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Morning Briefing for pub, restaurant and food wervice operators

Fri 12th Aug 2016 - Update: Vapiano, The Restaurant Group, Loungers, Charles Wells, Deliveroo, et al
Vapiano UK reports Ebitda up: Vapiano UK has reported Ebitda in the UK rose to £1,126,451 in the year to 31 December 2015 (2014: £699,644). Turnover rose to £11,418,638 from £9,160,629 the year before. The company made an operating loss of £130,109 after the costs of opening its Manchester site. The company stated: “In 2015, Vapiano UK saw a sales growth and a positive improvement in Ebitda (and after pre-opening costs) of £1,126,451 (2014 £699,644). The trading position although very competitive remains very positive for Vapiano financially – we are pleased with how the first store in Great Portland Street continues to lead the Vapiano world in sales, how Bankside, our second store, continues in double-digit sales growth and Wardour Street, Soho, opened in 2014, has continued its very positive trading start. The latest site and first outside the capital is performing satisfactorily – although below expectations it is growing steadily week-on-week. The pre-opening costs of the Manchester site were £538,000 and, in the main part, accounted for the loss recorded this year. However, in 2016 with no openings planned we will see a return to enhanced profitability.”

London’s Deliveroo riders strike over pay row: Riders in London working for restaurant food delivery service Deliveroo have gone on strike over a pay row. Deliveroo has started trialling a new contract with workers but, according to some of the company’s delivery riders, it means they are being paid less than the minimum wage for people over the age of 25. Riders said they used to get £7 per hour with a £1 commission for delivery but the new scheme only paid £3.75 per delivery. However, Deliveroo said the new contract gave staff more flexibility. A spokesperson told Bitter Wallet: “We have just started trialling a new £3.75 per delivery model in London this week. After feedback from our rider surveys, we learnt the most important thing to our riders about the job was flexibility. We’ve designed this trial to enhance flexibility, allowing riders to work whenever they want by logging on and off as desired. Rider feedback is key to everything we do and we’ve built in a process throughout the trial to ensure continuous communication and drop-in information sessions are available to all riders. The 2.2km size of each delivery zone has been designed with delivery distance and time in mind. Following extensive testing, this zone size was found to be the optimum size for ensuring riders can complete two-to-three orders an hour safely and with plenty of time, while still receiving fees of more than £10 per hour across the lunch and dinner times our riders work. We’ve developed this trial to better reflect the way riders work with us. Along with this increased flexibility, we’ve seen average hourly fees for riders in previous trials rise to more than 2.1 times the previous payment model at our busiest times. We are keen to hear more about the London riders’ concerns.”

Loungers signs up for new Oldham multiplex: Cafe bar brand Loungers will open a new venue at Oldham’s Old Town Hall multiplex development, which is due to open later this year. A premises licence has been submitted for a 3,272 square foot unit that also features a 743 square foot terrace with views across a new public space – Parliament Square. A Loungers spokesman said the new Molino Lounge would offer brunch, main meals and authentic tapas and be a “retro home from home”, including dramatic artwork and oversized vintage sofas. It will have a family-friendly focus with a selection of board games, daily newspapers and a free book-swap facility. Grade II-listed Oldham Old Town Hall is being transformed into a multiplex Odeon cinema with 800 seats and seven screens. The scheme will include seven family restaurants, including Nando’s and Gourmet Burger Kitchen. Loungers operations manager Mike Butler told The Business Desk: “Oldham is the perfect location for our Lounge concept. There’s already a thriving and vibrant community and we’re really looking forward to playing our part.” Loungers, which also operates the Cosy Club brand, currently has 84 sites.

ALMR calls on government to delay introduction of apprenticeship levy: The Association of Licensed Multiple Retailers (ALMR) has called on the government to delay the introduction of the apprenticeship levy, warning it would place a severe burden on employers in the licensed hospitality sector at a time of economic uncertainty post-Brexit and might harm investment as a result. The chancellor first announced the levy last year but the government has only now published details of how it would work. The levy will see all UK employers with a wage bill in excess of £3m, which includes many small and medium-sized businesses, liable to pay an additional payroll tax to fund apprenticeships from April 2017. ALMR chief executive Kate Nicholls said: “Introducing additional regulatory costs for businesses is going to put them under additional strain, particularly in a labour-intensive sector such as ours. Licensed hospitality has already doubled the number of apprenticeship starts and is investing on average more than £1,000 per employee per year in in-work training – this could well be jeopardised by a blunt additional tax on employment. The timing of the levy, coming shortly after the EU referendum and while business and consumer confidence still needs a boost, could scarcely be worse. This is a time of economic uncertainty for UK businesses, not a time to be introducing significant additional costs at such short notice. The ALMR has liaised with the government to voice its concerns, and business leaders in hospitality and retail have been united in telling ministers, as part of the Brexit dialogue, to delay the levy. We urge them to rethink the introduction of a measure that will place added strain on employers at such an uncertain time.”

