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Morning Briefing for pub, restaurant and food wervice operators

Fri 1st May 2015 - Update: Zonal, M&B, Whitbread, franchising, Living Ventures
Zonal acquires liveRES: In a strategic bid to ‘create the UK’s most sophisticated and innovative online booking and table management system’, Zonal Retail Data Systems has acquired online bookings company liveRES. Established in 2011 by Living Ventures founders Tim Bacon and Jeremy Roberts, bespoke online booking system liveRES provides solutions for some of the UK’s leading restaurant operators including Living Ventures, Carluccio’s and Spirit Pub Company. Commenting on the strategic partnership, Jeremy Roberts, non-executive chairman of liveRES, said: “Our in-depth knowledge of online bookings, coupled with Zonal’s technology expertise will create a compelling business, helping to build on the highly successful platform that we have created over the last four years.” The partnership will see Zonal Tables Management, TXD Digital Marketing and liveRES reservations evolve into a new business division that will offer restaurant customers a unique service and solution focused on growing their business and engaging with their customers. Zonal’s chief executive Stuart Mclean added: “We’re continually looking at ways to enhance our customer proposition and a strategic alliance with liveRES connects its market leading bookings engine to our market leading Tables Management system, which is already being rolled out to over 1,000 restaurants nationwide. The restaurant operations and marketing expertise brought by the liveRES team is a perfect complement to the Zonal group’s digital marketing and systems experience. We’re looking forward to pooling this talent to further develop our proposition for the restaurant sector.” Zonal Retail Data Systems is the leading provider of integrated hospitality management solutions to over 8,000 leisure and hospitality businesses across the UK. 

Professor Chris Edger and Andy Emmerson publish book on franchising: The UK’s leading academic and thinker on multi-site foodservice management, Professor Chris Edger, has partnered former Domino’s UK and Dunkin Donuts executive Andy Emmerson to publish a major new book on franchising called “Franchising: How both sides can win”. The book, which is Professor Edger’s fifth book in four years, contains a large number of case studies with key insights from the owners and operators of successful franchise systems, including Domino’s Pizza, Costa Coffee, SSP, Spar, TGI Friday’s, Dunkin’ Donuts, SSP, Haagen Dazs, and Burger & Lobster. The book is described as the ‘essential contemporary guide for aspiring franchisees or ambitious franchisors, providing comprehensive advice on how franchisors and franchisees can avoid potential elephant traps, laying out both the key success factors that enable both parties to win’. The 200-page book costs £19.95 and is available from and

Whitbread – we want to add to our 18 Premier Inn sites in ‘lively’ Edinburgh: Whitbread, which has 13 Premier inn sites open in Edinburgh, has stated that it wants to add to its five-strong pipeline of Premier inn and hub by Premier Inn sites in the city, which it described as ‘lively’. The company stated: “Today, we have 13 hotels and a further 1,313 bedrooms (with four in central Edinburgh with 541 rooms) and a robust development pipeline with five prime sites dotted around the city (including three new hub by Premier Inn sites). But we’re looking for more. We want to do more deals like our recent investments including our £17m, 127-bedroom Premier Inn in the former HMRC building on York Place, and our £11.4m, 150-bedroom hub by Premier Inn on Torphichen Street, in the city’s financial centre. We’re also eagerly anticipating the opening of the New Waverley major regeneration project just between Waverley Station and The Royal Mile. In the city’s old town, we’re building a Premier Inn and a hub by Premier Inn side-by-side in the New Waverley scheme as part of the Artisan Developments scheme. We’re actively seeking new sites to complete the expansion strategy, whether freehold or leasehold, developer-led or self-build and for both our Premier Inn and hub by Premier Inn formats.” Whitbread will open its 700th Premier Inn site in June. Recent openings have been in Melton Mowbray (55 bedrooms in a £3.5m investment), Southend on Sea (80 bedrooms in a £7m investment), Brentford (124 bedrooms in a £11m investment) and Clacton (66 bedrooms in a £4m investment.

