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Tue 24th Jun 2014 - Propel Tuesday News Briefing

Story of the Day:

Deutsche Bank – new Greene King 2020 strategy goals should extend outperformance: Deutsche Bank leisure analyst Geof Collyer has argued that Greene King’s new expansion strategy, unveiled to analysts last month, should extend the company’s outperformance versus peers as it maintains its sector consolidator position. Greene King, under Project 2020, plans to improve exposure to day-time trading and reduce exposure to alcohol sales and evening weekend trading through investment, strategic alliances and/or mergers and acquisitions activity. Collyer said that there are 50 private companies in the UK with sales between £20m and £600m and more than 80 where sales are below £20m. “This implies that there is plenty of scope for Greene King to maintain its consolidator role in the sector as well as repeating the exercise it performed with Cloverleaf, Realpubs and Loch Fyne, providing scope (for) brands to grow to the next level. The ability to fund all of its growth from internally generated cash flows is presumably why the board is confident of establishing such long-term growth targets – something we have only seen in the sector from Whitbread. This financial robustness is important in a period of rising interest rates, though we see Greene King’s product suite of ‘affordable treats’ playing well to a still value-conscious consumer. Despite the modest dilution (from the recent sale of tenanted pubs), we remain Buyers, with 21% upside to our new price target of 1,005p. The strategy update on 1 May extended the group’s growth targets out from 2015 to 2020 (and) these should maintain circa +4% to +5% space growth for (managed) whilst taking the size of the tenanted and leased estate down by a further -15% beyond the new level post the recent disposal. This will reduce the tenanted and leased estate by circa -55% versus 2010, whilst driving managed profits up by +165% (in) 2020 versus 2010. This should take “controllable profits” (managed and brewing) to circa 88% of pre-overhead EBITA by 2020 compared to 67% in 2010.”

Industry News:

Coffee shop waste could be used to fuel cars: Waste from Britain's coffee shops could be used to fuel cars, research from scientists at the University of Bath claims. Costa Coffee, Starbucks and Caffe Nero could be the next big petrol providers to rival BP and Shell if the process can be scaled up. A coffee shop generates an average of 22lbs (10kg) of leftovers each day, enough to be converted into two litres of biofuel. This would make it a relatively minor operation but coffee chains could use it to power their delivery vehicles. The same delivery vehicles could be used to collect spent coffee grinds and take them to a central biodiesel production facility to be processed. Companies such as the London-based firm Bio-bean already produce biodiesel and biomass pellets from waste coffee grounds.
Irish pubs see biggest monthly sales bounce since 2006: Irish pubs in April saw the biggest annual increase in sales since 2006 as drinkers began to emerge from five years of austerity after the near-collapse of the country’s banking system forced Ireland to seek an international bailout. Across Ireland, bar sales rose 1.4% in April from a year earlier. John Younge, a Dublin-based pub auctioneer who expects to sell ten bars in Ireland this year, twice as many as in 2013, said: “Given that the economy has been dormant for the last number of years, there’s some light at the end of the tunnel. Maybe people are more optimistic than they used to be.” Ireland’s rampant economy caused the average price of a Dublin bar to more than double to €5.9m (£4.7m) in the five years to 2007, according to Morrissey’s, an auctioneering firm based in the city.
Global fast food market to grow by 4.1% a year: A new market report published by Transparency Market Research, "Fast Food Market – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2013- 2019", predicts that the global fast food market was worth $477.1bn in 2013 and is expected to reach $617.6bn in 2019, growing at a CAGR of 4.4% from 2013 to 2019. North America was the largest market for fast food in 2012, thanks to a preference for food on-the-go and demand for quick and convenient food in day-to-day life, the report said. Emerging countries such as India, China and Brazil are some of the fastest-growing markets for fast food and are expected to experience double-digit growth over the next five years. The top emerging markets in terms of growth rate are Brazil, China, India, Russia, France, Saudi Arabia, South Africa and Vietnam.
