Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Paul's Twitter Link Paul's Twitter Link

BrewDog Banner
Morning Briefing for pub, restaurant and food wervice operators

Wed 24th Jul 2013 - JDW to deliver profit uptick after margin boost

Story of the day:

JD Wetherspoon on track to produce better outcome after margins increase: Managed operator JD Wetherspoon has reported that it is on track to produce a better outcome for its current financial year than previously anticipated. For the 11 weeks to 14 July 2013, like-for-like sales increased by 3.5% and total sales increased by 6.2% – a better than expected performance. In the year to date (50 weeks to 14 July 2013), like-for-like sales increased by 6.0%, and total sales increased by 9.2%. JD Wetherspoon’s operating margin was 9.5% in the 11 weeks to 14 July 2013, including some one-off benefits, and 8.7% in the year-to-date (50 weeks to 14 July 2013). The company said: “We view the year-to-date margin as a possible indicator for the future, if we were to achieve reasonable sales growth.” The company has opened 29 new pubs and sold three since the start of the financial year and intends to open around 30 pubs in the following financial year. The company added: “As previously indicated, the company warmly welcomes the reduction in beer duty announced in the March budget (but overall excise duty increased). However, the late night levy, machine gaming duty and business rates taxes have increased, as well as pension costs. Continued progress in sales will be required in order to overcome these costs. The biggest dangers to the pub industry are the VAT disparity between supermarkets and pubs and the continuing imposition of stealth taxes. We are now on track to achieve a slightly better outcome (before any exceptional items) for the current financial year than previously anticipated.” In the next financial year, starting on 28 July, the company warned that it is likely to incur further tax and regulation increases of excise duty (circa £2.5m), business rates (circa £2m), machine gaming duty (circa £2m) and increased pension contributions (circa £1.5m).

Industry news:

Martyn Cornell joins Propel: Martyn Cornell, one of the most respected journalists in the leisure and hospitality sector, has joined Propel as managing editor. Cornell, who has been covering the leisure sector for two decades, has previously worked as editor of M&C Report for four years and also worked for The Times and The Daily Telegraph. He is a published author on the history of beer and pubs. His books include ‘Beer – the story of the pint’ and ‘Amber, gold and black – a history of British beer styles’. Paul Charity, managing director of Propel, said: “We are delighted to welcome Martyn to Propel. He has been in the first rank of journalists covering the sector for many years and combines analytical rigour with a wonderfully engaging writing style.” Cornell said: “The sector is very much my first love and I’m delighted to join the team at Propel. I’ve been watching the development of the company’s various news services and been impressed by its rapid progress as a must-read publication.”

Starbucks and Danone form strategic alliance: Starbucks and Danone have unveiled a strategic agreement to offer a jointly created and developed selection of new, healthy specialty yogurt products in US Starbucks stores and in grocery channels – with a view to roll-out into other markets. The deal will advance Danone’s ambition to expand yogurt consumption in the US, while growing Starbucks health and wellness offer for its customers under the company’s Evolution Fresh brand. A new range of Danone-branded ready-to-eat Parfait Greek yogurt products will be co-created by Starbucks and Danone for exclusive distribution in the US. Starbucks will offer the products through its sites in spring 2014, and Danone in grocery channels in 2015. Distribution is to be extended to include targeted markets around the world in a second phase that builds upon the success of the US initiative. “Starbucks is committed to evolving and enhancing our customer experience with innovative and wholesome food offerings. (This) announcement underscores this commitment through the transformation of our existing yogurt offerings and our multi-year agreement with Danone,” said Starbucks chief executive Howard Schultz.

Shaftesbury – West End owners reluctant to sell: Shaftesbury, which owns a large portfolio of restaurants in the West End, has reported that property owners are currently reluctant to sell. The company stated: “The availability of properties that interest us and are in our areas of focus continues to be low. Existing owners recognise the strengths and prosperity of the West End and are reluctant to sell. We remain patient and continue to track a range of opportunities.” It has exchanged contracts to acquire a long leasehold interest in all the commercial elements of a substantial development in the heart of Soho, on the site formerly occupied by Trenchard House. It stated: “Our interest will comprise retail and restaurant space (approximately 6,500 square feet) on the ground floor and basement fronting Broadwick Street, a busy route linking Carnaby and Berwick Street. This important regeneration scheme is expected to complete in summer 2015.”

Developer – Bournemouth’s Nautilus Project will be one of the south coast’s best restaurant pitches: The developer behind Bournemouth’s Nautilus Project, next to the Pavilion, has reported a surplus of applicants to take one of the 14 restaurant sites available at the project. Trevor Osborne said: “A selective approach is being taken to choose the right occupiers. The signature restaurant at the summit of the spire is regarded as so special and significant that it is not being offered at this stage and restaurateurs are being made aware that it will be the subject of a competition to select a high-profile occupier once the development is underway. The addition of a cinema and a selection of 14 restaurants, with new gardens overlooking the sea and improved car parking provision, will make the Pavilion complex one of the most desirable leisure hubs on the south coast.”

