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Morning Briefing for pub, restaurant and food wervice operators

Thu 18th Jul 2013 - Ask, Corney & Barrow, Fuller's and Whitbread

Story of the day:

Ask Italian – ‘we’ve been transformed by better food, design and recruitment’: Ask Italian, the Gondola-owned brand with 117 sites, has been re-energised by transforming its approach to menu content, design and staff recruitment, managing director Steve Holmes told the Arena lunch yesterday. Holmes reported that the brand has been revitalised in the past three years after addressing the key problem – ‘no reason not to go but no reason to go’. Food had been the primary area to address and the decision to ‘work with the best’ was made – former River Café chef Theo Randall was drafted in. Not a typical celebrity relationship ‘where they come on board and knock up a couple of pizzas’ but a relationship with passion for ‘all that is Italy, the culture, the seasoning and the ingredients’. Randall has changed every dish and ingredient in the last three years after ‘many long and arduous trips to Italy’, said Holmes. Design was next and it had been essential not to ‘do exactly what everyone else was doing just slightly better’. The Tuscan theme had already ‘been done’ so inspiration was taken from Milan, arguably the fashion capital of the world. ‘Modern, contemporary and fresh designs’ were important and everything was replaced, including glasses and crockery. Holmes revealed that the company has sold more than 30,000 of its new wine glasses to admiring customers since they were introduced. He said “the pub test” had been applied when it came to recruiting staff. “If you meet someone and within the first 30 to 60 seconds you want to go the pub with them, we hire them,” Holmes revealed. “It’s important to create the right culture where people come to work for the right reason – because they love it!” A flagship Ask Italian was opened at Bluewater shopping centre last November that represents ‘the best realisation of brand vision’. Holmes spent eight years as PizzaExpress London region director before joining Ask Italian in November 2009 as operations director. He became managing director in September last year.

Industry news:

Kate Nicholls – the sector has managed to resist prescriptive alcohol proposals: Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers (ALMR), has welcomed yesterday’s alcohol strategy implementation proposals from the government. She said: “The strategy is more newsworthy for what is missing from it than what is contains. The headlines have been focused on the U-turn on minimum pricing, but by working together, the industry has managed to resist some of the more extreme and prescriptive proposals put forward by the police and health lobby. We have successfully fought off proposals for the introduction of health as a licensing objective for CIPs; new bans on the serving of shots, large pitchers, happy hours; proposals for mandatory unit labelling on menus, seating ratios, training, provision of low alcohol products, mandatory incident logs, regular glass collection, policies on serving drunks. It is worth noting in this context that the trade – particularly producers and supermarkets – has been able to use the Responsibility Deal successfully to resist prescriptive legislation and gain added leverage. The government is looking to mirror this going forward to encourage social responsibility pledges to address local crime and disorder – support for Pubwatch and Best Bar None. We will work centrally to translate this into appropriate commitments for operators. We have also collectively secured a major reduction in bureaucracy and business costs with the decision to remove the requirement to renew personal licences every ten years and a planned consultation to abolish the licences altogether. Unfortunately, plans to scrap newspaper adverts and introduce an annual payment date for fees have not been taken forward.”

Bargain Booze plans AIM flotation: Off-licence chain Bargain Booze is eyeing a flotation on the Alternative Investment Market. The retailer, which has 611 franchise stores under the Bargain Booze, Select Convenience and Thorougoods fascias, will float under the name Conviviality Retail. The business is currently owned by private equity firm ECI Partners. The flotation would raise between £60m and £65m through the flotation and the funds would be used to buy out ECI Partners and repay all debts to leave the company in a debt-free position.

UK’s best-known restaurant designer dies: David Collins, arguably the UK’s best-known restaurant and bar designer, has died. His death was caused by complications from a virulent skin cancer, an illness that was diagnosed only three weeks ago. “David will be remembered for his incredible style, but more importantly for his great humour and wit,” Tom Konig, his friend and director of public relations company The Communications Store, told Vogue. “In 1985, he founded David Collins Studio and has gone on to create the interiors for London venues such as The Wolseley, Claridge’s Bar, Nobu Berkeley, J Sheekey and The Connaught’s bar.”

Met Office upgrades heatwave warning: The Met Office has upgraded its heatwave warning in parts of the UK, as temperatures are set to rise well above 30C (86F). It said they could reach “Level 3 heat-health watch criteria” in London and the south east, requiring healthcare services to help high-risk groups. The “Level 3” warning is part of the heat-health watch system, which is intended to put health, housing, social care and other public bodies on alert in case of a heatwave.

