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Morning Briefing for pub, restaurant and food wervice operators

Wed 7th Aug 2013 - Adnams, Burger King, Decks, McDonald's and M&B

Story of the day:

McDonald’s, Burger King and Domino’s all using zero hours contracts: McDonald’s, Burger King and Domino’s have all been drawn in the row over zero hours contracts. McDonald’s has admitted 90% of its UK employees are on zero hours contracts, which makes it potentially the largest zero hours employer in the UK’s private sector, with 82,800 contracted staff not guaranteed work. Meanwhile, Burger King employs 20,000 people on zero hours contracts and Domino’s has around 90% of its workforce – more than 20,000 employees – on the controversial contract. Speaking to The Guardian, Labour MP Andy Sawford said: “McDonald’s could lead on addressing this issue. There will be some employees working 20 to 30 hours a week, week in week out and it is indefensible not to put those people on contracts”. A McDonald’s spokeswoman said: “The zero hours contracts which all our hourly-paid employees are on do not affect employee benefit entitlement – all of our employees are entitled to a range of benefits including life assurance, employee discounts and access to a range of training and qualifications.” Helen Dickinson, director general of the British Retail Consortium, which represents high street retailers, argued that zero hours contracts need to be used responsibly. She said: “The key issue for zero hours contracts is that where they are used, they are used responsibly. Our members don’t tend to have them but in the right circumstances, zero hours contracts can offer mutually beneficial flexibility and certainty that, for example, students away at University might require to return to work during the holidays. Parents can also benefit from the flexibility as they juggle family commitments and colleagues moving towards retirement might see benefits as they begin to reduce their hours gradually.” Meanwhile, Pret A Manger reported that it guarantees all employees a minimum of eight hours work a week and Greggs chief executive Roger Whiteside reported that “values” prevented the company using the contracts with the majority of its workforce on a guaranteed 12 to 15 hours. He added: “To have a flexible workforce to call for a business is obviously very attractive but we have certain values with our business, especially with looking after our staff and helping in the community.”

Industry news:

Co-operative pubs gain traction in past two years: The 21st co-operative pub to be launched in the last two years, The Rose and Crown in Slayley, Northumberland, has opened its doors. Three more are close to become co-operatively owned - The Fox and Goose in Hebden Bridge, West Yorkshire is approaching its fundraising target, as is The Anglers Rest in Bamford, Derbyshire. The Ivy House, Nunhead, is preparing to open as the London’s first community-owned pub - and the first registered as an asset to the community under the ‘community right to bid’ element of the Localism Act. The Bell Inn in Bath, the UK’s 20th co-op pub, raised over £780,000 through its share issue, representing a new scale of community investment in large, high value, city centre pubs. Dave Hollings, director of Co-operative Mutual Solutions, who advised nine out of the current 21-strong crop of pub co-ops, says the idea really caught on in mid-2011. “From 2003 to 2009 not much happened, but a number of factors came together in 2009-11 which made a difference. The financial crisis made it harder for individuals to buy pubs from under the nose of communities, and there was increased interest in alternative business models and increased experience of community share issues. There were a growing number of examples with enthusiastic champions. The Co-operative Enterprise Hub was funded across the country by the Co-operative Group and Plunkett Foundation helped to make the movement national.”

Dorset cookery school receives Theo Paphitis boost: The Dorset-based White Pepper cookery school has received a business boost from TV Dragons’ Den star Theo Paphitis. Owner Luke Stuart tweeted Paphitis about his business during ‘Small Business Sunday’, an initiative set up by the entrepreneur that runs weekly. Paphitis re-tweeted Stuart’s message to his 376,700 followers and as a result, the cookery school (www.white-pepper.co.uk) has 15% more followers. They have also been profiled for seven days, on a new website (www.theopaphitissbs.com) that is exclusive to Small Business Sunday (SBS) winners. Stuart said: “Absolutely thrilled to be acknowledged by Theo’s SBS, after many months of trying. My Twitter account has gone bananas but more importantly we are looking forward to exploring the opportunities that being part of the SBS family might bring!” Anyone looking for a re-tweet from Paphitis should tweet him about their business on Sunday between 5pm and 7.30pm and include the hashtag #SBS. Six lucky businesses are re-tweeted every Monday at 8pm and then invited to enter their profile on the new website.