Gordon Ramsay ends his Kitchen Nightmares: Chef/restaurateur Gordon Ramsay has decided to stop making his Kitchen Nightmares TV shows. He said: “I'm currently filming four new episodes, Costa Del Nightmares, for Channel 4 which will be my last. I've had a phenomenal ten years making 123 episodes, 12 seasons, shot across two continents, watched by tens of millions of people and sold to over 150 countries. It’s been a blast but it's time to call it a day. In 2007, we took the show to America on Fox and they've just finished airing Series Seven this summer. It's sad to say goodbye to Kitchen Nightmares but I'll be continuing with my other shows.”
Businessman promises to keep Primrose Hill pub open: A businessman behind plans to redevelop a pub in Primrose Hill, North London has promised he will “look after the community” by ensuring the pub remains open and improves in the future. The promise comes after an application to Camden Council from Springcroft Constructions, which recently bought the freehold of the building, to build three flats above the pub. But the businessman behind the application, who did not wish to be named, told the Ham & High newspaper: “I’m not coming as a robust property shark. I’m trying to look after the community, to better what they have because it’s not working at the moment. If we want to keep the pub open, we have to do something about it. It is not viable as it is. We own pubs – we are not developers. We sell beer and we make a lot of money from it.” The businessman, who belongs to a group which owns numerous pubs across North London and is believed to be linked to the acquisition of the Old White Bear pub in Hampstead, plans to build three flats above the pub to boost income from private tenants.

Company News:

PBR Leisure creditors could lose more than £7m: Creditors of the north east of England bar group PBR Leisure, which saw administrators called in last November after it hit cash-flow problems, could lose more than £7m. The administrators, Peter Saville, Nick Cropper and Anne O'Keefe, partners at Zolfo Cooper, have sold a number of venues to raise cash to repay creditors, including the Waterside Hotel on the Quayside in Newcastle upon Tyne and the Boathouse in Durham to the Yorkshire brewer Theakston's for a combined total of £1.9m, and the Lodge and the Riverside in Newcastle, bought by Sixty Six Estates for a combined total of £2.2m. However, according to Insider Media, despite the money raised from the sales, unsecured creditors of PBR could potentially still not see £3.2m of the money owed to them after its failure. A secured creditor, the Royal Bank of Scotland, acts as security trustee for the senior lenders, consisting of RBS, West Register Investments, MB Group (UK) and AIB Joint Ventures. The consortium was owed £8m at the time PBR collapsed. Administrators said about half of that sum would be repaid, with £3.5m already having been distributed.
McDonald’s – the UK must stay in Europe:
The president of McDonald’s UK and North West Europe, Jill McDonald, has warned British jobs would be at risk if the UK pulled out of the EU. McDonald told The Daily Mail: "There are distinct benefits from being part of the EU. I would be concerned there would be an impact on British jobs directly as a result of pulling out of the EU.” On moves to curb obesity, McDonald told the newspaper: “It’s superficial to blame one company or element of people. At McDonald’s, customers on average eat a meal two to three times a month.”
YO! Sushi US franchisee lines up Florida opening:
YO! Sushi’s new United States franchisee, One.23 Entertainment Group, is lining up an opening inside the Mall at University Town Centre, Bradenton in Florida in October. The operator has filed for a building permit application with Sarasota County for a space inside the two-level, 880,000 sq ft mall. YO! Sushi has signed a deal with One.23 Entertainment that will see 50 sites open in the US over the next six years, mostly focused on the Eastern seaboard. The franchisee will open the first site at the Westfield Garden State Plaza in Paramus, New Jersey, one of the US’s top ten shopping malls. Coby DeVary, chief executive of One.23, said last month: “We were blown away with the food, concept and the fun dining experience this iconic brand provides. The flexibility of the footprint and the growing demand for quality sushi in the US is what led us to YO! Sushi. The timing is perfect.”
Chilango mini-bond hits £674,000: The mini-bond issued by the Mexican burrito brand Chilango through the crowd-funding website Crowdcube has now attracted £674,500 in investment, meaning it is 67% funded. The seven-strong chain is looking to raise money to allow faster expansion in London.
