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Morning Briefing for pub, restaurant and food wervice operators

Tue 30th Jul 2013 - Costa, Domino's, Jamie's Italian, JDW and Starbucks

Story of the day:

Domino’s UK reports sales and profit growth – 14 German corporate stores under-perform: Domino’s has reported sales up 13.8% to £326.5m (2012: £286.9m) in the 26 weeks to 30 June. Profit before tax, excluding Germany and Switzerland, increased 10.3% to £25.7m (2012: £23.3m). The company reported strong growth in like-for-like sales across the group with the UK up by 6.4% (2012: 5.7%), Republic of Ireland, in Euros, up by 6.5% (2012: 2.9%), Germany, in Euros, up by 23.8% and Switzerland, in Swiss Francs, up by 7.8%. Online system sales increased by 29.2% (2012: 43.4%) to £156.7m (2012: £121.2m) with online sales accounting for 63.3% of UK delivered sales (2012: 52.4%). Of this, 27.5% of online orders were taken through a mobile device (2012: 17.9%). Chief executive Lance Batchelor said: “I am pleased with the overall results for the first half – particularly the core UK and Ireland businesses which have shown strong like-for-like sales growth against challenging comparatives. Our franchise system leads the leisure sector and, with the majority of our business coming via a web and mobile platform, we are now truly an online retailer. In our fledgling German business, as in the UK, our franchisees are those with the expertise to run great stores. Our corporate stores have allowed us to test menus, develop marketing plans and understand the German consumer and are growing steadily. However the ground work is done and it is time to drive our German expansion using our tried and tested franchise model. We know the best way to get great results from stores is to put them in the hands of franchisees – and with five world-class franchisees now operating in the German market and more arriving shortly, we are excited about the future in this territory.” Douglas Jack, of house broker Numis Securities, said: “The first half was held back by higher German losses, which should peak at £5-6m this year. Partly due to the conversion of corporate stores to franchise, we are reducing our 2014 forecast loss for Germany to £2.0m (from £2.5m), upgrading 2014 profit before tax by £0.5m, such that we forecast group profit before tax growth of 19% (21% EPS) next year. We would use recent share price weakness to buy into this growth.” He expects the company’s German business to break even in 2016. The company’s finance director Lee Ginsberg is to retire in 2014.

Industry news:

Craft beer sales soar in the US: American craft beer dollar sales and volume were up 15% and 13%, respectively, in the first six months of 2013. Over the same period last year, dollar sales jumped 14% and volume increased 12%. During the first half of 2013, approximately 7.3 million barrels of beer were sold by small and independent craft brewers, up from 6.4 million barrels over the first half of 2012. American craft beer continues to grow despite decreased overall beer sales, which were down 2% through the first six months of the year. “Demand for beer produced by small and independent brewers has never been higher, as evidenced by increased production and the hundreds of new breweries joining the playing field each year,” said Paul Gatza, director of the Brewers Association. “Beer drinkers nationwide are responding positively to high-quality, full-flavored, diverse offerings from American craft brewing companies that continue to innovate and push the envelope.”

Families dine together ten times a month: Families sit down to eat together ten times a month on average, according to a survey of 2,000 families commissioned by the Museum of London. Some 45% of meals are now eaten in front of the television. A total of 40% of those questioned felt they no longer had meaningful conversation as a family.

Highly rated TripAdvisor restaurant did not exist: A restaurant, Oscar’s in Brixham, Devon, that earned rave reviews on TripAdvisor has turned out to be a hoax. An unnamed hoaxer, known as Oscar Parrott, has admitted he set up the fictitious restaurant and posted all the reviews after a friend’s hotel received hostile reviews on TripAdvisor that were suspected to be the work of a rival hotelier. He said: “There are many businesses that have had grudge reviews on TripAdvisor. Many of these are so blatant that any person doing a short check would see the obvious.” A spokesman for TripAdvisor said: “With over 60 pieces of content coming in every minute, occasionally a review or business that does not meet the TripAdvisor guidelines may slip through the cracks.”

Phil Mellows – drink drive stats show drinkers know what they’re doing: Industry commentator Phil Mellows has dismissed a suggestion by research firm Mintel that misunderstanding alcoholic strength is a particular problem in the on-trade because of drink-driving. In his blog for CPL Training, Mellows wrote: “It appears that estimated casualties from drink-driving accidents rose slightly in 2011, but it’s still fewer than 10,000 a year. In 1979 the figure was more than three times that, and even in the last decade casualties have halved. Over the years drivers have become much smarter at managing their drinking, choosing weaker drinks and smaller measures. They may not understand units, but they’re not completely stupid.” - See more at:

New York Post columnist – McDonald’s McDouble offers great nutritional value: New York Post columnist and blogger Kyle Smith has argued that the McDonald’s McDouble gives diners great nutritional value at $1. He argues: “Where else but McDonald’s can poor people obtain so many calories per dollar?” He claims that at 390 calories, 23 grams of protein, 7% of the daily value of fibre, 20% of daily calcium and 19 grams of fat – with a typical price tag of about one dollar - the McDouble, is the most price-efficient food ‘that has ever existed in human history’.

