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Morning Briefing for pub, restaurant and food wervice operators

Tue 25th Jun 2013 - Brewdog, Heineken and Starbucks

Story of the day:

Brewdog prospectus reveals extent of global ambition: The prospectus issued by Scottish brewer and retailer Brewdog to investors in the current £4m fund-raising round reveals the extent of the company’s ambitions. It has told investors that it is looking to open bars in Germany and the US – and it estimates the cost at around £350,000 a site. The company reports that UK openings are costing £200,000 each and it now has sites identified in Sheffield, Liverpool, Brighton, South London and West London. A Brewdog bar in Stockholm, operated by partners under Brewdog guidance, is to be followed in the next 12 months by Brewdog bar in Brussels, Tokyo, Sao Paulo and New Delhi. The company reported that turnover at its 11 bars in the UK five months to end of May 2013 stood at £2.13m (£4.3m for the whole of 2012) with gross profit of £1.25m (£2.3m for the whole of 2012). Net profit in the first five months is £117,000 compared to £149,000 in 2013. The company has told would-be investors that it plans to roll-out a new hop infused beer called Hop Head, which is a beer that is dry hopped on the bar at the point of dispense. It said: “A closed loop, pressurised, chilled system infuses the hops in a glass chamber right in front of the customer as the beer is poured into the glass. We are in the final stages of prototype development before we roll the concept out in all our bars. We will also look to launch our brand new ice distilled beer Watt Dickie internationally. The innovative product sits at 35% abv and blurs the distinction between beers and spirits. The beer is produced using a patent pending extreme ice distillation technique, which we have developed in-house. The response from our customers has been phenomenal. Our current production method here is time-consuming – we are extremely limited in how much we can make. We estimate the cost to develop and purchase the equipment to make Watt Dickie to be around £250,000.” Brewdog also reported that it is going to open one or two specialist craft beer shops starting with a site due to open in London in September 2013. The company revealed it is at an early stage in developing a £1m Brewdog London Brewing Academy, which will be a “ramshackle punk DIY brew-pub” with its own bottle shop, home brewery supply shop, ten barrel craft brewery with interactive brewing sessions, home brewing class and a bar. Brewdog also reported that the current investment will allow the company to increase production ten-fold to 500,000 hectolitres a year. It plans to use £1.5m of the £4m raised to buy more brewing equipment. It stated: “With currently only one-third of our site utilised and with demand exceeding supply by 35% we have both the space and demand to enable significant growth.” Brewdog reports that over 3,000 people have invested £1.5m in the first four days.

Industry news:

Luke Johnson receives honorary degree: Sector investor Luke Johnson received an honorary degree from Heriot-Watt University in Edinburgh last Thursday. He was awarded a Doctor of Letters (DLitt) for services to entrepreneurship. He told Propel: “It was an unexpected honour and I went up to collect the award. It was a very enjoyable occasion.”

Five Guys and Shake Shack to open on the same day: US better burger operators Five Guys and Shake Shack will open on the same day in London. Five Guys opens in Covent Garden on 4 July – a second site is planed for Reading. Five Guys has expanded to more than 1,000 locations in the US and Canada. Shake Shack, also in Covent Garden, holds its opening party the same day.

Deadline looms for ALMR ops manager awards: The deadline for this year’s Association of Licensed and Multiple Retailers (ALMR) operations managers awards entries deadline is just six weeks away. Nick Bish, awards spokesman, said: “We have been absolutely delighted with the number of companies that have nominated members of their operations team. Every year we are gratified to see companies that have previously never engaged with the awards, put forward one or more of their talented middle managers. We often hear companies say how good their ops managers are and these awards are the opportunity to identify and develop that talent in a truly competitive environment. We look forward to having yet another successful competition which showcases the brightest and best individuals and their companies.” With just six weeks to go before the completed entry paper needs to be submitted, the ALMR is now encouraging all companies seeking to identify their own talent to nominate now by logging on to or by calling the ALMR on 020 8579 2080.

