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Morning Briefing for pub, restaurant and food wervice operators

Fri 4th Oct 2013 - Abokado, KFC, Leon, McDonald's, Starbucks

Story of the Day:

McDonald’s UK pre-tax profit up 14.6% to £202.2m: McDonald’s has reported an increase in both turnover and profit in its UK operation in 2012. It saw turnover climb 5.5% to £1.317bn, up from £1.248bn the year before. Pre-tax profit was £202.2m, up 14.6% from £176.5m the year before. The company paid tax of around £91m across the two years. McDonald's said: “As we continue our strategy of franchising restaurants, our turnover reduces as we move from recognising sales to recognising rents and fees from the franchisee. However, due to strong sales growth from all store types, total company turnover increased by £69m. The ongoing franchise strategy is also driving improved profitability.” The company’s managed sites saw sales increase 3.7% from £1.006bn to £1.043bn. Franchised revenues rose 13.2% from £242.4m to £274.4m. McDonald’s has 37,133 UK staff and the highest paid director earned £1.05m, including a long-term incentive bonus of £391,000. The UK has consistently been one of the company’s best-performing territories in recent years, with sales growth in the high single digits.

Industry News:

Fuller’s boss to speak at Arena Christmas lunch: The chief executive of the London-based brewer and pub company Fuller Smith & Turner, Simon Emeny, will be guest speaker at The Arena Christmas Lunch 2013 on Monday 2 December at the Mandarin Oriental Hyde Park, central London. Emeny will talk about the four key pillars of Fuller’s strategy – outstanding cask conditioned ales, delicious food, great wines and engaging service. Tickets cost £145 plus VAT for Arena members and £185 plus VAT for non-members. Tables cost £1,305 plus VAT for Arena members and £1,665 plus VAT for non-members. For further information and tickets, visit or contact Lorraine Wood on, tel 020 3087 2378.

ALMR unveils finalists in operations manager awards: The Association of Licensed Multiple Retailers (ALMR) has unveiled the finalists in its annual Operations Managers Awards. They are:  Ashley Lovett (Enterprise Inns), Barrie Robinson (Greene King), David O’Brien (Star Pubs and Bars), Helen McKenna (Enterprise Inns), Ian Lester (Punch Taverns), Joy Jones (Enterprise Inns), Luke Davy (Enterprise Inns), Mark Collins (Star Pubs and Bars), Matthew Venables (Enterprise Inns), Mike O’Connor (Greene King), Peter Knowles (Greene King), Stuart Watts (Star Pubs and Bars) and Tom Richardson (Star Pubs and Bars). Managed operator finalists are: Eddie Greaves (JD Wetherspoon), Ian Torpey (Spirit Pub Company), John Cheetham (Spirit Pub Company), Mark Jones (JD Wetherspoon), Matt Cotter (McMullen and Sons), Natasha Williams (Bramwell Pub Company) and Will Fotheringham (JD Wetherspoon). A spokesman said: “Eighteen years after the Awards were founded, the judges can report that the standard of entries again demonstrates that the sector is home to some exceptional talent, underpinning the importance of the ALMR Ops Awards and the recognition it affords to the best operations managers in the UK.” The winning area manger and business development manager will be announced in front of the 1,200 guests at the ALMR Christmas Luncheon on Thursday 19 December at Old Billingsgate, London.

