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Morning Briefing for pub, restaurant and food wervice operators

Thu 21st May 2015 - Propel Thursday News Briefing

Story of the Day:

ALMR launches Casual Dining Manifesto: The Association of Licensed Multiple Retailers (ALMR) has launched a Casual Dining Manifesto promoting the UK’s varied and innovative casual dining market. The Manifesto highlights the dynamism and diversity of casual dining in the UK and calls upon the government to address issues surrounding property and investment to ensure continued growth in the sector. ALMR chief executive Kate Nicholls said: “The UK’s licensed hospitality offerings have evolved immeasurably over recent years with casual dining outlets driving new trends in the eating out market. Faced with tightening margins and increasing levels of red tape, many of this country’s licensed hospitality outlets have looked to new and exciting ways to entice customers and drive trade. Businesses have increasingly turned to food and we are seeing a fantastic depth of choice in our high street brands, but the benefits of this are not recognised collectively at either a national or local level.” The ALMR Casual Dining Manifesto calls upon both local and national authorities to: promote a free, fair and flexible property market by implementing a root and branch reform of business rates and updating the Code for Business Leasing Premises; cut unnecessary costs of doing business by ensuring that authorities have a regard to economic growth for planning and licensing decisions; unlock the sector’s potential for growth and investment in communities by scrapping NICs for under-25s, direct funding for apprenticeships and bonuses for businesses each time they take on an apprentice. Nicholls added: “Eating out businesses serve over 42 million meals each year and contribute £209,000 per restaurant to their wider local communities. This is a significant contribution that can be capitalised on if the conditions for businesses permit it. Cutting costs and providing businesses with opportunities to invest is crucial and the ALMR will continue to push for a fairer, flexible market, particularly in respect of property, that allows our casual dining businesses to flourish.”

Industry News:

Great Portland Estates reports strong London market: The property owner Great Portland Estates has reported a strong pipeline of projects in the buoyant London market. Chief executive Toby Courtauld said: "London's economy has continued to outpace that of the rest of the UK and we can expect this to continue, assuming the inevitable uncertainty surrounding the outcome of the proposed EU referendum does not damage London's appeal as a business capital; both the risk appetite and employment intentions of the capital's businesses remain expansionary and we anticipate their space needs to follow suit. As a result, with falling vacancy rates and the supply of new space to let in the near-term remaining extremely tight, we can look forward to further increases in rents. In the context of these supportive market conditions, the group's strategic positioning feels right: having bought more than 59% of our properties at opportune prices resulting from the financial crisis, we are in execution mode, delivering organic growth through developing, refurbishing and growing income across our 3.6 million sq ft portfolio. Our 1.2 million sq ft committed and near-term development programme is the largest we have ever undertaken and accounts for circa 25% of all core West End speculative deliveries over the next four years. It contains some exceptional schemes, including a major contribution towards the regeneration of the east end of Oxford Street. In addition, our long, flexible pipeline of future projects contains many enticing prospects, often near to Crossrail stations, stretching well into the next decade."
Technomic – three quarters of all sites owned by US top 500 restaurant companies now franchised:
Figures produced by the insights and research firm Technomic show that more than three quarters of the 220,011 restaurants operated by the top 500 restaurant firms in the United States are now franchised. In the past five year the total number of franchised sites has increased by 9.3% to make up 76.4% of the total, while company-owned outlets have fallen by 3% since 2009. Technomic reported that the 500 companies, which have an overall 59% market share, saw average like-for-like sales growth of 4.2% in 2014 with category growth performance as follows: Mexican, 10.4%); noodle, 10.2%; chicken, 8.9%; coffee cafe, 7.5%; frozen desserts, 6%; bakery cafe, 5.7%; pizza, 3.75%; sandwich, 1.9%; burger, 1.3%.

