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Wed 10th Jul 2013 - Benugo, Lazy Cow, Luminar, Pub People and Shake Shack

Story of the day:

Benugo reports big jump in turnover and profit: Benugo, the company that runs high street cafe delis and restaurants as well as providing catering in the Natural History Museum and the British Museum, has reported turnover leapt 28% to £56.5m in 2012. Pre-tax profit rose to £3,341,000 in 2012 from £2,187,000 the year before. The company stated: “When we founded Benugo we had a vision of not just superb, natural food but something that was a real experience. That vision is still true today. The Benugo brand now stretches from our own award-winning stores to concessions within some of the world’s largest and most-respected corporate organisations and public spaces. What makes Benugo unique is that we have combined the flexibility of a contract caterer with the consistency and commercial focus of a high street brand.” Gross profit at Benugo, which was founded by Ben Warner and is run by Guy Kellner, increased 34% to £21m and net assets climbed by 66% to £7.8m. Benugo was founded 15 years ago in Clerkenwell and now runs ten Benugo cafes, eights restaurants, including Ashmolean Dining Room and London Wall Bar & Kitchen, runs on-site food shops for 11 major corporate clients such as Deutsche Bank and UBM, and runs restaurants at 13 museums and castles. Benugo open its Fields Bar & Kitchen today, located within the heritage gardens of Lincoln’s Inn Fields near Holborn, London’s largest square. 

Industry news:

Portas Pilots – convert empty shops to homes to boost high street: Empty and boarded-up shops on side roads could be converted into residential property as part of efforts to rejuvenate the UK’s ailing high streets. The latest review of the Portas Pilots – a scheme led by ‘”Queen of Shops” Mary Portas, to revive struggling retail centres – said there will be a consultation over the next six months on further relaxing planning regulations, to allow the conversion of retail space on minor thoroughfares running off high streets into residential property. It was also revealed that the Portas scheme to revitalise ailing high streets has failed to stop the rot – with ten out of the 12 towns so far selected to share £1.2m of taxpayers’ cash seeing an increase in empty shopping outlets. The towns – Bedford, Croydon, Dartford, Liskeard, Market Rasen, Nelson, Newbiggin-by-the-Sea, Stockport, Stockton-on-Tees and Wolverhampton – together saw more than 95 units close.

Luke Johnson – ‘there’s a difference between confidence and arrogance’: Sector investor Luke Johnson has argued that business leaders need to distinguish the difference between confidence and arrogance to avoid unforced errors. In his Financial Times column this morning, he writes: “Business leaders need to be confident, but when their egotism segues into arrogance, delusions of grandeur tend to take hold. So Tesco’s management thought they could teach the Americans how to run supermarkets – only to retreat a few years later after a $2bn write-off. In a small way I learnt the same agonising lesson, when we opened a big restaurant in Manhattan, thinking our Belgo formula couldn’t fail: $5m later we knew better. Dumb acquisitions, foolish investments – these poor judgments are often made after ignoring sound advice – because the decision makers are afflicted by hubris, and believe they always know best.”

Technomic – craveable menu items are the key to hooking customers: Craveability is a major purchase driver for restaurants, with 83% of consumers saying that cravings are a main reason they purchase food away from home. Said Darren Tristano, executive vice president at Technomic: “Craveable items promote impulse-driven occasions, can build a strong emotional connection with consumers and, in many cases, are the items that restaurants become known for. To cultivate craveability, operators must develop and refine unique signature items that have the power to transform guests into regulars. Some of these items might include comfort foods, memorable sides, and sweet snacks.”

Survey finds 81% of pubs with accommodation now have Wi-Fi: A total of 81% of pubs offering accommodation offer Wi-Fi in their rooms now, according to a survey by RPBI Reports. However, just 15% of the accommodation providers have Wi-Fi in their pub and 4% have no Wi-Fi. Only 1% of those making Wi-Fi available charge for it. The consumer survey found that 29% found Wi-Fi in the room important and 44% very important with just over 25% saying it is not important. One survey respondent said: “A decent pub – with good food, en-suite bedrooms and free Wi-Fi would be an automatic first choice for not only me but for my employees when away from the office.” Go to to buy the report.

