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Morning Briefing for pub, restaurant and food wervice operators

Thu 16th Jan 2014 - Propel Thursday News Briefing

Story of the Day:

December like-for-likes up 3.2%; London managed pubs up 6.5%: Latest figures reveal that the nation’s leading pub, bar and restaurant groups enjoyed a festive season boost, with collective like-for-like sales up 3.3% on last year. Total sales were ahead 6.1%. Results from the Coffer Peach Business Tracker, the sector’s leading sales barometer, for the six weeks up to 4 January show that the London market out-partied the rest of the country with like-for-like sales up 4.4%, with drink-led pubs in the capital ahead 6.5% on last year’s sales figures. “But that’s not to say it was all about going out for a drink,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker for the out-of-home market in partnership with Coffer Group, Baker Tilly and UBS. “Even in those drink-led pubs and bars, food sales saw higher growth than drinks. Food sales in those pubs were up overall 5.8%, compared to 3.2% for drink. While London pubs had an especially merry time, outside of the M25 it was casual dining restaurant chains that had the best of the seasonal business, with like-for-like sales up 4.0% on 2012,” added Martin. “The weather as always played its part. Last year, the run-up to Christmas was hit by snow and freezing temperatures, keeping people at home, with heavy rain towards the end of December. Floods were a factor last year as well as this in many areas. Taking that into account, we would have expected better trading in pubs and restaurants this year, but what will have particularly cheered operators is the strong trading throughout the three key busy weeks from December 15th onwards,” said Martin. “All were up on the same weeks last year as more people went out to enjoy themselves. It shows that given the right occasion and offer, the public will go out and spend in the country’s pubs and restaurants. Putting that in context, monthly figures for December alone show a 3.0% like-for-like sales increase and 5.8% total market growth, making it the single biggest monthly increase since last February.”

Industry News:

First Propel Multi Club Conference of 2014 open to bookings: The first Propel Multi Club Conference of 2014, to be held on Thursday 13 March at the Lancaster London Hotel, Lancaster Gate, central London, is now open for bookings. Multi-site pub, restaurant and foodservice companies can claim up to two free places each. E-mail to reserve places.

Punch chairman confident about restructuring: Punch chairman Stephen Billingham has told The Times that he is confident that the proposed restructuring plan tabled yesterday will be accepted by bondholders, despite 75% of them having to vote in favour across 16 classes of noteholder. He said: “Who wants to hold a defaulted bond? I don’t see it.” He argued that a receivership process would be “very long and very messy – it could take years.”

Independent coffee shops fight Starbucks with ‘disloyalty’ cards: Independent coffee shops in Washington DC are biting back against the power of Starbucks by producing a “disloyalty card” that encourages people to seek their caffeine fix elsewhere than the giant’s outlets. Purchasers of a “DC Disloyal” card are encouraged to visit all six participating shops as part of a “coffee adventure”. At each outlet they receive a stamp with their coffee, similar to the coffee giant’s loyalty cards, and once the card is completed, their rejection of blind routine will earn them a free beverage at the shop they liked the most.

Thirty students team qualify for initial stage of Nestle Toque D’Or: After an unprecedented level of entries from colleges across the country, 30 student teams have made it through the initial stage of the Nestlé Toque d’Or 2014 competition. These teams progress to the regional heats, which will take place around the country from February 3 to 7. Neil Stephens, managing director of Nestlé Professional UK and Ireland, said: “The level of knowledge, skill and passion from the teams entering Toque d’Or never fails to impress. As we now move in to the hotly contested heats stage, I would like to wish every competing team the very best of luck.” The 30 teams who have made it through to the heats stage of Toque d’Or 2014 now go on to compete at Birmingham, Leeds, Glasgow, Bristol or London. Just six teams will make it through to the finals, taking place from March 6 to 9.