HowYa launches free 'at table' restaurant rating system for single sites alongside premium version for multiples:
HowYa has launched a free-of-charge app for single outlet operators, as well as a premium version for multi-site chains, that lets customers give their feedback on their meal while they are waiting to pay the bill. Customers are invited to tap responses to questions about their experience, and then input demographic details, if they wish, including  their email address. Customers can also add comments that can be posted to the restaurant’s social media account. The manager is alerted by email and text alert if a customer posts a poor score, enabling the team at the restaurant to respond before the customer leaves. In trials across 30 restaurants, HowYa said, 92% of customers offered the opportunity to give feedback via HowYa did so. HowYa said: "Research shows that if a customer experience has been poor but the server attempted to solve their concerns, that customer is less likely to post a negative comment on a review site. HowYa’s system provides the restaurateur with a chance to manage any concerns before they leave the restaurant as well as capture the positives to spot trends and shape their business." The paid-for Premium version of the service provides detailed analysis of the times of the day when service may be particularly good or weak and highlights servers than may require extra training. Mel Joseph, head of sales and marketing at HowYa, said: “Customer sentiment is fundamental to the success of any brand or hospitality business, and we know that the accuracy of online review sites is of particular concern for them, with bad customer service reaching twice as many ears as good customer service. While it is positive news that the Competition and Markets Authority review into online review sites is under way, understanding customer sentiment and managing it before it reaches any online site is crucial."

Company News:

Burger King franchisee Caspian UK reports small profit rise: Caspian UK Group, which runs 51 franchised Burger King sites, has reported pre-tax profit of £502,000 in the year to 4 January 2015, up from £349,000 the year before. Turnover was £46,658,000, against £45,356,000 in 2013. Ebitda was £2,731,000, down slightly from £2,778,000 the previous year. One loss-making site was closed in the year, but the company said it was "currently looking for other opportunities for expansion".

Nick Batram issues 'buy' note on Patisserie Valerie: Peel Hunt's leisure analyst Nick Batram has issued a buy note on Patisserie Valerie shares with target price of 309p. He said: "Patisserie Holdings delivered a strong set of H1 results which demonstrated the operational leverage in the business. As well as the expansion programme, we are encouraged by the progress made in areas such as menu development, digital marketing and third-party relationships. The high rating is justified for a business growing 20% year-on-year, with added spice presented by the potential for acquisitions. At the brand level, growth was largely driven by the inclusion of Philpotts (now fully integrated), and Patisserie Valerie which grew revenues by 18% and operating margins by 170bp to circa 18.5%. As we highlighted in our initiation note, management have plenty of options to improve average sales per store with initiatives such as seasonal menus and digital marketing helping to achieve this and also improving brand awareness. We do not expect to materially change our numbers, as there is plenty of upside in our base-to-bull-case scenario, which derives a 309p to 351p target price range. Management continue to develop their pipeline of stores and we expect the FY to end with 20 net new store additions in a positive consumer backdrop supportive of branded offerings. The group trades at 25x FY15 EPS, this may look fully valued, but deservedly so, as the group continue to deliver circa 20% EPS growth year-on-year with potentially more to come from acquisitions. 'Buy'."

Greene King wins VQ employer of the year award: Greene King has been named winner of the 2015 vocational qualifications large employer of the year award, in recognition of the outstanding support it has provided to those undertaking vocational qualifications (VQs) in its workforce. Greene King established its apprenticeship programme in 2011. Since then more than 3,000 employees have achieved nationally recognised qualifications, with 2,000 more expected to complete their courses within the next 12 months. Since introducing the programme, Greene King has seen a positive increase in staff retention. The company beat off competition from two other shortlisted organisations to win the VQ Large Employer of the Year Award. The award is sponsored by City & Guilds, and is split into large and SME categories. The overall winner will be chosen by a judging panel and announced at the VQ Awards on 9 June. Rooney Anand, Greene King's chief executive, said: "We are proud of our tradition of investing in our people, their skills and development and our apprenticeship programme has supported that commitment over the last four years. We are thrilled that our investment in employees has been recognised in this year's VQ Awards. Not only do vocational qualifications help the individual achieve their career goals, but they also improve staff retention and productivity."