KFC launches Go Cup to fit in the car: KFC in the US has launched a Go Cup take-out container that fits inside a car’s cup holder. The KFC Go Cup comes with a choice of five combinations of the restaurant’s popular chicken treats, all with a side of potato wedges. It comes after research showed that people are largely using their cup holders for things other than drinks. KFC found that 42% of Americans would be more likely to eat in their cars if their food container fitted conveniently into their cup holder. For millennials, KFC found that number jumped to 53%. Go Cups come with a piece of boneless Original Recipe chicken, chicken tenders, hot wings, Original Recipe bites, or even a mini chicken sandwich, all served with potato wedges. All five combos cost $2.49.
Allegra Strategies – British consumers looking for provenance and transparency: The 2013 "How Britain Eats” report, a survey of 1,200 consumers by insights firm Allegra Strategies, has highlighted the continued importance of value and quality combined with transparency. Allegra Strategies' Anya Marco, director of insights, said: “Consumers have more choice than ever before and recognise that when prices are low, quality can be compromised – and therefore provenance and transparency are key for both supermarkets and eating out operators.” The survey found one in six consumers are struggling to afford their food shopping. As a result, they are undertaking smaller, more frequent shops in order to help them manage.
Report highlights benefit of beer duty cut: A new report, "Cheers! Budget 2013 – The impact of the beer duty cut", has been launched this week, highlighting the wide benefits from the cut in beer duty. The report, published jointly by the British Beer & Pub Association, the Campaign for Real Ale and the Society of Independent Brewers (SIBA), sets out the social and economic benefits alongside case studies from across the sector. The report outlines how the 2013 Budget was a turning point for the beer and pub industry. From smaller businesses gaining the confidence to take on new staff and buy new equipment to larger businesses investing in and expanding their pub estates, there has been a definite change in industry perceptions. In terms of jobs created, the report highlights that more than 60% of BBPA members have said they would be employing more staff, with examples from JD Wetherspoon of at least 400 new staff and, in the supply chain, Charles Faram, the hop merchant, taking on seven new employees. The report’s focus on investment underscores the increased confidence felt by the industry. This is demonstrated by Shepherd Neame’s decision to renovate 40 extra pubs, Redemption Brewery’s investment on new equipment and even a change in attitudes from banks to support brewing investment opportunities. The combination of efforts across the country total some £400 million invested in beer and pubs during 2013.

Company News:

Starbucks launches UK food drive as sales rise: Starbucks UK, which has revealed that its UK sales in the third quarter of 2013 were higher than the same time last year, has launched its largest ever investment in food in the UK. Starbucks is adding the Duffin, a hybrid of a donut and a muffin, to its new food range. It is also introducing a selection of baked goods for its breakfast range, alongside sandwiches, soups and salads. Refreshed packaging and menu designs will support the move, highlighting the “artisanal" nature of the products. In turn, this is being backed by an advertising campaign to promote the breakfast line-up throughout October. Julie Prebble, category manager at Starbucks UK, said: “The team has worked hard to perfect existing recipes, as well as create new innovative products such as the Duffin. We know from our trials and customer insights, that this new food range will be a great success, complimenting the quality drinks we handcraft in our stores every day. This fusion trend elevates traditional American products, so when we combined our American heritage with our hero muffin range and ever-popular doughnuts, the Duffin seemed the perfect creation.”

Leon reports Ebitda boost: Leon, the healthy eating chain led by John Vincent and Henry Dimbleby, has reported turnover rose 6%$ to £12.77m in 2012, from £12.05m the year before. Losses after tax fell to £173,000 from £705,000 the year before. The company said: “Ebitda before pre-opening costs, which is a good measure of the underlying performance of the restaurant portfolio, more than doubled in the year, rising from £41,945 in 2011 to £920,554 in 2012.” New site were opened at King’s Cross in London and Heathrow Terminal Three during the year in partnership with franchisee HMSHost.

Abokado to open 17th site next week:
Abokado, led by Mark Lilley and backed by Kings Parks Capital, will open its 17th site next Tuesday (8 October) on Rod Lane, just off Fenchurch Street in the City of London and by the foot of London’s Walkie Talkie building. The opening will be marked with a giveaway of 400 lunches and free coffee all day. At June's Propel Multi-Club Conference, Kings Park Capital founder Jason Katz said Abokado would open a new site each month for the foreseeable future. He said: “It is focused on the lunchtime office market and we think it has a differentiated range of products.”
Games developer apologises over Wetherspoon homophobic quiz machine: Quiz machine developer Games Warehouse has apologised over a homophobic quiz machine that has caused offence at a JD Wetherspoon pub in Northumberland. Victoria Thompson went to her local Wetherspoons in Bedlington to play on a Gamestec quiz machine. One clue was “a little bit poofy”, with the answer being Peter Tatchell. Games Warehouse spokesman Nick Hardy said: “Guided by my colleague, our commercial director Andrew Henson, we apologised unreservedly to Mr Tatchell and moved immediately to rectify the situation. We totally share Ms Thompson’s thoughts in respect of the offending question in 'Pints Make Prizes' and are upset and angry that the developer of that game even considered including such an item."
Toby Carvery conducts 'carvery personality' survey: Mitchells & Butlers is conducting a Toby Carvery personality survey, with those taking part offered a free ice cream. The brand’s website says: “Did you know that your choice of roast dinner says a lot about who you are and even what you do for a living? The veg on your plate shows whether you're outgoing or dependable, conservative or impulsive; while your favourite meat can reveal how imaginative or sporty you are.” Vouchers are redeemable until 12 October, excluding Sundays.
Sports stars launch 'coffee bar by day, wine bar by night': The England rugby captain Chris Robshaw and his friend and former Hampshire cricketer Kevin Latouf have opened a venue in Winchester, Hampshire called Black White Red that operates as a coffee bar during the day and becomes a wine bar at night. Robshaw, 27, told the Daily Mail: “A lot of people are into coffee at the moment and we thought it would be a good concept to open a place that served wine too. We decided to open in Winchester because Kevin is based there." Robshaw is planning a series of wine tastings featuring wines from the rugby playing nations Australia and New Zealand to Argentina. "There will be special tastings during the autumn internationals, so when England play Australia, we’ll have an Australian evening, when we play Argentina we’ll be trying out their wines and the same for New Zealand,” he said.