ETM offers ‘ultimate’ £455 Valentine Day’s package: London gastro-operator ETM Group is offering the ultimate Valentine Day’s package at its Gun pub in the London Docklands: a secret rendezvous at its River Room at the Gun, which was allegedly a meeting point for Lord Nelson and his mistress Lady Emma Hamilton. The River Room will play host to just one couple eager to enjoy the panoramic views across the Thames for what ETM calls “the ultimate private date”. The couple will arrive by boat from central London, and be greeted with Champagne before being escorted to the private dining room. There will be a dedicated waiter serving a five-course meal with Champagne cocktails. The package includes a dozen red roses and a complimentary taxi journey home. The company said: “The River Room package, like any sophisticated lady, doesn’t come cheap but will go down in history as a night to remember.”

Luke Johnson – ‘I like entrepreneurs who touch operations’: Sector investor Luke Johnson has argued the benefits of entrepreneurs who stay close to the shop-floor. In his Financial Times column, he wrote: “I like entrepreneurs who go out and touch operations, meet staff in the field and talk to customers. Last year I spent a day on the road with Vernon Hill, the chairman of Metro Bank, where I serve as a board member. He spends much of his time viewing possible sites, checking up on the competition and monitoring service levels first hand in his business. There is no substitute for doing it yourself and being seen on the frontline in person. My friend Tim Martin, the relentless boss of pub chain JD Wetherspoon, roves around the country dropping in on his taverns at least one day a week. I am sure such behaviour is a vital ingredient in the company’s winning formula.”

Company News:

Wetherspoon lines up disused Blockbuster site in Morley; paid £3m for Muswell Hill site: JD Wetherspoon has confirmed it is set to buy a disused Blockbuster store in Morley town centre in West Yorkshire (population: 27,738). The former Blockbuster video store in Queen Street has been empty since before Christmas. The £1m project should create 40 jobs. A completion date of 10 February has been set, although planning and licensing permission will still need to be granted by Leeds City Council. Wetherspoon spokesman Eddie Gershon said: “We are delighted to have exchanged on the former Blockbuster store in Morley. We have been keen to open a pub in the town for a number of years and are now closer to that happening.” Meanwhile, it has been revealed that Wetherspoon paid £3m for the freehold of the Village in Muswell Hill, North London, where a further £1.5m will be spent before the venue is re-opened in July. James Grimes of agent AG&G said: “With a total site area of 907 square metres, an existing 470 square metre unit and planning permission to remove the roof from an old tram shed on much of the remaining area, Wetherspoons could either create one of the best beer gardens in London or double the size of the current pub. The potential of the site is huge.” Muswell Hill is where Wetherspoon founder Tim Martin opened his first pub. Martin said: “It was the launch pad for Wetherspoon’s success across the UK. I’m looking forward to seeing a Wetherspoon pub in Muswell Hill again.”

McMullen paid more than £8.6m for Old Bank of England pub: The Hertfordshire-based family brewer and pub operator McMullen paid in excess of £8.6m to buy the freehold of the Old Bank of England pub on Fleet Street in Central London, where the West London brewer Fuller Smith & Turner is a tenant for five more years. The freehold transaction is believed to have been one of the highest prices paid for a pub in 2013, at a transaction price of £8.6m. McMullen earns a yield for now of under 4%. James Grimes of agent AG&G said: “It’s a very significant deal for McMullen. This is a landmark building that is drenched in history – and customers. The contract also includes the freehold of 1 Bell Yard next door.” The acquisition is McMullen’s fifth since last summer. Managing director Peter Furness-Smith said: “We are delighted to have purchased the freehold interest in excellent pubs.”

Bohemia owners buy Wabi in Horsham for more than £1m: Owners of the hugely successful Bohemia bar in Brighton, Paul and Verity Craig have acquired the freehold of Wabi in Horsham from the receivers for well in excess of £1m. Paul Craig told Propel: “Wabi, Horsham is a viable healthy business and will keep trading as a stand-alone business. I intend to refurbish the site in coming months and lift the food and drink offering. It will remain a high-end cocktail bar, late lounge and Japanese restaurant.” Paul Craig was voted Entrepreneur of the Year at the 2010 Sussex Business Awards and has been in the industry over 20 years operating dozens of different sites.

