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Morning Briefing for pub, restaurant and food wervice operators

Thu 4th Jul 2013 - Glendola, M&B, Pizza Hut, TGI Friday's and Wabi

Story of the day:

Glendola Leisure paid £600,000 for two Enterprise leases: Glendola Leisure, the operator of 19 sites headed by Alex Salussolia, has paid over £600,000 to buy two Enterprise Inns leased sites, it has emerged. Enterprise Inns chief executive Ted Tuppen referred to 117 of his company’s pubs run by Association of Licensed Multiple Retailers (ALMR) members at the recent Tenanted Pub Company Summit – “mostly, great pubs in the hands of great operators”. He added: “One of the most respected members of the ALMR recently paid over £600,000 to take on the assignment of two great pubs. I have huge respect for these guys – they know how to run fabulous pub businesses.” Tuppen did not name the operator but industry sources have told Propel that the company is Glendola. The deal underlines the view that pub company leases can carry considerable value and the government’s plan to transfer value from pub company landlords to their tied tenants in a blanket fashion – part of the current consultation on statutory regulation – is wrong-headed. Glendola acquired Enterprise’s Crown & Anchor in Neal Street and The Barley Mow in Horseferry Road, Victoria. Glendola managing director Alex Salussolia told Propel: “We don’t mind tied leases if they are in the right location. We support the ALMR position – it’s not about the tie, it’s about the share of the business. For us, there is enough value to make a return on our investment. There is plenty of opportunity to grow these two businesses – they’re a very good acquisition for us.” The two Enterprise acquisitions came as Glendola is planning major expansion. It is seeking planning consent to create the largest Waxy O’Connors to date in a Methodist church in Edinburgh. The company is also planning to open a first floor coffee shop in Glasgow Central station, roasting its own coffee on site, with a bar and steak restaurant in the basement. “There’s nobody doing a steak restaurant in central Glasgow,” said Salussolia. In addition, Glendola is in talks to open its first site in the City of London. “It will something interesting and slightly off-the-wall,” said Salussolia.  

Industry news:

Heatwave arrives tomorrow: The longest summer heatwave in seven summers is due to arrive tomorrow, with temperatures in the south east above 30C for at least two weeks. The hot weather could last longer than a fortnight as an area of high pressure settles over southern and central areas. Scotland and Northern Ireland, though, will be cooler.

Pint a day is good for your heart: Scientists have found that drinking a pint of beer a day is good for the heart. They found that blood flow to the heart improved within a couple of hours of polishing off two-thirds of a pint – and that the effect was more powerful than drinking the non-alcoholic equivalent. The discovery supports previous evidence that drinking in moderation could guard against heart attacks and strokes.

KFC to test fast casual variant in the US: KFC is set to open a fast casual test restaurant in its hometown of Louisville, Kentucky. The “Innovation Restaurant” is set to open later this month. The name of the new concept is “KFC 11”, a reference to the brand’s signature 11 secret herbs and spices. The new restaurant will feature new cooking technology, which will be displayed in an open kitchen. A KFC job website states: “We’ve taken the best part of KFC (you guessed it, the chicken), and crafted it into simple, fresh tastes for today. Flatbreads, sandwiches, salads and rice bowls share the menu with refreshing new drinks and indulgent sweets. KFC 11 will transform how people think about the brand.”

Consumers more wary of the food they eat: A large number of consumers have trust issues when it comes to food, the latest report from Mintel has revealed. In its Consumer Trust in Food 2013 study, it found that six months on from the horsemeat scandal, British consumers are still sceptical about the British food industry supply chain. Only just under half (49%) said they trusted the food industry to provide safe food to eat, while 37% were undecided. Forty two per cent of Brits believe the food industry is able to effectively react to food scares such as BSE and horsemeat, and only 23% feel that the different elements of the supply chain work effectively together. According to Mintel, the concerns regarding the trustworthiness of food were strongly related to fact they felt the industry had a lack of awareness of its own supply chains, with 34% stating they felt food manufacturers weren’t aware of where their ingredients originated.