Wetherspoon to open in Abingdon next Tuesday: JD Wetherspoon will open a new site, The Narrows, in Abingdon’s former Post Office, next Tuesday (8 October). The pub, which will employ 40 people, has been named The Narrows after the former name for that stretch of street from the old post office building to The Square, before it was destroyed by fire in 1883. It will feature post office red urinals.
Chiquito and Bella Italia open in Huntingdon: Around 70 jobs are being created in Huntingdon with the opening of new Bella Italia and Chiquito restaurants. Both restaurants have been built at the Tower Fields leisure area adjacent to the Cineworld cinema. The Chiquito restaurant will be among the first in the chain to be given a new look with a modern Mediterranean colour scheme, special lighting and a “comfortable” atmosphere.

Elliotts wins Virgin Wines account: The Milton Keynes-based marketing and communications agency Elliotts, headed by Ann Elliott, has been appointed as the retained PR agency for the online wine retailer Virgin Wines. Headed by new account director Liz Bartlett, who has joined the agency from the travel industry company TUI, Elliotts will commence work on the Virgin Wines account this month. Elliotts won the account after a two-stage pitch process. After an initial proposal, the Elliotts PR team travelled to Virgin Wines’ Norfolk base to ensure there was a good chemistry between the two parties. The agency was appointed less than 24 hours later. The news comes just weeks after Elliotts relocated to Milton Keynes to become more accessible to clients. The agency provides marketing, PR and research services exclusively to the hospitality sector and boasts such high-profile PR and social media clients as SSP, Revolution, Smiths (Spitalfields), Hook Norton, Café Rouge and 7 Day Catering. The agency, which has doubled in size over the past two years, also works with the catering equipment giant Bunzl, one of the UK’s largest food suppliers, Brakes, and the specialist catering company Sodexo.

Stonegate extends cook-off competition: Stonegate Pub Company has expanded its annual Great Traditional Cook-Off competition to allow entrants to create any main course dish of their choice. It had focused on pies previously. Any member of staff within the pub company’s 151-strong Great Traditional Pub division may enter, submitting a detailed specification of the dish, including its name, the ingredients used and the cooking methods. Entrants will be judged on taste, presentation, feasibility, marketability and cost. Each area manager will put forward the best dish for his or her area, with the final "cook-off" held on 30 January at Stonegate Pub Company’s development kitchen in central Birmingham. Judges will include food industry experts alongside Stonegate’s chief executive, Toby Smith. The winning dish will be placed on the menus of all of Stonegate’s Great Traditional Pubs when it re-launches in April 2014. Last year’s winner was Ruth Armstrong, the kitchen manager of the Akenside Traders in Newcastle upon Tyne, who bowled over the judges with her Curry Lover’s Pie.

Enterprise Inns pub to re-open as a tapas bar: Entrepreneurs Dean Loynes and Sarah Boocock are to re-open Enterprise Inns' Old White Horse Inn, Bingley, Yorkshire as El Caballo Blanco – Spanish for "the white horse" – tapas bar and restaurant on Friday 18 October. Influenced by the new owners' love of Spanish cuisine and their Bradford roots, the restaurant will serve Spanish and Yorkshire tapas, as well as having a bar.

