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Morning Briefing Strap Line
Tue 9th Jul 2013 - Cote, Intertain, Jamie Oliver, Spirit, Young's

Story of the day:

Walkabout operator Intertain reports 80% returns from 11 refurbishments; company needs to rebuild fire ravaged Blackpool site: Walkabout operator Intertain has described the returns from its first 11 estate investments as “outstanding” – with an average return of more than 80% so far. Chief executive John Leslie told Propel: “We have some instances of contributions from landlords in the form of reduced rents for a period but a lot of the estate had been underinvested. The investments have meant a step-change in the way these businesses present to their customers. We have concentrated on the low-hanging fruit but we are still confident of getting a 50% return from the remainder of the investments.” The company has just completed its twelfth investment, a £500,000 refurbishment of The Walkabout bar on Market Place, Derby. The company is on site at its Carlisle venue at the moment and will refurbish the Lincoln Walkabout later in the year. One blow has been the destruction of its flagship 950-capacity Blackpool site in a major fire a few weeks ago, a site where Intertain owns the freehold. “We will be making a very big unplanned investment in Blackpool,” said Leslie. “It’s all covered by insurance – but it’s one of our most profitable sites and is now a major project for us to get re-open in the autumn.” Leslie said earlier this year: “The Walkabout brand has tremendous pedigree, the ability to deliver excellent returns on investment and great potential for growth given that it is not represented in many of the key towns and cities in the UK.” Intertain was formed in October 2009 to acquire assets previously owned and operated by Regent Inns. In May this year, private equity specialist Barclays Ventures took a stake in the business. The change of ownership enables Intertain to complete the refurbishment programme of the existing estate, with the business also actively looking for new venues in a number of UK locations. Barclays Ventures already held some of Intertain’s debt, as did a vehicle controlled by TPG Opportunities Partners and Goldman Sachs, who also took an equity stake in Intertain.

Industry news:

Douglas Jack – warm weather and Wimbledon could have boosted sales by 20%: Numis Securities analyst Douglas Jack has argued that the warm weather and Andy Murray’s victory at Wimbledon will have given pubs a sizeable boost. He said: “Andy Murray’s championship victory at Wimbledon was an excellent occasion for the pub sector, but not such a good one for the bookmakers. It is estimated that the Wimbledon final, combined with the great weather, boosted pub sales by 20%, or £60m. Given the high weather-sensitivity and operational gearing (in managed pubs), it is important that the current heatwave is forecast to continue. This is good for residential pubs, but not helpful for restaurants. We believe ongoing fine weather should help managed estates with August and September year-ends to recover to being in line/slightly ahead of expectations. We would ‘Buy’ Spirit Pub Company (Buy; TP 85p). Its shares have been left behind in the recent sector rally, yet the company offers the fastest growth and lowest rating in the pub sector. It should be benefiting from having the most weather-sensitive managed estate and should achieve higher returns (from a more solid base) from its “sparkles” refurbishment programme, again financed from internal cash flow.”

‘Aggressive’ taxman losing more VAT appeals: HMRC is losing 60% of appeals against its VAT decisions, according to figures from Pinsent Masons. In the most recent year, the taxman saw 30,000 appeals from businesses about VAT penalties and cancelled 18,317 penalties after reviewing the evidence. Jason Collins, head of tax at the firm, said: “HMRC is operating under a lot of pressure to increase its revenue and this pressure is particularly acute in VAT.” HMRC insisted most of the penalty reviews involved late filing penalties, which are issued automatically.