Freehold pub let to Mitchells & Butlers sells for £4m:
The freehold of the Cock Inn, formerly the Cock & Dragon, in Cockfosters, North London, has sold for £4m at an Allsop auction. The pub is let to Mitchells & Butlers on a 35-year lease from April 2015 at a current rent of £220,000 per annum, meaning the buyer gets a 5.5% initial yield. The pub was the highest value property sold at the auction. The auction raised in excess of £66m, with a success rate of 84%. Auctioneer Duncan Moir said: "The auction market has responded to the removal of political uncertainty with vigour."
Street Kitchen to open in Broadgate Circle: Street food vendor Street Kitchen is to open its first permanent shop at Broadgate Circle in the City of London on 15 June. Street Kitchen, which was founded by The Food Initiative chef Mark Jankel and chef Jun Tanaka, will offer "fast and accessible' gourmet sandwiches with "Michelin star know-how" from Monday to Friday, 7am to 9pm. Street Kitchen said all fresh, seasonal produce will be sourced from sustainable, organic farms, fisheries and producers in the UK, while everything from food waste and energy usage to furniture and staff uniforms will adhere to its ecologically sound ethos. The 550 sq ft, 18-cover site has an open kitchen with a deli-style marble counter and stainless steel serving benches on wheels. Street Kitchen will sell 24-inch sandwiches constructed on bespoke boards inlaid with vintage yardsticks for "cut-to-size" ordering. Two terraces on either side of the shop provide further seating outside for 24. Jankel said: “The opening of Street Kitchen, our first permanent shop since we began three years ago, is a huge landmark for us. We are confident that City dwellers near Broadgate Circle will welcome our quick and delicious ‘by-the-inch’ sandwiches, which can be enjoyed inside or on-the-go.”

