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Thu 13th Jun 2013 - Greene King, Marston’s and Nando’s

Story of the day:

Punch Taverns accuses ABI Special Committee of ‘inaccurate statements’; challenges fees of advisers: Discussions over the restructuring of Punch Taverns’ debt have turned into a public clash between the company and a powerful group of senior lenders. Punch Taverns has accused senior bondholders on the Association of British Insurers (ABI) Special Committee of making ‘inaccurate statements’ in response to restructuring proposals tabled by Punch on Monday. The ABI committee claimed the new proposals are ‘too vague’ and only a ‘marginal revision’ of earlier proposals. It also complained that the plans had been issued ‘without prior negotiation and discussions’ and without allowing bondholders to carry out ‘appropriate due diligence’. Punch responded with a strongly worded statement. It said: “Punch has gone to great lengths to engage with the ABI Special Committee, including offering to meet with the ABI Special Committee on no less than five separate occasions during the last month. In fact, even on 6th June 2013, the ABI Special Committee declined in writing a request for a meeting by Punch and stated that ‘the Committee believes it will be very useful to have discussions with you once the revised proposal is made public’. Punch points out that the ABI Special Committee and its advisers failed to attend the stakeholder meeting held this week. A Punch statement added: “Despite constructive discussions with a number of the ABI Special Committee members it is disappointing that the advisers to the ABI Special Committee have been unwilling to actively engage with Punch.” Punch also challenged the fees of the committee’s advisers at Rothschild and Latham & Watkins. It stated: “One matter where Punch has been unable to reach agreement with the advisers to the ABI Special Committee relates to their professional fees, a proportion of which were incurred by them before any contact was made with Punch. The board considers these fee demands to be disproportionate to all other adviser fees, and at a level that Punch and, more importantly, the transaction, would be unable to support.”

Industry news:

Alcohol Concern calls for alcohol advertising ban at music and sporting events: Alcohol charity Alcohol Concern has called for a ban on alcohol advertising at music and sporting events in an effort to protect young people from promotional messages. The charity has claimed that young people are facing “excessive” exposure to alcohol messaging and has claimed that current regulations around alcohol adverts are not proving effective, leading it to call on the Advertising Standards Authority (ASA) to be “more proactive”. Alcohol Concern has released a report, following research conducted by the Youth Alcohol Advertising Council, which reviewed complaints it has made to the ASA around alcohol advertising. That review found that just three of its 13 complaints had been upheld so far.

Company news:

Nine prime London sites among 11 Pubs ‘n’ Bars sites to come to market: Eleven further sites from the Pubs ‘n’ Bars estate are being brought to market by agent Christie + Co on behalf of the administrators at Grant Thornton UK LLP. The pubs, nine of which are in London, one in Westcliff-on-Sea and one in Tunbridge Wells, comprise of a mixture of freeholds some with vacant possession, long leaseholds, tenanted investment opportunities and managed houses. Simon Chaplin, director of Christie + Co, said: “As with the first tranche of Pubs ‘n’ Bars sites we took to market earlier this year, these pubs are in excellent locations and feature some high profile sites in London, with undoubted trading potential. Whoever acquires the sites will gain a strong foothold into the sector.” Pubs ‘n’ Bars went into administration in December 2009 and Trevor O’Sullivan and Nick Wood of Grant Thornton UK LLP were appointed to manage the portfolio. The full list of the newly-available sites, their tenure status and asking prices are: Angel & Crown, London E2 (long-leasehold, £500,000); Cambridge Heath (formerly Carpenters Arms), London E1 (long-leasehold, £250,000); Duke of Edinburgh, Brixton, London SW9 (freehold, £1.1 million); Hampton Court Palace, Elephant & Castle, London SE17 (freehold, £1 million); Hansbury’s, Lewisham, London SE13 (freehold, £440,000); Hobgoblin, New Cross, London SE14 (leasehold, £175,000); Nelson’s Head, London E2 (freehold, £495,000); Parish Bar, Wembley (freehold £395,000); Railway Tavern, London E2 (freehold, £400,000); Porters, Westcliff-on-Sea, Essex (freehold, £320,000); Royal Oak, Tunbridge Wells, Kent (freehold, £395,000). Just eight of the original tranche of 20 Pubs ‘n’ Bars sites taken to market by Christie + Co earlier this year are still available.