CGA – premium spirits are in 12.2% growth: Research from on trade research firm CGA Strategy shows that premium spirits are in 12.2% growth and now make up over 16% of all spirit serves. As pubs and bars adapt to changing consumer use, from habit to treat, one path to stronger trading is for venues to make premium spirits a more central part of their drinks offer. Key categories behind this current growth are gin, up 18%, and American whiskey, up a massive 48%. Central to their success is increased consumer awareness alongside those craft and heritage links. The latter fact is driving impressive performance across a huge number of smaller brands. As a result, many consumers now expect to see a premium range on the back bar of any pub, restaurant or high street bar.CGA’s Tom Lynch said: “Ensuring that bar staff are comfortable in the language of premium brands is something to consider. It’s not just a case of stocking a huge range or gins and watching the till roll – understanding and selling the benefits of them to consumers is key. After all, we know from previous research that 86% of consumers are receptive to bartender recommendations”.

Company news:

PizzaExpress marketing boss takes new role at Merlin Entertainment: The owner of attractions including Alton Towers, Legoland and Madame Tussauds, Merlin Entertainment, has appointed PizzaExpress marketing director Emma Woods to a newly created group marketing role. She will oversee marketing for all the group’s entertainment brands as well as focus on building the corporate Merlin brand among stakeholders. Woods’ position will also include ecommerce, group promotions and trade activity. Previously, marketing within the Merlin group was divided by each attraction, each with its own team of marketers with no oversight from a group level.

Ask Italian to open “flagship” restaurant in Birmingham city centre: Ask Italian, owned by Gondola, will open a flagship site in Birmingham in July. The new 150-cover restaurant is in the redeveloped New Street shopping centre and will be Ask Italian’s first site in the city. Ask Italian managing director Steve Holmes said: “This opening is a major milestone in our recent Ask Italian journey. We are in the middle of a hugely ambitious programme to transform our existing restaurants but still have plans to open new, large flagship sites. We are proud to have found one right in the heart of Birmingham and to be part of the reinvigorated New Street.” The company has also secured a site in Manchester.

All Bar One launches Cocktail Society: All Bar One, the bar brand owned by Mitchell & Butlers, is launching its Cocktail Society next month. Customers are offered free membership and receive free Cocktail Society membership pack including membership card and a voucher for a free cocktail (except in Scotland where licensing law does not allow) plus mixologist tips and tricks. Customers are promised ‘exclusive cocktail news and much, much more’.

TLC Inns closes in on seventh site: TLC Inns, the award-winning multi-site pub and restaurant operator headed by Steve and Jo Haslam, are close to securing its seventh site. The company is set to sign a free-of-tie lease on a site that will see an evolution of its Grand Central American dining concept, which debuted in Basildon 18 months ago on the site of a former Outback Steakhouse. Meanwhile, the company has reported strong trading in June with like-for-likes up by 8%. Steve Haslam said: “Our top end pubs are performing particularly strongly with 20% and 15% like-for-like growth in June.”

Cains hold public consultations on Brewery Village plan: Cains, whose brewing arm is the subject of a winding up order, is holding two public consultations on its plan to turn the brewery into a £50m brewery village. Formal plan are due to be submitted in July. A public exhibition of the proposals will be held at the Cains Brewery on Stanhope Street, Liverpool on: Thursday 27 June: 15:00-21:00 and Saturday 29 June: 11:00-15:00. The firm states: “You can drop in at any time between these times, and representatives from the development team will be on hand to answer any questions that you may have and more importantly to get your views on the ‘Brewery Village’ proposals.” In a letter to 38 employees who lost their jobs Sudarghara Dusanj, managing director of RC Brewery, said: “You will be aware that over recent weeks RC Brewery has been facing increasing financial difficulties. While the board have been actively exploring all possible options in order to preserve and safeguard the future of the business, it has become apparent that the company is no longer economically viable or sustainable.”