85% of foodservice managers fear new technology increases redundancy risk: A report from Caternet has revealed that 85% of foodservice managers fear new technology because it increases the risk of redundancy. Jerry Brand, managing director at Caternet, said: “It’s a pretty common phenomenon – the fear of change. So no great revelations there; but what is perhaps a little more unsettling is the contrasting view between business survival and a fear of being ‘too efficient’ and risking jobs as a result, yet ironically the failure of one will surely lead to the certainty of the other?”

Falling levels of alcohol-related crime vindicate partnership approach: The recently-published Crime Survey for England and Wales shows that crime is at a record low and the biggest drops have been in those incidents most commonly associated with alcohol: low-level violence, disorder and anti-social behaviour, particularly around licensed premises. The Crime Survey, which covers the year to March 2013, shows that crime is down 9% year-on-year, to its lowest rate since the Survey began in 1981 and half the level of the 1995 peak. Police recorded offences are down 7% to the lowest level since 2003. Responding to the figures, ALMR strategic affairs director Kate Nicholls said: “These results show the direct benefits of enhanced partnership working between the police and responsible operators, and the investment businesses have made in security and management standards – an investment which has increased more than 60% over the last five years – to stamp out public order problems and anti-social behaviour inside and around their premises.”

Company news:

Pret A Manger benefits from steep drop in Cardiff shop rents: Shop rents have fallen by up to 70% in parts of Cardiff city centre as landlords struggle to attract retailers to the Welsh capital. The number of empty shops in Cardiff increased from 9.7% in October 2008 to 15.8% last October. The figures were presented to Cardiff council planners by property firm Calan Retail, which has been searching for tenants for the empty Habitiat unit on The Hayes. Calan Retail, which has been marketing the property since November, has now applied for permission for a change of use for the ground and upper floors to a restaurant and/or cafes. Pret A Manger acquired a unit at Capitol Centre in the city last year for £70,000 per annum rent, compared with the £224,000 previously paid by fashion chain Oasis.

Restaurant Group plans Coast to Coast opening in Kent: The Restaurant Group is planning to open a Coast to Coast on the site of the former Mango Joe’s bar in Medway Valley Leisure Park, Strood, North Kent. The restaurant is due to open in December and will create 85 to 100 jobs. The new addition to the leisure park follows a Hungry Horse pub and Hollywood Bowl bowling complex, which opened earlier this year. M&G Property Portfolio, which owns the site, wants to make it more family-friendly. Spokesman Tim Haynes said: “We want to move away from alcohol-led sales and create more of a family entertainment-led park.” The Restaurant Group already runs Chiquito and Frankie & Benny’s at the park.

Costa Coffee hires brand and innovation director: Costa Coffee has hired Carol Welch to the newly created role of brand and innovation director with a brief to find emerging product and service areas that can be turned into global brands. She reports to the coffee chain’s managing director Christopher Rogers and sits on the management board. Welch is tasked with accelerating the company’s expansion into global markets as it looks to double sales to £2bn over the next years. It is hoped Welch can replicate the success of recent product and service launches such as Flat White and Costa Express, which the company credits for raising its profile overseas. She joins from Associated British Foods, where she is said to have led the turnaround of the Jordans Cereal and Ryvita brands as marketing and innovation director. She has also held senior marketing roles at PepsiCo, and Green & Blacks.

Oakman Inns start work on Abingdon site: Oakman Inns and Restaurants, the eight-strong operator led by Peter Borg-Neal, has started work on the refurbishment of its Crown & Thistle coaching inn in Bridge Street, Abingdon, a site acquired last year for £1.6m. A local blog stated: “There are a large number of outbuildings, including the barn and each of these has to have exploratory work performed first to ascertain how best to complete the detailed work of the full restoration. The Inn is due to be opened in November this year and will have 18 individually designed en-suite bedrooms, a restaurant to seat 80 people, on-site parking and a new function room that will hold up to 60 people.”

Starbucks extends wireless device recharging points trial: Starbucks has extended a trial in the US that allows customers to recharge their smartphone or tablet by putting it on a table in the coffee chain. The technology turns desks and tables into huge smartphone and tablet recharging points. Earlier this year, the coffee shop chain started testing integrated wireless charging technology in its Boston stores and is now rolling out the service to a second area of the US – Silicon Valley. “More and more customers are using Starbucks as their home base and they are looking to recharge in a number of ways,” said Adam Brotman, chief digital officer at Starbucks. “We have seen positive customer response to wireless charging through our tests in Boston.”