Senior industry figure gives feedback on Tesco’s Decks: A senior industry figure visited Tesco’s Decks carvery opening in Coventry yesterday – and provided Propel with feedback. The source said: “I think it is quite a soft opening – not overly busy. The car park had lots of visible signalling that Decks had arrived. The frontage is impressive – looks like an inline casual dining unit, with access from the supermarket behind it. It is a converted Tesco Café, so they have not had to dedicate additional space. The look of the place is a blend between Frankie and Benny’s and Toby Carvery. There is a rotisserie visible behind the main carvery counter and the pie of the day was sat alongside the main carvery meats. We were taken to a table and drinks were table service and then we ordered food at the carvery. We had a beef baguette (£3.95) and a roast chicken dinner (£5.50) and food quality was good. There were limitless soft drinks, and beer was £3-£5. Wine start point is £11.95. Service needs tightening up a bit (as is always the case in Week One) and the presentation of things like the pie also need to improve. Given they are Tesco, there is no doubt they will make it better still and then roll it out.”

Survey finds first glass of wine is at 6.53pm on a Wednesday: A survey has found that Britons typically have their first glass of wine of the working week at 6.53pm on a Wednesday. Men typically pour their first glass at 6.40pm while women wait a little longer and have their first drink at 7.07pm. Gillian Walters, marketing director at Cobevco, which conducted the survey, said: “People are turning to wine as a midweek treat and a bit of an escape – whether from office life or their family.” 76% of those surveyed drink their first glass of the week at home.

Tim Hortons customers perform random acts of kindness: Canadian restaurant chain Tim Hortons has made headlines after a series of random acts of kindness by customers. On 22 July, a Tim Hortons in Edmonton saw a customer order a coffee and a doughnut and then asked the cashier also to ring up 500 large coffees. The anonymous customer paid his $859 bill with a debit card and left quickly – delighted customers enjoyed the free coffees through the following morning. In the two days that followed, two customers in Ottawa and Calgary did the same – and last week so did a couple visiting the Tim Hortons at Toronto’s Mount Sinai Hospital. The manager of that location told The Toronto Star that the couple had praised the store’s “incredible” service. 

Company news:

Adnams – it’s been a tough first six months: Suffolk-based Adnams has reported a tough first six months. The company stated: “We noted in our AGM statement at the end of April that we expected our first half operating profits to be behind those achieved in 2012. This has been a difficult six months for our beer and pubs businesses in particular, and our operating profit stands at £668,000, compared to £857,000 last year. Our profits are weighted towards the second half of the year and so changes in the performance of our business in the first half can have a disproportionately large effect on our interim result. Turnover was just ahead of 2012 and the reduced profit reflected pressure on beer business margins in the last six months and tough times experienced by a number of our pubs. The coldest spring for over fifty years undoubtedly took its toll. Due to property disposals in the first half, notably the sale of The Southwold Arms, our profit before tax was comfortably ahead of 2012 at £1,327,000 compared to £754,000.” Turnover was £26,032,000 in the six moths to 30 June (2012: £25,748,000).

Cavendish Bars converts pub to George Shillibear Bar & Grill: Cavendish Bars, the seven-strong bar company headed by Christian Arden, has converted The George Shillibear pub, acquired out of the administration of the Butcher & Barrel business, into the George Shillibear Bar & Grill. Arden told Propel: “It’s great for Cavendish to have a site in London again after many years. We’ve turned the site into a food-led venue with a strong wet trade. We’re also using it as an events space and will be looking to develop a comedy club – similar to our Wahoo side in Oxford, which has a Glee comedy club upstairs. We’re also looking at holding a ribs night once a week.” The George Shillibear was purchased for an undisclosed sum – the 5,000 sq ft former warehouse is located beneath the Pleasance Theatre and boasts large open plan trading areas across four levels. Meanwhile, Arden’s other business Chicago Rib Shack is going on site at Leeds Trinity shopping centre this week with a view to opening on 17 October – it will be the company’s third site. Arden told Propel that there are two more sites in the pipeline.

Luminar lets Bolton site to Diamond World world buffet operator: Nightclub operator has let its Bolton site to Diamond World world buffet operator. A spokesperson for the Luminar Group, which also runs Lava and Ignite, Oceana and Liquid clubs, said: “As owners and licence holders of the venue we have no intention of re-opening it as a nightclub and have recently leased the site to a Chinese restaurant owner, who is currently carrying out renovations on-site.” The previous Ikon Jaxx nightclub at the site closed in January 2012 after trade fell by more than £1 million. The buffet restaurant is set to open this October.

JD Wetherspoon eyes end to six-year pub delay in Ilfracombe: JD Wetherspoon will start work this month on its most futuristic pub to date – the new site in Ilfracombe is on the site of the former Collingwood Hotel which was bought by the company in 2007 and had to be demolished. Developers predict the pub will be open by April 2014. But the futuristic pub is yet to be named and Wetherspoon is asking readers of a local newspaper for name suggestions. They will then put together a shortlist of the best ones and a poll will take place to decide on the final name.