Michelin-starred chef to open fish and chip restaurant and takeaway: Michelin-starred Chef Galton Blackiston, who cooks at Morston Hall in Norfolk, is to open a fish and chip restaurant in nearby Cromer. Blackiston and his wife Tracy have joined friends Spencer Gray and Chris Griffin to launch No. 1 Fish and Chips, a business launched, in part, through a conversation at a Norwich City game. Gray, who previously ran a seafood shop on Cromer prom and now runs Lucy’s chip stall on Norwich market, and potato farmer Griffin had decided to combine their skills to open a chippy, after spotting the premises in New Street. “Chris and I see each other at football and he said ‘have you never thought of doing another Morston?’ I said the only thing I’d ever consider would be fish and chips and, lo and behold, Chris met Spencer and this was born,” Blackiston said.

MP – Starbucks can’t pick and choose on tax: Margaret Hodge, chairman of the influential Public Accounts Committee, has argued that Starbucks offer to make a £20m UK tax contribution would mean little if its “aggressive tax avoidance” in the UK continued. In 2012, the firm said it would pay more corporation tax after it was revealed that it paid £8.6 million over 14 years, and nothing in the last three years. Hodge said: “I welcome that they recognise the importance of making a contribution, but it can’t be the case that they pick and choose.” A Starbucks spokesman said it had decided to “forgo” deductions, which would have allowed it to save £10 million in tax this year and next year.

Punch Taverns to hold perceptions meeting in the East Midlands: With over 1,500 work placements now available, the Perceptions Pub & Bars Careers initiative is staging a road-show event in the East Midlands in conjunction with Punch Taverns. The event, which is open to all operators, will explain the programme and how operators can get involved. Punch will be inviting their business partners along, both multiple and individual operators, in order that they have the opportunity to get involved. The road-show takes place on Tuesday 16 July, at Risley Park, Derby Road, Risley. It starts at 11am and ends at 1pm.

Woolwich Travelodge freehold sold for £8m: The freehold of the 120-bedroom Travelodge hotel in Woolwich, south west London, has been sold to an overseas investor for £8m. Sold by Powis Street Estates, the transaction represents a net initial yield of 6.75%. The hotel opened in July 2012 and will continue to be let to Travelodge on a 25-year lease. Tony O’Brien, UK development director for Travelodge said: “Very few investment sales have happened since Travelodge’s financial restructure and change in ownership last autumn, so it has been difficult to assess where yields currently sit for the Travelodge covenant. This is a good indication and several other investment sales are in solicitors’ hands, which should provide a better picture shortly.”

Simon Rhatigan named as chief executive of Devonshire Hotels group: The Duke of Devonshire has appointed Simon Rhatigan as managing director of the Devonshire Hotels group. Devonshire Hotels owns The Devonshire Arms Country House Hotel at Bolton Abbey as well as other hotels and pubs on the Duke’s Bolton Abbey and Chatsworth estates. Previously he was general manager of Blanc Restaurants and took charge of the development of the celebrated Le Manor aux Quat’ Saisons and the opening of Le Petit Blanc brasseries. He said: “I am here to develop the business and move certain areas forward and, in particular, explore and increase the spa opportunities at Bolton Abbey. The Devonshire Fell is a gem of a business – a popular wedding venue and short break destination – and I shall be looking at how to expand its potential. Likewise, there are opportunities for growth at the two Devonshire Arms at Chatsworth.”

Luke Johnson joins the board of contract caterers Harbour and Jones: Sector investor Luke Johnson has joined the board of contract cater Harbour & Jones. H&J owners Patrick Harbour and Nathan Jones said: “We’re delighted to be working with Luke. Next year we’ll be celebrating a fantastic first ten years of business and with the help of Luke we look forward to making the next ten years even stronger.” Johnson said: “It is great to be working with two hospitality pioneers like Patrick and Nathan. I met them when I chaired the RSA and I saw first hand how they are able to transform the food and drink offering for an institution. I hope over time to help make their already highly professional organisation even more successful.” H&J reported a 30% increase in turnover in 2012. Harbour & Jones runs the restaurant at St Paul’s and Even Keel Cafe on The Cutty Sark.