New 'pasta kitchen' concept to open in Altrincham: A new "pasta kitchen" concept will start up next month in Altrincham, Cheshire, when Alex De Martiis and Jonny Marcolgiese open Sugo in the Shaw’s Road unit formerly occupied by Deli Sabrosa. Sugo  (“sauce” in Italian) will specialise in Southern Italian cuisine. De Martiis said: “We’re both half-Italian and both our families are from the Puglia region, and when we met it was the first time either of us had met anyone who understood food the way we do." The concept was borne out of a frustration the pair consistently felt with the Anglicised nature of Italian restaurants in the UK. “A lot of places do pasta,” De Martiis said, “but our inspiration has come from a mutual feeling that pasta isn’t properly represented over here. Most Italian restaurants cater for English tastes, using ingredients that aren’t right and sometimes not the best quality."
TGI Fridays eyes Stevenage site: Plans have been submitted to convert the former Smilin' Sam's site in Stevenage Leisure Park, Hertfordshire into a TGI Friday's and a trampoline park, creating 130 jobs. The site has been empty for an estimated seven years. Designs have been lodged to divide the former arcade and bar into two units, to allow TGI Friday's and Air Space to move in. If Stevenage Council approves the proposal, Air Space would be opening its second trampoline park in the UK.
Wetherspoon lines up three more Irish openings: Pub operator JD Wetherspoon is to open three new pubs in the Republic of Ireland in the coming months. The company will open the Great Wood in Blanchardstown and the Old Borough in Swords, both in Dublin, and the Linen Weaver in Cork. At present Wetherspoon has two pubs in the Republic, at Blackrock and Dun Laoghaire, both in Dublin. The company is to invest more than €6m on developing the new pubs and will create approximately 150 jobs. Wetherspoon has also acquired a number of other sites in the Republic. Chairman Tim Martin said: “Our first two pubs have proven extremely popular and we are looking forward to opening our next three pubs. We have also acquired a number of other sites in the Republic of Ireland and look forward, in due course, to developing and opening them as Wetherspoon pubs. We are also continuing to look for good sites across the Republic.”
Deltic Group to close Luton Liquid and Envy: Deltic Group, formerly known as Luminar, will close its Luton Liquid & Envy site at the end of the month. The nightclub, which currently employs 30 people, is shutting up  because fewer people have been coming into the venue for nights out. A spokesperson from the Deltic Group said: "Following a long-term decline in footfall in the town centre, we have taken the difficult decision to close Liquid & Envy. We would like to thank all our employees, who have worked so hard in tough operating conditions to provide our loyal customers with a fun, safe and great value night out. We are currently consulting with our team about future opportunities."
Fleurets markets £3m New Forest hotel: The property agent Fleurets is selling Bramble Hill Hotel, in the New Forest off an asking price of £3m. It is situated in around 12 acres of countryside in the north of the New Forest National Park, close to the village of Bramshaw, Hampshire. The hotel Bramble Hill is configured as eight en-suite letting rooms and an additional five flats that provide a good variation of accommodation. It also has a well-equipped Fitness Suite in a single-storey, standalone, modern facility that includes a 16-metre, three-lane swimming pool, Jacuzzi, sauna, changing facilities and gym. William Thomas from Fleurets said: ''This is an opportunity that I suspect will appeal to a high end operator and is set within stunning grounds which could possibly be further utilized for some 'glamping’ opportunities. My client has been running the business almost single-handily and now wishes to retire."
Joule's opens 20th Tap House: The Market Drayton-based brewer and retailer Joule's is opening the 20th pub in its Taphouse chain, the New Inn, in Newport, Shropshire, on Wednesday 3 June. The brewery, which is headed by Steve Nuttall, acquired the pub at the end of last year and has since more than doubled its size, brought the toilets inside, and installed a full catering kitchen. Trudie Meredith, Joule's marketing controller, said: "We have received an astonishing amount of interest and excitement from locals, with lovely memories and stories from each, and, with the help of social media, we have received lots of old photographs and memorabilia relating to the pub and its fascinating journey."
Government regeneration fund helps pay for Enterprise pub's refurbishment:
A grant of £360,000 from Colwyn Bay’s Townscape Heritage Initiative has helped pay for a refurbishment at a historic Enterprise Inns pub in the North Wales town. In total, £660,000 has been spent on the Station Hotel, formerly the Central Hotel, including £200,000 from Enterprise and £100,000 from new publicans Rita and Keith Stuart. The Townscape Heritage Initiative money came from a £12m grant given to the local authority by the Welsh government for Colwyn Bay’s regeneration, part of which was to be used to “improve the general appearance, vitality and sustainability of Colwyn Bay town centre". Judi Greenwood, project manager for the Townscape Heritage Initiative in Colwyn Bay, said: “The Station was the second of four critical targets in the area, part of a conversation project running until 2017, and to see the hard work has paid off is a fantastic feeling. Our objective was to drastically improve the condition of the property, while respecting its history and heritage. We used old photographs to ensure we restored all parts of the building correctly.” Work on the pub and restaurant has seen the exterior overhauled, stonework replaced, and architectural period features reinstated, including the chimney and sash windows. Rita, who already runs another Enterprise pub, the Albert, in neighbouring Llandudno, said: “We’ve been at the Albert for 17 years, so taking on the Station comes as an exciting new challenge for us. Its transformation has been incredible to watch, and we know its return is highly anticipated in the town." Enterprise divisional director Jonathan Walter said: “This significant investment is yet another example of our commitment to supporting publicans. We’re thrilled that Keith and Rita are taking on another Enterprise pub in Conwy, given the great business they run at The Albert."

