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Fri 31st Jan 2014 - Propel Friday News Briefing |
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Story of the Day:Geof Collyer – progress at M&B but Herculean effort required to turn around bottom quartile: Deutsche Bank leisure analyst Geof Collyer has hailed progress at Mitchells & Butlers but argued that a “Herculean effort" is required to turn around the bottom quartile of the estate. Collyer said: “There has been progress in all of the brands in Q1. However, we still believe that whilst trading in 75% of the estate has been up there with the rest of the sector, and the group will have also been doing well in London, the problem for M&B is whether the group can turn around the bottom quartile of underperforming pubs. Sorting this out is the main upside potential in the short term, though this is also the most price sensitive part of the estate, as M&B discovered last year when food volumes fell for some brands by circa 20%.” Meanwhile, Numis Securities' leisure analyst Douglas Jack has issued an “Add” recommendation, with a target price of 525p on Mitchells & Butlers' shares after yesterday’s trading update. Jack said: “Like-for-like sales rose 2.0% over the first 17 weeks, having risen an estimated 3.7% over the last nine weeks. This was largely due to an improved sector backdrop during Christmas and snow-related comps in January. It is still too soon to claim that some of the like-for-like growth is due to gaining traction from self-help initiatives. We are holding our 2014E forecasts (£194m PBT; consensus £192m), which assume no margin growth. Over the medium term, we believe there is good scope for the shares to recover through LFL sales picking up, expansion accelerating, dividends resuming (this autumn) and the £0.6bn pension deficit falling.”
Industry News:Burning Night’s Alex Hazzard to present at first Propel Multi Club Conference of 2014: Alex Hazzard, managing director of Burning Night Group, operator of six-figure turnover sites in Leeds, Manchester and Liverpool, will present on retailing within multi-concept bar complexes and control of the business at the first Propel Multi Club Conference of 2014. Burning Night operates three brands, Shooters Sports Bar, Bavarian Bierkeller and Around the World in 80 Beers. Ebitda for the three units in the financial year to 31 July 2014 is forecast to be £2.55m. The event will be held on Thursday 13 March at the Lancaster Gate Hotel, Central London. Multi-site pub, restaurant and foodservice companies can claim up to two free places each. E-mail jo.charity@propelinfo.com to reserve places.
Michel Roux Jr unveils plan for underground farm: Chef Michel Roux Jr is backing a plan to create a subterranean farm in three former air raid shelters 100 feet below the London Underground. The farm is based 100 feet beneath the Northern line and its produce of herbs, shoots and mini-vegetables has already been described as “delicious” by Roux . For the past 18 months, entrepreneurs Richard Ballard and Steven Dring have been creating a working farm in a 2.5-acre tunnel network near Clapham North Tube station. Using special low-energy LED bulbs and an integrated hydroponics system, the farm will be carbon-neutral and, thanks to its proximity to New Covent Garden market and London’s many restaurants, food miles will be kept to a minimum.
Islington Council loses appeal to save pub: A London council has failed in a legal challenge against a planning inspector's decision to allow the demolition of a pub which it claims was made contrary to local planning policy. Islington Council had argued that a planning inspector was wrong to approve plans for demolition of the Good Intent pub in Islington and its replacement with six three-storey town houses. The council argued that the inspector’s decision went against its local policy protecting pubs from redevelopment. That policy requires a pub to stand vacant for two years, and have no realistic prospect of being reopened, before redevelopment can be permitted. However, at the High Court last week, one of the country’s top judges, Mr Justice Cranston dismissed the challenge and ordered the council to pay the government’s legal costs of £5,700. He said that the inspector made a clear finding of fact that the Good Intent was not of particular value to the local community and, by contrast, concluded that the proposed town houses “would represent a respectful addition to the street scene”.