Bloomberg – the McWrap is crucial to McDonald’s: Newswire Bloomberg has described the McWrap, which was added to the McDonald’s menu in the US in April after two years of testing, as one of the most important additions to the company’s menu in years. It stated: “It’s made to order and has cucumbers, a new vegetable for McDonald’s. The McWrap is also a salvo in the ‘fresh wars’: a high-profile attempt to get the attention of customers who have turned to fresher, seemingly healthier offerings from competitors such as Five Guys, Chipotle and Subway. In late March, just days before the introduction of the McWrap, Advertising Age obtained an internal McDonald’s memo discussing the chain’s struggle to attract customers between the ages of 18 and 32. Noting that McDonald’s didn’t even rank in the millennial generation’s top ten favourite restaurant chains, the memo went on to say, “McWrap offers us the perfect food offering to address the needs of this very important customer to McDonald’s”. The memo called the McWrap a ‘Subway buster’.”

Survey reveals huge investment planned in pub accommodation this year: A survey of the 5,500 pubs offering accommodation has found a surge of investment planned for the next year. The survey, conducted by RPBI Reports, found 51% of pubs are planning to refurbish their rooms in the next twelve months. Go to to buy the report.

Kate Nicholls – ‘why VAT should be cut to 5% in the sector’: Kate, Nicholls, strategic affairs director of the Association of Licensed Multiple Retailers, has added the trade body’s voice to calls for the sector to support Tax Parity Day on Wednesday 25 September. Nicholls, who has contributed an article to the 500,000 copies of a magazine, Taxing Times, sent to 50,000 pubs to argue the case for lower VAT, said: “A VAT cut would not only stimulate ever greater economic growth by business in the sector. It would also counteract the unfair situation whereby supermarkets are able to subsidise pocket money priced alcohol deals with the profits they make from VAT-exempt food. Government tax policy is bizarrely pushing customers into the supermarkets and fuelling at-home drinking. (It’s) a perverse outcome for a government that is supposedly seeking to reduce alcohol-related harm.”

Company news:

Young’s – ‘we have made a strong start to the year’: London pub retailer Young’s has reported a strong start to its financial year. Nick Bryan, chairman of Young’s, will tell today’s AGM: “We have made a strong start to the current financial year with trading in line with our expectations. Managed house sales for the first thirteen weeks are up 10.7% in total compared with the equivalent period last year, and up 6.8% on a like-for-like basis. I am also pleased to report that within the last fortnight we have acquired three further freehold pubs within our London heartland. Our well located and invested estate together with our premium positioning as regards both product and service standards have enabled us to make strong progress against last year. Although remaining realistic about the economic outlook and consumer confidence, our recent performance demonstrates our ability to meet challenges that emerge and we are confident about our future prospects.”

Britvic – ‘merger cleared but we’re in a different position now’: The Competition Commission has approved the possible merger between Britvic and AG Barr. The final decision is that the possible merger is not expected to result in a substantial lessening of competition. Britvic’s Chairman Gerald Corbett said: “The merger lapsed in February when the deal was referred to the Competition Commission. We would obviously consider any proposal tabled in the interests of shareholders. However, Britvic is in a very different position to last summer when the merger was agreed. We have a new chief executive in Simon Litherland, who has done a fantastic job in implementing his new plan for Britvic. The board is confident of driving £30 million of cost savings over the next three years and of the enhanced international expansion opportunities. In addition, performance has improved, the merger benefits are materially less than they were and our share price is almost twice the level it was. Britvic’s prospects as a stand-alone company are bright.”

Jamie Oliver launches fifth restaurant brand: Jamie Oliver launched his fifth restaurant brand, Jamie’s Italian Trattoria, in Richmond town centre yesterday. The 140-seat outlet is a smaller, cheaper and “more rustic” version of his Jamie’s Italian format that founded five years ago in Oxford but already has 33 branches. Oliver said: “We are returning back to the traditional trattoria where you would find tool boxes on the floor, plumbers, kids and old age pensioners. We have brought a touch of humour and a touch of nostalgia and being a parent myself I know what my wife wants from a kids’ menu and facilities.” Meanwhile, Jamie’s Italian in Oxford, where the brand was founded, is celebrating its fifth birthday with an offer for customers. The branch states: “We’ve designed a special menu that includes your current favourites and some of Jamie’s classics – with every dish priced at £5!” The offer runs from yesterday to 5.00pm on Friday (12 July).

