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Morning Briefing Strap Line
Wed 12th Jun 2013 - Enterprise, Real China and Red Hot World Buffet

Story of the day:

Industry expert – self-regulation has worked but tenanted companies are charging too much for beer: Pub industry expert Phil Dixon has defended self-regulation by the tenanted pub companies and argued that it is working. He reported that companies were clearly looking to resolve issues rather than risk being named and shamed. But he also told the Business Innovation and Skills Committee that companies are charging too much for beer supplied to their licensees. Dixon, who has been involved in the industry for a number of decades, said: “Beer volumes have dropped 54% since 2000. (Licensees) can’t make margin on the prices that are being charged.” Dixon argued that it was ‘nonsense’ that tied licensees hope customers buy a Diet Coca-Cola on a hot day rather than a beer because the margins are 80% compared to less than 40% on beer products. Dixon also dismissed claims that the average Enterprise licensee is earning between £30,000 to £40,000. “Pubcos need to give more margin to licensees on the beer tie – or risk losing it.” Dixon argued that another key issue is “onerous agreements – the full repairing and insuring lease”. He was also critical of rent-setting. He said: “The rent system doesn’t help – chartered surveyors don’t help. The Royal Institution of Chartered Surveyors guidelines are not fit for purpose. (Licensees) walk in with a big badge saying, ‘Please exploit me’. The best licensees are being penalised and discriminated against.” Dixon argued against including a company like Admiral Taverns, which prefers short-term tenancies to long leases, in statutory regulation. An Admiral Taverns tenant had received a cheque for £1,000 and a personal apology from managing director Kevin Georgel after complaining about the way she was spoken to by her business development manager. “Why do they need statutory regulation?” Dixon asked the committee. He also praised Punch Taverns. “The companies are too big – I think Punch Taverns has recognised that.” He also advised the committee on the consequences of allowing licensees a complete free-of-tie option on a pump. “Licensees will go for the (product) they make the most money on – standard lager. This needs to be thought through – it’s a camouflaged timebomb. If the idea is to abolish the tie, then fine.”

Industry news:

Pub and restaurant sales up 1.2% in May: Pub and restaurant groups saw collective like-for-like sales increase 1.2% in May, against the same month last year. Total sales, including the impact of new openings, were up 4.5%, according to latest figures from the Coffer Peach Business Tracker. The London market had the healthiest growth, with like-for-likes up 1.8%, and with managed pubs in the capital performing particularly strongly. “After a poor, weather-affected start to the year, operators will be pleased to see some real growth in the market,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS. “Despite May being colder and wetter than average, the public have shown they still have the appetite to go out to eat and drink,” Martin added. However, sales growth was not uniform across the market. While pubs and bars in London had a good month, collective like-for-likes for those outside the M25 were essentially flat, with drink-led pubs seeing a like-for-like sales decline. In contrast, mainstream restaurant chains saw a better performance away from London, both in terms of like-for-like and total sales growth. “Much of the market’s new openings are coming from the branded casual dining sector outside of the M25,” Martin added. Underlying growth trends also improved last month. On a year-on-year basis, collective like-for-like sales for the 27 companies in the Tracker sample were ahead 1.0% for the 12 months up to the end of May against the previous 12 months. Total sales were running ahead 4.1% year-on-year.

US publication names its hot concepts of 2013: US publication Nation’s Restaurant News has named its five foodservice Hot Concepts of 2013. The awards recognise companies that are at the leading edge of foodservice and show potential for growth. This year’s winners range from an innovative Italian street food concept to a brand that aims to create a “fast-fine” niche. The winners are: Fresh to Order (eight sites offering fine dining quality at fast food prices), Max’s Wine Dive (four sites offering gourmet comfort food and retail wine sales), Modmarket (four sites offering fresh-cooked local and organic ingredients), Piada Italian Street Food (ten sites selling high-quality ingredients in a tortilla-like piada) and Umami Burger (14 sites selling burgers with unusual ingredients like truffle glaze and shiitake mushrooms).

Ted Tuppen – Freedom of Information requests not the precursor to legal action: Enterprise chief executive Ted Tuppen has dismissed a suggestion that Freedom of Information requests by his company to the Business Innovation and Skills (BIS) committee is the precursor to legal action over proposed statutory regulation of the tenanted pub companies. The suggestion was made to the committee by Enterprise Inns licensee Simon Clarke. Tuppen told Propel that there was “nothing sinister” in the request. He said: “There is no question of a legal challenge to a consultation – you simply can’t. There is no question of a legal challenge until one knows what the outcome is. All I have said is that if the outcome justified such, we will consider a legal challenge. We issued a number of Freedom of Information requests to BIS a month ago to help us understand the questions in the consultation document and the evidence it referred to. The Freedom of Information requests are simply to enable us to understand elements of the consultation.” Tuppen added that no replies had been forthcoming yet although 28 days are allowed to respond under the law.