BBPA – rents in tied pubs are still coming down: Brigid Simmonds, chief executive of the British Beer and Pub Association, has told the Business innovation and Skills Committee, that rents in the tied sector are still coming down. In written evidence to the committee, she said: “In 2011 we reported to the BIS Select Committee that rents have responded to the market and have declined by over 20% in real terms since 2008. Rents are still coming down, A recent survey of BBPA members found that on average rents across their tied leased and tenanted estates (reflecting circa 20,000 pubs) fell by 5%. A prominent pub sector analyst has commented that the BIS impact assessment fails to reflect higher rents in the free-of-tie market, as reflected by Wellington (a free-of-tie company) charging an average rent of £33,000 versus Punch Taverns’ £27,000 and Enterprise Inns’ £31,000. Given the relative quality of these estates, this is consistent with the OFTs conclusion (in 2011) that tied tenants are no worse off than free-of-tie tenants”.

McDonald’s reduce global opening target after subdued trading: McDonald’s has shaved its global openings target for the coming year after subdued results on Monday. The company trimmed its estimate for new restaurant openings to reduce its capital expenditures and now expects to open 1,500 to 1,550 net new locations globally, down from its previous forecast of 1,500 to 1,600. Despite the challenges, chief executive Don Thompson repeatedly expressed confidence that McDonald’s would be able to grow over the long term. “One thing we’ve never done at McDonald’s, we don’t cry or whine about market conditions,” he said. A US sales rise of 1% wasn’t enough to offset the higher advertising and promotional costs for those new items, as well as the reduced efficiency in restaurants. Operating margin declined slightly as a result. “We threw a lot of new products at restaurants this quarter,” chief financial officer Pete Bensen said in a call with analysts. “So our efficiency per crew hour was down a little bit.” UK chief executive Jill McDonald told The Independent that UK sales grew by “mid single digits”.

Company news:

Best Place Inns launches better burger concept: Best Place Inns, the company owned and operated by Ben Stackhouse, has launched a better burger concept at a traditional London boozer in the heart of Paddington. On Monday, The Green Man on Edgware Road, a Spirit site, introduced a full food menu to its existing offer, combining traditional city drinking with an American-diner-inspired burger experience. The new burger concept, which is named Juicy B*stard, will serve a variety of American-style burgers seven days a week. The launch of the offer comes after the recruitment of new operations manager, David Trott, who was previously a part of the Rushmore group managing The Player bar in Soho and overseeing the Lucky Chip burger operation. Trott said: “We’re combining our traditional pub roots with the latest and hottest trend in London so we’re really excited about this new concept.”

Douglas Jack increases Enterprise Inns target price to 145p: Numis Securities leisure analyst Douglas Jack has issued an ‘Add’ note on Enterprise Inns shares with a Target Price of 145p. He said: “The Third Quarter (results), due on 8 August, should show an improvement in like-for-like net income, from the First Half Year’s -4.2%. Underlying like-for-like net income was -2% in First Half and -1% in the first six weeks of the third quarter, since when like-for-like weather conditions have been favourable. Reflecting self-help, the company targets a return to positive like-for-like net income in the fourth quarter. Such an outcome would be ahead and should be sufficient to trigger another re-rating. We believe there is upside to both forecasts and the rating if Enterprise returns to positive like-for-like net income growth in Q4.”

Geronimo Inns reports a turnover and profit jump: London gastro-pub operator Geronimo Inns, owned by Young’s, has reported turnover up to £39,914,849 in the year to 1 April 2013, up from £31,301,934 the year before. Pre-tax profit rose to £3,310,866 from £2,406,602. The company reported that growth was driven by like-for-like sales growth and the opening of two new sites. A Companies House report stated: “Situated next to the Olympic park, The Cow an the Calf shattered all the previous sales records in the second week of the Olympic Games. Sales at The Cow, as expected, have returned to normal trading patterns.” Due to the weak UK economy and recent falls in property values, an impairment charge was made in the year of £616,170 (2012: £705,352). Most of this impairment derived from The Cow and The West Hill. On 25 February, the company disposed of its entire 51% interest in Sticky Fingers, its food production subsidiary. Sticky Fingers was a non-core business and allows the company to focus on operating pubs. The disposal was for a nominal consideration of £2. Geronimo has added The Bull’s Head in Barnes to its estate this year, a pub was previously part of the Young’s managed estate. The company added: “The directors expect a solid sales performance from both new and continuing operations in the year that started on 2 April. However, the results will not include the uplift that 2012 had from one-off summer events, including the Olympics and the Queen’s Jubilee.” Geronimo was founded by Rupert and Jo Clevely – Rupert Clevely stepped down as managing director on 2 April with Ed Turner replacing him. Young’s bought Geronimo Inns for £60m in December 2010. The deal increased Young’s managed estate by more than 20% to 148 pubs at the time, and takes its total estate to 247 pubs. 

