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Morning Briefing for pub, restaurant and food wervice operators

Thu 9th Mar 2017 - Propel Thursday News Briefing

Story of the Day:

Industry News:

Propel Premium members to receive expanded database of multi-site operators: Propel Premium subscribers will soon receive an expanded database of multi-site companies. A total of 200 multi-site companies have been added to the database this time, which now features 900 multi-site companies in all. 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 will be able to receive the Morning Newsletter, which is sent at 6.30am each weekday, 12 hours earlier at 6.30pm the day before. Subscribers will also receive a digital version of Propel Quarterly magazine a week before publication plus regular audio tapes featuring sector executives and experts. 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 Anne Steele at

Win a 30-litre keg of London Pride Unfiltered: To celebrate the launch of London Pride Unfiltered, brewer and retailer Fuller’s has teamed up with Propel to offer five days of prizes. Today’s day-four prize is a 30-litre keg of London Pride Unfiltered. Yesterday, Toby Brett, managing director of Banwell House Pub Company, was the lucky winner of a 30-litre keg. Brewed true to London Pride’s original recipe, the beer is dry hopped for added character and flavour. Fuller’s goal was to make the beer as natural as possible so it is centrifuged – rather than filtered or pasteurised – to retain taste and complexity. To win, all you have to do is email with your name and company by 2pm today. Terms and conditions apply. Anyone interested in stocking London Pride Unfiltered should email or call 023 9271 4444. Check tomorrow’s newsletter for another London Pride Unfiltered prize draw.

ALMR – government must not restrict managers’ access to accommodation: The Association of Licensed Multiple Retailers (ALMR) has urged the government to retain the tax-free status of accommodation provided by pub employers, which the trade body negotiated in 2007. The government has said it will publish a consultation to bring the tax treatment of employer-provided accommodation and board and lodgings up to date. This will include proposals for when accommodation should be exempt, including accommodation for pub and bar operators. ALMR chief executive Kate Nicholls said: “For many pub, bar and restaurant operators the ability to live above the shop is an essential part of the job. Without this convenient accommodation, many licensees would be unable to work long hours and keep their businesses open. The tax-free status of pub accommodation must not be removed. The needs and concerns of operators across the sector must be reflected in the review and existing exemptions retained and expanded to reflect a changing hospitality sector. More businesses, including restaurants, are open into the night and represent a continually evolving eating and drinking-out market. These businesses must also be recognised for the contribution they make. The ALMR will respond to the consultation to make this point and push hard to ensure accommodation for landlords and managers remain tax free.”

CAMRA – drinkers have been let by down by 2p a pint rise in Budget: Drinkers have been let down by the chancellor’s decision to increase beer and cider duty in yesterday’s Budget, which will see the price of their pints rise. The announced two-penny-a-pint increase in beer duty is the first rise in five years. It marks a U-turn by the chancellor as he risks returning to the days of the “much-hated” Beer Duty Escalator. CAMRA national chairman Colin Valentine said: “UK beer drinkers, pubs and brewers have been let down by the chancellor’s decision to increase beer duty for the first time in five years. The announced two-penny-a-pint increase marks a return to the days when the much-hated Beer Duty Escalator contributed to 75,000 job losses, 3,700 pub closures and a 24% fall in beer sales in pubs. The rise in beer duty will ultimately hit consumers in their pockets and lead to pub closures across the country. The government’s U-turn on beer duty is a real missed opportunity to support consumers. The UK still pays one of the highest rates of duty across Europe, only consuming around 12% of the beer yet paying nearly 40% of all beer duty in the EU. Further beer duty increases will lead to unsustainable price increases in pubs. The decision completely ignores the pressures the beer and pub sectors face.”

Operators warned to seek formal request before handing over CCTV footage: Operators must ensure they have a formal request from the police or local authority before handing over CCTV footage, in order to comply with the provisions of the Data Protection Act, a leading barrister has advised. Speaking at the National Pubwatch Conference, Stephen Walsh QC admitted withholding CCTV images from police was a “tricky area” but said there must be evidence and documentation before a licensee or manager disclosed any data or footage. He said providing this data without a paper trail could open the premises up to proceedings from individuals who believed their data protection rights had been infringed. Police should provide a formal request, including evidence why the footage was required. It should be sufficiently detailed to allow the data controller (licensee) to make a considered decision as to whether they can share the data. “If a subject was to say ‘I challenge why you have done that’, there would be all kinds of trouble. There has to be a formal request from the police and it has to be sufficiently detailed to allow the data controller (licensee) to know the reason why the data has been requested,” Walsh warned delegates. The Data Protection Act does allow for sharing of information if it is required for the detection of crime. However, this does not provide police with an automatic right of access to personal data. “That has led to a common misconception,” Walsh said. “That is wrong as the Information Commissioner has repeatedly pointed out.”

