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Morning Briefing Strap Line
Mon 24th Jun 2013 - Charles Wells, Stonegate, La Tasca and Steve Cash

Story of the day:

Stonegate begins expansion drive for Slug & Lettuce: Stonegate Pub Company has begun a major expansion drive for its Slug & Lettuce brand. It has hired leisure agencies Davis Coffer Lyons and Colliers International to acquire sites in London and the Home Counties for the expansion of its recently revamped Slug & Lettuce brand. The company is looking for 4,000 - 5,000 square foot freehold and leasehold units with a minimum of 3,000 square foot at ground level. Sites are also sought throughout the UK, must be on or near major retail and leisure circuits and include external areas. In July last year, Stonegate chairman Ian Payne told Propel that Slug & Lettuce was on track to chalk up its fourth consecutive year of striking out-performance. He described it as the “best -performing and most successful high street brand” in the sector. He said: “Slug and Lettuce is 27 years old and with ten weeks left in Stonegate’s financial year, it is on track to deliver double digit sales growth for the fourth consecutive year. Slug has 75 sites in England and Scotland - Canary Wharf probably has the highest take per square foot of any high street bar in the UK.” The brand was subject to an in-depth study by consultants in 2005 when the brand was acquired by Robbie Tchenguiz when he bought the 80 best SFI leasehold sites – the study claimed the brand had no future. The very strong performance by Slug & Lettuce is consistent with strong performance by other parts of the premium bar market. Marston’s Pitcher & Piano chain has been reporting like-for-like sales growth in the high single digits and Mitchells & Butlers has identified All Bar One, largely stagnant in site numbers for many years, as a key area of focus for expansion.

Industry news:

UK alcohol prices are the highest in Europe: Alcohol and tobacco prices in the UK are dramatically higher than the rest of Europe. Figures show that successive governments using duty and VAT on drink and cigarettes to raise revenue has pushed average prices to the top end of the European price league table. Alcohol prices in the UK are 43% more expensive than the European average. Much of the additional cost is duty, which is £2 on a bottle of wine and 50p on a pint of beer. Tobacco prices are 94% more expensive than the European average.

Doom Bar is the UK’s best-selling cask ale: Figures from CGA Strategy show that Doom Bar is the UK’s best selling cask ale, with 133,000 barrels sold in the year to April, up 29.9% on the previous year. Greene King IPA fell by 7.4% to 127,000 barrels. Doom Bar sales were worth £114.9m over the period while Greene King IPA sales were worth £101.9m.

Company news:

Charles Wells accounts show increased borrowing and John Bull operating profits boost: Charles Wells, the Bedford brewer and retailer, increased borrowings by £26.7m to £61.1m in the most recent year to 29 September 2012, accounts filed at Companies House show. Interest for the year was £3.5m, 3.7% higher than the year before despite the higher borrowings as interest rates remained low. The company underwent a re-financing at the start of the year to give it £67.5m of committed facilities plus a £5m overdraft. This enabled the group to complete the purchase of McEwans and Younger’s brands and the purchase of Young’s share of Wells and Young’s Brewery. Meanwhile, operating profit at its French pubs operation John Bull Pub Company rose 39% with Ebitda close to breaking through the one million euros mark. Ebitda at its 213 pubs rose 3.8% per pub. A total of 22 smaller pubs were sold for a net profit of £4,041,000. Four pubs were bought - The White Hart, Mauldon, The Red Bull in Cambridge, The Plough at Cotton and The Gorringe Park in Tooting. A total of more than £2.3m was invested in developing 23 pubs. Group operating profit was £6.6m, down from £10.1m the year before. Pre-tax profit was £7,386,000 thanks to property profits compared to £9,625,000 the year before. Of 2013, the company said: “Property profits will be lower as the majority of the profit on the tail-end disposal program fell into 2012. Offsetting this will be the profit on the sale of Kestrel which should see bottom line results in line with 2012.” The company has a liability of £11.3m in relation to interest rate swaps, up from £9.4m the year before.

La Tasca to expand into food and non-food retail categories: La Tasca is working with global brand licensing agency Beanstalk to extend the brand into food and non-food categories. The food products will be inspired by head chef Antony Bennett’s most popular dishes, while the non-food categories include cookware, publishing and gift items. Ciarán Coyle, president of Beanstalk, Europe and Asia Pacific, said: “As consumers look to recreate authentic dining experiences at home, La Tasca is well placed to bring the vibrancy and colour of Spanish food and culture into new categories on the high street. La Tasca is an exciting client for Beanstalk as we continue to grow our portfolio of food and restaurant brands.” 

