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Morning Briefing for pub, restaurant and food wervice operators

Thu 26th Jan 2017 - Propel Thursday News Briefing

Story of the Day:

Goose Island – ‘we see Vintage Ale House in London as blueprint for potential further openings in key European cities’: Chicago craft brewer Goose Island sees its first Vintage Ale House in Balham, south London, as the blueprint for potential further openings in key European cities. President Ken Stout told Propel the move to London has been enabled by the success of Goose Island following its acquisition by Anheuser-Busch InBev in 2011, since when its beer volumes have increased fivefold in the US alone. Stout was in London with Goose Island founder John Hall for the official launch of Vintage Ale House, which began trading just before Christmas at the site previously occupied by cocktail brand Be At One. “We’ve now got national distribution in the US, and an expansion project like the Vintage Ale House just doesn’t happen if we’re not succeeding as a business unit,” Stout said. Describing the Balham site as an “experiment”, he added: “There’s no question that we’d like to do more. If it works we’re going to want to do it in other great cities where there’s a high appreciation for beer. So, Brussels would potentially make a lot of sense, so would Paris, Rome and Milan.” The concept is focused on beer and food matching, serving the core Goose Island beer range on draught, along with the brewer’s limited edition range of seven barrel-aged, fruit flavoured vintage ales – dubbed the “Seven Sisters” – served in 70cl wine-style bottles and matched to a bistro-style menu. Stout added: “Our square footage isn’t huge here, but It’s not just about the number of people who come through the door, it’s finding the right people, those who really appreciate the experience.” Hall, who started Goose Island as a brewpub in 1988, said the Balham opening has brought him full circle. He added: “I spent time in London and enjoyed the pub scene, way before I opened Goose Island, and wondered why we didn’t have the same kind of beers, and atmosphere, in the States. The biggest single influence on what I did was Fuller’s. In coming back to London with Vintage Ale House, we wanted to find a neighbourhood where we could fit in, and become part of the community.” 

Industry News:

Propel Premium subscribers to receive new membership benefit: Subscribers to Propel Premium are to receive a new benefit – a £50 discount on tickets to Propel’s Masterclass series of events in 2017. The series includes The Advanced Social Media Masterclass, The Leadership Masterclass, the Finance and Investment Masterclass, and the Multi-site Management Masterclass. The current free service to all existing readers remains the same, but readers can opt to upgrade to receive the Propel Premium service. Propel Premium subscribers also receive the Morning Newsletter, which is sent at 6.30am each weekday, 12 hours earlier at 6.30pm the day before. On 1 March, Propel Premium subscribers will also receive an updated version of the Propel database of multi-site companies, which will add another 200 companies to the existing database of 700 to hit the 900 mark. For operators, annual subscription costs £345 plus VAT, with an extra £50 per additional subscriber at each company. For suppliers, annual subscription costs £445 plus VAT, with an extra £50 per additional subscriber at each company. To subscribe to the Propel Premium service, email

Propel Multi Club Conference open for bookings, Wright & Bell boss Jayne Baker to present: The first Propel Multi Club Conference of 2017 is now open for bookings. Jayne Baker, managing director of Wright & Bell, will talk about the ground-breaking £3.2m Imbiba-backed Kitty Hawk – the ‘department store of dining’ concept that combines shopping, drinking and dining – its progress at its first site in South Place and future prospects. The full-day conference takes place on Thursday, 9 March at the Millennium Gloucester Hotel, London. Multi-site operators of pubs, restaurants and foodservice outlets can book up to two free places. Email Anne Steele on to book a place.