Palmers unveils final plans for Three Cups in Lyme Regis:
Dorset brewer Palmers has revealed its final proposals for the £5m redevelopment of the historic Three Cups Hotel in Lyme Regis, which has been closed since 1990. Among the hotel's many famous guests were JRR Tolkien, Jane Austen, GK Chesterton, Tennyson and Longfellow, and it featured in the film The French Lieutenant’s Woman, starring Jeremy Irons and Meryl Streep. Last year, as part of a public consultation on the future of the site, Palmer's revealed it was looking to conserve and renovate the building's Georgian frontage on Broad Street, create a "landmark" new restaurant with 12 letting rooms in the old car park at the back of the site with a ground floor shop space at the front, and build nine residential apartments to fund some of the cost of the scheme. Nigel Jones, of the estate agent Chesters Commercial, said: "Our architects are hard at work finalising the plans with the intention to submit the full planning application by 1 August. The final plans take full account of the views of people living next to the site, as well as feedback from last year's public consultation and comments from the town council." If planning permission is granted, work could start on the site in the autumn of 2015. The building phase is likely to take 18 months, meaning the scheme would be ready to open for the spring of 2017.
Patisserie Valerie asks landlords to change rent payments to monthly: Patisserie Valerie has been pushing landlords to change its rent payment frequency to monthly rather than quarterly, according to the Daily Express. The AIM-listed business pays “quarterly rent on the bulk of its 138 stores and landlords have faced down the firm’s management about late payments over the past year,” the newspaper reported. The newspaper said: “For its part, Patisserie Valerie, which declined to comment, has requested that rent on all stores be paid monthly. There is no suggestion the firm is unable to pay its rent. One source said moving from quarterly to monthly rent will help cash flow as it would mean no longer having to pay three months in advance. However, it is thought that the firm will have to wait until leases expire in order to renegotiate rental terms."
Citigroup raises Mitchells & Butlers price target: Analysts at Citigroup have increased their target price on shares of Mitchells & Butlers from 500p to 520p in a research report issued to clients and investors. The firm currently has a “Buy” rating on the stock. Citigroup’s price objective indicates a potential upside of 34.58% from the stock’s previous close.
Moo Bar cask concept to expand into Carlisle: The Moor Bar Cumbrian cask ale concept is to expand into Carlisle after the city council granted planning permission to transform a disused bank at 5 Devonshire Street, in the city centre, into a new bar. The building, the former HFC Bank, next to Le Gall, will be converted by Penrith businessman Nigel Tarn, who operates Moo Bar on King Street in Penrith, which opened in 2012. It is based in a former cattle house, hence the name Moo Bar. The bar showcases draught real ales from Cumbrian micro-breweries, with six on hand pump at any one time, alongside more than 100 bottled beers from all over the world. Tarn said: “The bar will be a cask ale haven for the city.” Every brewery in Cumbria will have its beer served at the venue.
Mitchells & Butlers' Crown Carveries brand offers armed forces free meal: Mitchells & Butlers' budget carvery brand, Crown Carveries, is marking Armed Forces Day on Saturday 28 June by offered active or retired servicemen a free meal. A current services ID card or veteran’s lapel badge is required, along with a voucher to claim the meal.
PizzaExpress wins constructive dismissal case: A mother who claimed constructive unfair dismissal against PizzaExpress after she became pregnant has lost her tribunal fight with her former employer. Jennifer Sammut, a former pizza chef at the High Street branch in Lincoln, alleged bosses had no intention of letting her return to work after the birth of her daughter and that a permanent replacement had been hired. But the employment tribunal has now ruled against her, saying she misread the situation and has been mistaken in some of her evidence. The judge also ruled that PizzaExpress had not breached flexible working legislation in its rostering system, which Sammut had felt was unfair.
Handmade Burger Co lines up 20th opening: Handmade Burger Co will open its 20th site at The Courthouse, Deansgate, Manchester on Friday (27 June). The first Handmade Burger Co was opened in Birmingham in 2006. A spokesman said: “We are a family-owned and run restaurant chain and are committed to sourcing the best quality produce from the best British farmers, with owner Chris Sargeant regularly visiting farmers and suppliers to ensure that the company stands by its fresh food philosophy. Sargeant said: “I am delighted to be opening our 20th restaurant, and our first in Manchester. I can’t wait to find out what the people of Manchester think of our new restaurant. Our teams pride themselves on delivering quality food, great service and hospitality.”