BII chairman calls for statutory code to apply to all companies: Bernard Brindley, chairman of the British Institute of Innkeeping (BII), has called for the proposed statutory code of conduct to be applied to all companies that run tenanted or leased pubs. The consultation suggests that statutory regulation should only be applied to companies with 500 or more pubs, which involves six major companies. In his evidence to the Business Innovation and Skills Committee, he said: “There should be no threshold – the threshold should be zero. Small companies have nothing to fear from this.” The committee heard that 37% of calls to the BII helpdesk had come from Enterprise licensees and 24% had come from Punch licensees. Brindley said: “Let’s be fair – you’d expect them to have more calls than the smaller companies.”

Brigid Simmonds – we are not considering a legal challenge at the moment: British Beer and Pub Association chief executive Brigid Simmonds has denied that a legal challenge to statutory regulation of pub companies is being considered at the moment. Asked about Enterprise Inns chief executive Ted Tuppen’s comments on taking legal action, she said in evidence yesterday: “Mr Tuppen is not threatening the government with a legal challenge – we are not considering it at this stage. Ultimately the tied system is governed by the European block exemption.”

Survey reveals mountain of paperwork for managers: A survey has revealed that 52% of food and beverage managers spend over an hour a day on administration, with another 28% complaining of extra administrative tasks increasing that time commitment even further to over four hours per day. The findings from Caternet showed that only 4% of managers spend less than an hour per week on administration duties – leaving 96% who are spending far too much time shuffling paper instead of performing their primary job role. The survey, which polled decision-makers in the sector, also found that 10% spend more than 20 hours on their paperwork with half of these admitting they spend up to 60 hours every week.

Mintel – demand for traditional cakes is dropping: Research company Mintel has reported that sales of traditional cakes such as fruit cakes and Victoria sponges have been overtaken for the first time by sales of cupcakes, muffins and cake bars as consumer seek snacks to eat on the go. Mintel head of food research Kiti Soininen said: “Smaller sizes are benefiting from the trend towards portability that was led by cereal bars and breakfast biscuits in a single-pack portion. The shift means people are simply not buying the bigger cake sizes.”

Pint and a glass of wine among 20 ‘bare necessity’ items: A survey of 2,000 adults has found that a pint of beer and a glass of wine are among the 20 top ‘bare necessity of modern life’ items. A cup of tea, fast internet connection, a full English breakfast, coffee and a trustworthy best friend also made the list.

Company news:

Punch Taverns bondholders call for independent restructuring process: Senior bondholders at Punch Taverns have called for an independent process after rejecting the latest proposals by the company to reduce debt. The company presented a fresh set of proposals on Monday that sought to address concerns among senior bondholders that junior bondholders were receiving preferential treatment. Punch’s fresh proposals on Monday offered senior bondholders an option to cash-out their stake in the company. Punch chairman Stephen Billingham has warned of the possibility of a distressed situation if the issue is not resolved. 

Bumper first month for restaurants at Whiteley shopping centre: Davis Coffer Lyons has been appointed by British Land and USS, the joint venture partners, as the sole agent to work on phase two of Whiteley Shopping in Hampshire. The appointment follows the agent’s success in delivering the leisure element of the scheme’s first phase. The 320,000 square foot mixed-use scheme anchored by M&S and Tesco opened last month and includes restaurants Dean’s Diner, Harvester, Frankie & Bennie’s, Prezzo and Chimichanga together with Starbucks, Costa and Cafe Nero. Phase two – which will include a multi-screen cinema along with additional restaurant units – is due for completion in May 2015. Alice Keown, associate director at DCL, said: “The restaurants at Whiteley Shopping have enjoyed a bumper opening month with takings exceeding everyone’s expectations.”

Luke Johnson – “I’m put off when advisors take a disproportionate fee”: Sector investor Luke Johnson has issued advice on what he looks for in a business plan. In his Financial Times column he wrote: “What interests me is the next 12 to 18 months – further out is pure speculation, especially in an early stage business. I never buy shares based on what might be possible years away – I want to see what milestones can be achieved in the near future.” He added: “Investors don’t want to see a material amount of their money going to pay corporate financiers. I was presented with a plan last year where the adviser stood to collect 20% of the funds raised. It put me off.”