Soil Association launches national organic award scheme for restaurants: The Soil Association has launched Organic Served Here, a national award scheme for restaurants, cafes and eateries to celebrate their commitment to using organic ingredients. The scheme assures customers that approved restaurants source between 15% and 100% of their ingredients from certified organic suppliers. Organic Served Here is the only award of its kind in the UK, awarding restaurants one to five stars on the basis of the percentage of organic ingredients they offer. Organic Served Here award holders enjoy a range of support and benefits, including access to a network of organic suppliers via a directory, networking events, and opportunities to learn first-hand where ingredients come from through training and farm visits. All restaurants, cafes and eateries that achieve the award are audited to verify the percentage of their food from certified organic farmers, growers and processors. Soil Association policy director Peter Melchett said: “Organic Served Here is a fantastic way for restaurants and cafes to show their customers how much they really care about quality ingredients. Demand for organic is on the rise and it has never been easier to serve organic thanks to the huge range of top-notch certified produce available, from meat and vegetables to essentials like flour, milk and just about everything else you can imagine. What’s more, organic food is produced to exceptionally high standards of care for the environment and animal welfare. So it’s good for business, for customers, for animals and for the world around us.”

Pub17 set to attract record number of attendees: Pub17 – the only dedicated trade show for the UK pub industry – is set to attract a record-breaking number of attendees. The event, which takes place at London’s Olympia on 7 and 8 February, has seen more than 5,000 visitors register for the show. Pub17 has also seen an “incredible” increase in visitors reserving a place in advance for the event’s free-to-attend talks and workshops. Subjects will include building a top team of employees, tips for scaling from a single site to multi-site operation, and the latest food trends in pubs. Marketing manager Sam Chance said: “We are thrilled to be able to announce our record-breaking number of visitors. With such a broad range of brands making up the 200 innovative suppliers on board this year and a spectacular line-up of speakers for our talks and workshops, we are certain this year’s show will be bigger and better than ever.”

Deliveroo hires Amazon’s Jamie Swango as its first UK marketing director: Deliveroo has appointed Jamie Swango as its first UK marketing director. Swango joins the company from her previous role as head of marketing for Amazon’s one-hour delivery offering, Prime Now. She will be responsible for leading consumer, restaurant and rider marketing in the UK and Ireland. Previously, Deliveroo’s marketing strategy was led by managing director Dan Warne. Swango told Campaign: “The company grew over 650% last year and I’m looking forward to helping Deliveroo bring more of the very best food to even more people across the UK and Ireland.” Deliveroo’s seven-fold increase in orders last year came despite an increasingly competitive environment. Tech giants Uber and Amazon both launched restaurant delivery services in London last year, while established rival Just Eat relaunched its brand and last month announced it would acquire another rival, Hungryhouse. In November, Deliveroo announced a deal with Heineken to offer home delivery of beer and cider, initially in London, Bath and Cardiff, with more cities to be added this year. Swango began her Amazon career in 2012 as associate director, beauty and apparel at subsidiary Quidsi. In August 2014 she became senior manager of Amazon Fashion, relocating from New Jersey to London.

AVLP appoints Bob Whittle as new president: Bob Whittle has succeeded Roger Thompson as president of the Association of Valuers of Licensed Property (AVLP), which provides specialist property advice to the licensed leisure industry. Thompson, founder of AW Gore, was elected to the AVLP in 1971, serving as president since 2005. He will continue as a member. AW Gore partner Pat Walker said: “Roger offered the AVLP all the qualities I admire him for – a steadying influence in good and bad times, a great knowledge based on when to make balanced decisions, and a wonderful sense of humour.” Whittle has been in the industry for 46 years and is a director of agent Fleurets. He joined the AVLP in 1985 and was the association’s honorary secretary from 2003 to 2012. Fellow Fleurets director Graeme Bunn said: “I’m sure Bob’s appointment as president of the AVLP will be a great success given his energy, enthusiasm and vast experience in the sector.” AVLP honorary secretary Daniel Mackernan added: “Roger and Bob have both given so much to the association it’s difficult to imagine what it would have looked like today without their energy, passion and desire to instil the highest standards to our profession. I’m sure the members will join me in thanking Roger for his tireless dedication as president and take time to wish Bob the very best in his new role.”