New Italian concept to launch in the City: A new single-dish Italian restaurant concept La Tagliata is to open in Sandy's Row in the City of London next month. The concept, from Andrew Davies, Lorenzo Boldi and Carlo Palumbo, will specialise in its namesake, selling tagliata, thinly sliced steak with Parmesan, cherry tomatoes and rocket, served with rosemary roasted potatoes or patate del pastore (slowly cooked potatoes in garlic and stock). Vegetarians will be catered for with a dish of baked Scamorza – an Italian cheese similar to mozzarella. The 1,088 sq ft venue, with an interior designed to imitate the rooms of an Italian villa, will consist of multiple dining spaces named the pantry, library, dining room, cellar, drawing room, study and music room, each accommodating between eight to ten diners, with the option of private dining in all seven spaces. Palumbo said: “This is a very exciting time for us. La Tagliata is a unique concept of which we’re very proud.”
Starbucks to raise US prices today: Starbucks will raise prices on some drinks offered by its sites in the United States today and also boost list prices on its own brand of packaged coffee sold in supermarkets and other retail outlets. The action comes after JM Smucker Co raised the list prices of its Folgers and Dunkin' Donuts brands, for the first time since 2011 because of soaring green coffee costs. Dunkin' Brand Group also has said it expects "modest increases in coffee prices" at its Dunkin' Donuts restaurants. Starbucks 7,100 company-owned US stores will raise the price of some drinks by five to 20 cents on 24 June. For example, the cost of grande (16oz) and venti (20oz) brewed coffee will increase 10 to 15 cents in most markets. The coffee chain said the drink price increases were "limited", saying they would affect fewer than 20% of customers.
Adam Hyman – Fox and Anchor owners open third pub: Industry consultant Adam Hyman has reported that the owners of The Fox & Anchor in Smithfield, central London and The Bull & the Hide in Bishopsgate in the City have opened their third pub. Hush Heath Winery and the Cunning Plan Pub Company recently soft-launched St Bart’s Brewery on West Smithfield, Farringdon, central London. The official opening is on 1 July.
St Austell Brewery bans e-cigarettes: Cornish brewer and retailer St Austell Brewery has banned e-cigarettes in its premises. Managing director James Staughton said the ban will cover all 25 pubs that the brewery manages, and will take effect immediately. He said he had imposed the ban because of uncertainty over whether the use of e-cigarettes can be harmful to people's health. The news comes after a report published by Social Change UK which highlights that youngsters are starting to use e-cigarettes as an alternative to smoking. The group claims they are now available in more than 300 different flavours, including gummy bear and Red Bull.
Enterprise Inns wins consent to restore historic Wootton Bassett soldiers’ pub: Enterprise inns has won planning permission to restore an historic pub in Wootton Bassett, Wiltshire, which was frequented by the bereaved families of repatriated soldiers. The roof of the town’s oldest pub, the Cross Keys in the High Street, has been shrouded in scaffolding and tarpaulin since it was gutted by fire in July last year. An application to restore the building, which dates back to 1742, has now been approved by Wiltshire Council, although with strict conditions to ensure the heritage of the building is maintained.
Inventive Bar Company invests £500,000 in Clapham: Inventive Bar Company is investing £500,000 in Clapham, South West London as part of its £10m Evolution programme. Both its Clapham High Street and Clapham Junction bars have been refurbished. Customers can now expect to be greeted on arrival and directed to a seating area, while the venues also now offer full table service. Inventive's chief executive, Mark McQuater, said: “We’re well on schedule to delivering on our planned investment in our Evolution programme across the Revolution brand. It is our intention to create one of the most premium service environments in the UK bar industry. Revolution is a unique all-round brand that can deliver an exceptional experience for its customers, from a strong lunchtime food offering all the way through to excellent quality evening trade in sufficient volume. The brand is positioned to be around cocktails, music and food – being able to blend all three is at the heart of the success of the Revolution brand and Inventive Bar Company business.”