McDonald’s scoops top corporate sponsorship award: McDonald's has won the top award for excellence in corporate sponsorship at the Corporate Engagement Awards for its partnership with the four UK national football associations, celebrating the longest running grassroots football programme in the UK: Ten Years of Teamwork. This year saw McDonald's celebrate the tenth anniversary of the programme with the publication of a report by Loughborough University assessing the impact of the brand's sponsorship investment. "Ten Years of Teamwork" outlined how McDonald's sponsorship investment is aimed at the development of the grassroots game through supporting the raising of standards, the training and development of coaches and celebrating the contribution of tens of thousands of football volunteers. Alongside the partnership activity, hundreds of McDonald's restaurants support local teams through the provision of kit, equipment and facilities.
Pesto in the Pub plans ten openings in a year: Pesto in the Pub, the company headed by Neil Gatt and Sara Edwards, is set to launch 10 new restaurants over the next 12 months. Pesto currently has 10 sites, with its most recent opening in Spirit’s Red Lion in Harrogate, Yorkshire. Gatt told the Manchester Evening News: “We’re very excited to announce the news that we hope to duplicate our portfolio next year with these 10 openings and look forward to hopefully hitting 1,000 employees by the end of 2014. Customers seem to love our grazing-style menu and relaxed atmosphere, as they can enjoy a more informal experience when dining out. We believe our success in giving diners something different has helped us reach a landmark ten restaurants last month."

Greene King pub banned from holding outdoor parties: A flagship Greene King pub in Leeds has been banned by the local council from holding any more outdoor parties, after local residents complained of excessive noise from a Freshers' Week event. The Skyrack, a popular student haunt and a stop-off on the "Otley run" pub crawl in Headingley, Leeds, was granted a Temporary Event Notice to use its outdoor area for an event during the recent Freshers’ Week. However, after residents complained to councillors, the council told the pub management it could not hold any more events outside. A spokeswoman from Greene King said: “We are sorry anyone had cause to complain. It is not in our best interests to upset neighbours. We make all efforts to be as considerate as possible. We fully respect the council’s decision and we apologise for any disturbance.” One local councillor said: "Whilst The Skyrack is a respected and much-loved pub, it is clear that on this occasion outside noise was not kept to acceptable levels and it is right the council issued the ban.”

Comptoir Libanais take Chelsea site: Comptoir Libanais, the canteen and deli concept headed by Tony Kitous, has been chosen to operate the newly created food outlet within Duke of York Square, in Chelsea, West London, an anchor at the eastern end of the Square. The Lebanese canteen and delicatessen has taken a 10-year lease on approximately 2,000 sq ft of space from Davis Coffer Lyons acting on behalf of Cadogan. This letting is part of a wider initiative by Cadogan to create a more vibrant food and beverage offer estate-wide, which takes greater advantage of the scheme’s extensive outdoor space. Cadogan chief executive Hugh Seaborn said: “Our research has shown that customers want more choice both in terms of operators and cuisine types. In order to achieve this we are carefully choosing the new operators of our eating and drinking outlets to ensure they provide the maximum appeal to our diverse range of visitors. Comptoir Libanais is a fantastic operation and the ideal addition to the scheme.”
Chaboba to open second site at Wembley’s London Designer outlet: Chaboba, which offers authentic Taiwanese bubble tea, is to open its second site at Wembley’s Designer Outlet in orth London. Its first site opened in Camden, North London. Currently very popular in Asia, North America, Canada and Australia, bubble tea is a tea-based drink, which has tapioca pearls at the bottom of the cup, giving the drink a bubbly appearance. Chaboba will offer three types of bubble drinks: milk bubble tea, fruit bubble tea and crush boba (smoothie), in a variety of flavours. Chaboba joins 15 other restaurant brands already confirmed for London’s first designer outlet.
Wyn Ellis – Diageo shares worth adding as spirit sales grow around the world: Numis Securities analyst Wyn Ellis has issued an add note on Diageo shares with a target price of 2200p. He said: “Diageo is positioning itself to deliver very significant EPS growth in the medium to longer term as it continues to enhance the strength of its brands via highly effective marketing and improved local routes to market. Uncertainty about exchange rate movements and slowing emerging markets are putting pressure on EPS growth forecasts in the near-term and unsettling the shares, creating an opportunity for investors with longer-term investment horizons. The global spirits market is in robust growth. Over the six years to 2012, industry revenues grew at a CAGR of 6%, driven by rising per capita spirit consumption in developing countries and increasing demand for premium brands. Scotch and vodka continue to perform strongly, boosted by the clear emergence of a cocktail culture in developed markets and increased penetration in developing markets."
Brasserie Bar Co sells Chez Gérard site: Brasserie Bar Co has closed its last Chez Gérard after the sale of its site in Bishopsgate in the City of London to an undisclosed buyer. Chez Gérard on Bishopsgate was re-launched last year with a “reinvigorated and exciting food and drink offering”. But 10 months later, Brasserie Bar Co has confirmed that the site has been sold subject to completion to an unnamed buyer who has plans to launch a new concept in the space. Mark Derry, chief executive of Brasserie Bar Co, said: “We were presented with an offer we could not refuse for our Bishopsgate site. The location was not perfect for Chez Gérard but should work well for the new concept taking its place.”