Geronimo Inns becomes first pub company to achieve five star sustainability rating: Geronimo Inns has become the first pub group to receive the highest possible rating, Three Stars, from the Sustainable Restaurant Association (SRA). The Three Star rating places Geronimo pubs alongside the likes of Hugh Fearnley Whittingstall’s River Cottage, and Raymond Blanc’s Le Manoir aux Quat Saisons, as among the most sustainable restaurants in the UK. The group, which operates 35 sites across London and the South-East, scored highly across the SRA’s Sustainability Rating, serving its five million customers a year with locally sourced food, demonstrating an exceptional level of environmental responsibility and showing a genuine commitment to working closely with the community. Ed Turner, managing director of Geronimo Inns, said: “We are really very proud of the three star rating - this sums up Geronimo’s passion for life perfectly. The whole team has been working on our sustainability for a number of years, and it is wonderful to see their hard work pay off. All of us at Geronimo want to serve the best food and the finest drinks in a relaxed environment in a way that we can sustain great pubs for a very long time.” Research for the SRA in 2013 showed that more than half of consumers are prepared to pay up to ten per cent more for a meal in a sustainable restaurant. Mark Linehan, managing director of the SRA, said: “Geronimo has shown an exceptional commitment to operating responsibly and providing its customers with what they want – well sourced food and drink in pubs that adhere to high standards of environmental responsibility, prepared and served by staff that are well trained and looked after. The company should be proud of its achievement, especially its dedication to improvement as its score in this rating is almost 20% higher than it achieved previously.”

Pesto take Star Pubs & Bars site for ninth venue: Pesto, led by Neil Gatt, has begun work on its ninth site, a £550,000 co-investment with Star Pubs & Bars to create a bar and restaurant at the former Reddicap Tavern in Sutton Coldfield. The lease is the first that Pesto Restaurants has taken with Star Pubs & Bars. The business will be renamed Pesto Sutton Coldfield. It will feature a 600 square foot bar with high level booth seating serving a high quality cask ale and wine offer as well as a 120 cover restaurant specialising in small plates of authentic Italian food, ideal for sharing and grazing. It is expected to open in March.

Harry Potter pub looking for first new tenant in 60 years: The National Trust is looking for a new tenant for the At The Sign of The Angel in Lacock, Wiltshire. Lacock has provided the setting for everything from BBC costume drama Cranford and the Harry Potter films to the Antony Hopkins thriller The Wolfman. One of the oldest buildings, and which often features as a backdrop, because of its original Tudor black and white frontage, “The Angel”, as it is known to villagers, has been run by the Levis family since 1953. But after 60 years, the family is giving up the lease, so now the National Trust is looking for new tenants to run the six-room hotel and 60-seat restaurant. The National Trust has hired agent Jones Lang LaSalle to market the lease, and said there had already been many enquiries.

Cook and Indi open sixth buffet restaurant with expanded offer: Cook and Indi’s World Buffet has opened its second outlet, and sixth overall, in Glasgow and expanded its offer with Spanish and Mexican flavours. It caters for 140 diners with a range of different cuisines from around the world. The new outlet, in the city centre on the corner of Renfield Street and Bath Street, supplies dishes ranging from pizza to pastas, starters to salads, sushi to noodles and pakoras to curries. Cook and Indi’s World Buffet offers seven different cuisines (Indian, Japanese, Sushi, Chinese, Italian, Spanish and Mexican) and more than 100 dishes. The new Mexican counter includes fajitas, tacos, enchiladas and chilli con carne, while the new Spanish counter offers paella, chorizo, patatas bravas, meatballs and more. Cook Gill, co-founder of the restaurant, said: “We’re delighted to serve up our second revolutionary ‘world on a plate’ concept in Glasgow with a distinct Mexican twist. The idea behind our World Buffet is to bring together various cuisines from different parts of the world so that when families, friends and office parties are dining out there’s no need for an argument about which restaurant to go to because we offer food to suit everyone’s tastes.”