Company News:

Peel Hunt’s Douglas Jack  – The Restaurant Group needs to focus on improving value and proposition at Frankie & Benny’s and Coast to Coast: Peel Hunt leisure analysts Douglas Jack and Ivor Jones have said The Restaurant Group needs to focus its efforts on improving the value and proposition at Frankie & Benny’s and Coast to Coast. Issuing a ‘Hold’ note on the shares with a target price of 300p, they said: “In the fourth quarter, like-for-like sales fell 5.9% against a backdrop of easier comparables (of -1.7% versus +2.0% in quarters one to three) but tougher conditions in which retail footfall fell by 2.8% and cinema footfall fell by 13.2%. Although year-on-year restaurant market supply was down 1.9% in the third quarter of 2016, due to a 3.5% decline in the number of independent restaurants, supply is still increasing where The Restaurant Group trades. This is reflected in the number of managed restaurants (which The Restaurant Group usually competes with in leisure/retail parks) being up 4.9%. The Restaurant Group has cut expansion, but its managed competitors have not. Margins should be down, by 220 basis points by our estimates, largely due to the decline in like-for-like sales. For 2017E, we forecast average sales falling by 3% (like-for-like -4%) and margins falling by another 220 basis points, despite closures adding 1.2% to average sales and 70 basis points to margins, by our estimates, spread between 2016E and 2017E, but weighted to the latter. In 2016E, The Restaurant Group opened 24 sites and closed 37. For 2017E, the openings programme is under review, which is appropriate in our view as the new management needs to focus effort on improving the value and proposition at Frankie & Benny’s and Coast to Coast at a time when cost inflation is rising. Our 300p target equates to 13.4x price-to-earnings ratio and 6.3 times EV/Ebitda (both 2017E) reflecting our 2017E profit before tax forecast cut from £67.5m to £57.5m. We would expect the dividend policy to be under review, and would await progress updates on management initiatives before buying the shares.”

Yard & Coop owners – ‘we’re aiming to open two sites annually over the next five years as we look to build nationwide chain’: The owners of fried chicken concept Yard & Coop, former Revolution Bars Group employees Carl and Laura Morris, have told Propel they aim to open two sites annually over the next five years as they look to build a nationwide chain. The venture launched in Manchester’s Northern Quarter in July 2015, with the restaurant making a profit from its first week of opening and growing week-on-week, with an annual turnover of £2m. Carl and Laura, who are not related and have 35 years’ combined experience in the hospitality industry, have now opened a second site in Liverpool, at the Liverpool ONE complex. The 6,425 square foot venue has 200 covers – double that of the Manchester restaurant – across a multi-level space. Now they are hunting for sites three and four as they look to continue expansion. Among the cities they are targeting are Birmingham, Chester, Leeds, London and Sheffield. Carl Morris, who was formerly head of marketing and sales at Revolution Bars Group, said: “We have no plans to slow down. We are focused on opening our next sites across the UK, with an ongoing strategy to launch two sites per year for the next five years. We understand that for our business and future plans to be achieved, we must create the perfect formula of dedicated staff, in-depth training, high-quality product and a strong brand message. This ethos is the only way the brand will continue to grow as successfully as it is currently. It is this level of investment and commitment that is instilled into both teams in Manchester and Liverpool.”

Douglas Jack – M&B is ‘starting to turn the oil tanker’: Peel Hunt leisure analyst Douglas Jack has said Mitchells & Butlers is “starting to turn the oil tanker”. Issuing an ‘Add’ note on the shares with a target price of 300p, he said: “In the first quarter, like-for-like sales rose by 1.7%, albeit against a -1.0% comparable, ahead of the pubs constituent of the Coffer Peach Business Tracker (+0.9%). M&B’s like-for-like sales averaged just 0.6% between 2013 and 2015, and fell by 0.8% in 2016, so an element of the recovery may be due to soft comparables and some due to repositioning assets and operational improvements. Similar to trends elsewhere in the sector, M&B is right to be repositioning away from its less differentiated value and mid-market sites. To date, converting some Harvester sites to Miller & Carter and some Toby Carvery/Crown Carveries sites to Sizzling Pizza & Carvery has finally started to lift M&B’s return on capex. M&B is finally making progress with rebranding assets, generating attractive returns (25% to 40%) after arguably a decade of underperformance in this area. We estimate this process is adding 0.5% to 1.0% to average sales, in addition to which the planned disposal of circa 75 tail-end sites should bring further support to average sales and margins. There should be £56m of cost increases in 2017E (3.5% inflation), comprising £30m labour (+4.8%); £12m input costs (+2.2%); £5m utilities (+7%); £6m business rates (+7%); and £3m Apprenticeship Levy. The company aims to partially mitigate this impact through renegotiating supply agreements (half are locked in for 2017E), price increases, and cost-saving ‘initiatives at both site and overhead level’. We are holding our 2017E forecasts, which assume like-for-like sales rise by 1.5% and margins fall by 70 basis points. In our view, the 7.9 times EV/Ebitda rating is attractive for a high quality (south England-oriented, circa 85% freehold) estate that is showing signs of progress. We estimate the EV/Ebitda would be seven times without the pension deficit, and the pension deficit should fall if higher inflation eventually leads to higher bond yields.”