Company News:

The Restaurant Group updates on brand performance: The Restaurant Group has updated on how its key brands performed in its 2016 financial year. It said: “Frankie & Benny’s (258 units): The brand had a difficult trading year, with declining like-for-like sales and operating margins substantially underperforming the market. Operational leadership was changed in June and, following the strategic review of the brands at the end of the summer, a series of price and menu trials were launched to test and learn the most effective way to arrest trading performance. Ten sites were opened and 15 sites closed during the year. Chiquito (79 units): Chiquito traded poorly in 2016, with declining like-for-like sales and operating margins. While a drop in cinema attendances contributed to some of this decline, the main drivers were poor proposition changes and operational issues affecting speed of service. Five sites were opened and 12 sites closed during the year. Coast to Coast (21 units): Coast to Coast had a difficult year. The brand is relatively young and, while lower sales are to be expected from new units after their opening year, sales have continued to decline. A radical change to the menu in January was received poorly and progressive price changes in recent years have also contributed to significant declines in like-for-like sales. Two sites were opened and two sites closed during the year. The Restaurant Group is exiting from six unopened but contracted Coast to Coast sites. Pub restaurants (57 units): Our pub business traded well during the year, growing like-for-like sales and profits. The strong and stable team continued to develop the business, improving the menus and successfully trialling new booking technology to accommodate more covers. Four sites were opened and one closed during the year. Concessions (59 units): Our concessions business had another strong year. While benefiting from strong passenger growth across our UK airport sites, we added to this by successfully driving incremental covers and spend per head. We opened one site during the year, a new pub in Gatwick North terminal, which has its own gin distillery, and closed two due to airport configuration changes.”

Douglas Jack changes Restaurant Group recommendation to ‘Add’ from ‘Hold’: Peel Hunt leisure analyst Douglas Jack has changed his recommendation on The Restaurant Group (RTN) shares to ‘Add’ from ‘Hold’ following the company’s results update. He said: “In 2016, profit before tax fell by 11% to £77.1m (we forecast £74.7m; consensus £67.5m). The decline in profit stemmed from a 3.9% decline in like-for-like sales and a 183 basis points fall in Ebit margins. Pricing initiatives will soon shift from promotions to addressing the core menus. RTN is holding the dividend (as forecast) and we are holding our 2017E profit before tax forecast of £57.9m (consensus: £54.9m) and raising our recommendation to ‘Add’ to reflect the dividend and planned cost savings. Total sales grew by 3.7% to £710.7m (we forecast £710.7m; consensus £690.4m), with like-for-like sales down 3.7%. In early 2017E, like-for-like sales are in line, which we interpret as down 3% to 4%. The company intends to “address the competitiveness of our leisure businesses head-on, requiring investment in both price and proposition, as well as increased marketing spend to re-engage lapsed customers... which will take time”. Frankie & Benny’s has added a value lunch menu, a “50% off main courses”, and two courses for £9.95 (previously £11.95). This is temporary, the key will be reinstating some previously popular dishes and launching a substantially better-value core menu later this month. Coast to Coast, which is offering 25% off main courses, will reposition to focus on steaks and burgers but at substantially more affordable prices. Margins fell by 183 basis points (we estimated -220 basis points), due largely to the decline in like-for-like sales. For 2017E, we forecast average sales falling by 3% (like-for-likes -4%) and margins falling by another 262 basis points, due largely to lower like-for-like volumes and pricing. In 2016, RTN opened 24 sites and closed 37. In 2017E, the company expects to open 16 to 20 sites. Although the company is facing lower pricing and higher cost pressures in 2017E, we estimate 2016 closures should add £3m to profit in 2017E and the company intends to make £10m of savings in 2019E. The related exceptional charges are £116.7m (£43.2m cash) in 2016, with another £6m to follow. Management is clearly trying to reinvigorate the business with initiatives that will take time to drive more regular customer visits. Core menu price reductions should materially undermine profits in 2017E but this was already in forecasts; now management has the opportunity to show why the dividend, yielding over 5%, is being held, and how it plans to drive cost savings and the customer proposition.”