Phil Mellows – Hong Kong experiment in duty-free drink led to people drinking more sensibly: Leading sector commentator Phil Mellows has reported that the abolition of duty on wine and beer in Hong Kong has led to more moderate drinking. In his blog for CPL Training, he writes: “Five years ago Hong Kong took the dramatic step of abolishing duty on beer and wine. Tax on spirits has remained on 100%. In fact, in two years Hong Kong went from being the most highly taxed alcohol market in Asia to one of the least taxed in the world. Has Hong Kong descended into an alcoholic stupor as a result of all that cheap booze? Not really. Since 2006 more people have become drinkers, up from 66.6% of the population to 85.2% in 2012. That’s quite a big rise. Yet it seems they are generally drinking moderately. Overall, self-reported consumption has remained flat. Even more surprisingly, the incidence of ‘binge drinking’ has decreased from 9% of the population in 2006 to 7.3% in 2012.” See more at:

Company news:

The Lazy Cow Group enters talk over franchising its Shed better burger format: The Lazy Cow Group, operator of four sites headed by Ross Sanders, has entered talks with a large contract caterer over franchising its The Shed better burger format. The company opened its first site in an underused external area at the Lazy Cow site in Stratford a few months ago. Takings at the site average of £70,000 per week, with The Shed chipping in with £11,000 of turnover last week – GP was 75% and labour costs were 16%. Sanders told Propel: “The company, which has a very high profile, is looking for an opportunity in the better burger segment – we were approached after one of its executives visited the site.” The Shed has already been franchised to an operator in Majorca, who will open a site next week.

Luminar adds second Jongleurs comedy club: Nightclub company Luminar has opened a second Jongleurs comedy club, this time at its Oceana site in Nottingham in partnership with Momo Leisure. The company opened its first site in Cardiff at the end of May and Momo has now transferred its existing Jongleurs venue in Nottingham – a third Luminar site is understood to be in the pipeline. Momo sales and marketing director David Elphick told Propel: “Trading has been fantastic so far – Cardiff has been brilliant and Nottingham is even better with the venue almost fully booked for July.” Momo Leisure also runs sites in Birmingham and London’s Piccadilly in a partnership with Lightening Bars, formerly known as Yellowhammer – it has its own site in Bristol. The company has the cities of Manchester, Liverpool and Brighton high on its list of targets for openings. David Elphick can be contacted on

Simon French issues Buy note on Young’s shares: Panmure Gordon leisure analyst Simon French has issued a Buy note with a price target of 995p on Young’s shares after yesterday’s trading update. He said: “Young’s has reported Quarter One like-for-like sales growth of 6.8% for the 13 weeks to 1 July. This is slightly ahead of our expectation of circa 6%. Total sales growth in managed pubs for the 13-week period was 10.7%. The group has acquired three London freehold pubs within the last two weeks and remains confident about its future prospects. Consensus forecasts are for £24.8m profit before tax (39.8p EPS) and we expect no change to this given the early stage of the year.”

Burning Night to launch three bar concept at Manchester Printworks: Bar group Burning Night is launching its brands at Manchester’s Printworks. It has taken a 20,000 square foot unit which will house three bars from August – the Bavarian-style Bierkeller, sports bar Shooters, and Around the World in 80 Beers. The Leeds-based business is owned by former DJ and yacht salesman Alex Hazzard who has already opened the venture in Liverpool, Blackpool and Leeds. He also operates The Park Row Bar and Brasserie in Leeds. The Bierkeller will feature Oompah bands, German food and staff in traditional Bavarian dress. Shooters will show live sport all day and Around the World in 80 Beers promises 200 world beers. Fred Booth, centre director at The Printworks said: “We are very excited to welcome our first traditional Bavarian bar to The Printworks in plenty of time for Oktoberfest, adding to the wide variety of offers already on display.”

No Saints adds Cheltenham site: No Saints, the nightclub operator led by Stephen Thomas, has added a site in Cheltenham, formerly called The Place, which has been closed for 18 months. The nine-strong company began work this week on expanding the site after winning consents – capacity will be increased from 750 to 1,100 with an opening scheduled for early September. Thomas told Propel: “We haven’t named it – we’re running a local competition to find a name.” No Saints is in advanced discussions to add two more sites to the estate.

Costa Coffee plans up to 900 new-style Costa Express machines in the Middle East: Costa Coffee hopes to install between 800 and 900 of its new, high-tech vending machines in the Middle East in the next three years. The Marlow 200, which boasts a 27-inch touch screen and vends 250 variety of coffees, was unveiled at Dubai International Airport Terminal 3 this week, where the first two units in the world have been installed. The machines feature technology from Microsoft and Intel and are designed to replicate the authentic cafe experience.