Atmosphere Bars and Clubs administrator closes another site: Deloitte, the administrator of Atmosphere Bars and Clubs, has closed another site after failing to find a buyer. The Broadway Boulevard in Llandudno had stayed open despite their parent company Atmosphere Bars and Clubs going into administration last month due to cashflow problems. Administrators Deloitte, a business advisory firm, tried to find a new buyer for the venue but without result. A spokeswoman for administrators Deloitte said: “Deloitte has confirmed that the Broadway Boulevard has closed.” Sites in Basildon, Bedford, Chelmsford, Fareham, Hanley, Kings Lynn, Norwich, Stevenage, Stourbridge, Stratford upon Avon, Windsor and Yeovil remain open.

Phil Dixon – Marston’s are market leaders at pub franchising: Industry expert Phil Dixon has described Midlands-based Marston’s as market leaders in franchising with 500 pubs. Dixon told the Business Innovation and Skills committee: “What I like about franchising is that the licensee doesn’t lose his life savings. Some (other companies) replicating Marston’s franchising are playing at it.” Dixon also refuted claims that the major tenanted pub companies had not publicised the self-regulation bodies. He described Punch Taverns as “dragging me around the country” to talk to licensees at the company’s roadshows.

Wayne Brown – Britvic and AG Barr merger still makes sense: Leisure analyst Wayne Brown, of Canaccord Genuity, has argue that a merger between Britvic and AG Barr still makes sense, given tough trading conditions and Coca-Cola’s 28% market share – a merged Barr Britvic would have circa 14% of the market. Brown said: “Whilst the provisional Competition Commission clearance is clearly a positive, comments from Britvic have raised concerns that they are either a) attempting to renegotiate the terms of the proposed merger or alternatively b) are no longer keen to proceed. This level of uncertainty is unhelpful in our view. The creation of BarrBritvic Soft Drinks is much more than cost savings and represents an opportunity for both companies to enhance their industry position, and achieve significant longterm shareholder value. The strategic rationale for the merger remains in tact and would create one of the leading soft drinks companies in Europe, with a number of market leading brands. There are three key points supporting the strategic rationale. The most obvious is synergies. The initial guidance of £40m of cost savings (20% of combined EBITA) is a prudent estimation in our view, but note, no guidance has been provided on revenue synergies which we feel could be materially higher over the medium term. The two companies have complimentary geographies, complimentary channels, complimentary product lines which if combined make it a much stronger competitor. The combination would take the best of companies, not just from a management team perspective providing for much greater depth and breadth of skill sets but also systems. It is worthwhile to highlight that in our view Britvic has its strengths in the supply chain and AG Barr has an enviable track record on operations and delivering long term shareholder value.”

Greene King re-thinks modern pub signs: Greene King is rethinking its plans to replace traditional pub signs with modern ones without pictures. The company has been accused of ‘cultural vandalism’ by conservation groups. It has already agreed to change The Dog & Partridge sign in Bury St Edmunds back to the old one. The firm said it would consider which of its other 85 Flame Grill pubs should keep their pictorial signs before rolling-out the rest of its programme. Richard Lewis, managing director of Greene King’s local pubs division, said: “The change to the new Flame Grill branding has generally been very well received by our customers. However, we do accept that the changes may not be right in all 85 of our Flame Grill pubs and as a result we are looking again at the pictorial signs at some of the more historic pubs. We are passionate about our pubs and it is heartening that the local community appears to be just as passionate.”