More detail emerges on KFC ‘innovation restaurant’: More details has emerged on KFC’s “innovation restaurant” ,“KFC eleven,” to be opened Louisville, Kentucky. The site will take the brand’s signature Original Recipe chicken “and craft it into simple, fresh tastes for today” like flatbreads, sandwiches, salads and rice bowls. KFC president John Cywinski said in April that its new ‘original recipe boneless’ menu item will serve as a springboard for further menu innovation. “Boneless will be a platform,” he said. “The sandwiches will leverage this platform, and you can expect other products from it, whether they’re new sandwiches, wraps or other innovation items.”

Food Standards Agency – public more concerned about supermarket food: The Food Standards Agency (FSA) has reported a sharp increase in public concern about supermarket food. The FSA surveys the public twice a year and has reported concern about food safety in UK restaurants, pubs, cafes and takeaways (52%) has remained largely unchanged. However, concern about food safety in UK shops and supermarkets (52%) increased in this survey, compared to all previous surveys (44-46%, November 2010 to November 2012). When asked about wider food issues, respondents were most concerned about food prices (59%), the amount of salt in food (47%) and food waste (44%).

Company news:

Date for new Pitcher & Piano opening unveiled: Marston’s Pitcher & Piano brand will launch its first new site in five years in Hitchin, Hertfordshire, on 2 August. Housed in the Corn Exchange in Market Place, the 2,700 square foot, 141-cover venue will be Pitcher & Piano’s 20th opening. Designed by Concorde BGW, Pitcher & Piano Hitchin has been carefully divided into areas, making it a flexible space for casual and relaxed drinking and dining. A stylish and modern look has been achieved, with dark oak timber flooring and contemporary lighting alongside an eclectic mix of fabrics, vibrant pops of colour and quirky touches creating a dynamic venue for socialising. 

Whitbread’s Table Table launches customer rewards scheme: Whitbread’s Table Table brand has launched the Tasty Rewards scheme, a loyalty initiative that gives diners the chance to collect points at the restaurant every time they visit. Going live on 22 July, the scheme rewards loyal customers with exclusive offers, deals and savings. Tasty Rewards cardholders will also be given a free main meal both on their own birthday, and on family member birthdays, as well as being offered extra deals for other special occasions such as anniversaries. The Tasty Rewards card comes with 250 free points when customers activate and members can collect a further five points for every £1 they spend at Table Table. For every 500 points earned, members will be entitled to receive £5 off their bill or a choice of free dishes including two free gourmet burgers, two free sundaes or two free kids meals. Jennifer Kilham, marketing manager at Table Table, said: “Not only are we keen to attract new guests but also to reward returning guests with savings on future visits. Tasty Rewards is a great initiative in bringing exclusive deals and savings to our most loyal customer.”
JD Wetherspoon targets Poulton with suburban pub: JD Wetherspoon has unveiled plans to open a pub in the suburbs of Poulton, near Blackpool on the Wirral Peninsula – it wants to convert the two-storey Edge bar, which has stood empty for two years. Eddie Gershon, a spokesman for JD Wetherspoon, said: “We don’t have any opening date at the moment but there’s an investment cost of £1m and the pub will create between 45 and 50 jobs.” Roger Critchley, chairman of Poulton Partnership, said: “If it was in the centre of Poulton I would have been a bit worried because there’s already enough pubs in the core of the town, but a lot of people I’ve spoken to see this as being good.”

Douglas Jack – “we’d be adding Fuller’s shares”: Numis Securities leisure analyst Douglas Jack has issued an ‘Add’ recommendation on Fuller’s shares ahead of its first quarter results on Thursday 25 July, with a target price of 950p. He said: “We expect trading to have been strong, particularly in managed pubs and hotels, which achieved 7.0% like-for-like sales over the nine weeks to 1 June. We expect to hold our full year forecasts, but believe the risk is firmly on the upside. Our forecasts assume a continuation in last year’s trends, but weather-related comps, operational improvements and scope to be expansive (net debt/EBITDA is forecast to fall to 1.8x in 2016E) point towards potential upgrades later in the year. These factors, combined with the highest asset quality and the best operational track record in the sub-sector, justifies Fuller’s premium rating, in our view.”

Corney & Barrow looks to send customers to the races: Corney & Barrow bars, the chain of ten city bars in London, has teamed up with the Goodwood Estate to offer its first 200 customers a complimentary ticket to ‘Glorious Goodwood’ on Friday 2 August when they buy a bottle of Veuve Clicquot Rosé, Veuve Clicquot Vintage Brut 2004 or Veuve Clicquot Yellow Label Magnum champagne.

Richard Negus joins AG&G: Richard Negus has officially joined boutique licensed leisure specialists AG&G as a director with a special focus on the restaurant sector – he worked for ten years at Fleurets previously. He will be focusing on corporate restaurant disposals and acquisitions. He said: “I wanted to work in a smaller company that is passionate about its business and where senior people are hands on – and I believe I am joining the UK’s top boutique licensed leisure agency. Demand for restaurant premises is as strong as it has ever been and the sector continues to attract much international investment. It’s a dynamic market where there are many transactions and requests for specialist advice but very few specialist advisors.”