Company news:

Administrator appointed to Wabi in London: An administrator has been appointed to the now-closed Wabi restaurant in London’s Kingsway. The restaurant’s executive chef Scott Hallsworth, who worked at Nobu, left last month after a fall-out with his partners. One TripAdvisor reviewer wrote last month: “I will start by saying I am not the type of person for this restaurant. You need a hefty wallet to walk in, eat, then leave, without panicking about the bill. That said, it was great food, friendly if slightly overbearing service (except from the small blonde waitress, who was wonderfully measured, polite, helpful and very affable), and pleasant surroundings.” It is understood the original Horsham branch of Wabi is unaffected. Meanwhile, Hallsworth will open Kurobuta, a traditional Japanese pub serving small plates of food and drink, in London’s Connaught Village this September. 

M&B’s Alex brand in Germany shows sales up 7.5% in 2012: Mitchells & Butlers Alex brasserie brand in Germany saw sales up 7.5% to 67.2 million euros in 2012. At the start of this year M&B chairman Bob Ivell told Propel: “We are really pleased. The team over there has done extremely well. We have places like the site in Hamburg that does fantastic business – it’s got 1,000 seats outside. We went through a phase in the industry where we talked about chameleon bars and pubs. That was about, ‘How do you make your assets sweat all through the day?’ That’s where they got to in Germany. The market there is much more conservative than we are and what we have done is a fantastic job on breakfast.”

Simon French – Domino’s has hit a speed-bump in Germany: Panmure Gordon analyst Simon French has recommended selling Domino’s shares, with a Target Price of 380p, after the company reported its losses in Germany will be £5-6 million this year rather than £3 million. It has 14 managed sites in Germany and 11 franchised. French said: “The group’s German expansion has hit its first speed bump with corporate stores performing below expectations. This will result in a £2-3m increase in full-year losses. The superior performance of the franchise stores in Germany means the group will convert the majority of the corporate stores to franchise as soon as possible. This will involve additional one-off costs, which will be disclosed at the group’s H1 results on 30 July. In the UK the group anticipates opening a comparable number of new stores to last year (net 55) despite only opening 15 in H1 compared to 19 in the same period last year. The group plans to open 12 new stores in Germany in H2.”

Hungry Horse one of a host of restaurant brands lined up for Hemel Hempstead leisure development: Greene King’s Hungry Horse brand is preparing to open another site on a leisure development, this time in Hemel Hempstead’s Jarman’s Park Leisure World development, after the success of its pioneering site in New Brighton’s Marine Point development. Other brands signed up include Nando’s, plus three Restaurant Group brands – Coast to Coast, Mexican restaurant and bar Chiquito and Frankie and Benny’s. In addition, terms have been agreed with an unnamed buffet operator. Renovation work at the centre is not due to be complete in a year’s time.

Brewdog reports turnover and profits jump: Scottish brewer and retailer Brewdog has reported turnover nearly doubled from £5.9m in 2011 to £10.7m in 2012. Pre-tax profit rose from £424,101 to £485,936 and operating profit rose from £495,355 to £515,755. The company stated: “2012 was hell of a year for us at Brewdog. What started off as a dream five years ago became a reality as we moved from a brewery we cobbled together on a shoestring budget to our new world class brewery in Ellon. We still cannot get close to supplying the current global demand from our customers. We have the space needed to be able to really scale up our brewery’s production and are planning significant investments over the course of 2013 to further and drastically increase capacity, which means we are planning for another year of very strong growth. We are insanely optimistic about 2013.”

