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Morning Briefing Strap Line
Fri 26th Jul 2013 - Anglian Country Inns, Orchid, Polpo and Diary

Story of the day:

Giggling Squid receives approaches from private equity firms: Giggling Squid, the highly regarded six-strong Thai brand with ambitions to become the first national ‘modern’ Thai chain, has had a number of private equity approaches in recent weeks. Propel understands the company, led by husband-and-wife team Amy and Pranee Laurillard, has received preliminary approaches from half a dozen private equity firms, including Kings Park Capital and Piper Private Equity. The company, which was founded in 2008, is understood to be happy to continue its expansion using cash flow and bank debt but would consider private equity investment in the medium term. The six openings so far has achieved a 100% Return on Investment (ROI) in their first year of trading. One site, Giggling Squid in Henley, achieved a 100% ROI within its short rent-free period after the company spent £40,000 opening it. Generally, the company expects to invest circa £250,000 per opening and earn £250,000 Ebitda per site. Andy Laurillard, who was marketing director for travel firm TUI prior to founding Giggling Squid, said: “Part of keeping our costs low is opportunistic buying – we use recycled materials, including driftwood, in our restaurants and don’t spend a massive amount on kitchen equipment.” The company’s sixth restaurant opened last week in Reigate and it has ‘turned people away every day since it opened’ as demand outstrips the supply of covers. The company plans to open four sites in 2013, including one in Marlow. It is understood to be close to signing up for its first restaurant in the Midlands – and venues in West Sussex and Kent in the pipeline.

Industry news:

World’s biggest snow dome to be built next to the Olympic Park: A giant snow dome to equal the largest indoor ski resort in the world is to be built next to the Olympic Park site in Stratford. The city’s first indoor ski centre will feature several runs, snowboard ramps and an ice-skating rink. The project will cost up to £200 million and is being funded by shopping centre developers Westfield – it could be ready to open in 2015. The longest run will be 300 metres – twice the length of the next biggest one in the UK. The centre is expected to provide about 20,000 square metres of piste. It will be double the size of other British snow centres at Milton Keynes and Hemel Hempstead and on a par with Ski Dubai, the world’s biggest, in the United Arab Emirates.

Two new members join the ALMR: Two new companies have joined the Association of Licensed Multiple Retailers (ALMR) this week. ITP Leisure, which operates five venues in Blackpool, including Flying Handbag and Funny Girls, has joined along with Chicago Bars, the newly formed operator of nine Chicagos and one Modello Bar and Kitchen.

Technomic – pubs and restaurants getting more creative with kids’ meals: Insights firm Technomic has reported that UK pubs and restaurants operators are becoming more creative with UK kids’ meals – adding more-healthly side dishes, offering scaled-down portions of adult mains and reformulating classics. Examples of re-made classics include: Jamie’s Italian: Puppy Dog – “herby” organic sausages, grilled and served in a soft sweet roll with tomato relish and baked crinkle-cut wedges, accompanied by “shake me salad” and fresh fruit juice; Table Table: Hetty’s Special Spaghetti – organic lean minced beef, onion, carrot, tomato, pea, basil and baby-length spaghetti; Wagamama: Mini Ramen – noodles in a chicken-and-pork soup, topped with grilled chicken breast, seasonal greens, carrot and sweet corn; Fire & Stone: Macaroni Cheese – with Parmesan and Cheddar sauce, sun-dried tomatoes and spinach, topped with toasted breadcrumbs.

Neil Morgan – average pub prices increasing in the north as well as the south: Christie + Co head of pubs Neil Morgan has reported average pub prices are increasing in the north and the south of the country. He said: “In London, average freehold sales prices have increased some 10% or so over the corresponding period to July 2012 – the average price being around £770,000. The UK regions, without seeing the same level of increase, have recorded a 5% increase in average sale price – again for freehold pubs – to around £250,000. Christie + Co has for many years recorded the closure rate of pubs in the UK – back in 2000 I suggested that some 10,000 pubs needed to close to make the sector leaner and more in tune with consumer demand. Around 7,500 pubs have closed since that time. Although this still suggests that some 2,500 pubs still need to close, it may be time to revise this number, or at least the rate at which these pubs should close. In the intervening years we’ve seen the disposal by the major pub groups of many pubs from the bottom-end of their portfolios, as they seek to increase the quality of their product. Today, as customers increasingly see the trip to the pub as a one-stop destination for a food and drink-led night out, we’ve seen a step-change in the pub offering. Quality has improved in tandem with the wider variety of service offering. The old-school ‘back-street-boozer’ has largely become a thing of the past. And as the quality improves, so by osmosis will the values of pubs, along with the sale prices they achieve when they do come to the market.”