Anthony Flinn closes four sites: Anthony’s Flinn’s restaurants based in Leeds Corn Exchange have closed after falling into administration. Anthony’s, Piazza by Anthony and Rib Shack all shut their doors last week. Sister restaurant Anthony’s Patisserie in the Victoria Quarter also closed. The group employs about 70 staff. A statement on the Corn Exchange’s website said: “Very sad news that Anthony’s has closed. Do continue to support our lovely indie traders who are all original, magnificent and individual. It’s business for them, as usual.” Flinn opened Anthony’s Restaurant in March 2004. The chef began his professional career at Huddersfield Technical College and worked at the Michelin-starred restaurant Lords of the Manor, in Gloucestershire, then moved to Barcelona, working alongside Xavier Pellicer at the Michelin-starred Abac restaurant. From here he moved on to the world-famous El Bullì restaurant, where he worked for two years with respected Spanish chef Ferran Adrià.

Former Luminar superclub site set to become a gym: The site of a former Luminar nightclub in York, operated as Ikon & Diva, looks set to become a gym. Gym proposals have been handed in to City of York Council for the Clifton Moor building after it was vacated by Great Outdoors earlier this year. A statement said it was now earmarked for a “commercial gym operator”, although the name of the company has not yet been revealed. The site is alongside Roko gym.

Intertain set for £500,000 Derby re-opening: Walkabout operator Intertain will re-open its latest refurbished site in Derby on 4 July. The site has seen a £500,000 refurbishment

Lawson Mountstevens – the government needs to think again on regulation of the pubcos: Heineken on-trade director Lawson Mountstevens has called on the government to think again in relation to plans to impose statutory regulation of tenanted pub companies. Writing in Management Today, he said: “I believe the great British pub is the gold standard and as a brewer, we are in the business to sell our ciders and beers. I don’t think continued decline is inevitable. A great pub can get customers back. I know that when we invest in the right pub, in the right place with the right landlord, we can grow the pub business. That’s why we are investing £13m this year to improve our pubs, over and above the money we spend on general maintenance. We are calling for the government to think again. We need to work together on a plan for growth that gets more people back in to the pub. If we don’t do that, no amount of rules, regulations and formulas will convince ordinary people to open their wallets and spend more of their hard earned cash in their local. Not everything is perfect in the industry, but we believe that, for the vast majority of our tenanted pubs and publicans, the system is working and can continue to be improved. What we don’t need is increased bureaucracy red tape and intervention. What we do need is for the government to heed our call and work with us on an agenda for growth. I’ll toast to that.”

£40m Park Lane investment comes on the market: A prime piece of London real estate, adjacent to both Park Lane and Piccadilly, and which forms the major part of the 5-Star Metropolitan by Como hotel, is being sold by agent Christie + Co on the instruction of Canada Life Investors. The freehold investment benefits from two co-terminus 125-year leases, with approximately 78 years unexpired. The tenant, Comojo (Gibraltar Ltd), also sub-lets part of the property to the Colony Club Casino, operated by Genting UK. The opportunity, available in the form of an asset acquisition comprises the majority of The Metropolitan Hotel together with nine apartments and the Colony Club Casino. After a major re-fit in 1997 was re-named The Metropolitan by COMO and transformed into a 5-Star lifestyle hotel — accommodating the first Nobu restaurant in Europe and the former members-only Met Bar. The hotel comprises 102 guest-rooms and nine apartments. Director and Head of Investment at Christie + Co Jonathan Parrish said: “Opportunities on Park Lane, particularly freehold investments, are the rarest of rare things. With its long income profile, substantial passing rent (set to increase considerably at the next rent review in 2015), and the high quality reputation of the tenant, we expect a competitive process for this investment opportunity, attracting investors from the UK and worldwide.” Christie + Co will be seeking offers of circa £40 million.

Local media reports suggest Wetherspoon targeting two Huntingdonshire towns: JD Wetherspoon is understood to be looking at converting the Warehouse Clearance store in Market Hill, St Ives, and is also believed to be in negotiations for a building in Huntingdon, which has been a long-term target. A spokesman for JD Wetherspoon said: “We don’t comment on specific sites, however, we can confirm that St Ives is a town we are keen on and we are interested in Huntingdon.” St Neots-based Barford + Co are joint agents for the Old Post Office in Brampton Road, Huntingdon, which Wetherspoon is believed to be interested in.

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.

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