Apartment Group to launch 12th site in Sunderland: North east bar operator Apartment Group is to invest £500,000 to launch Dr Feelgood’s above its existing Wearside venue – Liberty Brown – later this month. Two flats have been transformed to create the new bar, which will have a separate entrance and identity. Apartment Group owner Duncan Fisher, whose company runs Florita’s, Madame Koos and House of Mr Smith in Newcastle, said: “Dr Feelgood’s is a bar that would probably do really well in Newcastle, but Liberty Brown has proved so popular that we decided to do it here,” he said. “Not in terms of takings, but in terms of being busy, Liberty Brown is our busiest venue in the group. We do 3,000 meals a week here. I knew it would do well, but I never thought it would do this well.” The new 200-capacity bar, which will seat about 80 people and serve tapas, will also feature a roof terrace.

Alistair Darby – ‘Simon Cope leaves with our very best wishes’: Mitchells & Butlers chief executive Alistair Darby has given his departing marketing director Simon Cope the company’s ‘very best wishes’ in his new position as marketing, property, and international franchising director at Wagamama. Darby said: “Simon has made a significant contribution over the years to Mitchells & Butlers, helping to establish and evolve many of our well known brands such as O’Neill’s, Castle and Harvester. Simon will be with us until the end of September, at which time he will leave with our very best wishes for a successful future.” Cope has worked for twelve years at M&B in a number of senior marketing roles, most recently as marketing director. In his new role, he will have responsibility for Wagamama’s overall brand position, with his role encompassing marketing, property and the international franchising business, which collectively cover all the group’s key brand and consumer touch points. Wagamama chairman David Williams said: “Simon joins the team at an exciting stage in Wagamama’s development, as we recently accelerated the Group’s expansion programme, with plans to open 15-20 sites per year in the coming years.”

Scotland’s smallest pub opens: Scotland’s smallest pub, The Wee Pub, opened in Edinburgh’s Grassmarket on Tuesday, serving customers from a small drinks cabinet. The Wee Pub, just 17ft by 14ft, only has room for 20 customers and is too small for a proper bar. Drinkers are instead served from a drinks cabinet – although there’s a choice of 80 whiskies and three draught beers inside. There’s no room for normal seats – it has just three bus-stop-style benches and narrow standing tables. The drinks menu is printed on a postcard and comes with a handy magnifying glass so customers can read through their options.

New Moon Pub Company opens fourth site: New Moon Pub Company has re-opened one of the Wirral’s most historic disused pubs as a fine dining ‘gastro pub’. Renamed The Montgomery Pub and Kitchen, The Stanley Arms, in Eastham Village, has been closed for more than a year. The Montgomery will be serving home cooked, locally sourced food in a relaxed home from home environment.

TGI Friday’s to run roadshow bus until September: TGI Friday’s, headed by Karen Forrester, has launched a TGI Friday’s roadshow bus for the summer. The bus visited Wembley as its first stop and will travel to 11 more UK cities before completing its schedule in Bristol on 5 and 6 September. Visitors are offered a mini mixology masterclass with the company’s ‘legendary bartenders’ and are given the opportunity to be the first to preview its new cocktail range. Meanwhile, the company will move to 60 sites with its next four planned openings. It has a venues opening in Bristol’s Cabot Circus on 7 July, Glasgow Fort on 12 July, Braintree on 5 August and in a former Spirit pub on Norwich’s Riverside. The company has also scheduled an opening at the former post office close to The Laines in Brighton, a project delayed by squatters occupying the premises.

Mitchells & Butlers O’Neill’s brand steps up live music: O’Neill’s, the Irish pub brand owned by Mitchells & Butlers, is beefing up its live music credentials with the launch of the O’Neill’s Live Music Festival through the summer. In the period up to Monday 26 August, every O’Neill’s pub is having its own weekend-long festival with at least four live music acts a day. The brand has also launched two offers to coincide with each pub’s music festival: a 25% discount on food bills and a buy one Jack Daniels and Pepsi and get one free deal.