Living Ventures doubles the size of Manchester’s The Alchemist: Living Ventures has doubled the size of its Alchemist venue in Manchester Spinningfields. The site, which opened in November 2011, now occupies 5,200 square foot with a new dedicated dining area. There are now 116 covers in the restaurant and 140 more on the outdoor terrace. Chief executive Tim Bacon said: “We are delighted that the bigger and brighter Alchemist is set to re-open in Spinningfields. The original and fire-starter for the Spinningfields, we see now, the Alchemist opened in 2011 and was an instant hit if a little on the small size so when the opportunity arose to acquire half of the old All Saints site we jumped at the chance to let the Alchemist grow.” 

Geof Collyer – it’s disappointing that food-centric M&B’s like-for-likes haven’t been stronger: Deutsche Bank leisure analyst Geof Collyer has issued a ‘Buy’ note on Mitchells & Butlers shares ahead of First Half results on 15 May – even though he argued that it is disappointing that the company’s like-for-like sales haven’t been stronger given its food focus as a company. He said: “We forecast total revenues to grow strongly by +11% to £1,129m. Our sales growth forecast is mostly driven by 9.8% higher average trading pubs (addition of 173 sites from Orchid acquisition) and like-for-like sales growth of +1.3% (+0.2% in drinks,.+2.4% in food). We expect Ebita margins to have declined 36bps to 14.1% due to input cost inflation and integration costs. As such, we forecast First Half 2015 Ebita to grow +8.3% to £159m. With almost flat net interest cost and circa £9m of pension charge, we forecast profit before tax to grow +11% to £80m. We assume income tax rate of 21% and forecast EPS to grow 12% to 15.3p. M&B’s like-for-like growth so far (17 weeks in H1’15E) has remained below the industry performance, which is disappointing given that restaurants have been outperforming pubs and M&B is the most food-centric pub estate amongst the pub stocks. M&B’s like-for-like growth rate has declined from +2.4% in first 8 weeks to +1.7% in 17 weeks. Industry data is showing signs of weakness in trading (March’15 like-for-like sales -0.3%) as 12 month rolling like-for-likes growth has declined to +1.8%, breaking the trend of above 2% growth. As such we forecast group lie-for-like growth to have slowed further to +1.3% for the first 28 weeks in FY’15E. However H2’15E is against soft comps. Shares in M&B are up 11% YTD and are currently trading at 12x P/E and 11x EV/Ebita (both on FY’15E) and is below our target FY’15E P/E of 15x. We see continued scope for M&B’s trading to improve, helped by momentum from investment and synergies from Orchid. We forecast FY’15E Earnings Per Share EPS) to grow circa 11%, predominantly driven by Orchid acquisition. However, we expect the group to deliver stronger average EPS growth rate of 12.7% annually over FY’15E- FY’18E on the back of margin and trading improvement which underpins our investment case. With c. 22% upside potential to our target price we continue to recommend ‘Buy’.” 

Costa Coffee unveils new limited edition blend: Whitbread’s Costa Coffee brand has unveiled a new limited edition roast to join its Old Paradise Street range, Old Paradise Street Limited Roast No.7. Launching nationwide today, the new roast will be the third in the Old Paradise Street range and is the first single origin roast, created with 100% Sumatran beans. Named after the street in Lambeth, London where Costa’s Roastery has roasted all of its beans since 1971, the Old Paradise range has become known for its limited edition blends. The Old Paradise Street roast adds an additional option for customers to try alongside Costa’s Mocha Italia Blend. Gennaro Pelliccia, Costa’s Master of Coffee, has been part of the team creating the Old Paradise Street range. He said “We’ve brought a completely different taste to our customers with the Old Paradise Street No 7 roast. We experimented with various beans from allover the world but the Sumatran bean provided us with the unique characteristics and distinctive taste that fit perfectly with the quality we demand from our coffee.” Old Paradise Street No. 7 provides a ‘smooth but intense espresso with underlying blackberry aromas, a clean aftertaste, and light acidity’. The new roast is available nationwide today with Costa sampling the roast at the London Coffee Festival this bank holiday weekend (30th April – 3rd May).

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