Company news:

Anglian Country Inns reports “epic”  July: Anglian Country Inns, the four-strong gastro-operator led by James Nye, has reported an “epic” July with sales up 21% on a like-for-like basis – two sites were up by 30% in the first three weeks. Nye told Propel: “One week saw takings of £165,000 net across the four sites – our busiest week ever in early July. It’s been epic in Norfolk and started earlier than we normally see.” The White Horse in Brancaster Staithe – mentioned twice in recent weeks in national newspaper articles on outstanding pubs – and The Jolly Sailor, also in Brancaster Staithe, have both produced sales up 30% in July. The company’s town centre, upstairs site, The Hermitage in Hitchin has also performed well despite having no outside area – like-for-like sales are up 8%. Nye added that the company is now “actively looking” for a fifth site and “come close on a couple”.

British Country Inns to sell six pubs: British Country Inns, the 24-strong Enterprise Investment Scheme company, is to sell six of its smaller pubs. The sale comes as the company focuses on its larger, more profitable pubs. It hopes to be able to eliminate bank debt and free up some limited capital investment to be put back into the better sites. The six pubs are in rural locations in East Anglia, the south west and South Wales. The company reports that current trading is ‘satisfactory’ and is responding well to the recent fine spell of weather. Chairman Martin Sherwood said: “We are pleased with progress so far this year and are confident of achieving our targets by the year end. Our disposal of a handful of small units is in line with our latest strategy of concentrating on our larger units, eliminating debt and putting some investment back into our better houses.” British Country Inns is a group of four separate EIS companies which raised over £30m between in 2006-2007 through City professional services group Smith & Williamson. Christie + Co is joint agent with Fleurets, Gully Howard and Sidney Philips.

Orchid integrates loyalty and till data in industry first: Orchid Group has launched an industry first with a loyalty, reservations and till data integration system that could transform its approach to marketing and sales opportunities. Piloted at the company’s Pizza Kitchen & Bar pubs across the country, the purpose-built, integrated database system is the first of its kind to be comprehensively rolled out. It will allow managers to access and analyse information on all purchases made by members of the Slice scheme – the Pizza Kitchen & Bar loyalty card. “For the first time a pub group will be able to see and understand the needs and habits of loyalty scheme customers, taking into account the various ways they interact with us in the online environment and how that helps to drive a sale offline,” said Maria Hamilton, Orchid Group senior marketing manager digital & loyalty. “By linking purchase data from our till system with the data we already have on our Slice card holders we can better target our marketing and sales initiatives and time our promotions and offers to align with purchases that our customers are most likely to want to make, at times when they are most likely to take advantage. It is a dedicated and comprehensive system that marks a real step forward in pub till and reward technology.”

TV chef Bobby Chinn to open restaurant in Soho: Bobby Chinn, the TV chef who currently runs restaurants in Hanoi and Saigon, has unveiled plans to open a Vietnamese restaurant in Soho, London in the autumn. Chinn, born in New Zealand, has appeared on the BBC’s Saturday Kitchen show and UKTV Food’s Great Food Live, and presented Bobby Chinn Cooks Asia for the Discovery Channel, among other programmes. The 90-cover restaurant will be on the former site of Med Kitchen, Old Compton Street, and will mix traditional Vietnamese dishes with modern influences from Chinn’s travels. He has lived in Vietnam for the past 18 years, and currently runs Restaurant Bobby Chinn in Saigon and Home by Bobby Chinn in Hanoi. Earlier this year he told a Vietnamese news website: “Vietnamese food is already healthy, light and potentially sustainable. Vietnam could lead the world in promoting a healthy fast food, which is the fastest growing sector in the global food market.”

Chipotle peppers Twitter with fake ‘hacked’ messages: The American restaurant chain Chipotle has admitted it faked a ‘hack’ of its own Twitter account, as part of an attempt to promote its 20th anniversary. For an hour last weekend its account, @ChipotleTweets, posted a series of bizarre and random tweets of the sort that would indicate the account had been hacked, including: “What is cilantro? How do you pronounce it?” and “Find avocado store in Arvada, Colorado”. The stunt saw a total of 12,000 retweets of the “hacked” tweets, a huge leap from the normal 75 retweets a day that Chipotle normally gets, and helped it put on 4,000 extra followers, up from the normal 250 a day, according to news reports. A spokesman for the Mexican food chain told the tech site Mashable that the company carried out the stunt because “We thought that people would pay attention, that it would cut through people’s attention and make them talk, and it did that.” However, many commentators were underwhelmed, with one saying: “While it might get them publicity, it hurts the brand overall.”