TCG Pubs reports pre-tax loss of £2,337,000: Managed operator TCG Pubs has reported a loss of £2,337,000 on turnover of £24,267,000 in the year to 31 August. The company lost £2,225,000 on turnover of £25,753,000 the year before. Average weekly sales per site were £13,726 compared to £12,538 the year before. Rent to sales stood at 17% compared to 17.2% the year before. A sister company, TCG Taverns, made a pre-tax loss of £260,000 on turnover of £9,158,000. The year before it lost £433,000 on turnover of £10,960,000. Average weekly sales in this company were £15,315 compared to £14,536 the year before. Rent to sales was 22.1% compared to 22.7% the year before.

Dragon Inns reports success with its Celtic Carvery and Alehouse concept: Dragon Inns, the six-strong Welsh operator led by Graham Wall, has reported “stunning success” with its Celtic Carvery and Alehouse concept which has been launched at the Navigation pub in Abercynon. The pub’s website states: “The Celtic Pride brand can be traced from the farm to the customer and is produced and processed in Wales to meet the highest standards of quality, health, taste, flavour and safety. These standards are achieved by the adoption of best practice in production, procurement, processing and sale with the meat being matured for 21 days.”

Luminar to invest £1m in reinvention of Bristol Oceania: Nightclub company is to invest £1m on a reinvention of its Oceania site in Bristol with three large clubs under one roof, with Bristol setting the blueprint for other venues within the 53 strong estate. A key change includes combining two of the old lounges into one big room, transforming it into what will be ‘Bristol’s hottest-looking dance room’. Oceana manager Ken Getgood said: “Oceana Bristol is one of the UK’s most popular nightclubs, attracting 5,000 clubbers on a typical trading week.” Already employing 100 people, Oceana will be recruiting 30 additional staff to deliver the high service standards of the new club that will feature booth seating with table service throughout the three distinctly styled music rooms and VIP lounge. “Not only will each of our rooms be revamped but they will also have new names to match their individual characteristics from glamorous and elegant to contemporary and high tech styling.” Oceana Bristol will remain open for most of the refurbishment programme, which is due to start end July 2013 and will re-open after a short closure early September 2013.

ETM Group unveils chef for Canary Wharf opening in September: Gastro-pub operator ETM Group has unveiled its chef for the opening planned for September on Canary Wharf. It is Jamie Dobbin, who has been head chef at the Club at the Ivy since it opened in 2008 and at the Ivy restaurant, Connaught, Savoy and Berkeley before that. Tom Martin told Hot Dinners: “Following the successes of our two London restaurant and cocktail bars, The Botanist on Sloane Square and Chiswell Street Dining Rooms in the City, we have been actively looking to expand our restaurant and bar portfolio. Canary Wharf has been on our radar for a long time and the opportunity to work with Canary Wharf Group and to open a site in the lobby of one of London’s most iconic buildings (One Canada Square) is second to none. We are now in the middle of developing an exciting range of menus including what we hope will be one of the capital’s best weekend brunches.”

Plans for two brewery pubs in York city-centre approved: York is to get two new city-centre pubs after plans for a brace of sites were approved by councillors. Ossett Brewery is to turn a currently empty building in Fossgate, which was previously home to Italian restaurant Fellini’s and Leila’s tearooms, into a bar, while Leeds Brewery will open a “family-friendly” pub in King’s Square which has the provisional name of The Duke of York. Both schemes were given the go-ahead after being debated by City of York Council’s area planning sub-committee.

Newcastle bar and restaurant operator buys boutique hotel: Newcastle multi-site operator Malhotra Group has bought the boutique Grey Street Hotel out of administration – a seven figure investment is planned. Grey Street Hotel in the city centre was forced to call in administrators in November 2012 after battling falling guest numbers for some time. The deal includes the purchase of the entire Grade II listed building, part of which is leased by The Living Room bar and restaurant. The Malhotra Group owns the Louis’ Restaurant, Osborne’s and Scalini’s in Jesmond as well as The Three Mile Inn in Gosforth.