Firezza to open flagship restaurant in Soho’s Dean Street: Firezza, the 22-strong pizza delivery and takeaway business that is owned by PizzaExpress, is set to make its restaurant debut in Dean Street this spring. The Soho restaurant will be the London flagship site for the pizza group, which offers “proper pizza” by the metre. Firezza, founded by managing director Edin Basic in 2001, has recently added six delivery sites, including Dulwich. The Soho residency will be a “social pizza experience” for customers built around sharing. Basic said: “Our customers have been requesting a restaurant for years and this location is the perfect place to launch the flagship restaurant. Firezza is a brand built on simplicity and sharing and that will be the experience our guests will enjoy, whether they have a lot of time or are having a bite before the theatre.” Firezza will trade daily from 10am until late.

Shepherd Neame and new concept Hancock’s sign for Chatham 5 development: Kent-based brewer and retailer Shepherd Neame and new concept Hancock’s American Restaurant and Bar have signed for units at the Pier 5 development at Chatham Maritime in Kent. Shepherd Neame has applied to open a bar and restaurant that would feature an outside terrace overlooking Chatham marina and open later this year. The company has submitted an application to Medway Council for a premises licence, with daily operating hours of 10am to 12.15am. Hancock’s will open in May offering ribs, steak, chicken, burgers, hotdogs and pizza. It will also offer cocktails and American craft beer, Kent Live reports. Businesses already open at the development include Burger Priest, a second site for the church-themed burger restaurant concept launched by Bar Sport founder Scott Murray, dessert cafe operator Creams Cafe, and UK noodle bar brand Wok&Go. There are only two units left to be filled at the waterside development. Last week, Shepherd Neame reported that like-for-like sales in its managed division grew 5.3% in the 26 weeks ended 24 December 2016. At the half-year end, the company operated 335 venues, ranging from inns and hotels to destination dining, traditional and local community pubs.

Shore Capital downgrades JD Wetherspoon shares: Shore Capital has highlighted margin concerns in a note downgrading its stance on JD Wetherspoon shares to ‘Sell’ from ‘Hold’. Shore analyst Greg Johnson pointed out that in its pre-close trading update last July, Wetherspoon “delivered a much better than anticipated margin performance, which has continued into the current year, snapping a long-term downward trend”. In a note, he said: “The subsequent re-rating leaves the stock trading on multi-year multiple highs and we believe the market is now pricing in a recovery in margins to circa 10%; a level not achieved since FY2010. Although we see JDW as a first-rate operator with scope to build margins from current levels, industry headwinds could limit progress. With limited visibility and a high sensitivity to margin development, we downgrade from ‘Hold’ to ‘Sell’. We believe the aggressive re-rating beyond past metrics leaves investors exposed should margins not recover towards 10% in the medium term. Should margins fail to build from current levels, fair value could be circa 650p per share.”

PizzaExpress picks Zonal for UK-wide EPoS roll-out: PizzaExpress has chosen hospitality management solutions company Zonal Retail Data Systems to roll-out EPoS across its 450 restaurants in the UK. Following a competitive tender, PizzaExpress chose Zonal for its “breadth of integrated technology solutions that can adapt and grow”. PizzaExpress has already adopted Zonal’s online booking system liveRES, which it said had led to an increase in bookings since its installation last year. PizzaExpress has piloted the Zonal technology at 20 sites, with the full roll-out due to complete in May. Zonal will install technology at up to ten sites a day, including Aztec EPoS software and the company’s iServe hand-held ordering app and integrated card payment system, which offers chip-and-pin and contactless functionality and is compatible with Apple and Android Pay. Zonal will also provide e-learning training and onsite go-live support. PizzaExpress IT director Siobhan Fagan said: “We were impressed with Zonal’s knowledge of the restaurant sector and the need to provide flexible systems that enhance the customer journey – from booking a table to taking an order and settling a bill. Last year we installed liveRES and it has really helped how we manage our bookings. It provides us with valuable insight, which will now be enhanced with the adoption of Aztec, providing us with a single customer and operational view.” Zonal sales and marketing director Clive Consterdine added: “We are delighted to have the opportunity to build on our partnership with PizzaExpress.”