Hampshire businessman opens second site: Hampshire businessman Rob Smith has opened his second site. The Tollhouse Inn in Lymington has undergone refurbishment after suffering £100,000 damage in a blaze started by the landlord and his wife. It has re-opened as the Haven Bar at the Monkey House. Smith also owns the Haven Bar and Bistro at Lymington Yacht Haven. Dean Thomas, 42, and his wife Melynda, 36, were jailed for six and three years respectively for setting fire to the Tollhouse Inn by spreading petrol around the bar area and igniting it.

Wagamama opens in Chichester after beating planners: Wagamama opened in Chichester on Monday after initially being refused planning permission. Chichester residents had launched a petition to bring it to the city. It is occupying the building previously used by Store Twenty One. The chain was refused planning permission by Chichester Council, as officers said it would create a 15m length of street that was just restaurants, as it was situated next to PizzaExpress. However, a planning inspector ruled that as no other business had wanted to occupy the building, despite it being advertised, the appeal should be upheld. A year ago, when it was refused permission, campaigners launched a petition calling for the chain to come to the city which garnered more than 800 signatures. Since September, when the appeal was granted, the building has been fitted out for the restaurant. On Monday, Wagamama issued full-year accounts showing a £17.6m profit in the year to 28 April 2013. The company said: “The management is confident that there is considerable potential for continued expansion of the business and the brand and will continue to focus on a well-controlled growth programme.” The accounts also show that a dividend of £60m was recommended by directors. However, a spokesperson said that this was paid within the group to settle a loan.

Douglas Jack raises Wetherspoon price target to 925p: Numis Securities leisure analyst Douglas Jack has increased his price target on JD Wetherspoon (JDW) shares to 925p. He said: “In Q1, like-for-like sales rose 3.7%, the benefit of which was fully offset by margins falling 30bps. However, some initially margin-dilutive initiatives, such as extended food trading hours and free coffee refills, should benefit medium-term growth. We expect LFL sales to have improved slightly in Q2 (versus Q1), with margins remaining at c.8.3%, resulting in forecasts being held.” JDW claims it is not discounting and that sales are not being bought directly through promotions (for example, the duration of the January sale is one week shorter this year). However, the company is still not passing on a sufficient amount of cost inflation to maintain margins and management “cannot provide guidance that margins will stop falling any time soon”. Its “focus is on sales, profits and EPS.” Eight new pubs opened in Q1. JDW expects to open 40 to 50 pubs this year, up from last year’s 29 openings, of which 65% of sites are likely to be freehold (the company average is 44% freehold). As a consequence, net debt is likely to increase by £40m to £50m this year, but the company can look forward to maturing swaps reducing interest costs by £12.5m a tear between 2015-18E. “We expect to hold our forecasts (2014E: PBT £80.5m; consensus £80.2m), which are consistent with guidance of 3.0% LFL sales and 40bps EBIT margin reduction. The shares have re-rated to 17x P/E (historic average: 14.6x). Reflecting stronger medium-term growth prospects (faster expansion and falling swap costs), we are raising our 12-month target price to 925p (equivalent to 16x P/E on next year’s earnings).”

Greene King unveils new compromise signage plan: Greene King is to re-sign many of its tenanted and leased estate over the next two years, helping boost kerb appeal for hundreds of licensees but leaving traditional signage alone. The work to refresh the external branding is already under way on many Greene King Pub Partners pubs. It does not affect traditional pub signs, concentrating instead on updating the branding and lettering on the outside of the buildings. Tracey Barker leases the Red Lion in Bletchingley, Redhill, Surrey. She said: “The Red Lion’s new signage has made a big difference and it really does make the pub look a lot more attractive. I’m in no doubt that it has helped bring new customers through the doors, whose interest has been piqued by the new exterior.” Tenanted division managing director Simon Longbottom said: “The Red Lion is a great example of how this investment helps lift business. Keeping the outside of our pubs looking smart, welcoming and something to be proud of is critical and these plans for a widespread upgrade have been welcomed by our licensee partners.”