Merseyside-based multi-site operator Paul Adams behind plans for new Liverpool boutique hotel: Merseyside-based multi-site operator Paul Adams is behind plans for a new boutique hotel in Liverpool. Developer Elliot Group originally submitted a proposal to the city council for a block of apartments in Norfolk Street. Now it has revised its plans and lodged plans for a 306-bedroom luxury hotel, worth £70m, after Adams became involved in the scheme. If the change of use is approved, the development will instead become a mixed-use hotel block – providing 50 serviced apartments, an events space, a rooftop restaurant and an outdoor circuit training terrace. It would be the second city centre hotel for Adams’ Vincent brand, after construction began on the Ropewalks-based Times Aparthotel earlier this year. Adams told the Liverpool Echo: “The development has a great waterfront location with superb views and guests will feel they have chosen to stay in a very special place.” Adams also operates the Vincent Hotel in Southport and its sister operation, the Vincent Cafe & Cocktail Bar at Liverpool’s Exchange Flags. He is also launching Vincent Asian Kitchen in Bold Street, Liverpool.

Simmons Bars opens ninth central London site, in Camden Town: Cocktail bar operator Simmons Bars has opened its ninth central London site, this time in Camden Town, after agents Davis Coffer Lyons assigned the leasehold for a site in Kentish Town Road previously trading as Havana BBQ & Bar. A new 15-year lease was agreed at a rent of £125,000 per annum exclusive for the 2,000 square foot ground floor and basement venue. Simmons Bars, which is privately funded by Nick Campbell, has other sites in nearby Mornington Crescent and King’s Cross, as well as in Chelsea, Fitzrovia, Fulham, Liverpool Street, Soho and Tower Bridge, with a tenth site set to open in Temple later this year. The company states on its website: “Located right next to Camden Town underground station, the latest addition to the Simmons empire promises more top-quality, drinking-related fun. Please note this is our second site in Camden, not to be confused with our Mornington Crescent venue!”

Wetherspoon decides Scottish seaside town is too small for opening: Pub giant JD Wetherspoon has ditched plans to open in the Scottish seaside town of Leven, claiming the town is too small with a population of 8,850. The company is putting the derelict Threeways Inn back on the market. Wetherspoon denied speculation their decision had anything to do with local businessman Lee Murray’s plan to open a pub in the same street. A spokesman said that would have made no difference to Wetherspoon. “The company has made a commercial decision that the town is too small for one of its pubs,” he said. “It was simply the case of looking at the town again and realising it wouldn’t work for Wetherspoon.”

Adam Handling to start expanding The Frog restaurant concept with second site, in Covent Garden: Chef Adam Handling is to start expanding his restaurant concept The Frog with a second London site, in Covent Garden. Handling, who launched the concept in Shoreditch last year, will open the new venue this summer. The flagship restaurant will showcase Handling’s distinctive cooking style – combining technical savvy with the best possible produce – with a sizeable open-plan kitchen and a large private dining room in the basement complete with its own kitchen. The restaurant will serve breakfast, lunch and dinner all year round, with a team of 37 staff. Alongside the food, Handling will showcase his love for premium cocktails in a speakeasy-style basement bar with its own entrance, and will feature artwork from a prominent artist. Handling said: “The Frog E1 has been so well received and set the standard for The Frog as a group. The new restaurant will be rooted in those foundations but also have its own distinct style with its own dishes. The new site will draw a different clientele to the first restaurant in Shoreditch and I want it to be unlike anything else currently available in Covent Garden. The bar will be a new venture for me – I’ve always loved creating and drinking quality cocktails. Having a separate space downstairs dedicated purely to the drinks offering has given me scope to be so much more creative in creating its own identity separately from the restaurant and my food offering.”