Pub People Company picks up two sites including Spirit freehold: Pub People Company, the East Midlands operator led by Kevin Sammons, has added two site sites to bring its portfolio to 52. The company has bought the freehold of the Marr Lodge, between Doncaster and Barnsley, a Spirit freehold that was originally part of the Tom Cobleigh estate. It is a co-investment with its partner, investment firm Downing, run through its Autumn Pub Company vehicle. The pub was sold by agent James Baker off an asking price of £230,000. Pub People Company operations director Andy Crawford told Propel: “We will be looking to invest £200,000 to turn the Marr Lodge into another of our family food pubs. This is a former Tom Cobleigh pub. (Tom Cobleigh founder) Derek Mapp’s legacy still holds strong – we are delighted with the location and facilities at this pub. James Baker has also been great to deal with.” The company also taken a Greene King tenanted pub, The Duke of Wellington in Matlock. Added Crawford: “This part of our business model. We’re hoping to develop a relationship with Greene King – this is our second site with the company, both excellent former Hardys and Hansons sites.”

US Shake Shack customer reviews Covent Garden opening: Garth Johnston, a US citizen who is a customer of Shake Shack in New York, has reviewed the Covent Garden opening. He states: “The buns, always my favorite part of a Shackburger, are slightly less bouncy, moist and flavourful than the ones back home. The 100% Scottish beef in the burger is drier and distinctly less flavourful than the magical mixture that Pat LaFrieda whips up for the Gotham Shacks. Still the fries (not chips) are actually, maybe, an improvement over the oft-derided ones in NYC – though that may be a personal taste thing as I prefer mine to have a uniform golden crunch to them.”

Caffeine & Co adds two sites in Manchester: Caffeine & Co, the cafe concept launched by Claire and Phil Howells, on St James Square, Manchester a year ago, has added two new sites. The expansion will see Caffeine & Co launch a cafe at Longford Park, Stretford, and a site in Manchester’s Spinningfields district. The cafe in Longford Park will be a partnership with Hulme-based co-operative Uprising Bakehouse, which is run by a group of local food producers passionate about reviving real bread in the community using entirely seasonal, locally sourced ingredients and organic produce. The bakery produces wheat and spelt slow-fermented breads and sweet buns, along with foraged preserves, local relishes and oils and lots of other bread accompaniments made in their wholesale kitchen garden. Claire Howells said: “Longford will be a working kitchen and bakery as well as a cafe. We think this will be a great spectacle – you can watch a cake being made while you have a coffee, go for a walk and then come back an eat a slice.”

Broken Foot Inns takes sixth site: Broken Foot Inns has taken its sixth site, The Manor Arms in Streatham. The venue, in Mitcham Lane was bought in November 2010 by former Capital Pub Company senior operations managers, Richard Coltart and Alex Hughes, who set up a company called Who Cars Wins. Broken Foot Inns, headed up by industry veteran David Franks, also operates The Theodore Bullfrog near Charing Cross, The Coach & Horses in Greenwich, The Three Guineas in Reading, The Village Inn, Ealing and The Seagate in North Devon. Chris Bickle, associate director at Davis Coffer Lyons, said: “The Manor Arms has played its role in the ongoing gentrification of this area which is fast becoming a preference rather than an alternative to pricier neighbouring boroughs.”

SSP showcases Manchester airport pop-up street food in new food court: Transport hub caterer SSP is breaking new ground at Manchester airport by showcasing street food from the city in the Food Quarter. The first of these is an ice-cream that is quickly gaining fame in Manchester and beyond. Claire Kelsey, the woman behind the Manchester institution that is Ginger’s Comfort Emporium, serves ice-cream aimed at ‘grown-ups’, with flavours that include marmalade on toast, which was named ‘best desert’ at the British Street Food Awards in 2012, where Ginger’s also scooped the ‘best of the best’ award. The pop-up street food offer will be varied according to the season. The line-up is being devised in partnership with food journalist and street food aficionado Richard Johnson, who has presented ‘Full on Food’ and ‘Kill It, Cook it, Eat It’ for the BBC among others, and is a regular contributor to Radio 4’s ‘Food Programme’. The Food Quarter also features one of SSP’s new concepts Mi Casa Burritos. Since the first outlet opened at London’s Victoria station in February 2012 sales grew week-by-week (beating budget by over 40% in the first year), and are now increasing at a rate of over 20% year-on-year. The new openings follow the successful debut of The Grain Loft bar. The outlet, which was designed to reflect the warmth and character of the north west of Britain, offers a menu that celebrates the region’s food and drink. A highlight of the list is the Beer Can Chicken sharer for two – a whole marinated chicken, slow roasted over a can of Thornbridge’s Jaipur IPA, and served with triple cooked chips and homemade seasonal coleslaw. Sharers and light bites include beer battered Bury black pudding fritters, bite-sized pulled beef sliders or British brie club sandwiches. Olly Swayne, business development director (airports), SSP UK and Ireland, said: “Over the two decades that we’ve operated at Manchester Airport, the ‘eating out’ market has changed dramatically and passengers’ tastes and needs have evolved. We are very proud to be providing new food and drink offers that provide them with examples of current food trends and flavours from the north west.”