Glendola Leisure closes Brighton site after ten years of trading: Glendola Leisure, the Waxy O’Connor and Rainforest Cafe operator led by Alex Salussolia, closed its seafront Brighton site last month after a decade of trading, it has been revealed. The Terraces Bar and Grill in Madeira Drive had closed to make way for an ambitious plan for the site. Sales manager Ian Baker said: “Brighton Seafront Regeneration, our landlord, has taken the decision to redevelop our unit in order to realise their future vision for the wider development. Terraces Bar and Grill will regrettably not play a part in this vision.”

Prince Charles renews royal warrant on Shepherd Neame product: The Prince of Wales has renewed the royal warrant on a Faversham product once favoured by Queen Victoria. Royal warrants are given to goods or services supplied to the Households of the Queen, the Duke of Edinburgh or the Prince of Wales. Royal warrants are only granted initially for five years and then come under review periodically after that. Prince Charles has now renewed the warrant for Grant’s morella cherry brandy, which is produced by Shepherd Neame. This royal warrant will last for the next three years before it is up for review again in 2017. A spokesman for Shepherd Neame said: “We are delighted that the Prince of Wales has renewed our royal warrant. Grant’s morella cherry brandy is a prestigious high-quality liqueur and it has an enviable reputation and heritage.”

Tragus closes Chiswick Cafe Rouge: Tragus has closed its Cafe Rouge branch in Chiswick, West London, one of the area’s longest surviving restaurants. There are unconfirmed reports that the Chiswick High Road premises will be refurbished shortly to become a branch of a popular burger restaurant chain. The nearby Strand on the Green branch of Cafe Rouge will remain in business despite local reports that it is earmarked for closure.

‘Exciting brand’ wanted for last restaurant site at Vangarde Shopping Park: One 1,000 square foot restaurant space is left at the Vangarde Shopping Park at Monks Cross shopping centre in York after the retro-American chain Ed’s Easy Diner signed up for the development. Brands already signed include Costa Coffee, Prezzo, Nando’s, Frankie & Benny’s and York’s first Giraffe restaurant, all set to open in April this year. Richard France, managing director of the developer, the Oakgate Group, said: “The addition of Ed’s Easy Diner to our restaurant line up gives another amazing dimension to our already impressive food offering. We now have only one 1,000 sq ft unit remaining, which has already received a tremendous amount of interest. However, we’re looking for an exciting operator to fill the last space in order to complete our fantastic line-up.”

Milestone partner quits business: One half of the partnership that founded the award-winning Milestone gastro-pub in Sheffield, winner of Gordon Ramsay’s “Best British Restaurant” title in 2010, has announced he is leaving the industry. Marc Sheldon, 31, who also runs the Wig and Pen restaurant in Sheffield with his business partner, Matt Bigland, told the Sheffield Star newspaper he had been bought out of the business for an undisclosed sum. The pair met when both were working at the All Bar One in Sheffield, and turned the derelict Ball Inn in Kelham Island, Sheffield into the Milestone in 2007. Sheldon said he was leaving “because you only live once. I’m 31 and I want a new challenge. I don’t want the Milestone to be my defining moment. Matt is like a brother and has supported me in my decision. My next venture won’t in the restaurant industry.” Both the Milestone and the Wig and Pen are in profit and running smoothly, Sheldon said.

28-50 Wine Workshop & Kitchen hires executive chef: 28-50 Wine Workshop & Kitchen has appointed Graham Jessop as executive chef to oversee its three London restaurants, in Marylebone, Fetter Lane and the recently opened Maddox Street in Mayfair. Jessop will be responsible for the creation of new and innovative dishes for the regularly changing menus, while ensuring that the culinary standards set by 28-50 owners Xavier Rousset and Agnar Sverrisson are maintained. Jessop said: “I am delighted to be part of the 28-50 team – working with Agnar and Xavier is inspirational given their passion for excellent food and wine. Our latest 28-50, Maddox Street, has had a really successful start and I’m looking forward to an exciting future with all three of the restaurants.”