Piper Private Equity takes stake in Turtle Bay Caribbean restaurants: Private equity firm Piper Private Equity has taken a £6m stake in Turtle Bay Caribbean restaurant, headed by Ajith Jayawickrema, who co-founded Las Iguanas with Eren Ali. Piper has bought the stake of Turtle Bay investor Mark Mason of Mubaloo, the mobile apps developer. The first Turtle Bay opened in Milton Keynes in 2011 and it has since added sites in Bristol, Nottingham, and Southampton. Propel reported last week that Turtle Bay has acquired Peach Pub Company’s Almanack site in Leicester’s Highcross shopping centre development for a new site. The company has turnover of £8m per annum. This is Piper’s third current investment in the sector – it has also invested in Loungers and Be At One cocktail bars business in the past couple of years. 

Brewdog targets Sheffield for opening: Scottish brewery Brewdog is looking to add to its 11-strong estate of UK bars with an opening in Sheffield’s Devonshire Quarter. It wants to convert premises vacated by a Starbucks coffee shop in Devonshire Street. It has applied to the council for a premises licence. The company was founded by Martin Dickie, one of the first brewers at Thornbridge Brewery, near Bakewell, and James Watt. The company launched a £4m fund-raising last week and raised £1m on the first day of launch. 

Mud Crab Pacifico opens fourth site: Mud Crab Pacifico, the US American-inspired diner chain, has opened its fourth site, in West Bridgeford, Nottingham, converting the former Felicini’s, in Central Avenue. The concept, which has other restaurants in Sheffield, Didsbury and Manchester, was inspired by a trip to Ed Debevic’s in Chicago by chain owners Neil Lawrence and Ged Lynch. A spokesman said: “The most popular dish is the Original Dirty Burger, which entails two diced beef steaks to make a proper meaty burger with a secret recipe club sauce.”

Harvester supremo Steve Cash to retire from Mitchells & Butlers: Steve Cash, brand operations director for Harvester and Miller & Carter, has decided to retire from Mitchells & Butlers (M&B) on 31 December 2013. M&B operations director Robin Young said: “This is a momentous week with the announcement of the retirement of one of our most experienced and valued operators. Whilst we can all assume this day will come at some point, a man of Steve’s reputation and over 30 years’ service will be sorely missed. On the bright side, he is staying for the next seven months.” Cash said: “I have had a great and really happy career with a top-class company working in every segment of the business from community pubs, food led country pubs and carveries through to full service restaurants. I work with fantastic people in Harvester and Miller & Carter, but it’s time for these brands to have a fresh pair of eyes and the next seven months will give me the opportunity to decide what the future looks like for me too.” Cash joined Charrington & Co as a graduate in 1978 and spent ten years as a tenanted and managed area manager in the south east before leaving for a short spell to join David Lloyd Leisure and Harvester which was then owned by Trust House Forte. He rejoined Bass in 1990 as a catering area manager. He then spent 14 years with Vintage Inns as retail director, overseeing the very first opening in 1991 to over 200 Inns by 2005. From 2005 to 2008, Steve was retail director of Pub & Carvery – which later became Crown Carveries – overseeing their expansion from 35 sites to 100 sites. During this period he also helped integrate 240 pub restaurants acquired from Whitbread, into M&B. For the last five years Cash has led Harvester, which now has 209 sites.

Newcastle multi-site operator takes third site – his second Spirit site: Newcastle multi-site operator Darren Goodwin has acquired its third site, The Duke of Wellington, High Bridge, Newcastle - its second Spirit site. Spirit has made a major investment in the pub. The site joins on to the affluent Grey Street area of Newcastle – neighbouring venues include Browns, Las Iguanas, Bacchus and Cafe Rouge. Goodwin told Propel: “We have introduced new draught and extra hand pulls onto the bar to deliver excellent ales, mostly sourced from micro breweries from a 30 mile radius of the pub. We are also developing a ‘Northern tapas’ food menu to accompany the drinks offer.” Last year, Goodwin undertook a joint investment with Punch Taverns at The Tanners Arms Newcastle. Its other Spirit leased site is The Northumberland Arms, Newcastle.

Bridgepoint in line for £150m payday after Pret debt renegotiation: Private equity firm Bridgepoint is in line for a £150m payday after renegotiating the debts of Pret A Manger. Bridgepoint took a stake in Pret in 2008 and is in negotiations to replace existing loans with £375m of new borrowings, which would provide £100m of expansion funding as well as the dividend. Pret’s Ebitda hit £61m last year with sales topping £440m. Meanwhile, Bridgepoint Development Capital is in early stage negotiations to take a small stake in Hotel Chocolat – valued at more than £100m – in competition with other would-be investors. The retailer has 70 UK sites and outlets in the US, Denmark and the Netherlands.