Tougher drink guidelines for sports sponsors: Alcohol companies could lose sponsorship deals for sports events if they fail to promote responsible drinking under new rules coming into force today. New Portman Group guidelines mean all future sponsorship contracts must contain legally binding pledges to combat binge drinking and advertising must contain messages promoting moderate drinking. Careers perception survey launched: A pub and bar careers survey has been launched to gain an understanding of young people’s views about their careers and further opportunities in the pub and bar sector. The short survey is targeted at employees aged between 18 and 24 and young general managers under the age of 30. Managers and staff are asked to complete their own respective surveys, both of which can be found on the Pub & Bar Careers blog at www.pubandbarcareers.com. Alternatively, managers can access the tailored survey directly on www.kwiksurveys.com and all staff, excluding managers, can access the survey, also on www.kwiksurveys.com. Company News:Fuller’s bring forward key pub refurbishments: The London brewer and pub operator Fuller Smith & Turner has brought forward refurbishment projects at a couple of key London pubs. The Red Lion in Westminster is closed for a major refurbishment and will re-open on 14 February. The Prince Blucher in Twickenham is also undergoing an early refurbishment. Fuller’s chief executive, Simon Emeny, told Propel: “We don’t like having pubs closed, but it’s the best move for the long term, and we’ve had some big successes with the project we’ve recently carried out.” Commenting on yesterday’s trading update, Emeny said the company had established trading momentum in the summer, aided by good weather, which had continued through autumn and winter. He said: “London is also benefiting from the halo effect of the very successful Olympics.” Emeny reported that Fuller's planned coffee shop in Ealing, West London had now slipped from a previously proposed Easter opening as the company focused on rolling out its Brewer Street coffee brand across the estate. Fuller’s has not been immune from the effects of recent wet weather, with ten pubs closed on one particularly soggy day, although only three of these were closed for longer. One site, the Mill in Elstead, Surrey, will not re-open until April after particularly bad flood damage.
Real Greek reports improved operating profit: The six-strong Real Greek Food Company, led by David Page, has reported turnover of £7.76m in the year to 30 June 2013, down 12% from £8.82m the year before. The company closed one restaurant during the year. Real Greek Food achieved an operating profit before restaurant opening costs, onerous leases, exceptional operating costs and impairment of fixed tangible assets of £513,000, up from £495,000 in 2012. Profit before tax was £485,000, up from £259,000 the year before. Greene King partners Kerridge to extend Hand & Flowers: Greene King Pub Partners' tenanted division and Tom Kerridge have made a joint capital investment at the Hand & Flowers in Marlow, Bucks to create a new bar and lounge area at Britain’s only two Michelin-starred pub. The restaurant is now fully booked for dinner on Friday and Saturday evenings until January 2015. Kerridge, who was named the AA Chef’s Chef of the Year in 2013, said: “The success of the Hand & Flowers is incredibly exciting. With people now potentially facing a long wait to dine with us, we want to make sure that their visit is both special and memorable for all the right reasons, and this extension will better enable us to do that. We are grateful for the support of Greene King, which has allowed us to bring our vision for the pub into full fruition.” Simon Longbottom, managing director for Greene King Pub Partners, said: “The Hand & Flowers is a huge asset to our tenanted pub estate and we were only too happy to join forces with Tom to take this much-revered gastro pub to even greater heights, with an ambience that truly aligns with the multi-award winning menu. Tom and his team work hard to maintain a family feel and create a great team spirit at the Hand & Flowers and we hope that guests can further enjoy these aspects before and after their meal now that the extension is complete.”
Malones Irish Bars adds third Scottish site: Malones Irish bars, which operates sites in Aberdeen and Edinburgh, is to open a new site in Glasgow. It is due to open in the former site of the Universal Bar in Sauchiehall Lane this Saturday to tie in with the start of the Six Nations rugby tournament. It will specialise in sport and live music and has been given " traditional Irish decor". The first Malones opened in Aberdeen, followed by a second in 2010 in Edinburgh, which now also houses a hostel upstairs. The owners believe the key to their success during the difficult economic climate has been their “authenticity, uniqueness and warm Irish charm”. Caffe Nero HR director hits back at coffee shop jobs slur: Caffe Nero's human resources director, Paul Kennedy has hit back at the suggestion that young people have to curb their aspirations to work as baristas, after the UK's employment minister, Esther McVey, said youngsters should be prepared to drop their unrealistic job expectations and work in coffee shops. Kennedy said that his firm gives employees the "opportunity to realise their goals and dreams" and that young people's aspirations could be boosted by working at Caffe Nero. Kennedy said: "We are creating 450 to 600 jobs a year – we're always on the look-out for great talent to come into our company. I'm not sure young people should lower their aspirations at all. They should see a company like Nero giving them an opportunity to achieve and raise their aspirations. We are building an army of mini-entrepreneurs in their own right. For instance, employees in their late 20s and early 30s could run a store, which could run on a turnover of £500,000 or £750,000 – the workers are in charge of that responsibility." BrewDog to open Dog Tap at brewery: The Scottish brewer and retailer BrewDog plans to open a brewery tap, the Dog Tap, at its brewery headquarters in Ellon, Aberdeenshire in time for its annual general meeting in May. Co-founder James Watt said: “The Dog Tap promises to be one of our most exciting projects to date. The Dog Tap is our new visitor centre, tap room, shop and pilot brewing facility. We will have a 10hl brewing system for recipe development and interactive brewing. In addition we will have a shop selling BrewDog beer and guest bottles, offering growler fills and showcasing our merchandise. We will also have a tap room with ten beers on tap serving the freshest BrewDog beer anywhere in the world.” The company is also quadrupling the size of its offices. The new offices will be over two floors and include a team library, some vintage pinball machines, a few random dogs, an industrial spiral staircase and some networking booths, Watt said, "oh, and we will have some desks, computers and phones too." BrewDog is planning to move into its new offices in March.