650 Wetherspoon pubs achieve five star hygiene rating: A total of 650 Wetherspoon pubs in England, Wales and Northern Ireland have gained the maximum five star rating in the Food Standards Authority (FSA) Scores on the Doors scheme which highlights hygiene standards in pubs and restaurants. This represents 85% of the 761 Wetherspoon pubs listed on the FSA website. Additionally, 92 of the company’s pubs gained a four star rating, with 19 pubs below this score. Wetherspoon’s chairman Tim Martin said: “It is a myth that all regulation is bad for business. The Scores on the Doors scheme is an excellent example of government legislation which works well and is of great benefit to the public. It is important that people are made aware of the hygiene levels in pubs and restaurants. Our Scores on the Doors results are a great achievement by our management and staff and we will strive to ensure that hygiene levels within our pubs remain high. This positive legislation is in contrast to some government legislation that is unfair on publicans and pub operators. For example, sending in under age people into pubs in order to entrap them is wrong.” Last month Mitchells & Butlers chief executive Alistair Darby had argued that it will be increasingly important to ensure sites earn good Scores on the Doors numbers as they start to go compulsorily on display outside premises. “If you score three or less, people are not going to want to eat with you,” he said.

Cranfield University sells 49-bedroom hotel: A 49-bedroom hotel in Oxfordshire has been sold by Cranfield University. The Best Western Sudbury House Hotel at Faringdon, which had a guide price of £2m for the freehold, was sold to a private investor after the Bedfordshire-based university deemed it secondary to its educational work. Opened in 1991, the facility occupies seven acres of land centred on a grade II-listed 18th century house. It has 49 bedrooms, function rooms, conference facilities, a croquet lawn, a bar and restaurant.

Two Michelin star Spanish chef looking for London site: Property agent Restaurant Property has reported that an unnamed two Michelin star chef is looking for a 2,000 square foot property in Soho, Mayfair, Belgravia or Fitzrovia. The agent reports that “market rents and premiums” will be paid. 

McDonald’s launches mobile app campaign for smoothies: McDonald’s is launching its first marketing activity through its mobile app as part of a campaign to support the launch of its iced fruit smoothies. The drinks are being rolled out nationally after a trial at a number of Welsh stores and at the Olympic Park last summer. McDonald’s store finder app will for the first time be used as a marketing channel with a game asking users to “break the ice” on their screen to win a digital voucher to try a smoothie for free. Other prizes include access to interactive games and exclusive branded content. The mango and pineapple and strawberry and banana smoothies are blended to order using fruit juice, fruit puree, ice and low-fat yoghurt. They form part of McDonald’s McCafe sub-menu, which brings together its treats and dessert items. The campaign includes TV and cinema ads that show an “iced up” McDonald’s restaurant and digital, outdoor, press and in-store activity. McDonald’s is also launching two iced frappe drinks.

Individual Pubs start to accept virtual coins: Sites in Cambridgeshire run by Individual Pubs have started to accept digital currency Bitcoin. Its Haymakers in Chesterton, for example, is now accepting digital currency Bitcoin – and all you need to pay your way is a virtual Bitcoin wallet and a QR reader. Rob Curtis, manager at The Haymakers in Chesterton, said the virtual currency was “catching on”. To allow a customer to pay for their food and drink using Bitcoin, Haymakers staff will bring up a QR code on the till or on a receipt which the customer can scan using their smart phone. He added: “It’s a new thing for us. We have tried alternative currencies before. There was a system called PingaPint which we had in The Devonshire Arms a year or so ago but didn’t really take off. But people seem to be quite interested in Bitcoin and it has been around for a bit longer so it has got a bit more credibility.”

