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Thu 23rd May 2013 - Marston’s, M&B and Young’s

Story of the day:

Mitchells & Butlers reports profit leap; unveils results of survey of 8,000 consumers: The UK’s largest operator of pubs and restaurants, Mitchells & Butlers (M&B), has reported a jump in profit before tax to £72m in the 28 weeks to 13 April ((2012: £42m), with like-for-like sales growth of 0.8%. M&B has surveyed 8,000 consumers to understand the growth areas of the market. It reported: “We believe that there are areas of substantial opportunity to grow through increasing share in our highly fragmented market, worth £75bn in the UK. We have identified five ‘market spaces’ in which to focus, covering around half of the total market size. Upmarket social: value £8bn. This space is focused on relaxed but refined environments in urban and suburban locations. It is about friends and colleagues socialising and enjoying a drink. Our brands and formats in this space are All Bar One, Castle, Nicholson’s and Alex; Special: value £22bn. This large space covers special occasion dining, from established and trusted brands offering reliably special and high quality food, to destination brands offering a premium experience to adventurous and knowledgeable guests. Our brands and formats in this space are Miller & Carter, Vintage Inns, Village Pub & Kitchen, Premium Country Dining Group and Browns; Family: value £5bn. This space is focused on family dining, from brands which appeal to younger children where a stress-free and value-for-money experience is essential, to relaxed and familiar environments with broad appeal to bring the whole family together. Our brands and formats in this space are Harvester and Toby Carvery; Everyday social: value £2bn. This space encompasses brands which play a community role and provide casual, comfortable environments that bring people together. Our brands and formats in this space are Ember Inns and O’Neill’s; Heartland: value £4bn. This space describes an area of the value market where guests enjoy regular and familiar experiences - for a drink with friends, a quick meal or to take their families as a social activity. Our brands and formats in this space are Sizzling Pubs, Crown Carveries and Oak Tree Pubs. Of these sectors, Upmarket Social, Special and Family currently benefit from the most attractive consumer trends. We will invest in these areas and expand our brands where possible. In the Everyday Social space, we will optimise and invest in our brands to grow like-for-like sales and profits. In the Heartland space, we will protect our highly cash generative formats by competing on the basis of giving the greatest value to consumers that have been most exposed to the economic downturn. We call this our ‘five-star’ approach to the market.” Chief executive Alistair Darby added: “These results demonstrate the progress we are making through our business change programme. We are growing sales and profit in a tough market by building on the firm foundations of our excellent estate, strong brands, dedicated people and substantial scale. Having now delivered our restructuring cost savings in full, we have identified specific market segments where we can grow successfully and we have outlined clear operational priorities. By focusing on these areas, I believe that we will provide great experiences for our guests and sustainable returns for our shareholders.” Meanwhile, Stewart Gilliland has been appointed non-executive director of the company.

Industry news:

Shaftesbury – London market remains strong: Property company Shaftesbury, which owns 500 properties in and around Carnaby Street, Covent Garden, Chinatown, Soho and Charlotte Street, many let to restaurants and pubs, has reported the London market remains strong. Chief executive Brian Bickell said: “London continues to benefit from its unique features and unrivalled variety of attractions which draw visitors, businesses and those who wish to live here. Its status as a global destination brings world-wide interest, leading to prosperity and stability which is not reliant on the wider UK economy. As we anticipated, growth in our rental income is tempered this year as a result of the unusually high level of refurbishment and development activity across our portfolio. With sustained good demand across all our uses, we expect these valuable projects will let well on completion and make an important contribution to our revenue growth.” Revenue was £35.9m in the six months to 31 March, up from £35.5m in the same six months the year before.

New York Times - London awash with culinary redundancies: The New York Times has argued that the London restaurant scene is awash with culinary redundancies but praised Bubbledogs. The newspaper wrote: “London’s restaurant scene can seem awash with culinary redundancies. How many more ramen soup bars can the city really support? Do we really need another Peruvian restaurant with a “bespoke” pisco bar? So it’s a delight when clever culinary novelty hits town. To wit: Bubbledogs, a restaurant opened last August that revels in its Champagne selection, but substitutes hot dogs for caviar on its menu.”