Darden launches revival plan for Olive Garden: Darden Restaurants has launched a brand renaissance programme to halt sliding sales at its key 837-strong Olive Garden brand. Olive Garden's like-for-like slipped 3.5% in the most recent quarter. The makeover, completed in one unit in Fort Walton Beach, Florida, features refreshed colours, a new menu strategy, and more seats. Darden is also planning new technology for the brand, such as online ordering and a test of tabletop tablets. Eugene Lee , Darden's president and chief operating officer, said: "Olive Garden provides a strong foundation for the overall Darden business. It's a premier brand in casual dining, with average restaurant volumes of $4.4m and industry-leading returns."
Lease on Lichfield Brasserie offered: Chandlers Grande Brasserie, an award-winning restaurant in Lichfield, Staffordshire is being marketed for sale by the specialist property adviser Christie + Co as the owner seeks retirement. It is offered at £250,000 on the remainder of a ten-year lease that started in October 2013 with a rent of £23,000 a year. Paul Reilly, of Christie + Co's Birmingham office, said: “Chandlers Grande is a fine brassiere serving great quality, locally sourced food and is now being placed on the market due to the current owner’s impending retirement. Its reputation, demonstrated by its numerous awards, should ensure significant buyer interest.”
Brazilian concept lines up fourth opening: The Brazilian-themed brand Viva Brazil Churrascaria will opening its fourth UK site next month, opening in a building in Golden Square, Aberdeen that currently houses Tropeiro, which announced its closure last week. The brand, which has restaurants in Glasgow, Liverpool and Cardiff, specialises in meats. Staff will move from table to table offering different cuts of beef, lamb, pork, chicken and sausages.
Liverpool One centre reports cafes' and restaurants' sales up 23%:
The restaurants and cafes in the Liverpool One shopping centre saw an increase in sales of 23% year-on-year in 2013, and are 12% up for the year to date, landlord Grosvenor has reported. Meanwhile, Caffe Nero is to open a 3,097 sq ft cafe on Lord Street in Liverpool, a sister site to the existing Caffe Nero on Peter’s Lane. The new Caffe Nero will also open this summer. Miles Dunnett, head of asset management for the Grosvenor Liverpool Fund, said: “Caffe Nero has been successful in Liverpool One since it first opening five years ago. This has driven their decision to acquire a second cafe, and we have worked closely with the brand to deliver the ideal sister location to their well-established cafe on Peter’s Lane. Caffe Nero is a great addition and joins Ed’s Easy Diner in reaffirming Lord Street as a key element of Liverpool One, with its own complementary catering offer for visitors.” Other recent additions include Home, an independent cafe, Hotel Chocolat, with its first Cocoa Cafe-Bar in the north west of England, TGI Friday’s and Bill’s.
Moles Brewery adopts new logo and launches six new craft ales: Moles Brewery, based in Melksham, Wiltshire, has unveiled a new range of six craft beers and a new company logo. Each of the six ales will be available for a rotating two-month period. The first craft beer, Jailers Daughter, will be available from 1 July to the end of August. Roger Catte, managing director of Moles Brewery, said: “We have created a new range of beers to compliment the market demand for more powerful taste infusions, at the same time taking the opportunity to re-appraise our seasonal range of beers and refresh our branding. Jailers Daughter is the first of our new craft ales to be available and we wanted to bring something that was refreshing and would appeal to traditional ale drinkers as well as those trying craft beer for the first time." Of the new branding, Catte said: “As the business has grown substantially in the last five years, so it was appropriate to review the original Moles branding from when the business was launched in 1981. We wanted to demonstrate to those licensees and customers, who may not have come across our products, that we have been brewing award-winning ales for many years and distribute throughout the UK.”