Coca-Cola disappointed with advert ban: Coca-Cola says it is “disappointed” with the advertising regulator’s decision to ban its global “Be OK” TV ad – which highlighted various activities consumers can partake in to burn off the 139 calories in a can of Coke – for being misleading. The advert sparked ten complaints challenging whether the activities depicted were sufficient enough to negate the effects of consuming a can of Coke and the advert was therefore misleading. The Advertising Standards Authority (ASA) agreed it was likely to mislead because the use of a + sign between the activities was not as prominent as the on-screen text describing them, meaning viewers were likely to mistakenly believe each individual activity could burn off 139 calories. 

TGI Friday owner applies to open Ticket Hall in Fulham: Carlson, the company that owns TGI Friday’s, is planning to return to the site of the former Fulham Broadway tube station with a new UK concept restaurant called Ticket Hall. TGI Friday’s occupied the most prominent corner site on Fulham Broadway from 2005 until 2010, when it left and was replaced by the upmarket Union Market grocery store. However, this brand ran into financial trouble 18 months after opening and it closed its doors on 12 February 2012. An accompanying planning statement for the site, which it called The Old Station, states: “The proposal is to use the premises as one of the first UK concept restaurants by Carlson Restaurants. Ticket Hall, as it will be called, will be a restaurant where the food and drinks are lovingly crafted and are as sociable as the atmosphere. The restaurant will be catering for young professionals where quality over value is a key driver.” The statement added: “ The proposals seek to retain an element of retail within the ground floor use by the installation of two timber retail display cabinets, each to be located within the front windows either side of the main entrance. These display cabinets would be locked and would exhibit items that can be purchased by members of the public from staff over the counter at the restaurant. It is envisaged that such items would include pastries, freshly ground coffee, wood chips, home smoking kits for food, cook books, fresh herbs and condiments.”

Ampersand to expand London Zoo restaurant to 700 covers: Ampersand is to create a hugely expanded 700-seat Terrace restaurant at London Zoo – a year ago it was awarded a £22m five-year public catering contract at the site. London Zoo attracts 1.1 million visitors every year and Ampersand has invested £4.6m in the revamp of the restaurant, which is a key part of the restoration of the zoo’s historic Regent’s building, to create a more user-friendly space. Previously the catering facility was capable of accommodating 200 diners. Ampersand managing director Paul Jackson said: “It’s a massive leap to go from 200 seats to 700 but it was so choked before. It’s been on the cards for years.”

Giggling Squid – HSBC been very helpful: Giggling Squid founder Andy Laurillard has praised the support his company, which has ambitions to become the first national chain of Thai restaurants, has received from his bank, HSBC. The company opened its sixth site yesterday in Reigate, Surrey – and will open in Marlow later this year. Propel understands the company is eyeing a least one more opening in West Sussex. Laurillard, who runs the business with his wife Pranee, said: “We’ve broken through the bottleneck in terms of expansion through cashflow. HSBC has been very helpful.” Paul Charity, managing director of Propel Info, said: “We attended the opening night in Reigate on Tuesday evening and this is a seriously credible growth brand – with a modern, well-designed and clearly replicable offer. The Asian space is clearly still very open with few national brands.” 

Spirit puts popcorn flavour created by seven year-old on sale: Seven year-old Scott Withington has created a popcorn flavour that has gone on sale in 78 children’s play centres across the country. Withington, from Moston, in Manchester, created an apple and cinnamon-flavoured popcorn in a competition to design a new flavour for Wacky Warehouse. He came out on top against four finalists in a vote on the brand’s Facebook page – the runners-up were Salted Caramel, Marshmallow, Banana and Honey. Withington also won a VIP Gold Card, a visit to the factory to see his popcorn being made, and a family meal at his local Fayre & Square.

Heineken falls foul of advertising watchdog: An Heineken television advert has fallen foul of the advertising watchdog for showing people drinking at a football stadium. Football supporters have not been allowed to drink alcohol in their seats since the mid-1980s, but the advert showed a man and a woman clinking two bottles of Heineken together at the Champions League final at Wembley Stadium after the man travelled there from a remote island. The Advertising Standards Authority received 17 complaints about the advert, a number claiming it condoned or encouraged the consumption of alcohol in a football stadium within sight of the pitch. Other complaints argued that the advert condoned or encouraged people to take glass bottles into a football stadium, which is not permitted. Heineken insisted the humorous and unrealistic tone of the advert, which featured a man swimming to catch a plane, entertaining border guards and arriving at the front of the stadium by helicopter, meant viewers would infer the ad was showing one person’s fantasy of how they got to the big final.