Kitchen Nightmares production company threatens restaurateur with $100,000 claim for public discussion of show: The production companies behind the US version of Kitchen Nightmares, ITV Studios and Upper Ground, has threatened a US restaurateur, Arizona-based Amy’s Bakery, with a $100,000 claim for public discussion of involvement in the show. The letter states: “If you speak about the show without prior approval, and if you disparage the show, its host or its producers, you will breach your obligations. These agreements prohibit you speaking publicly about Kitchen Nightmares, other than to acknowledge “the mere fact of your participation in personal publicity relating to yourself”. Your conduct exposes you to liability for liquidated damages of $100,000.”

London hotels cash-in on all-German Champion League final: London hotels are cashing in on the all-German Champions League final on 25 May, according to a survey from Some hotels are charging as much as 700% more than normal. In total, about 85% of London hotels are already sold out for the final. In response to the shortage of available rooms, the remaining hotels are charging an average of 146% above regular rates for their vacancies. The biggest rate hikers are the Shaftsbury Metropolis, a four-star accommodation near London Paddington, and Ascot Hyde Park Hotel, a budget hotel close to Kensington Gardens - both have increased prices by 700%.

Coffee festival attracts record attendance: London Coffee Festival, the flagship event of UK Coffee Week, returned to the Old Truman Brewery, with unprecedented attendee levels of 16,209 (a 38% increase from 11,728 in 2012). It attracted more than 160 exhibitors and raised more than £50,000 for Project Waterfall, the charitable initiative delivering clean drinking water in African coffee-making countries. The hybrid B2C/B2B event, which extended from one to two industry days this year, welcomed more than 6,000 industry professionals and 10,000 consumers through the doors during its four days.

Company news:

Young’s reports profits boost: London pub retailer Young’s has reported turnover up 8.2% to £193.6m with adjusted profit before tax up 13.1% to £24.1m in the year ended 1 April. Chief executive Stephen Goodyear said: “(It was) an exceptional year in a number of ways, with one-off events such as the Diamond Jubilee and the Olympic and Paralympic Games, helping us to deliver strong like-for-like performance in the first half of the year despite some decidedly unseasonal weather, followed by further like-for-like growth when London returned to normal in the second half. We have added to our managed estate, both last year and in the early weeks of this, and we are nearing the end of the process of re-shaping our tenanted estate into one that is smaller but of higher quality. Trading since the period end has been strong with managed house revenue in the first seven weeks of the new financial year up 14.7% in total and 10.6% on a like-for-like basis, albeit against relatively weak comparatives. Over a thirteen-week period, which gives a more rounded picture, like-for-like trade was up 3.7%. Our premium offer, through both Young’s and Geronimo, continues to prove attractive despite the continued caution on the part of the UK consumer. With the quality of our estate, the talent within the business and our balance sheet strength, Young’s remains in a strong position to continue to grow and deliver value to our shareholders.” The company invested £20.5m in the year and sold seven tenanted pubs. Five managed pubs were opened, including transferred from tenanted.

Miller Brands boosts UK volumes by 4%: SABMiller has revealed that its UK subsidiary, Miller Brands, has delivered lager volume growth of 4% in the 12 months to 31 March 2013. This is despite poor weather, which contributed to an overall decline in the UK beer market of 5.1% over the same period. Miller Brands’ growth was achieved through a continued focus on its portfolio of imported lagers, including Peroni Nastro Azzurro, Miller Genuine Draft, St Stefanus, Lech and Tyskie. In particular, the business grew volumes of SABMiller’s global brand from the Czech Republic, Pilsner Urquell, by 10% during the year. Miller Brands managing director Gary Haigh said: “Beer drinkers in the UK have the luxury of thousands of brands to choose from and hundreds of thousands of pubs, bars and restaurants in which to enjoy them. To stand out in a noisy market, we must respond to consumers’ demands as they are increasingly looking for brands with a story, heritage and interesting provenance. Each of the beers we import to the UK has these qualities in abundance but as the original pilsner, none more so than Pilsner Urquell.”