InnBrighton plays the Joker in Islington: Joseph Grimaldi, early nineteenth century Islington resident and the creator of the modern day clown, provides the inspiration for a new InnBrighton pub opening this week, The Joker of Penton Street, at the junction of Chapel Market and Penton Street, Islington. Comedy will feature in the first floor function room and the food is provided by the aptly-named “Tongue ‘n Cheek” street food specialists, who produce a Heartbreak burger, made from 50% ox heart and 50% dry, 40-day aged beef. Cask ale comes from the Laine’s Brewery located in Hackney at sister pub The People’s Park Tavern. InnBrighton chief executive Gavin George said: “The Joker of Penton Street will put a contemporary spin on the satire that Grimaldi introduced to the stage at nearby Saddlers Wells by defying hipster bar fashion and taking itself far less seriously than its location suggests it should, and by celebrating those skilful raconteurs whom, throughout history, have raised a laugh at the expense of the conventions of the day.”
Star Pubs & Bars to invest £938,000 in six Lancashire pub refurbishments: Star Pubs & Bars is to invest £938,000 in six pub refurbishment schemes in Lancashire with a further £274,000 of additional funding being invested on fixtures and fittings by the lessees running the pubs. The investment follows a £1m spent by Star Pubs & Bars on upgrading Lancashire pubs in 2013. The six projects earmarked for investment include: The Station Inn in Lytham, The Anchor Inn in Salterforth, The White Bull at Gisburn, The Plough at Grimsargh, The Hyndburn Bridge near Accrington and The Stanhill at Oswaldtwistle.
Gordon Ramsay’s Fat Cow to close, says report: Gordon Ramsay’s Los Angeles restaurant The Fat Cow is to close at the end of March, according to a media report in the United States. Eater LA, a Los Angeles-based restaurant news website, quoted an anonymous employee as saying that the closure is not due to lack of business but because another restaurant bearing the same name, Las Vacas Gordas (“The Fat Cows”) in Miami, “is threatening Gordan’s place to change its name … or close.” The restaurant has had a number of problems since it opened in 2012, including being sued by four former employees last year who alleged they were not properly compensated for overtime hours, and were forced to work through meal times and other breaks, and being sued by contractors over an alleged underpayment of $45,000 for work done.
Horatio Group quits The Fly in Belfast: The Horatio Group has decided to leave the former Botanic Inns pub The Fly in Belfast after it failed to reach an agreement on new lease terms with representatives of the ultimate landlord for the south Belfast nightspot, the Republic’s ‘bad bank’ Nama. It will now be put on the market but Horatio Group managing director Stephen Magorrian said it would have been interested in continuing to operate the bar. He told The Belfast Telegraph: “We wanted to keep The Fly going under our management and were in negotiation before our lease runs out on February 12. We tried renegotiating with them but their terms were too onerous, so we made a commercial decision to walk away.” Horatio Group was established last year by Magorrian shortly before the business he formerly led, Botanic Inns, went into administration.