Wildwood gets planning officers' approval for new Brentwood outlet: Wildwood, the restaurant chain owned by the Tasty group, has had its second application for an outlet in Brentwood High Street recommended for approval by local council planning officers, after its first application was rejected for having a design for the restaurant's exterior that was "out of keeping", and on the ground that another restaurant would be "further erosion of the character and appearance of the High Street". The second change of use application submitted to Brentwood Council has a traditional wooden shopfront as part of the plans and answered the council's stipulation that no more than 40% of ground floor units in the part of town where the restaurant would be situated must be used for non-retail by saying that if it opened, the percentage of non-retail in the area would only rise from 41% to 43%. The application now has to go before the council's planning committee. Meanwhile the local Brentwood Gazette newspaper has announced that its survey of Brentwood High Street found that 25% of it was made up of restaurants, bars and eateries. Retail use, meanwhile, amounted to just 50% of the High Street.
Douglas Jack issues 'add' note on Cineworld ahead of AGM next Tuesday: Numis Securities' leisure analyst Douglas Jack has issued an "add' recommendation, with a 550p price target, on Cineworld shares ahead of next Tuesdays AGM. He said: "We are expecting a positive update given that UK cinema market admission growth has accelerated from 3.5% in January-February, to 15.8% in March-April. Cineworld described January-February trading as being “in line” at the time of its preliminary results (12 March). Since then, UK market admission growth has accelerated from 1.3% in January, to 5.8% in February, to 11.4% in March, to 19.3% in April. Cineworld outperformed the UK market by 3% in 2013 and by 1% 2014, in terms of LFL admissions. In a falling market, it benefited from a quarter of its admissions deriving from 'unlimited' subscribers, as well as having a broader film range, and superior online/estate investment. We expect Cineworld to under-perform the market in 2015E with its broader film range acting as a disadvantage in a year in which there should be numerous blockbusters. Aided by £5m of forecast acquisition synergies (of which £2m was achieved in 2014), strong self-financed expansion and attractive LFL admission prospects, we forecast double-digit earnings growth in 2015E and 2016E. Our 'add' recommendation reflects the risk of further upgrades."
Bar Azita expands to second Herts town: The owners of Bar Azita, a Mediterranean restaurant and tapas bar in Harpenden, Hertfordshire, are opening a second venue in the nearby town of Hitchin. Bar Azita, which is owned by Nick and Julie Pike, is moving into the premises formerly occupied by the Brick Rooms barbecue grill and cocktail house on Bucklersbury. The Harpenden venture has a tapas and cocktail bar in the adjacent premises, which was added in 2012, but Rory Calow and Matt Dreyer, Bar Azita's managers, told the Hertfordshire Mercury newspaper that the Hitchin site would marry up the two concepts, with the venue functioning as a restaurant but with cocktail and tapas service. Calow said: "We are going for a more upmarket vibe, but one which is still affordable." Dreyer said: "The food which will be on offer is made with a traditional charcoal grill. It has Spanish, Greek and Persian influences. This has been our mainstay in Harpenden and it has proved to be a winner for us. I feel bad when we have to disappoint customers on Fridays and Saturdays when we have to turn them away."
Punch Taverns ramps up summer support: Punch Taverns is ramping up summer support for its licensees with a range of support tools and free training opportunities. The Punch Progress Training and Development Team is offering a suite of free "Best in Class" regional workshops on topics such as "Best in social and digital media", "Best in sales and marketing" and "Best in lead and training your team" to help its licensees address all elements of their summer offer and ensure their team members are a great reflection of their business. Dan Armes, Punch's regional learning and development manager, said: “We want to help get our partners’ businesses in the best possible shape so they become the first place that customers think of when the sun does shine! It’s about seeing things through a customer’s eyes. Pub gardens and external areas should be clean, bright and appealing and there should be a clear plan for summer service."
Just Eat wins regulatory backing for Menulog acquisition: Just Eat has received a green light over its proposed acquisition of Menulog, Australia’s largest online food and beverage ordering service company by number of orders, from  the Australian Foreign Investment Review Board. The board said that the Australian Treasurer has no objections to Just Eat's proposed acquisition of the entire issued and outstanding capital stock of Menulog for £445m. The acquisition is likely to be financed from a proposed share sale in the form of a placing and open offer.