Marston’s to open Revere site with wood-fired oven: Midlands-based Marston’s is to open its next premium unbranded site this coming weekend with a wood-fired pizza oven. It is thought that Marston’s has taken inspiration from Richard and Loren Pope’s Bull’s Head pub in Repton, Derbyshire, which has pioneered the highest quality wood-fired pizza as part of a broader pub offer. The opening, The Curious Pig in the Parlour was previously known as The Hedgehog Inn, and is in Copthorne, West Sussex. The Curious Pig in the Parlour’s nine modern bedrooms will provide many of the comforts and amenities expected of a boutique hotel. Each room has been designed by BGW Concorde and will offer stylish, contemporary décor, bespoke furniture and textured fabrics. In-room facilities such as luxury bed linen, flat screen TVs, spacious bathrooms with walk in showers, complimentary Wi-Fi and a homemade welcome basket come as standard. Overnight stays are priced at a starting rate of £79. 

TLC Inns founder to step down for three months: Founder of award-winning six-strong TLC Inns, Steve Haslam, is to step down from the business for three months. He said: “I’ve been waiting for the right moment to undergo a long-delayed surgical procedure. TLC Inns is enjoying a strong trading period at the moment so this seemed like the right time to step back from the business for a short period. Needless to say, I’ll be raring to go again in a few months’ time.” TLC Inns, which has on numerous awards at the Great British Pub Awards, will be run by Haslam’s partner Jo Drain during Haslam’s time away. Haslam’s break from the business is due to take place around mid-June, which means he is likely to return after the summer. 

Atmosphere Bars and Clubs administrator closes two sites: Atmosphere Bars and Clubs administrator Deloitte has closed two Chicago Rock Café sites in Warrington and Maidstone, Kent. A Job Centre application form was attached to the email sent to staff by Karen Thornley, joint administrator. In it, she said: “Your venue has been closed with immediate effect and regrettably your employment has been terminated by means of redundancy. You will probably feel it advisable to contact Job Centre Plus as soon as possible.” She added that any outstanding wages and redundancy pay would be decided by Deloitte.

Orchid Pub Company to launch biggest summer staff incentive: Orchid Pub Company is to launch its biggest ever summer staff incentive. The scheme, called The Big Drink, will run across June, July and August and on offer are 25 places across two trips - a seven-day all-inclusive trip to Mexico or two nights at the Oktoberfest in Munich. Staff are tasked with upselling its summer drinks range consisting Stella Cidre, Greene King IPA Gold, Old Golden Hen, Corona with lime and pitchers of Pimms. 

Warr opens new Leicester Square mega-site: Platinum Lace chief executive Simon Warr has partnered Club Operators to launch a new super club in London’s Leicester Square called Rise. The 1,000-capacity club, which opened last week, has been developed on the former Sound site at 1 Leicester Square. Warr, the ex-managing director of Spearmint Rhino European Ventures, is thought also to be close to also securing the Metra Bar & Club in Leicester Square for his Koru Lounge gentlemen’s club format. Platinum Lace, launched in 2010, operates five clubs in Brighton, Glasgow, Leicester, Nottingham and near Piccadilly Circus.

Renaissance Pub Company offers decade-long free food: Renaissance Pub Company is celebrating its tenth anniversary by offering one lucky customer free food for a decade. The company is also ‘giving away’ £200,000 in the form of £10 vouchers in May with all dining bills. The company is also marketing its tenth anniversary by offering ten house wines, launching a Ten Golden Ale and Ten London gin. 

Everards to open second Project Artisan site this weekend: Leicestershire brewer and retailer Everards is to open its second Project Artisan site this Saturday (25 May), The Church Inn in Birmingham’s Jewellery Quarter, which will have seen a £400,000 investment. Project Artisan, an evolution of Everards’ Project William venture with microbrewers, looks to install local food and drink businesses – such as bakers, chocolatiers and butchers – in Everards pubs or property. The company’s tenant at The Church is Soul Food Project, formed in 2010 by Matthew Beck and Carl Finn, who have more than ten years experience in the food, drink, music and hospitality trade. Soul Food Project is based on the pop-up restaurant revolution and has been cooking food “with care and passion” at live events across the Midlands.