BBPA publishes online guide to business rates changes: The British Beer & Pub Association (BBPA) has published an online guide to show what the upcoming changes in business rates means for the industry. The new valuations are due to be revealed on Friday, 30 September and the BBPA has put together the guide to help licensees navigate the process. The BBPA is stressing the need for licensees to plan ahead and make sure they have made the necessary financial preparations for next year. Businesses will be able to notify the Valuation Office Agency (VOA) of any obvious errors from September – and officially appeal to the VOA if there are any serious mistakes – under the government’s “Check, Challenge and Appeal” process from April next year. This is the first time the valuations have been amended since 1 April 2010. The VOA, with the help of five trade bodies, including the BBPA, has developed the 2017 Approved Guide to the process, which will be published shortly. The BBPA has long campaigned for rates reform, as pubs foot 2.8% of the total rates bill despite having only 0.5% of business turnover. Along with new increased costs through the Living Wage, apprenticeship levy and auto-enrolment for pensions, there is already considerable financial pressure on the industry. The BBPA has therefore supported the revaluation, which will lead to a rebalancing of the burden within the sector and alleviate some pressure from pubs that have struggled since the last revaluation. It is, however, likely that some pubs will see an increase in their rateable value, particularly where the business has thrived since 2008. The BBPA said it would continue working to ensure that for pubs, any increases were mitigated as far as possible. Industry pressure has already seen reforms that mean pubs with a rateable value of £12,000 will pay no business rates at all. In future, the BBPA would like to see more frequent revaluations of business rates and it is proposing a new self-assessment system for pubs, which would be both flexible and reduce the administrative burdens of the system. BBPA chief executive Brigid Simmonds said: “It is crucial licensees stay well informed, keep track of these changes, and raise concerns if they arise. Businesses that have thrived since 2008 should be aware they could see an increase in business rates and will need to be prepared. However, overall the revaluations should help the industry.”

Charles Wells agrees UK distribution partnership with US craft beer specialist Founders Brewing Co: Bedford-based brewer and retailer Charles Wells has agreed a UK distribution partnership with US craft beer specialist Founders Brewing Co. One of Michigan-based Founders’ most popular beers, the award-winning Founders All Day IPA (4.7% ABV), will be available in keg and 355ml bottle and can formats across the UK from mid-August. A wider range of Founders’ seasonal beers is expected to be added to the Charles Wells portfolio in the near future. Charles Wells will take responsibility for all national account development in the on and off-trade and focus on the independent free trade in London and the south east for core Founders beers. Importer and distributor Vertical Drinks will focus on Founders’ seasonal ales and speciality range. Charles Wells commercial director Peter Wells said: “We have taken a careful look at the import sector and the UK market trends to determine what could add value to our portfolio and that of our customers. When the opportunity came up to work with such an exciting and progressive US brewer, we jumped at the chance to help Founders expand its footprint in the UK.” Founders vice-president of international business Brian May added: “As American craft beers continue to grow in popularity globally, we see the UK as an important hub for distribution of our award-winning range.”

Numis – The Restaurant Group new chief executive an ‘excellent appointment’, company remains ‘compelling turnaround situation’: Numis Securities leisure analyst Tim Barrett has said The Restaurant Group’s new chief executive Andy McCue is an “excellent appointment” and the company remains a “compelling turnaround situation”. Issuing a ‘Buy’ note on the shares with a target price of 455p, Barrett said: “The Restaurant Group has announced that Danny Breithaupt, chief executive, will leave with immediate effect. Having completed the initial stages of its operating strategy review, the board decided a new leader was needed to implement the initial actions and prioritise the next phase. Andy McCue, previously chief executive of Paddy Power, has been appointed to replace him, and will join the board on 19 September. McCue succeeded Patrick Kennedy as chief executive of Paddy Power in January 2015 and led its successful merger with Betfair. Prior to becoming chief executive he ran Paddy Power's retail operations in the UK and Ireland. With a strong track record in leadership and multi-site retail (circa 600 betting shops), we regard this as an excellent appointment. This completes a refreshed management line-up, including a new chairman, chief financial officer and additional non-executive directors. We are reassured there is no further deterioration in trading and therefore confident that our low end of expectations estimate will be achievable (£73.7m profit before tax with like-for-like sales down 3.5%). We expect the market to take comfort from this statement. Interim results on 26 August will be accompanied with an update on the operating strategy review. Last month, we published our preview and gave our impressions of strategic options for the group (no quick fix but support from concessions and pubs, 22 July). In conclusion, we believe The Restaurant Group remains a compelling turnaround situation with established leisure brands enhanced by freehold-backed pub restaurants and a strongly growing concessions arm. The Restaurant Group is a cash generative business and has funded 102 openings and £115m in dividends over the last four years. Our new target price of 455p represents a free cash flow yield of 8%.”

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