Turtle Bay launches one-member 'Golden Rum Tankard Club' in promotion for Manchester opening: Turtle Bay, the Caribbean restaurant chain, is running a promotion in advance of the opening of its second outlet in Manchester in which the winner will become the only member of the Golden Rum Tankard Club. The new restaurant, on Oldham Street in the Northern Quarter, opens on 5 June. Rum fans are being asked to email and tell the team why they think they should have the honour of exclusive club membership bestowed on them. "Supporting nominations from friends and other members of the community will also be taken into account," Turtle Bay said. The winner will be invited to celebrate at the VIP launch of the restaurant on 4 June, where he or she will be presented with his or her personal rum tankard.
Robinsons opens 'beer shrine' pub: The Stockport-based brewer and retailer Frederic Robinson is reopening one of its puts as a "beer shrine" with an extensive range of international craft beers as well as a rotating range of Robinsons’ cask ales and guest beers via six hand-pulls. The pub, the Cock, in Hazel Grove, an upmarket suburb of Stockport, has been given a refurbishment and renamed the Flying Coach. Tony Massey, business development manager at Robinsons, said: “The Cock has always been one of our most popular pubs so it was never a question of if but when we would reopen it. After several months of discussions with the brewery design team and the influence of several of our other high-profile refurbishments in the area, we decided on a new vision that would carry the pub into its next era.” The brewery’s design team has worked to maintain the historic atmosphere of the pub, and the traditional rooms remain with select walls removed to open up the snug and lounge areas, Massey said. The design also includes a number of unusual elements such as old elixir bottles and a wall of loom shuttles in a nod to Stockport's textile history. Massey said: “The pub will offer something that is completely different in Hazel Grove. The Flying Coach will champion an unmatched beer range with different types from around the world.” The Flying Coach is due to open  at 12 noon today (Thursday).
Byron to debut in Derby on Monday: The better burger chain Byron will open in Intu Derby on Monday, next to the shopping complex’s food court. To celebrate the opening day for the restaurant, the chain's first outlet in Derby, Members of the Byron Burger Club will be invited along for a hamburger.
Bunga Bunga launches bespoke pizza challenge for customers: Bunga Bunga, in Battersea Bridge Road, South London, has launched a competition where customers are given the opportunity to design their own pizza for a chance to have their creation featured on the menu for a month. Each month, the Bunga Bunga team will sift through the entries and will choose one winner and runner-up with the most outrageous pizza conception. The latest winner has concocted the “Easta-Pizza” a blend of Cadbury Cream egg, caramel swirl, Nutella and marshmallows, on top of a sweet hot cross bun pizza dough with raisins, as a post-dinner dessert. The runner-up has created the "Pizza Auberge" with aubergine, parsley and goats' cheese, topped with hazelnuts on a classic Bunga Bunga crust. The person with the most avant-garde and -inspired pizza is also receive dinner for four and will be able to eat their pizza for free anytime of the month. The runner-up will receive a bottle of prosecco and will be able to try the winning pizza for free the next time they visit Bunga Bunga.
Restaurant chain revokes franchise agreement of branch where nine died in motorcycle gang shoot-out: The parent company of the Twin Peaks restaurant chain, which has 69 outlets in 24 US states, has revoked the franchise agreement of the outlet in Texas where nine people were killed in a shootout involving motorcycle gangs and police. Front Burner Restaurants, which is based in Texas, said that the branch in Waco where the shootout took place had not followed advice from both the police and the company to enhance security to prevent possible motorcycle gang violence. "And did not uphold the high security standards we have in place to ensure everyone is safe at our restaurants.” About 170 members of rival motorcycle gangs have been charged with engaging in organised crime after Sunday’s fatal fight. It began in the restaurant’s toilets and spilled into the car park, police said. Twin Peaks, founded in 2005 in Dallas, is known for scantily clad waitresses, mountain lodge decor and serving beer at 29ºF (-1.6ºC). Front Burner also owns seven Ojos Locos Sports Cantinas, a concept similar to Twin Peaks aimed at the Hispanic market, two fast-casual Velvet Taco restaurants and two upmarket Whiskey Cake Kitchen & Bar casual dining restaurants.

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