Plans for McDonald’s drive-through and Marston’s pub in Dereham, Norfolk, recommended for approval: Plans to revive a redundant Dereham industrial site as a McDonald’s, Marston’s new-build pub and 51-bedroom hotel will be recommended for approval when councillors meet next month. A decision on the future of the derelict Cemex site, near the Tesco roundabout, had been expected earlier this month, until the Mid Norfolk Railway raised concerns over the safety of the level crossing on Yaxham Road. But a planning officer’s report says those concerns have now been overcome by the offer of a £15,000 contribution to upgrade the crossing – and the application is recommended for approval when the planning committee meets to decide it on 1 July.

Travelodge opens 60th hotel in London: Travelodge has opened its 60th hotel in London alongside a new scheme to get young people into employment. The hotel chain, which first opened a hotel in London in 1988, unveiled its latest in Vauxhall with 148 rooms in a £15m investment. Half of the brands’ development in the capital has been opened since 2007. Chief executive Grant Hearn said: “This is just the beginning. London’s hotel market, we believe, is still the strongest in the world but the branded budget sector is less than 20% of the market compared to other UK cities where the share sits at 30%. It is clear there are other suppliers or B&Bs that do not provide a standard service or offer poor value so there is demand for branded budget accommodation in the capital.” The hotel chain has plans to open another 145 hotels in London’s 33 boroughs and has previously made it clear this will include non-central areas. Travelodge’s youth employment programme will enable young people to progress through the company into managerial roles. The chain already works with Job Centre Plus to fill its hotels with local unemployed people.

Starbucks to pay £5m in UK tax despite loss of £30.4m: Starbucks is to make a start on its promise to pay £20m in UK corporation tax in the next two years by reporting this week that it has paid £5m – another £5m will follow in the second half of the year. Company accounts for the UK business will show the UK business made a loss of £30.4m in its most recent year, reduced from £32.9m the year before. The company plans to close another 25 locations this year as part of plan to become profitable in the UK within three to five years – it closed 30 sites in the last year. A site in Oxford Street, for example, was closed in favour of a move to a site around the corner where rent was 80% lower. The company is focused on licensing the brand in airport and railways station sites where margins are better. A total of 17 sites in the Republic of Ireland have been transferred to franchisees.

Cupcake business goes into voluntary liquidation: Sheffield cupcake business Fancie has gone into voluntary liquidation. The business has estimated debt of £100,000, and is due to hold a meeting for its creditors with business rescue and recovery specialist Begbies Traynor. The business, founded by Amanda Perry, closed its Meadowhall shop in May, after three years in business. But it also opened its first canteen and bakery outlet on Eccleshall Road later that month. Fancie also has two dedicated cupcake shops in Sharrowvale Road, and The Winter Gardens. Responding to messages on its Twitter feed, Fancie posted a message saying: “It’s a very unfortunate situation but the only option in the circumstances.”

Loungers and Just So Italian set for Market Harborough: Cafe bar chain Loungers and Italian deli concept Just So Italian are both set to open sites in Market Harborough, Leicestershire (population: 20,170). Loungers, led by Alex Reilley and Jake Bishop, is looking to convert the former Golden Wonder site in Abbey Street with a September opening planned. Italian food importer and wholesaler Just So Italian will be opening a deli in Adam and Eve Street and that is set to open its doors in about four weeks. A spokesman for the company, which is run by Italian chefs Danilo and Alison Trozzi, said: “Very exciting times for us at Just So Italian at the moment. We are really excited to be opening our own shop packed with Italian goodies, including all our regular stock as well as focaccia and pizza from Naples.”

Giraffe launches summer offers: Restaurant chain Giraffe, now owned by Tesco, has launched a couple of summer offers. It has emailed its database offering a free £5 voucher when customers buy £30 of vouchers. Anyone buying the Giraffe cookbook, which costs £30, is being offered a £10 bonus voucher.

Bumpkin opens Chelsea site: Restaurant chain Bumpkin has opened its latest site in Chelsea’s Sydney Street. Housed in a Georgian townhouse, the restaurant and bar offers a ‘secret garden’, private dining room and a ‘Potting Shed’ bar. The ‘secret garden’ has been designed by double RH Chelsea Flower Show medal winners, Second Nature Gardens. It is framed with large reclaimed pots, colourful scented climbers and painted ivy.

Dagenham pub freehold with £13,500 of extra income per annum comes on the market: A Dagenham freehold with £13,500 of additional income has come on the market with agent AG&G. The Bull sits on a site of around 0.6 acres and comes with a telecoms agreement worth £12,306 a year, while its licence for a shellfish kiosk brings in a further £100 per month. “The Bull is a two-storey, landmark pub that has plenty to offer existing pub or restaurant operators, as well as investors looking for a property with retail or development potential,” says Panayiotis Themistocli of AG&G, who is marketing the property. Offers are invited.

Bramwell Pub Company to invest £250,000 in second Wild Lime Bar & Kitchen: Bramwell Pub Company is to invest £250,000 in converting its Grand Union pub in Banbury town centre pub to its second Wild Lime Bar & Kitchen. The second Wild Lime Bar will open on Monday 8 July. The first Wild Lime Bar & Kitchen opened recently in Southampton and another site is planned to open in Reading at the end of July.