Freehold of iconic pub comes on the market for £895,000: The freehold of the pub rated by Marco Pierre White as his ‘favourite pub in Britain’ as come on the market for £895,000. Landlord Gerry Stonhill has owned The Mason Arms and Cuban Cigar Club in South Leigh, near Witney, for 18 years, which closed at the beginning of the month. The pub has its own helicopter landing pad. Stonhill refused to let children into the pub and only accepted payment by cash and American Express card. Few prices were displayed on the menu. The pub’s website reads: “We don’t like children, mobile telephones or media restaurant critics.” Raymond Blanc described it as his “all-time favourite” pub and Marco Pierre White said it was his “favourite pub in Britain”, adding: “The food has all the cocksure confidence of the owner, Gerry Stonhill, and almost as much attitude.” Stonhill fell out with The Sunday Times’s late restaurant critic Michael Winner, who described The Mason Arms as “the tackiest pub in Britain”. Stonhill celebrated the accolade by erecting a sign with the quote by the pub’s front door. A picture of Mr Winner was also hung above the urinals in the men’s toilets. Property agent, Peter Brunt, of Colliers International, said: “The Mason Arms was run in a very individual – probably unrepeatable – style by our client but all the fundamentals for a fabulous business are there in spades.”

Jamie’s Italian hires Karmarama as first advertising agency: Jamie’s Italian has hired Karmarama as its first advertising agency, after a three-way pitch against Antidote and CheethamBell JWT. Karmarama will now carry out brand, digital and CRM work for the chain, which has 32 restaurants around the UK. Karmarama’s first work will appear this autumn and is likely to run across print, outdoor, radio and digital, as well as CRM. As part of the pitch, each agency partnered with one of the Italian restaurants, with staff spending time working there and taking cooking lessons with Gennaro Contaldo, who co-founded the chain with Oliver in 2008. Louise Ludlam, the head of communication and culture at Jamie’s Italian, said: “From the first meeting, Karmarama felt less like an agency, more like a very creative part of the Jamie’s Italian family.”

Diageo makes changes to executive committee: Diageo has revealed that its group strategy director Jim Grover is to retire from the company. Grover will leave the executive committee on 30 June 2013 and will retire from the business on 30 September 2013. Anna Manz, finance director at Diageo Asia Pacific, becomes group strategy director and will join the Diageo executive committee on 1 July 2013. Diageo chief executive Paul Walsh said: “Jim has served on the Executive Committee of Diageo since 1997 and has played a major role in this business for more than 20 years: first leading strategy for Grand Metropolitan’s food business, then for Grand Metropolitan itself and most recently as group strategy director for Diageo. I am very grateful to him for his commitment to our brands, values and our people over his long and successful career with Diageo.”

Claremont Farm opens the world’s first pop-up asparagus restaurant: Claremont Farm has opened the world’s first pop-up asparagus restaurant. Asparagus Patch in Liverpool One is a temporary restaurant that celebrates the vegetable’s short season with a menu of asparagus-based dishes. The restaurant will be open for a limited period, until June 20. The farm at Old Clatterbridge Road, Bebington, has staff working around the clock as the asparagus harvest has begun. Normally the season runs from May Day until midsummer’s day, but this year it has been delayed. The restaurant, on Manesty’s Lane opposite Waterstone’s, is open for lunch and early dinners.

Burger King returns to 100% British and Irish beef with Kepak deal: Burger King has returned to sourcing 100% British and Irish beef burgers for its restaurants in the UK and Ireland after the horsemeat scandal forced it to temporarily buy burgers from Italy and Germany. The burger chain announced a new deal with Kepak group under which it will buy British and Irish patties from Kepak. Burger King said that Kepak’s Ballybay site would be subject to “frequent and rigorous” audits and the Irish government has also committed to carry out inspections and tests at the site.