Jarrow Brewery to launch share issue to raise £750,000: South Tyneside’s Jarrow Brewery is to sell 30% of its equity via shares to raise £750,000. Launched in October 2002, the brewery will enter a new phase in its expansion plans this month as it starts producing 56,000 pints of real ale a week at a new brewing plant in Jarrow. Shares in Jarrow Brewery will cost £50, and people can apply for a prospectus from this week. Owner Jess McConnell said: “We are releasing about 30% of the company, and we estimate the share issue could generate £750,000, which will be reinvested in the company. Jarrow Brewery is going through an unprecedented period of growth, including a Carlsberg UK deal. The new brewing plant will start production later this month, but there is also an adjacent unit at Bede Industrial Estate, which we may take over for our bottling process and other parts of the operation.”

Beannchor to invest £700,000 in artisan bakery and patisserie: Northern Ireland operator Beannchor is to invest £700,000 at a new cafe bar and artisan bakery in Belfast’s Cathedral Quarter. The National Grande Cafe Bar is due to open in early September in the former National Bank building on High Street, and the artisan bakery and patisserie are to be housed in the adjacent building. A further announcement of up to 50 additional jobs is also expected in the autumn with the opening of a third new venue in the city by the Beannchor group, which owns 50 hotels and pubs. Managing director Bill Wolsey said: “Our latest investment of around £700,000 in these two new venues – adding to our major investment of over £16 million in the hospitality industry in recent years – will bring an economic boost not only to the Cathedral Quarter, but to the city centre and the wider hospitality industry as a whole.” Beannchor has an annual turnover of approximately £20 million and directly employs 600 staff. Its new cafe bar will offer classic dishes, coffees, craft beers, spirits and wines.

Spirit rolls out food package to leased division: Spirit’s leased division is rolling out a food menu package to its leased pubs that operate under the category Great British Sports Locals. The menu has been trialed in 17 pubs over the last four months and has shown significant increases in food and drinks sales at those involved. Licensees benefit from a circa 60% margin on food due to Spirit’s purchasing and free waste collection on food, cardboard, tin and cooking oil, reducing licensee’s waste costs of up to 50%. They pay £1,000 for the start-up package saving £1,500 on the actual cost price for everything that’s included. Chris Welham, managing director for Spirit leased and managed local pubs, said: “This menu has been developed using our managed pub expertise to create a fantastic food offer for local community pubs.” Meanwhile, Spirit has been recognised for its waste management after being named winner at the AD & Biogas Industry Awards 2013. The pub company won the Innovation in Food Waste Collection for its successful partnership with Convert 2 Green (C2G) in removing used cooking oil and food waste from each depot and converting the waste into another usable energy source.

Work begins on Bill’s site in Chiswick: Work has begun on a new site for Bill’s in Chiswick. Two existing sites, Gelato Mio and Giraffe, are being joined to make one restaurant. The company already has ten branches within the M25 and will open at 10 Kensington Arcade in the autumn. There are also currently 13 sites outside of London.

Ribble Valley Inns updates offer at its flagship Lancashire pub: Ribble Valley Inns has invested £300,000 updating the offer at its flagship Three Fishes pub in Milton, Lancashire. Craig Bancroft, managing director of Ribble Valley Inns (RVI) said: “When we opened The Three Fishes in 2004, we introduced a new dining experience to our customers. As trends have changed within the hospitality industry it is important that we continue to raise the bar and be the market leaders.” The interior and décor has moved away from the dark traditional wood to a more contemporary and relaxing design. Nigel Haworth, chef patron of Ribble Valley Inns, added: “Over the past couple of months we have worked hard on the menu. The classics have remained but we have added some new and exciting dishes using various new cooking techniques. There is a bit of a retro aspect to the menu, bringing back classics such as ‘Prawn Cocktail’, ‘Steak Diane’ and ‘Black Forest Cheesecake’ – I love taking these traditional dishes and putting that contemporary twist on them.”