Barclays Capital reiterates overweight rating on M&B stock: Mitchells & Butlers stock had its “overweight” rating reaffirmed by equities research analysts at Barclays Capital in a research note issued to investors on yesterday. They currently have a 500p price target on the stock. Barclays Capital’s price target would suggest a potential upside of 20.77% from the stock’s previous close.

Hall & Woodhouse’s innovative Portishead site short-listed for design award: Hall & Woodhouse’s Portishead site has been shortlisted in the Restaurant & Bar Design Awards 2013. The pub restaurant, which was designed by Mackenzie Wheeler Architects & Designers and is built from recycled shipping containers, has been shortlisted in the pub category. The contemporary two-storey building, which pays homage to the marine heritage of its location through design elements, industrial materials and rugged appearance, incorporates 28 shipping containers as key structures and internal ‘rooms’ which serve as private dining rooms or meeting spaces. David Hoare, from Hall & Woodhouse, said: “The building not only manages to meet the needs of our guests for various occasions but shows our ambition not to simply regurgitate the mundane ‘pub in a box’ but to come up with something original. We get some fantastic comments from guests and slowly Hall & Woodhouse Portishead is becoming a key part of the local community – fingers crossed for the final results in September.”

Brunning & Price lines up opening at pub closed for a year: Brunning & Price, The Restaurant Group-owned gastro-pub operator, has applied for planning consent to refurbish The Aspinall Arms in Mitton, which sits on the banks of the River Ribble has been closed for almost a year. The Aspinall Arms is owned by the trustees of Standen Estate – Brunning & Price has acquired the lease. “It is intended to refurbish and extend the property to establish a viable and sustainable pub restaurant at the site,” state architects Johnson and Robson on behalf of Brunning & Price. “To secure the future commercial viability of The Aspinall Arms it is proposed to increase the capacity of the pub to accommodate approximately 150 diners and to install modern kitchen and catering facilities required to provide a high quality restaurant service.”

Leeds building occupied by PizzaExpress and Brewdog in Leeds sold for £1.35m: Property consultancy GVA has sold White Cloth Hall in Leeds city centre on behalf of a private investor for £1.35m. The building, which was constructed in 1775, was developed into a mixed-use shopping complex in the 1990s. Occupiers include a PizzaExpress restaurant and a Brewdog bar. Ben Hall, Leeds-based investment director at GVA, said the sale price represented a net initial yield of 7.63%.

Inventive Leisure hires Manchester agency to rebuild website: Inventive Leisure has hired Manchester agency Cube3 to design and develop a new central website to reflect the current evolution of the Revolution vodka bar brand as well as managing the brand’s social media and online customer communications channels. Dave Willey, head of digital for Inventive Leisure, said: “We are excited at the prospect of working with Cube3 on this next stage of Revolution’s growth. They have an in-depth understanding of the brand and are very much at the cutting edge of digital innovation, which suits our customer base perfectly.”

Falmouth hotelier buys beachfront hotel: Falmouth hotelier Nigel Carpenter, who owns the 4-star St Michaels Hotel & Spa, has bought the Falmouth Beach Hotel, closed by a fire in April 2012 from owner Hazel Evans. Agent Christie + Co received multiple bids with a sale being agreed to Carpenter within three months of the site coming to the market and the sale completing less than three months later. Planning permission had been passed to rebuild a 67 bedroom hotel on the site. Carpenter said: “We are very excited by the purchase and look forward to breathing life back into the buildings and welcoming visitors once again. The Falmouth beach site is the best in Falmouth, right opposite our wonderful blue flag Gyllyngvase beach. I am sure guests will flock back once they know it is partly re-opened.” The re-opened Falmouth Beach hotel will initially operate on a bed and breakfast basis and guests will be invited to take breakfast, dinner and spa treatments at St Michaels Hotel, which is 20 metres away.

Beds and Bars reports new €38 million Paris hostel is fully operational: Pan-European hostel provider Beds and Bars has reported that its new €38 million Paris backpacker hostel, St Christopher’s Inns, is now fully operational.  Located just 100-metres from the Metro and Eurostar connections at Gare du Nord, this 600-bed hostel offers the latest amenities for modern day backpackers. With free Wi-Fi throughout, the new hostel provides Pod Beds for all guests staying in dormitories. Each pod has a privacy curtain, an under bed locker, a reading light and a power point – with both USB and plug sockets. A large number of private en-suite rooms are also available. Robert Savage, press and PR manager for St Christopher’s Inns, said: “This is the biggest St Christopher’s Inns hostel ever and it comes with all of the great features that our guests have come to know, love, and expect, over the past 18 years. You’ll find lots of communal space, discounts on food and drinks for guests, and a mix of locals, and travellers in the bar. Add to that the latest generation of sleeper-carriage style pod beds, and you have the most modern backpacker hostel in the world.”