UK firm Beatson Clark supplies bespoke bottle for top US craft brewer: The UK glass manufacturer Beatson Clark is joining the craft beer revolution in the United States by producing a premium bespoke bottle for the Brooklyn Brewery in New York. Local 1, Local 2, and Sorachi Ace are part of Brooklyn Brewery’s family of "Big Bottles", special brews that are refermented in the 750ml amber glass bottle and capped with a champagne style cork and wire closure. Brooklyn Brewery operates the largest bottle refermentation programme in the United States. It will also use the embossed bottle for special releases including Black Ops, Wild Streak, and Silver Anniversary Lager.

Anglian Country Inns wins national hotel award: Anglian Country Inns, the four-strong operator headed by James Nye, has been awarded a coveted Cesar and won Norfolk Hotel of the Year for its White Horse pub with bedrooms site in Brancaster Staithe. A Cesar is awarded by the Good Hotel Guide to its choice of the ten best hotels of the year countrywide. Nye said: “It is a huge honour to be named Norfolk Hotel of the Year and even more so to have received national recognition with a Cesar. This is ultimate recognition for the years of hard work from the team at the White Horse and I can’t thank staff enough for their contribution and to our guests who submit reports.”

Community shop opens in Lincs village pub: A business called Shrub and Grub has set up a community shop in the Robin Hood and Little John pub in the Lincolnshire village of Aslackby. It opens every Saturday from 9am to noon. Aslackby, a village of about 80 houses, has been without a shop for many years. Shrub and Grub supplies a range of fresh produce, plants and local crafts. These include fruit and vegetables from SJA Produce in Spalding, bread and pastries from Bread Smiths, of Thorpe Latimer, speciality cheeses from the Cheese Society in Lincoln, and meat from long-established butchers Hickson, also in Lincoln. Customers can also enjoy fresh tea and coffee with homemade cakes and order any of the foods for delivery during the week.
Black Sheep Brewery reports substantial loss: Black Sheep Brewery, the Masham, Yorkshire-based brewer headed by Robert Theakston, has reported a substantial loss of £740,000 in the year to 31 March after losing 6,000 barrels of pub company business. It made a pre-tax profit of £504,000 the year before. The company saw turnover drop 5.4% to £18.79m, down from £19.86m in 2011-12. Managing director Robert Theakston said: “This year, given the aggressive driving of Doombar by Coors into the market and the pub groups buying increasing amounts of microbrewery cask beer, we have seen our Best Bitter hit particularly hard, and volume has dropped way faster than we have been able to control. As a result, during the year, we lost just short of 6,000 barrels in the national pubco sector – this represents 90% of or volume drop for the entire year. We are totally focused on re-housing profitable volume and controlling further loss of barrelage.” The company has restructured its sales team and is to introduce keg Best Bitter. Theakston said: “I am aware of the preconceptions surrounding keg, but the opportunity the keg market brings is not to be dismissed. It will allow us to reach into the types of venues that can’t justify cask beer. There are an awful lot of sports clubs, hotels and restaurants than can only take keg beer that we currently can’t trade in. We have also installed a five-barrel brew plant to give us the flexibility to produce the new interesting beers that the current marketplace demands.” Theakston reported that the £740,000 loss included exceptional items of £197,000. He said: “Duty still accounts for £8m of our turnover. There remains a constant threat from the microbrewery explosion, and the cheap beer they are able to sell only serves to artificially drag down the wholesale price of cask beer, thus making it very difficult for a brewery paying full duty to be competitive. Nonetheless, we have spent a significant amount of time developing our recovery plans for the next 18 months and we fully expect to turn the business back into a profitable one within that timescale.” Chairman Paul Theakston said he was confident about the business: “Our total volume sold into local direct trade, wholesalers and take-home declined by only 1.3% in the face of a 5.1% decline in the national beer market. Our Achilles heel has always been in our cask beer sales to the national pub companies, where downsizing their estates and a policy of buying an increasing proportion of their cask beers from microbrewers, thus taking advantage of a significantly reduced buying in cost through Progressive Beer Duty, has been the order of the day.”

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