Second 'free meal in exchange for a photo' restaurant opens in Manchester: A second "pop-up" Picture House restaurant, where customers get a free meal as long as they post a picture of their food on Instagram or social networks sites with the hashtag #BirdsEyeInspirations, opens in the Pioneer Suite on Canal Street, Manchester on Thursday, June 26. The one-day-only restaurant has been organised by the frozen food group Birds Eye. The first opened at the Ice Tank in Soho, London in May as part of a digital campaign by Birds Eye to promote its new range of premium evening meals. Birds Eye claims research shows 11% of Mancunians cannot go a day without snapping a picture of one of their meals, while around a quarter of Manchester residents purposely arrange food on their plate just to make it look pretty for an online post, and around 15% see taking pictures of food as an expression of creativity.
Former Stonegate executive joins Davy's: The London wine bar and restaurant operator Davy’s has hired Darren Rumbelow as its business development manager. Rumbelow’s responsibilities extend to the operational delivery of the capital investment programme. James Davy, the chain's fifth-generation chairman and chief executive, said: "This appointment is in line with our five-year plan ambitions, and we consider ourselves fortunate to welcome such a high-calibre addition to the team.” Rumbelow, who has worked for Revolution operator New Inventive Bar Company, Bramwell Pub Company and most recently Stonegate Pub Company, said: “In the past few years the City of London has raised its expectations on service. Joining Davy’s gives me the opportunity to take their existing high level of customer service to the next level through the investment programme. I look forward to working with the team on this exciting new project and implementing the next chapter in Davy’s history”.
Papa John’s founder – I am the American dream: Papa John’s founder John Schnatter has argued that the success of the company he founded makes him the personification of the "American dream". In 1984, John Schnatter bought used restaurant equipment worth $1,600, set it up in a broom closet in the back of his father’s tavern and started making pizza. His business would eventually become Papa John's, now a publicly-traded international pizza franchise that brought in $1.4bn in sales last year. Schnatter got the idea for Papa John's aged 15, while washing dishes at a pizza place called Rocky's in his hometown of Jeffersonville, Indiana. “The original goal for Papa John’s was to make $50,000 a year and have $50,000 in the bank so I could get a date,” he said. When he opened a real location, outside the broom closet, the site was doing about $9,000 in sales a week while comparable national chains were doing $6,000 in sales a week. “And I went, ‘If we can beat them in one store, we can beat them in the whole world.’ I thought that at 22,” Schnatter said.
South Tyneside gets first 'pop-up' restaurant: The first "pop-up" restaurant in South Tyneside is opening in a cafe in South Shields. The Mac ’n’ Alli cafe, in Sea Winnings Way, Westoe Crown Village, has been given approval to stage an over 16s-only “secret supper club” on the last Friday and Saturday of the month, from 7.30pm to 10.30pm. Cafe owner Dee Clayton sad the supper club would offer a “high-class, discreet dining experience which will bring back the art of conversation. It really is something very different for South Tyneside – a first of its kind. It’s all about real artisan food and communal dining and places are limited to 22 on each night. Everyone will have pre-booked in and there will be no tables outside. We will be providing information via e-mail and menus will be sent out in advance. We’ve already had lots of interest.” The first event is on Friday, 29 August.
New burger brand to open in Torquay: A new "better burger" brand, The Shack, is to open in the former Hooks restaurant site in Torwood Street, Torquay. The premises, originally the showroom of the catering equipment firm Allsop and Pitts, closed over three years ago. It will be operated by Christopher Cload, former head chef of Amici Torquay, and his partner Natalia Bilkiewicz, who was the front of house bistro manager at the Elephant in Torquay. Cload said the Shack is going to be "a restaurant with a difference, serving burgers and chicken with a twist, using locally sourced produce to create handmade gourmet burgers at an affordable price". The Shack is due to open this month.
Marston’s – premium bottled ale category to be worth £1bn by 2020: A dramatic rise in demand for premium bottled beers will see sales increase to a value of £1bn by 2020, according to Marston’s in its annual Premium Bottled Ales (PBA) report. The company said sales in the premium sector are increasing by 7% year-on-year. The increase in sales has outstripped its predictions of a year ago. The PBA sector has attracted half a million new customers over the past year. Marston’s says the main driver of sales in the sector has been Hobgoblin, which grew by 20% over the past 12 months.

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