Conran set to open second Albion restaurant: Restaurateur Sir Terence Conran and Peter Prescott will open their second Albion restaurant later this month, close to the Tate Modern on London’s South Bank. The opening of Albion Neo is the first time that Conran has built a second site for a brand. He said: “Albion has been a smash hit in Shoreditch, and we believe it is a popular concept that will work well and we are looking to secure other sites in London.” The menu will feature favourite British dishes such as fish and chips, shepherd’s pie, sausage and mash and the all day breakfast.

Benugo to open Field’s Bar & Kitchen tomorrow: Award-wining Benugo will open its new site, Fields Bar & Kitchen tomorrow (Wednesday 10 July), located within the heritage gardens of Lincoln’s Inn Fields near Holborn, London’s largest public square. Field’s Bar & Kitchen is the newest addition to the restaurant division at Benugo, which was founded by Ben Warner and operated by Guy Kellner. The opening of Field’s Bar & Kitchen follows the success of Hyde Park’s Serpentine Bar & Kitchen, The Riverfront at BFI Southbank, and Ashmolean Dining Room in Oxford, all of which offer expansive outside dining.

Imperial Arms, Chelsea is sold: The Imperial Arms in Chelsea has been sold by agent Davis Coffer Lyons to a private start-up company who plan to reconfigure the space in order to maximise the pub’s potential. The bar and lounge area will be refurbished and a new 50 seat restaurant will be created at the rear, complete with open plan kitchen. The restaurant menu will serve quirky British cuisine with a focus on healthy dishes and fresh local produce. The remainder of the 25 year tied lease with a passing rent of £61,000 per annum was sold off an asking price of £125,000.

Hop Stuff Brewery hits crowd-funding target over the weekend: Hop Stuff Brewery, a start up brewery in Woolwich, south east London that is looking for investment to part fund the cost of set-up and produce new ales and craft beers for younger audiences, managed to hit its £50,000 fund-raising target in return for 30% of its equity over the weekend through crowd-funding website Crowdcube. In fact, a total of 70 investors have so far pledged £58,300 of investment in return for 34.98% of the company’s equity.

Cote to open fourth site in three weeks next Monday: Cote will open its fourth site in three weeks next Monday (15 July) when it unveils a venue in St Katherine Docks. The opening follows new sites in Sevenoaks (24 June), York (29 June) and Tunbridge Wells (1 July). A fifth site opens in Windsor on 31 July. Cote Restaurants reported turnover increased by 38.7% to £49.3m in the year to 29 July 2012. Ebitda increased £3.3m to £10m, an increase of 46.6% – with Ebitda as a percentage of turnover increasing from 19.2% to 20.3%. Pre-tax profit jumped to £6,916,508 from £3,971,680 the year before. The company has circa 40 sites open.

Lease on Trust Inns site is sold to hostel provider for second site: The lease on Trust Inns’ The Horse, Westminster Bridge Road, has been sold by agent Davis Coffer Lyons to the owner of the nearby Walrus Bar & Hostel, who plans to convert the substantial upper floors into further hostel space. The Horse and Stables, as it will be renamed, will also have an American-British bar and restaurant with a hybrid food menu. The buyer, Walrus Inns, is headed up by Steve Chapman. The three-year rolling lease from Trust Inns was sold with a passing rent of £42,500 per annum and an asking price of £125,000.

Shipstone’s return brewing heritage to Nottingham: Shipstone’s, one of the best-known names in British brewing, is set to return after a 20-year hiatus. The iconic Nottingham brand will once again be stocked in pubs, bars and retail outlets after being bought back by Nottingham-based Richard Neale, who has 16 years previous experience with AB InBev, after acquiring the rights to the Shipstone’s name. Neale has been working with Colin Brown, a former brewer at Shipstone’s Star Brewery, to ensure the beer follows in the footsteps of 150 years of brewing history and tradition.