Marco Pierre White sues for share of pub proceeds: Celebrity chef Marco Pierre White has launched legal action for £174,000 in damages after claiming he was cheated out of a share of a pub that used his name. The business, Marco Pierre White’s Yew Tree Inn, was sold for £900,000 in June 2012 but White claims he has not received any proceeds. His former business partners, Andrew Parton and Peter Featherman, are suing White for between £400,000 and £600,000, alleging he refused them a licence to use his name. White told the High Court he did everything he could to promote the business on his Great British Feast programme and in a book of the same name.

Hand Picked Hotels buys Guernsey venue: Hand Picked Hotels, the operator of country house hotels owned by Guy Hands and his wife Julia, has bought the four star St Pierre Hotel and Golf Resort in Guernsey for an undisclosed sum. Last month, Hand Picked Hotels reported a pre-tax loss of £6.9m in the year ended 29 November 2012, following on from a loss of £7m the year before. Turnover decreased by 0.7% to £59,911,036. Operating profit decreased to £510,000 from £730,000 in the previous year. EBITDA was £8.3m compared with £8.9m in the previous year. 

Real China signs for Lowry shopping centre: Buffet restaurant chain Real China, which runs 22 sites in the UK, has signed to take a 4,120 square foot space at the Lowry Outlet shopping centre in Salford Quays. Helen Anderton, centre manager, said: “The restaurant sector is a key area we’re looking to expand at the Lowry Outlet and The Real China will give our customers further choice on our diverse and popular mix of restaurants. We know there is an increasing demand for dining here and feel this new opening will drive commercial growth for the Plaza restaurants as a whole and position us as an attractive dining destination.”

Metro Inns site placed in administration: A number of hotels owned by Metro Inns have been placed into administration. The administrator is trading the hotels while seeking a buyer. Annette Menzies, head of business recovery and insolvency at accountancy firm Haines Watts in Glasgow, was appointed administrator of the hotels. The businesses affected operated hotels in Derby, Chesterfield, Manchester, Gloucester and Hayes. Newcastle upon Tyne-based Metro Inns was formed in 2006 to support the acquisition and expansion of a new budget hotel brand in the UK. The company’s north east-based hotels are not included in the administration. The full list of businesses involved in the insolvency process is: Metro Inns A1 Ltd – Barnsdale Bar Hotel; Metro Inns (Gloucester) Ltd – Orchard Hotel; Shepiston Lodge (Hayes) Ltd – Shepiston Lodge; Rangemoor Park (Derby) Ltd – Rangemoor Park Hotel; Metro Inns (Manchester) Ltd – Altrincham Lodge Hotel; Metro Inns (Chesterfield) Ltd – Chesterfield Hotel; and Bexley Square Property Company Ltd – The Lord Nelson Hotel.

Red Hot World Buffet in Milton Keynes receives no stars: Red Hot World Buffet, which is reported to be in negotiations with Luke Johnson over an investment in the business, was one of just two restaurants in Milton Keynes to receive a zero in its food hygiene rating. Red Hot World Buffet in the Theatre District and Sid’s Snack Bar, which operates on Renny Park Road in Newport Pagnell, were given the lowest possible rating by Milton Keynes Council’s inspectors. Raman Gulati, restaurant manager, Red Hot Milton Keynes, told the local newspaper: “Inspectors have visited the restaurant since our previous rating was announced and they were satisfied that we are working to improve standards. We closed the restaurant for two days to make immediate improvements and we are undertaking a complete refurbishment this year to upgrade the site.” Red Hot’s revised hygiene rating is due to be announced in June.

Shaka Zulu launches champagne bar: Shaka Zulu, London’s largest South African restaurant, has launched a new oyster and champagne bar. The 850-capacity venue in Camden launched the bar, which is set above the 2,508 square metre restaurant, after the success of its Meat Bar – featuring meat-based cocktails - last year. Its menu features an array of champagne and oyster-based cocktails, including the Smoked Vodka Oyster Martini, and the Oyster Shot, both of which use Fine de Claire oysters. Bar manager Tony Safq, said: “Following on from last year’s success of the Meat Bar, we once again decided to launch an exciting drink concept, this time, oyster-infused cocktails, which would also help us generate more awareness of our new champagne and oyster bar too.”