Pizza Hut franchisee reports on progress in updating stores: A Pizza Hut franchisee, KMP Group, which has acquired 19 Pizza Hut franchises since November 2011, has reported on progress in updating its sites. The company, for example, has spent £20,000 on a refurbishment of its Erith Pizza Hut delivery store since it scored the lowest possible food hygiene rating in January. KMP Group has refurbished Pizza Hut delivery stores in Bromley, Penge, Dartford and Lee Green. One in Charlton is in the process of being redeveloped and will be followed by one in St Mary Cray. KMP Group director Viresh Patel, said: “We have gone away and tried to fix everything as quickly as we could. All the signage internal and external has been removed and replaced with new signs. The flooring has all been retiled, we have a new desktop, new countertop and new menu boards. The stores have been completely repainted and new lighting has been installed. We have introduced new layouts to make the stores more efficient – in the Penge store, for example, we knocked down a wall.” YUM! Brands retained the delivery side of Pizza Hut when it sold the UK store network to private equity firm Rutland Partners last year.

Gourmet pizza and cider brand The Stable set to open third site – biggest yet: Pizza and cider brand The Stable will open its third site in Bristol’s Harbourside next Tuesday (9 July). In 2009, Nikki and Richard Cooper opened the first Stable Bar and Restaurant in Bridport where they serve stone-baked gourmet pizzas topped with locally sourced ingredients, complimented by more than 57 varieties of cider. The Stable won awards for its pizzas (PAPA Awards) and for its cider (CAMRA best cider bar). In 2012 the Coopers opened a second Stable, in Weymouth and have now decided to extend their horizons beyond Dorset with Bristol, in the heart of cider country, being the natural choice. Bristol Stable at the Harbourside is their biggest venue yet, with capacity for 200. A spokesman said: “Bristol is the obvious choice for our first step outside of Dorset with its fantastic range of West Country food and cider suppliers available.” A fourth opening is lined up for the former Hole in the Wall restaurant in Bath.

200 Stonegate managers gather in Santa outfits: Motorists in Manchester city centre have been greeted by the unseasonal sight of 200 Santas gathering outside the Portland Hotel for a Stonegate Pub Company conference. Tim Edwards, area manager of the Stonegate, said they have been meeting in fancy dress for five years. He added: “We meet up to discuss our Christmas promotions and we always dress up as Santa, but each time we have a different theme. This year, it’s Santa’s Army which is why I’m a soldier Santa. We’ll be here all day – it’s a fun way to meet up and share our ideas because we start advertising our Christmas promotions in July.”

Spirit picks new waste management partner: Spirit Pub Company has selected Specialist Waste Recycling (SWR) as its waste management partner over the coming years to develop an industry leading approach to recycling, waste management and waste minimisation. The multi-million pound deal builds on other projects that the companies have been working on together in recent years and will see SWR manage the waste collections, including residual general waste and glass, from all Spirit managed pubs. SWR’s operations team is migrating all 789 pubs across to its service in an intensive five-week project.

Norwich restaurant chain Zaks looking to franchise: Norwich restaurant chain Zaks is to begin franchising. Owner Blue Sky Leisure has two outlets in Norwich – on Mousehold Heath and Barrack Street – and a third in Poringland. Ian Hacon, Zaks chief executive, said: “We believe we have a winning formula of a great brand with a great team supporting it and this gives us a real opportunity to succeed in the franchising world. We are keen to replicate our neighbourhood supplier network across each of our franchise regions. In order to do this we will be enlisting the help of our current providers to assist us in finding suppliers of an equal quality in the different locations. We will, however, continue to produce our famous burgers in Norwich using our original recipe.” He said the firm had spent 18 months drawing up the franchise plans, working with specialist franchising consultants Morgan and Blake, and the franchise team at law firm Ashton KCJ.