Worcestershire couple open fourth site: Worcestershire entrepreneurs Kevin Donegan and Carol Marshall have opened their fourth site. Their new restaurant, On the Rocks, in Evesham, will serve British food and with a wine bar for the over-21s. Donegan and Marshall also own three pubs and restaurants in Honeybourne, Offenham and Childswickham. The new restaurant specialises in fish and steak and will source quality local and regional produce, including rare breed steaks from Herefordshire and fish served within 24 hours of being caught.

Salt Yard Group lined up fourth site: London operator Salt Yard Group is to open a fourth site, this time in Soho. The new site on 60/61 Berwick Street will open in November as a 90-cover restaurant featuring a menu devised by chef director Ben Tish. The unnamed venue will join Salt Yard, Dehesa and the Opera Tavern in the estate.

Tenanted pubs see unprecedented 4.69% sales jump: A recent six-week period saw a large jump in sales across the board for 432 largely tenanted pubs, hailing from all parts of the UK, whose accounts are handled by Roslyns Accounting Company. The sales increases are likely to have carried on in the eleven days since the end of the reporting period as the weather has grown warmer. Average like-for-like sales increases have been 4.69%, an unprecedented across-the board increase in sales as pubs benefit from the warm weather. Around 95% of the pubs in the sample are leased and tenanted with a large proportion among the estates of large companies such as Punch, Enterprise and Star Pubs & Bars, with around 5% of them being freehold. The sales data covers the three weeks prior to the hot spell (27 May until 15 June 2013) and the current three weeks of balmy weather (16 June until 6 July 2013). Roslyns managing director Martin Roslyn said: “Wet-only pubs have seen the biggest increase of 5.02% whilst closely behind pubs selling food have shown an increase of 3.6%. We’ve seen increases sales like these in particular regions in the past, but never across the board.” Billy Buchanan, chief executive of LT Pub Management, the sector’s largest out-sourced management company operating more than 1,000 sites, including a large number of pubs, said: “Some of the sales spikes we’ve been seeing in the estate in recent weeks have been incredible.” 

Geof Collyer – unusually hot weather provides (big) scope to upgrade Mitchells & Butlers: Deutsche Bank leisure analyst Geof Collyer has raised his price target from 300p to 435p on Mitchells & Butlers ahead on its third quarter results on 25 July. Collyer said: “The 2013 financial year looks like being a year of two halves with exceptional weather disrupting the first half significantly, and boosting the second half by possibly more than we could have hoped for back in March when the temperature was 50% below the long term average. We have upgraded our EBITA forecasts by +4% and raised our price target from 300p to 435p. This is driven by the forecast changes, rolling the base year to FY’14E and removing the corporate governance discount. The dividend reinstatement remains dependent upon the deficit funding agreement with the pension trustees, but M&B is arguably our preferred pub retail name behind Greene King (Buy). Management guidance was unchanged at the 33-week stage; however, we see the unusually hot weather and better than expected H1 performance as providing scope to upgrade. Our new forecasts are 2% above Reuters consensus for the 2013 full year. We estimate that a 1% increase in sales is worth around 3% on EBITA and 5% on earnings for M&B. To temper this enthusiasm though, we do believe that there is a requirement for upgrades at M&B to soften any potential negative impact from the current pension discussions, which are preventing the reinstatement of the dividend that is also hampering the total returns profile. We see the dividend reappearance as potentially a second half of 2014 event at the earliest. The uncertainty means we have not yet put it into our forecasts.”

CGA buys Peter Martin’s Peach Factory: CGA Strategy has acquired Peach Factory, the information and research company founded by Peter and Christine Martin. CGA Peach, a specialist retailer focused division of CGA Strategy, will bring together CGA’s market leading suite of on trade tracker and consultancy services with Peach’s insight and data services, Coffer Peach Business Tracker and Peach BrandTrack. Scott Elliott and Peter Martin will spearhead the enlarged retailer insight division with a focus on consumer, volumetric and outlet trackers and related analytical services. Peach founders Peter and Christine Martin will be staying with the business. Peter said: “This is an exciting time for the Peach brand. Having the support, resources and expertise of the CGA team on board will allow Peach to strengthen and develop its presence further in the eating and drinking out sector in providing high quality insight and research.” Jon Collins, chief executive of CGA, said: “We are delighted to have Peach in the portfolio and excited to be working with Peter and Christine to uncover new opportunities by building on their reputation alongside our own well established operations. Our combined consumer metrics, market data and analytical capabilities will, for the first time, give our clients the ability to easily close the loop between strategy development and ongoing performance benchmarking around relevant metrics and brand-related success factors.”

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