Brinker buys back Canadian franchise sites to speed-up expansion: Brinker International has agreed to buy back 11 existing Chili’s Grill & Bar units in Canada from its first international franchisee and is creating a Canadian subsidiary. The 11 Chili’s, in the Canadian province of Alberta, are being purchased from Speedy Creek of Edmonton, which first opened the brand in Canada in 1991. The deal is expected to close in June. The Alberta casual-dining units generate about $35 million in annual sales, Brinker said. “For more than 20 years, Chili’s has been delivering signature favorites to Canadian guests and with this new agreement will continue to do so while Brinker accelerates the expansion of the brand in the region,” said Guy Constant, Brinker’s chief financial officer.

Spirit chooses new vegetarian dishes with help from 150 staff: Spirit Pub Company has hosted a vegetarian taster session as part of National Vegetarian Week (20 - 24 May) to help decide which dishes stand out and will make it on to future menus. The taster session, which ran on Tuesday 21 May at Spirit’s Support Centre in Burton, involved five suppliers who showcased 40 vegetarian dishes for 150 of Spirit’s head office team to taste. Alongside Spirit employees were Vanessa Brown and Benjamin Orlowski-Hatton from the Vegetarian Society who gave product development manager, Jason Radbourn, their official point of view on the variety and quality of dishes available. Vanessa Brown, head of business and catering services, said: “The vegetarian food market is growing and its not just vegetarians who are choosing to buy meat free meals. Companies need to develop ranges of dishes that offer not only value but tasty and delicious choices. It’s great that the Spirit Pub Company are building on their past menus and looking to improve and develop.” The top 15 dishes will now go through to a panel vote which is judged by a variety of guests from across five of Spirit’s brands; Fayre & Square, Flaming Grill, Chef & Brewer, John Barras and Taylor Walker. The dishes that are the most popular will then make it on to the next refresh of the menus. Radbourn said: “Our taster sessions are a great opportunity for our Support Centre teams to get involved in the menu development of our brands, we held our first one last year which was a huge success and led to nine new dishes making it on our menus including the Rustic Open Lasagne in Fayre & Square which increased the sales in the vegetarian category by 6%.”

Turnaround at La Tasca complete: La Tasca, the Spanish tapas business led by Simon Wilkinson that went through a restructuring in 2012, has reported that its turnaround has been completed. The management team at La Tasca is approaching the end of the first quarter of their third year since taking over the ailing business. The company reports that four years of sales decline have been halted, guest recommendation scores are at an industry-leading all-time high and their company average score for the Council Hygiene Scores on Doors scheme is well above four out of five. This week sees La Tasca launch its “Stage Two new La Tasca design” at the Trafford Centre and its first new acquisition in New Brighton is performing way above expectations. During the last two years, the management team has “radically overhauled every facet of the business, and most importantly the quality of the food has changed beyond recognition”. Its unbranded concept Bellota in Brighton is performing very well where the introduction of the first stand-alone Cava Bar in the UK has seen cava sales rise from 2.6% of sales mix to 26.2%. Wilkinson said: “Every member of the La Tasca family has contributed to this very quick turnaround of the business. When you look at other companies that have had a radical turnaround within our industry the norm for traction is around three years so to achieve this in just over two years is a massive achievement for the team. These are very exciting times for the business, rather than closing down sites we are now opening alongside competitors and taking market share. We are also about to embark on a comprehensive roll-out of our new look within all three concepts across the existing estate as well as looking for acquisitions.” La Tasca reported a £4,673,000 operating loss at its the 64-strong estate in the last full year before it entered a Voluntary Agreement that saw the company shut 23 sites and vary terms on other leases. The operating loss occurred in the year to 26 February 2012 when turnover was £50,193,000 – there was also exceptional operating items of £7,426,000, including impairment charges of £6,413,000, to create an overall pre-tax loss and pre-interest loss of £11,228,00. (The year before it had lost £7,922,000 on turnover of £58,457,000.) The Company Voluntary Arrangement took effect on 29 September 2012 – it was approved by 85.2% of its unsecured creditors. La Tasca currently has banking facilities in place through to 30 September 2014. The company reported its financial covenants are currently set at a level the directors feel are suitable for the business. The CVA also saw a rent reduction on 19 sites. Sites the company left behind in the CVA were producing annual losses in excess of £2m. La Tasca is owned by Icelandic bank Kaupthing and German’s Commerzbank.

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