Craft beer pub operator launches home brew awards: Craft beer pub operator The Craft Beer Company is launching a new set of awards aimed at home brewers, with the overall winner getting the chance to brew their beer commercially and win a £5,000 cash prize. The awards will recognise beers across a wide range of categories, with the overall winner of ‘The Craft Beer Company Home Brewer of the Year’, handed a £5,000 cash prize and the opportunity to have their winning beer brewed commercially by the Dark Star Brewing. Craft Beer Company managing director Martin Hayes said: “There’s never been a better time to drink craft beer. There are so many great brewers producing such a diverse range of beers, it’s frankly amazing. People often overlook the fact that most of the well-known craft brewers started as enthusiastic home brewers. The winner will have their winning beer brewed commercially and will be available to the trade as well as being stocked across The Craft Beer Co estate.”

UK’s biggest restaurant wins later hours – despite opposition: The UK’s largest restaurant, Za Za Bazaar in Bristol’s Harbourside area, which has 1,000 covers and a trading space of over 30,000 square feet, has been allowed an extension of the terminal hour for licensable activities on Fridays and Saturdays from 12.30 to 1am, with a closing time of 2am. It was the first application for extended hours granted since the council adopted a cumulative impact policy. It was opened 18 months ago by private operator Maricksons and international chef Nitin Bhatnagar as the first site for a new concept for future roll-out.

Cote to open in Windsor: Cote, the brand owned by Richard Caring, is to open a branch on Eton High Street in Windsor on 12 August. The opening will be the fifth new Cote since the end of June – openings have been St Katherine’s Docks, (15 July), Sevenoaks (24 June), York (29 June) and Tunbridge Wells (1 July).

Wayne Brown – we’d recommend selling Greggs shares: Canaccord Genuity leisure analyst has issued a sell note on Greggs shares with a price target of 330p. He said: “Interim results are worse than we had expected and whilst total sales are up +3.4%, the combination of like-for-like sales down -2.9%, and a deterioration in operating margins has seen profit before tax down -28.8% to £11.4m. The group has also announced a number of initiatives with regards to their strategy review. (1) The rate of refurbishments are set to rise with 90 completed in H1 rising to 130-150 in H2. This is needed and we see this as a medium term positive but note higher closure rates will result in short term profit impact; (2) The trial of a new bakery concept as well as a new food-on-the-go concept is to be merged into one concept. This raises questions as to the returns being achieved in the refurbishments completed to date; (3) Wholesale sales: the group is not looking to expand distribution with Iceland further raising questions of the long term opportunity; (4) Whilst much work has to be done to remove costs in the supply chain over the past five years, the group is now going to invest £25m over the next five years. We expect some of this investment is to support the complexities of a food-on-the-go concept as opposed to a traditional baker but we question the depth and breadth of management skill set to manage a very different retail operation. We question whether costs behind training and investment in management is required to drive fundamental change.”

London investors buy historic Wales country hotel: A consortium of unnamed London investors have bought Pembrokeshire’s Slebech Park country hotel out of administration. Plans for its further development will include additional bedrooms, improved facilities for functions including weddings and a full spa. It comes just weeks after the Welsh government said hotels and high-end offerings like spa venues could provide the solution to falling visitor numbers. The hotel was put on the market with agents Colliers International and GVA Humberts Leisure in November 2011. The sale, at just under £2m, comes nine years after the hotel was launched as part of a £4m development.

Plymouth multi-site restaurateur goes into liquidation: Plymouth multi-site restaurateur Edmond Davari has closed three of his four Sutton Harbour restaurants – Asia Chic, Rocco y Lola and Zucca – on Sunday morning after a fourth, Souk, was sold two weeks ago. Davari told the local newspaper: “The company is being forced into liquidation. The decision was made late on Friday and I was left with no choice. I have fought for the last two years – I have done everything I can do keep the businesses going for the sake of my staff.” He said the decision to close the outlets was hastened by his bank withdrawing his overdraft earlier this year. “My business can’t run without overdraft facilities,” he said. “Mine was very small. They withdrew it three or four months ago and they said the government needs the money back. This is the bank that has been given billions to give to businesses.”

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