Polpo founders to launch first pub in October: Polpo founders Russell Norman and Richard Beatty will launch their first pub in October – they have acquired the former Marquis of Granby at Cambridge Circus, gateway to London’s Seven Dials. It will be called Ape and Bird will retain a pub atmosphere while providing all day dining options. Its 120-cover restaurant will focus on wholesome and hearty British dishes including mince and dumplings, Scotch egg with celeriac fries, devilled kidneys on toast and whole poached trout with cobnuts and watercress. Kate Taylor, associate director at Davis Coffer Lyons, which acquired the site for Polpo, said: “We can’t wait to see the results of Russell and Richard’s first foray into the pub market; it may be a far cry from Venetian cichetti but we’d expect the same level of innovation, excitement and attention to detail that has defined the pair’s other venues to date. This is a key gateway to Seven Dials and a very important addition to its eclectic eating and drinking offer.”

Sir Terence Conran – my appetite for opening restaurants has not diminished: Sir Terence Conran has opened his 105th restaurant – his second British-themed Albion Café in Bankside, a £1.4m investment – and insisted his love of opening restaurants has not diminished. He told The London Evening Standard: “That thrill of taking a risk and seeing if you can pull it off, endlessly going over the designs and suggesting things and then seeing it in reality, you still get a kick out of it. It is like a playwright seeing his play on the stage for the first time. At the end of the day it’s my money that’s gone into it and it means a lot to me whether it’s successful or not.”

Douglas Jack – Marston’s well-placed to accelerate growth: Numis Securities analyst Douglas Jack has stated that Marston’s is well-placed to accelerate growth next year after reporting much-improved trading yesterday. He said: “Trading has picked up in Q3, with Premium & Destination like-for-like sales up 6.0% and profits recovering to being flat in both Taverns and Leased. As a result, year-to-date trading is close to our full year assumptions, which we expect to be met with reasonably easy comps to come in Q4. We believe Marston’s is well placed to accelerate growth next year, when there should be: falling interest costs; £1.5m of additional cost savings; and only 1% price increases needed to offset lower inflation. However, due to better than planned progress with tail-end disposals (on track for £50m of proceeds per annum), we have shaved £1m off our profit before tax forecast; otherwise, forecasts are unchanged. The shares, on a 9% calendar EV/EBITDA discount to Greene King, are attractive, in our view.”

Simon French reiterates ‘Sell’ recommendation after ‘disappointing’ M&B results: Panmure Gordon leisure analyst Simon French has reiterated a ‘Sell’ recommendation on Mitchells & Butlers shares, with a 310p price target, after yesterday’s trading update. He said: “M&B has reported a slightly disappointing trading update with like-for-like sales growth of 2.0% in the nine weeks to 20 July compared to our expectation of 4.0%. Year-to-date like-for-like sales are up 0.7%, total sales are up 2.4% and EBIT margins remain slightly above last year meaning the group remains on target to deliver full year results in line with expectations (consensus circa £180m profit before tax). The stock trades on a CY 2014E adjusted EV/EBITDAR of 8.0x which is too rich relative to its managed pub and restaurant peers given the weaker operational performance, large (circa £600m) pension deficit and consequent lack of dividend. We reiterate our Sell recommendation and 310p Target Price.”

Former Yellowhammer Bars nightclub allowed to re-open – with stringent conditions: The former Yellowhammer nightclub in Taunton, Bliss, which closed earlier this year, will be allowed to re-open with a raft of stringent licensing conditions. 241 Leisure, which also runs Okoko nightclub in the town, wants to open a Hawaiian-themed cocktail bar called Aloha and a nightclub called Khode at the site after a £250,000 refurbishment. The plan has been green-lighted subject to a host of conditions: The smoking area must not contain any chairs, umbrellas or heaters, clubbers will not be allowed to take drinks outside, and staff must ensure that noise created in that area is kept under control. Drinks must be served in plastic or toughened glass, staff will conduct litter picks in surrounding streets after people have left and more door staff must be hired. There is also a ‘Chill Out’ policy, which will see music stop at the venue one hour before closing to “encourage calmness”. 