JD Wetherspoon gets the backing of planners for Alnwick pub: A £1.3 million plan for JD Wetherspoon to open a pub in Alnwick, Northumberland creating around 40 jobs, has been recommended for approval by planning officers. The application, for the town’s derelict Corn Exchange, will go in front of councillors at next Thursday’s north area planning committee meeting. A report which has been prepared for members of the committee by planning officers states: “The Corn Exchange is a significant building which occupies a prominent site within the town centre, but has stood empty and disused for some time. The principle of appropriate renovations, alterations and change of land use to secure the future of the building is accepted and supported.” Travelodge site sold for £2.55m: A Travelodge hotel in Huddersfield has changed hands in a £2.55m deal. The 62-bedroom Travelodge on Leeds Road has been sold by GMI Developments to CRT Property Investments. The hotel was completed in 2011 as the final phase of GMI’s £10m Spindlegate regeneration scheme. It created 13 jobs when it was officially opened in December that year. Travelodge has a 25-year lease on the property and will continue to operate the site. In addition to the Travelodge, the Spindlegate scheme also includes the Yorkshire Rose pub, which was built for brewer and pub operator Marston's in 2010, and a drive-through Costa Coffee, which was bought by CRT Property Investments early last year. Crystal Palace goalkeeper opens restaurant: Crystal Palace FC goalkeeper Julian Speroni has opened a restaurant in Purley, South London. His partner in Speroni, on Russell Hill Road, is a fellow Argentine, Cristian Barrionuevo. The restaurant serves food influenced by Italian, Argentine and Spanish cuisines and is something Speroni has been thinking about for a long time. He said: “My family is Italian and my wife’s family is Spanish, so we wanted to make a fusion of that. I also wanted to make it feel like when I am eating at home. I was looking for a place and this came up. But everything had to be perfect, we wanted to make sure the menu was perfect and that every dish was perfect.” Starbucks' Shultz to focus on digital strategy: Starbucks' chief executive, Howard Schultz, is shaking up the ranks of his senior management in order to focus on the company's digital strategy. Schultz is handing over day-to-day operations to Troy Alstead, who is being promoted to the newly created position of chief operating officer. Scott Maw, senior vice-president of corporate finance, will succeed Alstead as the company's chief financial officer, starting next month. The reshuffle is part of the coffee giant's plans to adapt to "the rapidly evolving retail environment", Schultz said in a statement. "They will partner with me as I focus on Starbucks' mission, growth initiatives, and the convergence and integration of our retail and e-commerce, digital, card and mobile assets around the world," he said. Cote and Bill’s tipped to take Bishop’s Stortford sites: Planning consent has been granted to convert the former Pearsons department store in Bishop’s Stortford, Hertfordshire into two restaurants. Cote has confirmed its interest in moving into the former department store, with planning applications for advertising and listed building permission to install catering equipment and add awnings, hanging signs and an illuminated fascia; it is the proposed use of spotlights that has prompted opposition from planning officers at East Herts Council. Bill’s is tipped to take the second unit. Hyde’s launches Lowry beer range to mark move to Salford Quays: Hyde's Brewery has teamed-up with The Lowry theatre and art gallery complex to launch six cask ales to mark its relocation to Salford Quays in Manchester and pay tribute to the local artist. The first celebration ale from the "Lowry Collection" is a 4.5% brew called Mill, inspired by LS Lowry's 1930 painting "Coming from the Mill". The beer will be available in the majority of Hydes's 60 pubs as well as other pubs and bars across the country until the end of February. Chris Hopkins, managing director of Hyde's brewery, said: "The Hyde's marque has been on the city's landscape since 1863. We are privileged to be able to associate our fine refreshing beers with such a highly revered artist and feel sure this exclusive collection will prove enormously popular." Mark Harris to open Strand Dining Rooms: Entrepreneur Mark Harris will open the Strand Dining Rooms in the redeveloped Grand Buildings in Trafalgar Square, London in May. The all-day dining restaurant will serve a blend of traditional and contemporary British food “against a quintessentially British backdrop”. Those involved hope the 180-cover restaurant will become "a classic all-day dining destination in the heart of the capital". The founder of Harris Restaurant Consultants, Harris has previously held positions at the Capital Hotel, Simon Parker Bowles’ Green’s Restaurant & Oyster Bar, and Searcy’s at the Gherkin. Selsian acted for Skylark Restaurants in securing the premises amid fierce competition for the 4,000 sq ft site. It is occupied on a new 20-year lease off an asking rent of £300,000 a year. Egyptian hotelier invests in Welsh hotel: Dr Shoukry Rozek, who owns four large hotels in Egypt, has acquired a hotel in Wales as the Egyptian tourism economy struggles. Rozek has bought the Brig Y Don Hotel in Llandudno, with 31 en-suite bedrooms, which was on the market through Fleurets with an asking price of £525,000. Lesley Watmough of Fleurets’ regional office in Manchester said: “This is a good opportunity for Dr Shoukry to put his hotel experience gained in Egypt to use in one of the most popular resorts in North Wales.” Rozek said: “I decided to invest in Wales because of the impact of revolution on tourism in Egypt at the moment – the business is down a lot and I’m looking for a more peaceful, stable life. Tourism is a stable and steady market in the