Northern Ireland-based Balloo Inns Group invests £500,000 in Hillsborough gastro-pub refurbishment: Northern Ireland-based Balloo Inns Group is giving its gastro-pub the Parson’s Nose in Hillsborough a £500,000 refurbishment and launching an extended menu. The company, which opened the venue in 2009, is expected to complete the overhaul next month. Plans include a new interior and a courtyard, along with substantial expansion of the pub’s kitchen. Managing director Ronan Sweeney told Insider Media: “We are delighted to announce this significant investment in the Parson’s Nose. We will continue to offer the same first class produce, including local seafood, premium dry-aged steaks and pub grub classics, but are also particularly excited to be introducing new culinary features to the menu including lighter, more casual-dining options.” Balloo Inns Group also owns the Balloo House in Killinchy and the Poacher’s Pocket in Lisbane.

Stonegate reopens former JD Wetherspoon pub in Walton: Stonegate Pub Company has reopened The Regent in Walton, Surrey. The company acquired the pub in Church Street from JD Wetherspoon as part of a ten-strong package in September last year. Stonegate said it planned “significant investment” for the coming months and previous staff would continue to work at the venue. Chief executive Simon Longbottom told Get Surrey: “We have a strong track record in picking sites that, when we add a touch of Stonegate magic, customers love. We are already planning the next stage of the pub’s future with investment that will enhance the pubs offer, and we’re looking forward to revealing those plans in the coming months. In the meantime, it’s a huge welcome to the pub’s team and loyal customers.” The leasehold was put up for sale by agents CBRE and Savills, with a yearly rent of £64,800 expiring in March 2034.

Halifax-based Thai restaurant operators open tapas concept in town: Paul Nichols and Scott Carroll, who operate two Thai restaurants in Halifax, West Yorkshire, have launched a new tapas concept in the town. The cousins launched their first Café Thai in 2010 in Green Lane, opening a second, larger site in 2014 just around the corner. They have now opened 50-cover Café Thai Tapas in Stainland Road. Nichols told BDaily: “Our restaurant is extremely popular in the local area, often fully booked four to five weeks in advance. We found ourselves in the frustrating position of turning customers away. Now Café Thai Tapas has launched we have more than doubled our capacity, offering people another way to try our tasty food.”

Former Molson Coors director to join Microsoft and Lego chiefs as new Starbucks board members: Former Molson Coors director Rosalind Brewer is one of three industry leaders nominated to join Starbucks’ board of directors. Brewer, now Wal-Mart executive vice-president, has been nominated alongside Microsoft chief executive Satya Nadella and Lego executive chairman Jørgen Vig Knudstorp. If elected at Starbucks’ Annual Meeting of Shareholders on Wednesday, 22 March the additions will increase the Starbucks board to 14. Starbucks said Nadella would provide “invaluable insight in international operations and distribution as Starbucks continues to focus on innovative ways to use technology to elevate the brand and grow its business”. The company added that Brewer would provide “vast experience in product development, product management, leadership, digital technology and innovation”, while Knudstorp would bring a “proven record of innovation and unique insight of brand and digital marketing, strategy, consumer products, and international operations and distribution”. Starbucks chairman and chief executive Howard Schultz said: “Innovation and pushing to alter the status quo are core to our culture and by welcoming three world-class, values-based leaders to Starbucks’ board of directors on their election at the annual meeting, we will strengthen our leadership and add unmatched expertise in technology, strategy and retail to the company at a time of unprecedented change for our industry.”

Huddersfield-based multi-siter gets go-ahead for new wine bar in town, fourth venue in total: Huddersfield-based multi-site operator Mark Robertson has been given the go-ahead to open a new wine bar in the town – his fourth venue. Robertson has been given permission by Kirklees Council to convert the former Armitage Sykes solicitors in Macaulay Street, which is next door to his real ale pub the Plumbers Arms. He will transform the grade II-listed building to house a wine bar on the ground floor with eight bedrooms on the first and second floors, reports the Huddersfield Examiner. Robertson also owns The Waterloo pub in Huddersfield and the Waggon and Horses in nearby Outlane.

