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Morning Briefing for pub, restaurant and food wervice operators

Thu 16th Feb 2017 - Update: JD Wetherspoon, Revolution, HGEM
JD Wetherspoon set to open 50th hotel: JD Wetherspoon is to open its 50th hotel next Tuesday, 21 February. The hotel will open alongside its new pub, The George Hotel, in Brecon. Wetherspoon opened its first hotel, The Shrewsbury Hotel in Shrewsbury, in 1998. Wetherspoon chairman Tim Martin said: “We are pleased to have reached this milestone. Our hotels continue to prove extremely popular and we are looking forward to opening many more in the coming months and years. They complement our pubs perfectly and are an important part of our overall business.” Previously, chief executive John Hutson has stated that the company has found hotels reasonably easy to run. In recent years, the company has been developing unused upstairs space within its estate into hotel bedrooms. The company also opened its first stand-alone 22-bedroom hotel in Huntingdon in the past year.

Douglas Jack issues ‘Buy’ note on Revolution Bars Group: Peel Hunt leisure analyst Douglas Jack has issued a ‘Buy’ note on Revolution Bar Group (RBG). He said: “Revolution Bars Group has built a track record for consistently generating like-for-like sales, average profit growth and cash returns that are amongst the highest in the sector. Despite this and the potential for the company to accelerate expansion and drive scale economies, its EV/Ebitda rating is the lowest in the licensed retail sector. We initiate coverage with a ‘Buy’. RBG has grown its average sales by 74% and average outlet Ebitda by 67%, since 2004. This is partly due to the unit scale of its venues enabling it to deliver a wider range of functions over longer trading hours than other licensed retailers, as well as its product range being orientated towards fast- growing premium products that cannot be bought in the off-trade. The company’s last 39 openings have generated a 42% average CFROI, by our estimates, over the last 11 years. Operating in a bar market with falling supply and rising barriers to entry, RBG’s reputation and preference for large sites has helped its site pipeline to be longer than it has been for 10 years. Our forecasts cautiously assume like-for-like sales slow from 2.0% in H1 2017E to 1.5% in H2 2017E and beyond, with no increase in margins or acceleration in expansion over the next three years. In our view, faster expansion could create material upside, utilising spare cash to invest in projects that typically generate c.40% cash returns, and boosting margins through adding more cost-efficient units and driving economies of scale. RBG’s EV/Ebitdar valuation is the lowest in the licensed retail sector, even though its lease-adjusted CROIC is the highest, and its earnings growth is amongst the highest. We believe RBG’s low valuation reflects the FD resigning (albeit for personal reasons), and market concerns about the bar market. In our view, these concerns overstate RBG’s risk profile: Bar market supply is falling. RBG is not heavily exposed to the supply-side risks that restaurants face; nor does RBG share nightclubs’ dependence on door fees (other sales are 2% of total sales). RBG currently has no net debt and no pension deficit. From this basis, we believe RBG offers attractive upside through growth and a potential re-rating, before considering upside from accelerating expansion.“

HospitalityGEM become HGEM: HospitalityGEM has completed the amalgamation of its brands to operate as HGEM, in line with its evolution to be the authoritative voice on guest experience management. The client-facing HospitalityGEM division of the business and guest-facing The Mystery Dining Company will both now function under the umbrella HGEM brand, in order provide a more holistic approach to clients across the hospitality sector. As part of the company’s mission to professionalise the discipline of guest experience management, HGEM has developed a unique framework alongside the brand repositioning. The ‘GEM Wheel’ will help operators to define their expectations for key aspects of the guest experience, to measure performance against these expectations and to take actions to improve results. The rebrand coincides with the appointment of client success manager, Amy Dignon, as the company evolves its software and service offer as part of the transition to HGEM. The new role will lead clients in best practice across all aspects of the guest experience, helping operators to explore ideas to improve the customer journey at a more strategic level. Her decade of experience within the hospitality and leisure sector – including roles as a restaurant manager at the De Vere Group and client manager at the Glasgow 2014 Commonwealth Games – combined with her experience at HGEM to date ensures she is best placed to understand the challenges faced by operators across the sector and help develop practical solutions. “The management of the guest experience is a core function in any hospitality business. The combination of industry experience and growing technical capability makes HGEM uniquely positioned to shape the landscape for how businesses not only measure the guest experience but take actions to improve it,” said Steven Pike, managing director of HGEM. “The rebrand is more than a refreshing new look – it’s a statement of intent for how we intend to empower businesses and individuals in creating amazing hospitality experiences. We recognise the value of being an extension of our clients’ teams in order to achieve this, and Amy’s experience is perfectly suited to help them go from strength to strength in creating a premium guest experience,” he added.

UK’s first alcohol free craft brewery set to brew first beer today: The first UK based brewery, to focus entirely on low and no alcohol beer, is set to brew its first craft beer today (Thursday 16th). Nirvana Brewery Co, is a new craft brewery based in East London, set to produce some great quality, full flavoured craft beers, but with low or no alcohol. Steve Dass, co-founder of Nirvana Brewing, said: “I came up with the idea after travelling and selling craft beer across many countries. I was asked several times from mainly buyers overseas – whether I could offer them any good quality, low alcohol beer. We know that a number of major breweries already have non-alcohol and low-abv beers. We want to create a range of alcohol free beers in a way without compromising on quality or taste and sticking to traditional brewing methods. Ultimately, we want to produce a range of beers that can be enjoyed by those looking to cut down – as well as craft beer fans. Not sat lonely on a different shelf but rather sat alongside all the other good quality craft beers. We are really excited with our initial feedback and we’ll do this by targeting specialist craft bars and bottle shops in London and around the country, as well as other brewery taprooms.” 

New online platform supporting interactive pub quizzes launches: A new online platform supporting interactive pub quizzes has been launched. Kwizzbit is the brainchild of Mark Walsh. Following his previous success with the pub game, Rock and Roll Bingo, Walsh gained key insight into customer findings and feedback and used his learning experiences to develop Kwizzbit. A multi-faceted online quiz platform, Kwizzbit provides a cloud-based solution that customers can access on their smartphones. Having attracted attention from a variety of sectors, Kwizzbit has ambitious plans to roll-out the game through pubs and clubs across the UK. Kwizzbit enables hosts and venues to deliver a interactive quiz through an internet browser and broadcast to smartphones and tablets creating a game show format in a real-time quiz environment. Originally intended to transform the traditional pub quiz, Kwizzbit is currently being tried in tested with several pub chains and has already been part of a major industry showcase. Walsh’s business partners John Sheard and Steve Saul have added their experience in quiz and business development, technical expertise and project management to the mix. Currently based in Leeds, West Yorkshire, Kwizzbit is set to deliver interactivity for a variety of purposes including audience participation during conferences and events, as a learning tool for training and development and the next generation of interactive marketing. Kwizzbit has already been trialled by Royal Bank of Scotland as a learning development tool and has received interest from companies including KPMG and Sky.

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