McDonald’s teams up with Box TV for summer music programme: McDonald’s has teamed up with Box TV to commission a new entertainment show presented by 4Music presenters Rickie and Melvin. McFlurry Music Mix Up takes the form of two 60-minute shows filmed at London’s Alexandra Palace and Liverpool’s Sefton Park; each of which combines pop trivia, celebrity guests and live acts. Complementing this will be an interactive consumer experience orchestrated by OMD UK’s sport and entertainment division, Fuse, alongside Bauer Media. This will provide McDonald’s customers with exclusive online content when they purchase a limited edition McFlurry and scan its QR code, including the chance to win VIP tickets to the live shows.

Star Pubs & Bars wins top award for responsible business: Star Pubs & Bars has been named overall winner of the Asda Enterprise Growth Award at Business in the Community’s annual Responsible Business Awards Gala Dinner in London last night. The event, at The Royal Albert Hall, marked the culmination of the 2013 Responsible Business Awards that are set up to celebrate the powerful and positive role of business in society. The Star Pubs & Bars award winning lessee support programme is designed to help lessees’ grow their businesses, which in turn has a positive effect on their local communities. Chris Jowsey, trading director of Star Pubs & Bars said: “We are delighted to have won this award in recognition of our lessee support programme. Our leased pub business model support SMEs, offering industry leading support, helping them to create businesses that are sustainable in the long term.”

SSP boss wins Entrepreneur of the Year award: Andrew Lynch, chief executive of SSP, has been named one of the winners of the prestigious Ernst & Young UK Entrepreneur of the Year London and South competition. The judges cited the company’s impressive international growth and scale together with its strong track record of innovation in the food travel sector as among the most striking aspects of Lynch’s performance as an entrepreneur. Andrew will now go on to compete in the UK final of the event, which will take place in October.

Strada unveils biggest ever menu change: Italian restaurant group Strada has unveiled what the brand is calling its “biggest ever menu change” after trialing the options in 19 restaurants, as revealed originally by Propel. Strada surveyed over 2,000 customers, which had a large impact on the direction of the dishes and ingredients. Executive chef Nico Tortorelli said changes included a new style of pizza: “We cook our pizzas longer to create a crisper caramelisation in the crust and toppings. In Italy, food is all about sharing, and more than ever, diners want to try many different flavours in one sitting, which is why we’ve delivered with a really fun starter selection for them to explore and share.”

Lavazza scales back UK plan: Coffee producer Lavazza has scaled back its expansion plans in the UK after problems with its business partner. Lavazza planned to open up to 400 Lavazza Espression coffee shops in the UK across the next decade. Surrey-based Catalyst Retail was handling the roll-out. It has now revised the target to just 50 stores in five years. Catalyst Retail’s details have been removed from the Lavazza Espression website. Last month, it was reported many franchisees signed up by Catalyst Retail wanted their £24,000 deposit back, claiming a lack of support and communication from the company.

Jamie Rollo – Whitbread investor day showcased Premier Inn competitive advantage: Morgan Stanley leisure analyst Jamie Rollo has reported that Whitbread’s Investor Day, held yesterday, showcased Premier Inn’s ‘competitive strength, gave us confidence that expansion targets can be attained, and we think our forecasts accurately reflect its changing business mix’. He added: “Premier Inn’s ‘Hub’ is unlikely to move the dial for quite a few years, if ever, though. Main positives: (1) Premier Inn seems to have an almost unassailable market position, with a 37% and rising market share, well-invested product, and growing innovation. (2) Management is clearly confident over its five-year target to hit 75,000 rooms by F18, with 18,000 of the 23,000 rooms needed nearly signed already, and an uptick in interest since the ‘hub by Premier Inn’ launch. (3) Central London growing from 2,000 to 8,000 rooms should add circa 1% to annual RevPAR and profit growth. (4) The apparent stabilisation in Restaurants’ performance. Main concerns: (1) PI International looks to us set to make small losses for some time, and hints of expansion into Continental Europe are a concern. (2) The high level of UK hotel supply, with branded budget hotels soon to reach US and France penetration levels. (3) Premier Inn’s recent underperformance in the UK Regions, with competition becoming more aggressive.”

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