Stonegate extends cocktail offer at refurbished Slug & Lettuce: Stonegate Pub Company will re-open its Slug & Lettuce in Farnham, on Saturday (13 July) after a £205,000 refurbishment. As part of the refurbishment, new booth seating, ideal for small parties or groups dining, has been installed. General manager Maria Johns said: “We’re extending some of our most popular promotions such as 241 cocktails – now available from 4pm until close every Thursday, Friday and Saturday.”

SSP names former WH Smith boss as new chief executive: Transport hub caterer SSP has named the former boss of WH Smith Kate Swann as its new chief executive, replacing Andrew Lynch, who is leaving after nine years in the job. She will take up the role on 4 September, leading a business that operates franchises for WH Smith, Marks & Spencer Simply Food and Starbucks, as well its own brands, including Upper Crust, Millie’s Cookies and Pumpkin. SSP is owned by the Swedish private equity firm EQT and posted £1.74bn of sales in 2012. It was sold by support services group Compass in 2006 and has its headquarters in the UK, but operates at 400 locations in 30 countries, including the US, Germany, France, Russia, China and Australia.

Bristol Cowshed plans expansion next door: Bristol restaurant Cowshed has launched an online campaign to move into the cellar below former ABC cinema next door. The cinema has been standing empty for more than a decade and the most recent plans to convert it into a bar and a gym were thrown out following a five-day public inquiry. A spokesman for Cowshed said: “We have the lease for the old Picture House bar and restaurant which is next door to the Cowshed. Our plans is to make this a Cowshed Bar and extend the restaurant and kitchen by knocking through the downstairs bit of the two properties.”

Leamington Nando’s to open tomorrow: Nando’s will open its Leamington Spa restaurant tomorrow (Wednesday 10 July). The new restaurant will be located in Regent Court, in the heart of town centre, seating up to 96 people at a time and bringing 30 new jobs to the area. Dean Boiles, regional managing director of Nando’s, said: “The demand for a Nando’s in Leamington, a town that’s been on our radar for a while now, has been nothing short of incredible. We can’t wait to finally open our doors to the public on Wednesday. The Regent Court site is a fantastic location, and will offer shoppers, locals and visitors a great experience.”

Wadworth reports fall in pre-tax profit: Brewer and retailer Wadworth & Co has reported a fall in its pre-tax profit after a “disappointing” period during the London 2012 Olympic and Paralympic Games – £3,438,000 in the year to 30 September 2012 compared to £4,176,000 the year before. However, its profit before interest was slightly ahead at £4,147,000 compared to £4,117,000 the year before. The Devizes-headquartered company, which has 44 managed pubs and 197 tenanted sites, reported turnover rose to £55,231,000 compared to £55,027,000 the year before. Chairman Charles Bartholomew said: “The third quarter was affected by the exceptionally poor weather and, like others, our pub trading during the period of the Olympics and Para-Olympics was disappointing so our results were (lower) than in the comparable quarter last year. However, we made up the deficit with a strong performance in the last quarter which is encouraging.”

Restaurant Group and Giraffe unveil new concept: The Restaurant Group and Giraffe, the family dining brand owned by Tesco, have unveiled a brand new casual all day dining concept, Wondertree, to be opened at Heathrow’s ‘Terminal 2: The Queen’s Terminal’. The largest restaurant in the brand new terminal due to open in June 2014, Wondertree will occupy over 5,000 square foot with 210 covers and has been designed to take advantage of the airfield view over the UK’s hub airport. Following the appointment of John Torode and Gregg Wallace in April this year to provide a critique of Heathrow’s bars and restaurants, the airport has made clear its commitment to updating passenger dining. The Wondertree design ‘responds to Heathrow’s focus on bespoke customer experiences to enhance the passenger journey through a choice of self-service cafe and a more relaxed dining area’, a statement claimed. The design also incorporates the latest technology such as tablet menu translations, contactless payment and the potential to utilise device recognition mobile technology.

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