Costa gets Ampthill go-ahead: Coffee shop giant Costa has been granted planning permission to open a cafe in a historic market town. The coffee chain was given approval by Central Bedfordshire Council on Thursday to open up a shop on the site of the old Barclays bank in Dunstable Street in Ampthill. Central Beds Council received one reply in favour of the shop and eight against prior to the decision being made.

Pub’s new owners may supply school meals: Villagers who raised £150,000 to buy their pub from Punch Taverns with the help of a tweet from Stephen Fry are looking at providing school lunches and meals for care home residents to help bring in money to keep it open. The King’s Arms in Shouldham, Norfolk closed in 2012 after the tenants failed to keep up with rent payments. Villagers set up the Save Our King’s Arms (SOKA) campaign, which was handed the keys to the pub this week after selling shares in the venture to raise £150,000. The villagers’ cash was doubled by a matched-funding grant from the Social Investment Business (SIB) to buy and refurbish the pub. A supportive Tweet from Stephen Fry prompted a last-minute rush of share-buying, which took the campaign over the finishing line. The SOKA committee is now searching for tenants to run the pub. SOKA said there had also been “positive preliminary discussions” about the pub providing lunches for the village primary school after September 2014, as well as meals for Shouldham Hall care home residents and a café to attract parents on the school run.

Brewery in ‘live brewing collaboration’ with rock band: The Celt Experience brewery in Caerphilly, South Wales will be undertaking a “live brew” of a new collaborative beer with the Welsh rock band Super Furry Animals at a festival next month celebrating developments at the brewery site. The Fire Festival, at the brewery site on the Pontygwindy Industrial Estate, Caerphilly on February 1, will include a performance by the Super Furry Animals, food by the pop-up barbecue operation Hang Fire Smokehouse and beers by Celt Experience and the Tap East brewery in Stratford, East London. Developments at the brewery include a new brewery tap, a bottle shop, a nano-brewery for experimental beers and a “craft bowl” centre, which will open to the public later this year. The show will end with a “fire performance art display” to mark the Celtic festival of Imbolc. Tickets cost £10 and bookable transport is being laid on from Cardiff.

Food and drink supplier to pubs and restaurants bought out of administration: Sohal Foods, which supplies more than a thousand restaurants, pubs, bars and fast-food outlets in the East Midlands, has been bought out of administration, saving 30 jobs. The business and assets of Sohal Foods, which is based in Derby, were acquired by the retail chain Hyperama from the administrator, Dean Nelson, of the accountancy firm Smith Cooper. A number of potential buyers had expressed an interest in buying the company, with two submitting formal offers. Nelson said: “This is a fantastic outcome, not only for the entire workforce who have kept their jobs but also for Derby as a whole.” Hyperama runs three cash and carries in the Midlands.

Traditional chip shop opens on Curry Mile: The stretch of Wilmslow Road in Rusholme, Manchester known as Curry Mile, because of the 70 or so South Asian restaurants that line the street, now has its first traditional fish and chip restaurant for many years. Uncle B’s, opened by Irfan Malik, 36, his brother Iman, 38, and “chief fryer” Chris Farnell, 45, sells haddock, chips and mushy peas, fish cakes, scallops, pies and pasties, and is thought to be the first old-style fish and chip shop on the Curry Mile for around ten years. Irfan Malik said: ”Since we opened I have had a huge range of different people come up to me and say, thank god you’ve finally opened a chippy. The one thing that people said the Curry Mile lacked was a good old-fashioned British chippy. I’ve always been a massive fan of fish and chips. We would have it every Friday night when I was a kid as a treat, so it’s something of a dream to run a fish and chip shop.”

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