UK.” Three restaurants to be created at Bedford leisure site: A £3m redevelopment of one of Bedford’s leisure sites is to begin after permission was given for three additional cinema screens and restaurants. Bedford Council’s planning committee approved plans to overhaul Aspects Leisure Park which include a two-storey extension to the Cineworld building, although seat numbers would remain the same, and the opening of new three new restaurants. The new screens would be located on the site of the old Zapp Zone leisure centre. The work on the new, more "family friendly" facility is set to begin in June and be completed within 12 to 16 months. Former Moleface Pub Company manager takes on own pub: Andy Hunt, a former manager for the award-wining Moleface Pub Company, has taken over his own pub. Hunt, who ran the Wollaton Pub & Kitchen in Wollaton, Nottingham, has acquired the White Horse in Ruddington, south of the city. He will run the pub with his wife Abbie. A full revamp of the bar area and exterior is under way, as well as the fitting of a new commercial kitchen. Hunt said: “We want a village pub where people can come and eat, drink and be merry. Ruddington has no pubs that offer food to the extent that we are going to do.” Pipers Crisps reports 32% sales growth: Pipers Crisps, the award-winning, Lincolnshire-based gourmet snack maker, has reported a 32% increase in turnover as it enters its tenth year in business. As part of its next phase of growth, Pipers is looking to expand its delivery service into Oxfordshire and the surrounding counties. The company is looking for suitable premises for a distribution depot, ideally approximately 1,500 square feet of warehousing with additional office space, located within the Oxford ring road and with easy access to the M40. Pipers will also be recruiting additional sales and delivery staff to add to its existing team. Krispy Kreme to focus on smaller units in the US: Doughnut retailer Krispy Kreme is to focus on smaller units in the United States, where it has about 250 outlets. Meanwhile, the goal is to have 900 international shops by the end of 2017. Krispy Kreme plans to ramp up its expansion in the US behind its smaller shop format. The oldest of the new small stores has been opened about a year, but early results have been strong enough to focus on the model for future growth. Chief executive James Morgan said the smaller model reduces the cost of real estate, equipment and fixtures, and has generated higher-than-expected revenues so far. The company's chief finance officer, Doug Muir, said: "We're very encouraged with initial results. It's still a little early, but there is more than enough evidence to support ongoing construction of smaller factory formats. We're also recommending them to franchisees," adding that 10 to 15 of the smaller units are expected to open in the US in the coming financial year. Morgan said: "Consumers' desire for a special treat, an emotional reward, seems to be at the heart of [our] brand. Guests tell us they're open to eating doughnuts anywhere, any time. They just need us to give them more reasons." Krispy Kreme has honed its marketing strategy to promote special occasions such as holidays and Talk Like a Pirate Day, as well as "everyday occasions", such as birthdays and office parties. Morgan said: "Rather than chasing every food trend, we're focused on giving them a crave-able experience physically and emotionally. This strategy seems to be working." Administrator – Inc Group owed £6m in VAT and PAYE: The administrator of Inc Group, the operator of outlets at the O2 arena and elsewhere in London led by Frank Dowling, has reported a massive under-declaration of VAT and the transfer of leases despite warnings that the company was insolvent. The administrator said that in June 2012, Dowling, as director of Greenwich Inc Trading, sought the advice of an insolvency practitioner, who said the company was insolvent and should be placed in voluntary liquidation. Despite the advice, Greenwich Inc continued to trade for over 12 months and, at the same time, companies were formed in Scotland and the Greenwich Inc businesses transferred into them without any payment being made to Greenwich Inc. After this transfer, a meeting of creditors was called to place Greenwich Inc into liquidation. Dowling failed to attend the meeting, so on 17 October 2013 Greenwich Council presented a winding up petition against the company. Dowling claimed that all HMRC was owed was £148,000 by a separate company, Greenwich Inc Holdings, for PAYE. However, the provisional liquidator of Greenwich Inc Trading found the company owed HMRC £3.92m in VAT and £2.11m in PAYE. The company's books and records meticulously recorded all PAYE deductions and VAT matters, "but it appears no attempt was made to provide this information to HMRC." Dowling and others involved in the running of Greenwich Inc "have been arrested by HMRC,” the administrator said. The administrator reported that each of the company’s sites had been cleared of cash and "no staff had been paid for the work they had done in November, a situation they were not unaccustomed to.” Trading company sites have turned over £870,000 since 29 November, producing a net profit of £187,000. Unsecured creditors are estimated to be owed £15.11m. A meeting of creditors takes place on February 7. Dowling, 44, was born in the United States and moved to the UK in 1997. He bought his first site, Bar du Musee in Greenwich, in 2002, and secured the O2 Arena’s first restaurant tenancy in 2007. The following year he acquired the Elbow Room pool bar chain. At its height, Inc Group ran 24 sites, had a turnover of £20m a year and employed 400 people. In March last year, Inc Group was fined almost £20,000 after health inspectors found mouse droppings in the kitchen and raw sewage in sinks at one of its sites, the Trafalgar Tavern in Greenwich.
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