Multi-site Subway franchisee banned as company director for six years: Multi-site Sunway franchisee Shayne Nielson of Eglinton in Co Londonderry, has been disqualified as a director for six years over his conduct at the head of Subway franchisee Fresh Perspective Restaurants. The company, which ran Subways located in Belfast, Lisburn and Bangor, went into liquidation in November 2011 owing £948,000. He failed to pay VAT on toasted sandwiches, withheld £620,000, which was payable to the Crown for PAYE, National Insurance and VAT and failed to file annual returns. He is the second director of the company to be given a boardroom ban.

Micro-brewery set to open at former Young’s Ram Brewery in Wandsworth: Young’s historic former brewery is to be brought back to life with new restaurants, cafes, homes — and a new micro-brewery. The Ram Brewery in Wandsworth, which claimed to be Britain’s oldest brewing site in continuous operation, dating back to the 1500s, stopped production in 2006. This week, planning chiefs gave developers the green light to create 661 new homes while bringing the disused site back to life. The approved plans include a 36-storey residential tower, as well as new shops, cafes, bars and restaurants. The site’s Grade II and Grade II-listed buildings will be restored and brought into public use as a new micro-brewery and brewing museum. The developers will also give Wandsworth £16.5 million as a community infrastructure levy, which could go towards a redesign of the notorious Wandsworth one-way traffic system.

McMullen to name new-build pub after royal baby: Hertfordshire pub operator and brewer McMullen will name a forthcoming new-build pub in honour of the new royal baby. “We are delighted to be able to name our new pub in Tattenhoe, Milton Keynes in honour of the royal baby, a first we believe,” said Peter Furness-Smith, McMullen’s managing director. “Pubs have a long standing tradition of being named after persons that have left their mark on the public consciousness, thereby helping to remind the nation, over the generations, of their place in our history. We celebrated the Royal Wedding with the naming of The Duchess of Cambridge in Windsor and proudly continue the tradition by naming this new pub The Prince George of Cambridge”. The Prince George of Cambridge is currently being constructed and will become the eighth Chicken & Grill pub concept for McMullens. “The pub will have a wide range of world beers, our unique range of handcrafted McMullen ales and an interesting wine list along with our value Chicken & Grill pub menu,” said Heydon Mizon, McMullen’s retail director. “The Chicken & Grill concept was developed three years ago and has exceeded our expectations in all seven sites where it has been operated. We have been delighted generally with the performance of the concept that now serves on average over 1,300 meals per week,” he added.

Gordon Ramsay thought to have acquired Battersea site: Chef Gordon Ramsay is understood to have acquired a site in Battersea – the former Bennett’s Brasserie & Bar in Battersea Square. The site was formerly an All Bar One and is held on a Mitchells and Butlers lease. Agent Robert Foux at Wimpole Property Consultants oversaw the deal.

Bramwell opens second Wild Lime Bar and Kitchen: Bramwell Pub Company has opened its second Wild Lime Bar & Kitchen in Banbury. The next pilot site to open will be in Reading on Monday 29 July. Sarah Weir, commercial director of Bramwell Pub Company, who owns and operate Wild Lime Bar & Kitchen said: “We’re delighted with the response and feedback from customers in both Banbury and Southampton and look forward to introducing Wild Lime Bar & Kitchen to the residents and visitors of Reading. The opening of Wild Lime Bar & Kitchen in Banbury was successful and, with the benefit of a beautiful outdoor area, they’ve been able to maximise sales and make the most of the great weather. Wild Lime Bar & Kitchen in Southampton has been open for four weeks and we’re really pleased with its trading performance. Customers are embracing the values on which the brand was built; great food, drink and excellent customer service. Our key offers are also proving to be popular including the jam jar cocktails and the hand-stretched, stone-baked Parmesan crust pizzas. We’re also seeing that there is a real take up towards the premium style drinks and customers are making the most of our great deals including two-for-one pizzas, and two-for-one cocktails.”

CG Restaurants and Bars to open third Dirty Martini bar: Bar and restaurant operator CG Restaurants & Bars has started a multi-million pound London expansion strategy with the acquisition of one of the most prominent sites in the Square Mile. CG Restaurants and Bars plans to acquire 12 new units in the capital over the next three years, centred on high-end retail and footfall locations. The first new site is the Bishopsgate Exchange in the City, which will launch in mid-September as the third Dirty Martini bar.