Simon French increases Target Price on Greene King shares ahead of results: Panmure Gordon analyst Simon French has increased his Target Price on Greene King shares to 750p from 686p ahead of the company’s full year results on Thursday. He said: “We forecast £160.1m profit before tax, slightly below consensus expectations of £161.2m. Current trading should be solid, but the group is lapping a tough comparative of 7.1% like-for-like sales growth in its retail estate. During the 2014 financial year, we expect further growth in its retail estate with circa 35 new openings and further shrinkage in the pub partners (tenanted) estate via the disposal of over 100 pubs.”

Sunday Times – restaurant pop-ups are flourishing: The Sunday Times has reported that restaurant pop-ups are flourishing as a way of testing new concepts. Joe Grossman is looking for a second site for his Patty and Bun concept after his pop-up model proved itself at its first permanent address in Marylebone. Meanwhile, Jonathan Downey’s Match Bar Group is currently providing space for handmade bun concept, Yum Bun, at his Rotary Bar and Diner site in east London. Downey told the newspaper: “It’s nice to help new businesses if you can. Spotting exciting brands and inviting them into your kitchen is great. They come in, cook up a storm and you see them move on an up.”

Angela Hartnett to open Merchant Tavern: Angela Hartnett, who trained under Gordon Ramsay before becoming one of the UK’s leading chefs, plans to open a new, informal restaurant in east London. Merchant Tavern, which is scheduled to open in September, is on the site of Canteloupe, which was one of the first restaurants in Shoreditch. It will seat 80 in the dining room and another 50 in the bar, offering a modern European menu. The project is a partnership with Neil Borthwick, who will head the kitchen, and the co-founders of Canteen, Dominic Lake and Patrick Clayton-Malone. Hartnett said Merchant Tavern will provide opportunities for young chefs, just as Ramsay did in opening restaurants around London.

Good Life Group and Barworks to report £16m turnover: The Good Life Group, which runs the seven-strong Diner Concept, and Barworks will report respective turnover and profit of £6.8m and £1.2m and £9.8m and £1.1m. The two companies are both owned by partners Andras Akerlund, Patrik Franzen and Marc Francis-Baum. The latter told The Sunday Times that an eighth Diner site will open in Shoreditch in September. Barworks sold its Hoxton Bar and Kitchen for £1.9m recently, a move that allowed the company to pay off its debt. Francis-Baum said: “We have already been approached a few times – private equity firms have been sniffing around.” 

Winding up order issued against Robert Cain Brewery: A winding up order has been issued against Liverpool’s Robert Cain Brewery under the provisions of the Insolvency Act. The winding up order was issued after a petition from HM Revenue and Customs. The winding up order comes a month after the Robert Cain Brewery, owned by the Dusanj family, made its 38 staff redundant and it ended brewing at its historic site. The company has not filed accounts for any period after 2 October 2010. Robert Cain Brewery had lost money since it was set up by the Dusanj family in the wake of the administration of Cains, their previous company, in 2008. The company had lost £2.69m in the two years after administration on turnover of £42.6m but had hoped to turn a profit in its third full financial year post-administration. However, Sudarghara Dusanj told Propel that the company lost a major supermarket own label contract last autumn – and the family has begun to see the writing was on the wall. The freehold of the Cains brewery building is owned by a Dusanj family trust. A plan was unveiled in April that made it clear that the family saw a future for a redeveloped brewery site but not necessarily their brewing company – a new company, Brewery Village, was incorporated on 21 February this year with Sudarghara Dusanj and his brother Ajmail as directors. The family unveiled plans to develop a £50m tourism, leisure and retail destination on its current seven-acre site, with crucial consent for a supermarket underpinning the scheme.

Hakkasan plunges to £4m loss but receives £49.9m cash boost: Hakkasan, the international restaurant company founded in London by Alan Yau and owned by Abu Dhabi-based Tasameem since 2007, has plunged to a loss of £4,048,000 on turnover of £28,129,000 in the year to May 2012. The company made a small pre-tax profit of £58,000 on turnover of £20,933,000 the year before. The company is likely to have also seen losses in its most recent financial year after expenses incurred in opening its Chrysan Japanese restaurant site in September 2012 which closed in April this year – as well as other sites around the world. Hakkasan reported it is reviewing options for the Chrysan site but that its Chinese fine dining restaurant HKK, which opened in December 2012, is ‘trading satisfactorily’. Ebitda in the year reported at Companies House was minus £158,000 compared to £1,453,000 the year before. Turnover of £28.19m was a 34% increase on the year before driven by the first full year of operations from Hakkasan Mayfair, which opened in November 2010. 

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