Simon Kosoff – an Indian restaurant chain could be a massive opportunity: Carluccio’s chief executive Simon Mosoff has argued that a chain of Indian restaurants could be an untapped part of the market. He told a local newspaper: “When I’ve had meetings with fellow colleagues in the business about possible gaps in the chain restaurant market, Indian continually comes up. Indian is the most popular cuisine in the country, but I think that the reason it’s never been successfully done is that people like to think their local Indian restaurant has something unique that they can’t find somewhere else. It’s not something that people are perhaps comfortable with regarding as a chain, but clearly it’s a massive opportunity.”

Wayne Brown – merger between Britvic and AG Barr still makes sense: Canaccord Genuity analyst Wayne Brown has argued that a merger between Britvic and AG Barr still makes sense. He said: “Britvic have yet again commented that the business is in a different position to last summer when the merger was agreed. If that is the case, and Britvic are making decisions in the best of interests of shareholders for the long term, we question what has fundamentally changed since Feb 2013 when they openly supported the merger? Britvic go on further to comment about a new strategy but have failed to lay out targets by which we can measure the success. Considering past track record for the group and a failed M&A strategy we see a fundamental difference in laying out a strategy and actually delivering one. Lastly, the ability to deliver on this strategy when a significant cultural change is required, is challenging. This is even more the case where up to 15% of the workforce will be shed and a major restructuring of the operational framework will take place. Whilst Britvic’s comments represent a total reversal of the board’s view since Feb 2013, this comes at a time when the underlying performance of Britvic has worsened and the competitive landscape in the UK has intensified. Both parties provide different dynamics to an enlarged entity. The combination would have a stronger and broader portfolio of drinks, stronger competitive position, which will be able to compete more effectively and offer customers more choice. Coca-Cola Enterprises represents around 28% of the UK soft drinks market and a combined Barr Britvic would be around 13-14% – however the complimentary portfolios, channels and the integrated systems between the two would make it a much stronger British business.”

Harry Ramsden’s in talks with pub group as it plans major expansion: Fish and chip shop brand Harry Ramsden’s, which operates 29 sites, is in talks with a number of franchisees and a major pub group which could lead to rapid expansion of the brand. It is understood that the company is in discussion with a FTSE250 company with a managed and leased estate over licensing the brand for its leased division. In addition, the company is understood to be close to signing a franchisee for the Yorkshire territory with a view to opening 50 sites over five years. News of the discussions comes as the company opens a flagship site in Bournemouth that has seen a £1m refurbishment, creating the largest fish and chip shop in the world with 417 covers. The refurbished Bournemouth site showcases both the company’s restaurant and takeaway format and is expected to take £200,000-a-week net of VAT. Chief executive Joe Teixeira told Propel: “This (Bournemouth site) will point the way to the future in line with the strategic review of the business undertaken upon my arrival in September 2011 after ten years as head of foodservice at the John Lewis Partnership. We are currently in discussion with a number of potential franchisees and pub groups to expand the brand aggressively under a variety of formats (both here in the UK and internationally) with an ambition of 500 plus units over a period of time.” The business is expected to deliver a positive contribution this year after a short period of turnaround since the acquisition by its current owner Ranjit Singh Boparan, who also own Two Sisters Food Group and Northern Foods. Harry Ramsden’s also has three sites run by franchisees – one in Brighton, one in Inverness and a third in Euston train station, run by SSP. Harry Ramsden’s reported that it disposed of six sites in the year to 1 January 2012 at a cost of £1,160,000 but removing losses incurred at the sites in 2011 of £1,150,000. This is expected to mean the company moves to profitability this year. Turnover decreased to £15,707,934 from £18,879,874 the year before. The company made a loss before tax of £2,129,019, up from £1,471,958 the year before. The company stated in its most recent accounts: “The disposal of six loss-making sites and operational improvements have moved the business to a position where it is generating cash and is now looking to improve profitability through targeted investment in its core estate, together with expanding franchise operations and licensed retail range under third party agreements. During the turnaround period, the business has the full support of its owner to provide the required liquidity and capital expenditure to ensure the business is not only a going concern but is able to realise its full potential.”

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