London multi-site operator takes tenth Spirit leased site: London multi-site operator Sean Flynn has taken his tenth Spirit Pub Company leased site. City analysts toured Spirit pubs last week and were take to Flynn’s latest Spirit site, the former Angel and Askew in Shepherds Bush. Analysts heard that the pub was operated as a ‘pizza pub’ previously and had seen three consecutive years of decline, with Ebitda falling to £58,000. Flynn, who operates around 50 pubs in total through two vehicles, Premier Pubs and London Metropolitan Taverns, co-invested £177,000 to transform the business back into a pub with a strong beer range supported by a good food offer, which is between 15 and 20% of the mix. Spirit Ebita is forecast now to be £105,000 from sale in excess of £12,000 a week at the pub.

Tragus appoints Peter Blake as managing director of Café Rouge and Belgo: Tragus has appointed Peter Blake as managing director of its Café Rouge and Belgo brands. Blake spent 16 years at Whitbread, working as Costa Coffee operations director and more recently chief operating officer of its pub restaurants division. Chief executive John Derkach said: “He brings extensive operational and strategic experience, and will be a strong addition to our management team.” 

Entrepreneurs agree seven figure deal to buy Glasgow bar: Entrepreneurs Stephen White and Oli Norman will invest £300,000 refurbishing Brel on Glasgow’s Ashton Lane after agreeing a “seven figure sum” to buy it. White and Norman, founders of and marketing firm DADA, also own Sloans bar and restaurant in Glasgow city centre. Commenting on the acquisition, Norman said: “I live round the corner and have had many a great night in Brel so it is a real joy to take over ownership of a much-loved city institution.”

Carlsberg launches social responsibility website: Carlsberg UK is launching a new website to spotlight its Corporate Social Responsibility (CSR) activity, under the banner ‘Engaged with Society’. Telling CSR stories from across the business, is aimed at customers, employees, and consumers. The initiative is designed to keep CSR at the forefront of people’s minds throughout the year by reporting successes as they happen.

Chartridge Collection comes to market: The Chartridge Collection – three hospitality venues in south east England and the Midlands – is being brought to market by agent Christie + Co. The three venues – Hitchin Priory in Hitchin, Hertfordshire, Chartridge Lodge in Chesham, Buckinghamshire and The Beeches in Bournville, Birmingham – were previously operated as five-day, midweek residential conference and training centres. Since the shareholders appointed Hamilton Hotel Partners as managers in January this year, the portfolio has undergone an intensive review and re-launched as “The Chartridge Collection”. Jeremy Jones, director of Corporate Hotels at Christie + Co, said: “This is an excellent opportunity for prospective buyers to acquire a unique and profitable business, on either an individual asset or portfolio basis. New owners will be able to capitalise on improvements which are currently being made and operate the businesses as strong hospitality entities in their respective markets.” Offers are invited for the whole Chartridge Collection portfolio based on the combined price of £7 million.

Stella Artois Cidre set to claim cider fourth spot: Stella Artois Cidre is poised to usurp Magners as the fourth biggest cider brand in the UK just two years after launch if sales continue to climb at the rate they have over the past year. The AB InBev-owned cider brand saw retail sales leap 24.5% year-on-year to £67.9m in the 52 weeks to 22 June, according to IRI Worldwide. Volume (the number of litres sold) jumped 23.8% to 33.7 million over the same period.

Village backs plan for parish council to buy Enterprise Inns pub: Villagers have backed their parish council borrowing £300,000 to buy, refurbish and re-open their local pub. But Wellington Heath Parish Council would prefer a third party to come forward and buy The Farmer’s Arms instead of them. The village’s sole pub has been closed since last summer. The chairman of Wellington Heath’s parish council, Richard Hurley, who chaired the meeting of villagers that backed the purchase, said: ”Our position is we will buy the pub as a last resort, but we want a third party to come forward. We are not publicans and we are not used to running a pub.”

Risk Capital Partner hires James Knott: Patisserie Valerie owner Risk Capital Partners has strengthened its team by hiring James Knott. Knott joins after working for Catalyst Corporate Finance in Birmingham, where his main responsibilities included advising on MBOs, fund raising, company acquisitions and disposals. He was a key member of their healthcare sector team and also worked on a number of retail and leisure transactions. Knott has a BSc Degree in Mathematics from the University of Exeter and qualified as a chartered accountant with PriceWaterhouseCoopers where he worked in audit and assurance and latterly transactions services.