YO! Sushi name new finance director: YO! Sushi has hired Andrew Campbell, the former Novus Leisure finance director, as its new finance director. Previous incumbent James Fowler has left to join Nando’s as its finance director. Campbell has worked as finance director for Spirit, Premier Foods and a number of healthcare companies. YO! Sushi chief executive Robin Rowland said: “Andrew is a first class appointment for us at a time we continue to grow and innovate and with Vanessa Hall arriving as our new chief operating officer in September, we are continuing to power up the business.”

North Country Inns take over third pub: North Country Inns, led by Garry Smith and John Welch, has taken over its third pub. The Queens Arms in Warwick-on-Eden is to undergo a £300,000 co-investment with owner Thwaites. The Queens Arms, which has been a pub since 1752, has been derelict for nearly two years. Construction is due to complete in early July ahead of official opening in mid-July. North Country Inns also runs The Brackenrigg Inn, The Bull Hotel and The Marton Arms in Cumbria. Smith said: “This is a fantastic opportunity to turn what had become a local eyesore into an outstanding drinking and eating establishment to be proud of. There is nothing in Carlisle at present offering quality seasonal food and locally sourced produce combined with the finest cask conditioned ales so there will be a huge appetite for a quality inn able to provide this. We will have a minimum of six real ales on the bar, offer 15 wines by the glass and a range of between 15-20 malt whiskeys.”

Virgin reveals location of New York hotel: Virgin Hotels has revealed the location of its new hotel set to be opened in New York – it’s on the northwest corner of 29th Street and Broadway. With over 300 guest rooms, various fine dining experiences, meeting rooms, and a gym, the new Virgin hotel is set to open in 2016. Richard Branson, founder of Virgin Group said: “At long last, the city that never sleeps will get a beautiful and irresistible Virgin Hotel to play, eat, work, mingle, and yes, even to sleep.” Chief executive of Virgin Hotels Raul Leal said: “We are delighted to enter the New York market and specifically to play a part in continuing the NoMad neighborhood’s growth as a dynamic destination.” The group is also opening a Virgin Hotels site in Chicago in the second quarter of 2014.

Livebookings creates two divisions to prepare for growth: Livebookings, the real-time reservations and online marketing services company for restaurants, has created two new divisions in preparation for the company’s growth plans. Joining the consumer division, Joe Steele has been appointed managing director of consumer and Guy Halfhead has been promoted to managing director of Merchant Services. Livebookings chief executive Colin Tenwick said: “This is an exciting time for the company. This strategic hire and internal promotion reflects our aggressive growth strategy and the expansion of the consumer arm of the business. We are on track to process more than 25 million bookings before the end of 2013, representing 40% growth on 2012. This is testament to how quickly the sector is growing.”

Stella Artois Cidre launches weather activated adverts: Stella Artois is making the unpredictability of the British summer an irrelevance by running weather-activated outdoor adverts for its Cidre brands. The outdoor effort takes over digital out-of-home ad spots when the temperature rises two degrees or more above the average in that specific location. Anything below, and the advert will not appear. It serves up a scene of handpicked apples with the brewer looking to highlight the cider’s taste at times when people are most likely to impulse buy.

Whisky dominates list of the world’s 50 most popular spirits: Whisky brands account for more than a third of the total brand value in the top 50 world spirit brands, with Scotch whisky pulling away from other whisky styles. The combined brand value of all featured whisky in the list is $14.29bn. This is more than the totals for the next three most valuable categories combined – vodka, baijiu and rum have respective values of $5.35bn, $4bn and $3.73bn. Cognac and liqueur brands are next, making up 9% ($3.45bn) and 5% ($1.78bn) of the total brand value. Johnnie Walker is the world’s most popular whisky brand with a value of $4.37bn, $2bn clear of second place.

Costa Coffee doubles up in the centre of Swindon: Costa Coffee is to open its second site in Swindon city centre. The new venue, situated in The Parade, will be opening on 3 July. A Costa spokesman said there are no plans to close the other town centre Costa, in Havelock Square. 

Beefeater appoints Sir Ian Botham as brand ambassador: Cricketer Sir Ian Botham has been appointed as the brand ambassador for the Whitbread’s Beefeater brand. Botham has been given the tagline, ‘Boss of Beef’. The brand’s website states: “We’ll be releasing new games, Facebook apps and competitions throughout the summer, so why not pull up a deckchair and make yourself comfortable? There are thousands of freebies on offer, from free dessert and money off your food bill, to signed Beefy merchandise and even the chance to meet The Boss himself at the cricket.”

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