is reflected in the average price of a (on-trade) pint rising to £2.98, from £2.41, since March 2008. This 24% increase (largely paying for higher tax and regulation) was matched by a 24% drop in volumes. Also, the increase in the personal allowance on income tax from £8,105 to £9,440 on 6 April and £10,000 in April 2014 should boost disposable income. We believe current trading is weak due to weather, but given the improving outlook and easier comparatives ahead, we would use weakness as a buying opportunity.”

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