Nightclub and hotel king to open London hotel with Jason Atherton restaurant: Nightclub and hotel king Ian Schrager is to re-open a 173-bedroom hotel in partnership with Marriott, the former Berners Hotel in Fitzrovia, London. It is part of a Schrager and Marriott joint venture that will eventually create 100 hotels across the world under the Edition brand. The London hotel will have its own version of the Studio 54 nightclub on site – the famous New York nightclub Schrager set up. “London has always been great,” Schrager told The London Evening Standard. “It’s a world-class city, up there with New York, Miami and LA. There’s a lot of energy here – a lot going on. Everything is energised – the food, design, fashion, art – it’s a cultural capital.” Chef Jason Atherton will open Berners Taverns at the site, his fourth London restaurant.

Nando’s appoints agency with a global brief: Nando’s has appointed 101 to a global brand consultancy role. The independent agency will work with Nando’s on ensuring that its brand is consistent as the brand expands into new markets. Nando’s opened its first restaurant in South Africa in 1987 and is now in seven markets, including Australia, Canada, Malaysia and the US. Paul Appleton, Nando’s marketing director, said: “Ours is an exceptionally charismatic brand, held dearly in its key markets. 101 are helping us to create a common brand definition for our colleagues and partners everywhere to draw inspiration from.”

Peach Pub Company makes £1m move into Birmingham: Peach Pub Company, the gastro-pub operator led by Hamish Stoddart and Lee Cash, has made its first foray into Birmingham with a plan to work with Calthorpe Estates in Edgbaston to develop 22 Highfield Road into a new pub opening. Peach will invest over £1m in the redevelopment of this major architect-designed building, which is the former home of English architect and surveyor Francis WB Yorke, who practised in Birmingham and Stratford-Upon-Avon and wrote a seminal work on the building of pubs, “The Planning and Equipment of Public Houses,” published by The Architectural Press in 1949. The launch of the new gastropub will be overseen by Lee Cash, Peach co-founder, who got his first job as a general manager for Raymond Blanc when he opened Le Petit Blanc in Birmingham. Peach has a current turnover of £20m, having opened its first pub first pub in Warwick in 2002. The pub will open in Spring 2014. 

Realpubs founders to examine east London opportunities: Realpubs founders Nick Pring and Malcolm Heap are to examine opportunities in the emerging suburbs of east London, according to industry sources. Pring and Heap left Greene King two months ago and are blocked from active business involvement for six months under the terms of their exit from the company, which acquired their 14-strong business for £53.1m in April 2011. The pair has owned The Empress Of India in Victoria Park with their former manager Michael Buurman since 2011, a pub acquired from Ed and Tom Martin’s ETM Group. It is understood that the duo feel there is an opportunity to develop a Realpubs style offer in parts of the East End of London that are becoming gentrified, with affluent middle classes moving in because London property prices continue to climb. Pring told Propel: “The opportunity to acquire a freehold estate will never happen again in London in our lifetime – so we will be looking at free-of-tie leases and even tied leases.” Asked about his experience with Greene King, Pring said: “It was a very positive relationship – the company let us operate our pubs almost exactly the same way as we did before. Greene King didn’t have a premium offer in London and was very sensitive to the independent culture at Realpubs. We have both got a lot of respect for (chief executive) Rooney Anand – he’s a good guy who understood the culture of our independent pub company.” Pring reported that he and Malcolm Heap would be working on their new project but that both of them also plan to undertake projects independently. He also reported that becoming involved in other people’s businesses in a non-executive capacity is an idea that he finds ‘attractive’. “I’ve had lots of requests from various people to look at their businesses in a mate’s capacity – it’s given me a strong belief that I can add value.” Greene King expanded the Realpubs estate to 22 sites before Pring and Heap left. The most recent conversion was The Grove in Surbiton, will opened on 17 May. The new-look Surbiton pub will have a 70-cover dining room, dining terraces and outdoor bar/garden kitchen to serve its very large garden.

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