Brewdog lines up Shepherds Bush opening: Scottish brewer and retailer Brewdog is to open a site in Shepherd’s Bush, which will be the third opening in London. The company also has an opening lined up for 108-110 Devonshire Street, Sheffield in October or November.

Plans for Cornwall’s first drive-thru pasty shop are scrapped: Businessman Ken Cocking has scrapped his plan to create Cornwall’s first drive-thru pasty shop just outside of Helston on the road to Penzance. He told a local newspaper: “I’ve put the site on the market. We thought there was no point in me going on with it – it didn’t go before planning and it’s been withdrawn.” His decision comes after widespread concern about access to the drive-thru from the busy A394.

Walkabout operator Intertain re-opens Carlisle site – introduces new menu: Walkabout operator Intertain has re-opened its second Walkabout in a month after a major refurbishment – Carlisle has opened after a £500,000 investment. The refurbishment has seen the creation of a nightclub, Reef, on the top floor with its own entrance and the launch of a brand new food and drink menu that is to be rolled out across the rest of the estate. Chief executive John Leslie said: “Since 2010 we have carried out the complete refurbishment of 13 venues, with plans for more over the next 18 months. In due course, we will also be looking to acquire new sites, so this really is an exciting time for the brand. This refurbishment will reinforce Walkabout’s position as the best night time venue in Carlisle but our new menu will also put us on the map during the day.”

Orchid Pub Company opens latest Pizza Kitchen and Bar: Orchid Pub Company has re-opened its Mulberry Bush pub in Dunstable as the latest addition to its Pizza Kitchen and Bar estate – it’s now called The Bird In Hand, its original name. Tom Hamer, assistant manager at the bar, said: “We’ve got sofas, armchairs and it’s comfortable, more like your living room than being out at a restaurant.” 

Tesco to stock Jamie’s Italian wine: Tesco has revealed that three new wines from Jamie’s Italian will be sold exclusively in 500 Tesco stores and will be available online next week. Jamie’s Italian Bianco, Jamie’s Italian Rosato and Jamie’s Italian Rosso (at £7.99 each), are the first originally on-trade wines that Tesco has made available in the off-trade. The three wines have been on the wine list of the 35 Jamie’s Italian restaurants since October 2012 and will now join Jamie’s Italian Prosecco NV in Tesco’s wine range (added earlier this year), in the format of 75cl bottles.

Burrito chain drives footfall with customer reward: London-based five-strong multiple burrito chain Poncho 8 has created an eight-week campaign to reward its customers. Starting yesterday with a 50% off a burrito offer, customers signed up to the database will receive an email voucher each week for eight weeks, each with a different reward. Poncho 8 is using loyalty marketing specialists Footfall123 to deliver their eight rewards.

JD Wetherspoon to open sixth pub at Heathrow – with a deli: JD Wetherspoon is to open its sixth pub at Heathrow with a deli. The pub, ‘The Flying Chariot’ is set to open when Terminal Two, The Queen’s Terminal, begins operations on June 4 2014. A heavy emphasis is being placed on the design with the Heathrow control tower by Richard Rogers referenced as well as a number of aerodynamic fluid forms to give the pub the feel of aircraft and modern engineering. It will have a number of distinctive features including a tower, which can be accessed from the customer area. Customers will be able to look out over the runway and boarding gates using fixed telescopes. The Flying Chariot will have an open kitchen, a dedicated deli and coffee area, a coffee lounge area, as well as table service. In area behind the bar, there will be an emphasis on real ale with a range of kegs on display. Wetherspoon chief executive John Hutson said: “Our pubs have enjoyed great success across the airport and we are delighted to have been chosen to open a Wetherspoon pub within this major development. The Flying Chariot will have a number of original design features, which will enable it to stand out from the crowd.”

Square Pie to open fifth site at Westfield Stratford shopping centre: Handmade pie specialist Square Pie is to open its fifth site this Thursday (1 August), this time within the Westfield Stratford Food Court. The company, which was founded by Martin Dewey, has ambitions to expand to 20 units within the next four years. The brand also visits Glastonbury each year – last month it served over six tons of mash potato and pies at the festival. 

Costa signs for new Leeds leisure scheme: Coffee shop chain Costa has a signed a lease on a 3,740 square foot unit at Town Centre Securities’ (TCS) New Front scheme on Merrion Way adjacent to the new First Direct Arena in Leeds. This is the second Costa store based within the Merrion Centre and the new outlet, which creates ten jobs, will include an outdoor seating area. Helen Green, associate director for Town Centre Securities, said: “Costa trades very well at Woodhouse Lane so we’re really pleased to include a second store at the Merrion Centre as part of the New Front scheme. This is one of ten units that form an 80,000 sq ft leisure scheme right opposite the First Direct Arena, which opened this week. We are creating a destination that offers a great range of food and drink choices that will be popular with shoppers, office workers and visitors to the Arena alike. This development, part of the new Arena Quarter, is really going to enhance this part of the city centre.”