Steak of the Art to open in Bristol: A new art venue and steak restaurant will open in Bristol’s Harbourside area this Autumn. Steak of the Art will serve locally sourced steaks alongside an art gallery that will showcase and sell quality affordable art and hold artistic exhibitions and events. It is a new concept based on the ‘simple’ steak restaurants of Paris and London but set within an artistically inspired environment that one might find in chic Barcelona. The restaurant will occupy the 4,000 square feet former marketing suite and offices of Crest Nicholson at Harbourside and will be converted during the summer. Steak of the Art is the brainchild of classically trained chef and entrepreneur Steve Bowen, who has chosen to return to the West Country where his family has lived in Bristol for the past 35 years.

Wrap it Up! hires leading designer for three sites: Gourmet wrap chain Wrap it Up! has hired leading designer Julian Bigg of Fresh Produce to work on its three new sites in the City of London. The company is to open in Cannon Street, Middlesex Street and Blomfield Street in September on the site of the former Flying Burrito outlets, purchased in July. Bigg, who has worked on projects for Eat, Mitchells & Butlers and Cantaloupe, will be responsible for determining the appearance of the stores, including signage, interiors and all artwork. Wrap it Up! marketing director George Groves said: “We are delighted to be working with Julian on the new projects. The design and branding of our outlets is an important part of Wrap it Up’s ongoing development. The new look Wrap it Up! outlets will potentially be a template for the company as it continues its expansion.”

Propel Diary:

Number one for everything: JD Wetherspoon founder Tim Martin set his team the target of becoming the world’s number one purveyor of Pimm’s a few years back – and the company duly achieved his ambition. Attention turned to the upscale breakfast item, eggs Benedict, which are, by all accounts, selling well. When Diary caught up with Martin this week the list of items and brands where he aims to become global top seller had lengthened. “We want to be number one for steaks, Hendricks Gin, Skyy Vodka and Lavazza coffee.” The thing is, he means it.

It’s a small world: Emerging Thai brand Giggling Squid is run operationally by Pranee Laurillard with husband Andy, who has a very impressive FTSE 100 marketing director background, taking care of everything else. But it’s a small world, the Thai restaurant business. Andy tells Diary: “Pranee knows most of the Thai chefs in the country now. She can’t really walk into a Thai restaurant without being recognised by someone. It’s quite annoying really as the rumour mills starts (“are they opening here?”) when all we wanted was Pad Thai and a beer.”

Queen’s Head turning heads: Early reports have begun to filter through on Paul Salisbury and Paul Hales’s Queen’s Head pub in Stokes Pound, opened a fortnight ago after a £800,000 investment. Salisbury himself has been surprised by how busy it’s been since opening, with £75,000 of takings in the first week. One chum who visited the site incognito this week told Diary: “It’s incredibly imaginative – done with fantastic style and the best thing I’ve seen in a long, long while. It’s absolutely exceptional.” Former Mitchells & Butlers restaurant division boss Tony Hughes, now a non-executive at The Restaurant Group, is among the industry good and great taking a gander at the new site in recent days.

Reports of his death were greatly exaggerated: It was a case of there but for the grace of God goes Diary this week when Caterer and Hotelkeeper dropped a large one. It carried a report claiming chef Christian Delteil had popped his clogs based on information taken “in good faith”. A day later, better news emerged from the Caterer– ‘he is very much alive, having just launched a new bed and breakfast business in the south west of France’. Good news indeed.

Retail standards on Southend seafront: Businessman Philip Miller owns Adventure Island and Sea Life Adventure Aquarium in Southend and wanted to add a glass-fronted café to his offer. Alas, planning factotums had other ideas and turned down his planning application. An enraged Miller decided it was time for a few home truths: “Some of the pubs (on the seafront), you have to wipe your feet on the way out.” Diary, who recently attended TLC Inns founder Steve Haslam’s stag night in Southend, can confirm this is true.

The problem with chalkboards: Nine of the 12 pubs that appear in the World’s End film, the apocalyptic new release about a pub crawl, are actual pubs. Director Edgar Wright and his team did extensive research on pubs prior to making the film and now has strong views on some key issues in the sector, not least chalkboards. He says: “What I particularly find disturbing is that fake hand-written chalk that you get on pub menu boards. It’s everywhere! Sometimes in a nice organic, independent boozer you get a nice chalkboard, but most of the time they’re all manufactured fake handwriting. That creeps me out. If you watch in the movie, all of the signage in all of the pubs is the same.” Who says satire is dead?

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