Derby Brewing Company secures fourth site: Derby Brewing Company has secured The Kedleston Hotel in a Derbyshire village as its fourth premises. The hotel is situated on the Kedleston Estate, in Quarndon, and is a grade II-listed building. Sir Nathan Bart commissioned the property in 1761 and construction was overseen by Georgian architect Robert Adam. The building was later listed in February 1967 and opened as a hotel in 1970. It has been boarded up for the past three year following a long period of deterioration. The Derby Brewing Company will be working with the Curzon family on a joint £750,000 renovation of the premises.

Inventive recruits senior Novus operator: Revolution vodka bar operator Inventive Leisure has appointed Gavin Hughes to the position of regional operations manager – south, with responsibility for running the southern operating division of Revolution. He will report into Jimmy Del Giudice, the company’s operations director. Hughes joins the business from Novus Leisure where he was a senior member of the operations team. Chief executive Mark McQuater said: “We are delighted that Gavin is joining Inventive in this operational leadership position. He brings a wealth of experience from his seven years with Novus Leisure and a proven track record in achieving results within this sector, whilst also being very familiar with London and the south of England. Although Inventive is based in Manchester, this move reinforces the company’s operation as a fully-fledged national operator across all parts of the UK.”

Taco Bell in the US to axe kids’ meals: Taco Bell will eliminate kids’ meals and toys at all US restaurants beginning this month. Taco Bell chief executive Greg Creed said kids’ meals are not part of the chain’s long-term brand strategy and have an insignificant impact on sales. “As we continue our journey of being a better, more relevant Taco Bell, kids’ meals and toys simply no longer make sense for us to put resources behind,” Creed said. Taco Bell said the removal of kids’ meals will begin this month, and the effort will be complete across the estate by January 2014.

McMullen’s off the mark with royal baby beer: The Hertford-based brewer and pub owner McMullen & Sons has produced a beer called Heir Raiser, to celebrate the birth of a son to the Duke and Duchess of Cambridge. The beer, a 3.8% abv light-coloured cask ale, is part of the brewery’s regular series of seasonal ales. Fergus McMullen, the company’s production and sales director, told his local newspaper in Hertford that the beer had gone on sale early at the Duchess of Cambridge pub opposite Windsor Castle in Windsor, where it had gone down “extremely well”.

Peach Pub Company profits hit by wet summer: Peach Pub Company, the gastro-pub operator led by Lee Cash and Hamish Stoddart, has reported a 6% rise in turnover to £19,305,853m in the year to 30 December 2012. Group Ebitda was £1,540,552 compared to £1,712,893 the year before. Sales growth was a result of full year operations in two pubs and a part contribution from the Star and Garter in Leamington Spa. Profit before tax was £375,128 compared to £621,880 the year before. The company said: “This was a difficult trading period industry-wide as we experienced economic recession coupled with the wettest summer on record. In January 2013, we finalised a restructuring of our loans from NatWest which has the effect of raising another £600,000 of funding – NatWest remains committed to supporting the growth of Peach”. Profit-related pay and dividend for the directors totalled £130,609, compared to £265,073 the year before. The company said: “Directors are salaried at moderate levels and the majority of potential directors earnings are based on profits and only payable if cash is available.” Of 2013, the company added: “We aim for steady further growth based on our existing principles, sharing the fruits of our labour with our key operators and retaining sufficient profits to grow and develop our business with the support of our banking and equity partners. Our medium term goal remains Peach 22 – 22 great pubs with shared ownership and with six to eight great partners around our Peach table.” Last month, Peach closed its Almanack site in Leicester city centre’s Highcross retail development after concluding that the city is not suited to a gastro-pub offer. The Leicester Almanack is the company’s only city centre site. A spokesman for Peach told Propel at the time: “Peach continues to focus on gastro-pubs where it can deliver its successful formula of good honest and ethically sourced food, great hosting and service, and is on track to deliver its steady growth plan of three new pubs a year, as long as it can find the right sites.” Peach opened the doors of The Chequers in Eversley Cross in Hampshire following the refurbishment of the pub earlier this year, and has another new opening coming up in Edgbaston next year. Peach is also understood to be close to securing another new site in Bedfordshire. Peach Pub Company Holdings operates a shared ownership model and there are eight trading companies with the group. Across the group, the split between food and drink is 50/50.

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Monster Energy Banner
Casual Dining Banner
Pago Banners
Peppadew Banner
Commercial Kitchen Banner
Brixton Brewery Banner
Inch's Cider Banner
Santa Maria Banner
HDI Banner
Strongbow Banner
Propel Banner
Cynergy Bank Banner
John Gaunt Banner
Zonal Banner
HGEM Banner
Access Banner
Purple Story Banner
Propel Banner
Christie & Co Banner
CACI Banner
Sector Banner
Airship – Toggle Banner
COREcruitment Banner
Wireless Social Banner
Payments Managed Banner
Hospitality Rising Banner
Greene King Banner