Healthy takeaway Benny’s Pomodoro set for expansion with second north east site: Healthy takeaway Benny’s Pomodoro, which operates a venue in South Shields, has applied to open a second site in the north east, this time in Newcastle. Concept founder Benny Pomodoro wants to turn a site that once housed the Pineapple pub in Grainger Street into a healthy deli and takeaway. Pomodoro has submitted an application to Newcastle City Council to serve food from 6am to 11pm. Benny’s Pomodoro offers smoothies, brown rice and chicken dishes, jacket sweet potatoes and salad boxes. The concept’s healthy take on a pizza uses tortilla as a base. Pomodoro told Chronicle Live: “We won’t be using any fryers, frying pans or grills – it’s all going to be steamed or boiled.”

Freehold of Beatles-inspired hotel in Liverpool goes on market for £950,000: The freehold of the Beatles-inspired Penny Lane Hotel in Liverpool has gone on the market for £950,000. The three-storey, 17-bedroom property is being marketed by agent Christie & Co. Formerly a bank, the hotel is in the Mossley Hill area of the city, close to the childhood homes of John Lennon and Paul McCartney and 15 minutes from the world-famous Cavern Club. All 17 en-suite bedrooms, a mix of double and twin rooms, have been individually designed and, along with the reception and breakfast room area, feature Beatles artwork and memorabilia. Ryan Lynn, associate director at Christie & Co, told The Business Desk: “This is a fantastic opportunity for a buyer to not only get involved in a hotel that is continuing to grow on a yearly basis but also to be part of the history of The Beatles by paying homage to their memory. An experienced operator could capitalise on the unique location of The Penny Lane Hotel and build on the current business to drive profitability forward.”

Plans approved for £40m cinema, restaurant and retail complex in Redhill: Plans have been approved for a £40m cinema, restaurant and retail complex in Redhill, Surrey. Developer Coplan Estates has been given the go-ahead by Reigate & Banstead Borough Council for the scheme. The development will replace the council’s Marketfield Road car park plus 12 shops with offices above in High Street, opposite the main entrance to The Belfry shopping centre. It will include a six-screen cinema and up to 11 shops and restaurants on the ground and first floors. There will also be 153 studio, one, and two-bedroom flats for private rent built above. The scheme also includes basement parking for residents and a new pedestrian route connecting High Street to Marketfield Way. Council executive member for property Natalie Bramhall told The Construction Index: “The redevelopment will provide a huge boost to our regeneration ambitions and the local economy by creating hundreds of jobs and increasing spend in the town.” Work is expected to start later this year and complete in 2019.

Whitbread submits plans for Premier Inn, Beefeater and drive-thru Costa in Buckingham: Whitbread plans to open a Premier Inn, Beefeater pub and drive-thru Costa Coffee shop in Buckingham. The company has submitted plans to Aylesbury Vale District Council to build the venues opposite a planned Lidl superstore at Lace Hill, Mix 96 reports. Whitbread said the hotel, pub and coffee shop would bring jobs to the town on land that had “already been earmarked for employment use”. In the plans, the company also argued that the buildings would be more attractive than standard office blocks or warehouses, which could be another option for the land.

Novus Leisure donates £15,000 to fund water wells in Tanzania: Novus Leisure, the London bar and restaurant operator, has donated £15,000 to Cheers for Cheer, the charitable fund set up by Carly Pickering in August. Cheers for Cheer helps small, unsupported projects in South America, Africa and the UK, using the power and generosity of the hospitality industry together with the goodwill of the public. Prior to Christmas, Novus Leisure committed to donating 20p for every Christmas meal sold and 10p for every Christmas cocktail sold – generating almost £15,000, which the company rounded up. The donation means Cheers for Cheer can fund the construction of four water wells in Mseko, a village in Tanzania that is home to 4,000 people who have no access to clean water. Every penny will be donated to the village.

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