Gymkhana to open with focus on whiskies and tandoori: Chef Karen Sethi, who backed the opening of Bubbledogs, is to open a restaurant, Gymkhana, that takes inspiration from the whiskies and spicy foods served at gymkhana clubs in India. “They were sports and social clubs set up by the British Raj in India,” said Sethi, who has a Michelin star at Trishna. The menu will be based on traditional Indian fare from the tandoori oven and sigri charcoal grill, using British ingredients. The bar will feature spirits, tonics and mixers from India, as well as whiskies and old Indian punch recipes. The restaurant is set to open on Albemarle Street in late August.

Burger King allowed to open until 5am in Northampton if it employs two bouncers: Burger King has been told it can only open until 5am in Northampton town centre if it has two bouncers on the restaurant’s doors. The fast food chain applied to Northampton Borough Council for permission to open its Market Square branch until 5am on Fridays and Saturdays. But Northamptonshire Police objected, warning drunks could cause trouble in the area if there were not enough doorman employed by Burger King. During a hearing at the Guildhall, Sgt Mark Worthington said: “People who have been drinking will go to get food and things could start up while they wait to get a taxi.”

Young farmers go behind the counter at McDonald’s: Young farmers have been working alongside McDonald’s employees during the final stage of a year-long journey behind the scenes of its supply chain. The initiative is part of a training programme, the McDonald’s Progressive Young Farmer Training Programme, designed to provide them with unique insight into what consumers are looking for in the food they buy. Over the last 12 months, each student has traced the entire agricultural supply chain from farm to restaurant front counter. Warren Anderson, vice president, supply chain, McDonald’s UK, said: “Research shows that over half of UK adults consider how food is produced when deciding which products to buy, which means successful farmers today need an exceptional understanding of the entire process – from farm through to customer.”

Gordon Ramsay’s new Battersea restaurant to be called London House: Gordon Ramsay’s new Battersea restaurant is to be named London House. He is taking over the former site of the Bennett Brasserie and Oyster Bar in Battersea Square. Head chef at the new venue, which does not yet have a launch date, is Anna Kelly.

Las Iguanas eyes Swansea site: Las Iguanas, the company founded and headed by Eren Ali, has applied for a new premises licence at the former site of Aspers Casino in Swansea’s Wind Street. The site currently lies vacant after the casino closed its doors last year with the loss of more than 100 jobs.

Technomic – burger consumption at record levels in the US: US consumers are eating burgers more often than ever before, according to new research, the Burger Consumer Trend Report, from Technomic. The overwhelming majority of consumers (95%) say they eat burgers at least once a month—and cravings are driving this high consumption. Half of consumers (49%) cite cravings as one of the top reasons they purchased a burger on their most recent occasion. Additionally, year-over-year comparison data shows that the fast-casual “better burger” segment and customisation formats are fueling the momentum of the burger category. Other key findings include: Burger consumption is up at fast-casual restaurants; 51% of consumers report eating fast-casual burgers at least once a month—an increase from 43% in 2011; Quality is key: 51% of consumers say it’s highly important that the burgers they order are made from never-frozen beef - an increase from 43% two years ago. More than half (55%) want menus to specify the type of beef used, up from 48% in 2011; nearly two-thirds of consumers say that build-your-own burger concepts are appealing, and 64% also say that the ability to customise burger toppings and condiments is important; data indicates that interest in special diets—driven by younger consumers—continues to grow, as more than a fifth of all consumers who eat burgers say that gluten-free (23%), vegan (23%) and vegetarian (22% - up from 18% in 2011) burger options are important.

Tesco – food courts an important part of our plans: Tesco’s larger sites on the outskirts of towns will be turned into “retail destinations that are exciting, relevant and convenient”, new UK managing director Chris Bush has told The Grocer magazine. Bush said the company wants to create destinations that would means shoppers can visit a yoga class, pop into the dry cleaner’s, get their hair or nails done, or enjoy a meal - all in the same retail space. Bush said food courts were an “important part” of the company’s plans, with fresh food, coffee shops, and fast food options part of the offer. Tesco opens a Giraffe at its Watford store on 5 August – with plans to open ten in total this year – and a new carvery-style concept the same day in Coventry. Bush formerly ran Tesco Thailand and the company’s plans are influenced by the Tesco Lotus Plus Shopping mall at Srinakarin, just outside Bangkok. “Providing a space for the community is an important part of the destination offer there,” Bush told The Grocer. UK out-of-town hypermarkets are changing because retail was becoming “more personalised and anticipatory”, he said.

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