Starbucks debuts barrel-aged coffee: Starbucks is debuting barrel-aged coffee at its Seattle Roastery. The company is selling two new speciality drinks – a cold brew sweetened with vanilla syrup in a sidecar glass and a hot “con crema” drink that features vanilla syrup and is topped with sugar and foam. The drinks are made from beans aged in whiskey barrels, while the roastery is also selling bags of the beans. Starbucks Reserve Whiskey Barrel Aged Sulawesi beans are aged in “freshly emptied” oak barrels from local distiller Woodinville Whiskey Co. The beans are hand-rotated frequently during several weeks to ensure they all come into contact with the barrel and absorb the flavour of the whiskey. The roasting burns off the alcohol but retains the whiskey flavour and smell. Duane Thompson, from Starbucks’ beverage research and development team, said: “Exploring the potential of coffee and marrying non-traditional experiences and techniques is something we’re experimenting with daily. We start with the bean first and go from there. There’s no better stage than the Starbucks Roastery for a unique coffee like this because customers are seeking an immersive, sensorial experience the craftsmanship of barrel-aged coffee delivers.”

Mudman plans to bring Greyhound Cafe concept to UK with flagship London opening: Mudman, the master franchise operator of Au Bon Pain, Baskin-Robbins and Dunkin’ Donuts in Thailand, plans to bring its Greyhound Cafe concept to the UK. The company is eager to open a flagship store in London in the fourth quarter of this year as part of international expansion plans, the Bangkok Post reports. The London opening, with a budget reported to be between £1.8m and £2.4m, would pave the way for Mudman to sell Greyhound Cafe franchise rights in Europe. The company operates 13 Greyhound sites in Thailand, with plans for a further six to nine venues in the country this year. It also operates 307 Dunkin’ Donuts, 72 Au Bon Pain and 34 Baskin-Robbins sites internationally. Mudman chief executive Nadim Xavier Salhani said: “After England, we will target opening Greyhound Cafes in one to two more European countries a year. We believe in the cafe brand image and uniqueness.”

Casual Dining Group changes mind on Chelmsford opening: Casual Dining Group has decided against opening a Bella Italia in Chelmsford and withdrawn plans to open in the city. The company had expressed interest in an empty unit in the Meadows Shopping Centre last year. An application had been made for a change of use for the empty unit at the entrance to The Meadows – between Barclays Bank and Fat Face. There had even been detailed applications showing proposed floor plans and signs for the Italian chain. However, the company has now confirmed is no longer looking to open a restaurant there. A Bella Italia spokesman said: “We regularly review and evaluate the opportunities we have to open Bella Italia restaurants and, as a result, on this occasion we have decided not to take up an opportunity at The Meadows.” Earlier this week, The Restaurant Group pulled its plans to open a venue for its Coast to Coast brand in the new £150m Bond Street development in Chelmsford.

Wild Beer Co ‘smashes’ £1m crowdfunding target in six days: Somerset-based brewer Wild Beer Co has “smashed” its £1m crowdfunding target in only six days. The company is offering 3.85% equity for investment in its campaign on crowdfunding platform Crowdcube. So far it has raised £1,058,370 from 928 investors and the campaign is “overfunding” with 22 days remaining. The company will use the funds to build a destination brewery, including a visitor experience with bars, a restaurant, and shop, develop its current facility into an oak and wild fermentation specialist, and develop its bar and restaurant business. Wild Beer Co founders Brett Ellis and Andrew Cooper said: “Only six days into crowdfunding we smashed through our initial target of £1m. Every pound we raise is going to grow our business and the capital raised during this finite overfunding period will allow us to expedite our plans.” Cooper and Ellis founded the company in 2012 with a “passion for wild fermentation and barrel ageing to make beers with complexity and unusual flavour”. The company exports to 22 countries. Its pitch states: “The funds will not only shape the future of Wild Beer but allow us to continue pushing the boundaries of the beer industry. Our aim is to stay at the forefront of the UK wild fermentation and barrel-ageing beer scene and continue growing our business.” Wild Beer Co operates bars in Bristol and Cheltenham.

Building housing Jamie’s Italian in Chelmsford goes on market for £2.3m: The building housing Jamie’s Italian in Chelmsford has gone on the market for more than £2.3m. Jamie’s Italian rents the city centre building in High Street on a 25-year lease at £125,000 a year. Celebrity chef Jamie Oliver opened the site in 2014 as the first Jamie’s Italian in Essex. It is now one of more than 60 worldwide. The grade II-listed building, a former bank, is being marketed by agents HRH Retail. Jeremy Lovell, head of investment, told Essex Live: “This sale provides a fantastic opportunity to acquire a valuable restaurant asset let to a ‘local boy’ with a very high profile. The leisure focus of Chelmsford is shifting towards the northern end of High Street where the property is located, with the Bond Street centre acting as a magnet to other restaurant operators.” In January, Oliver closed six Jamie’s Italian restaurants on the back of difficult trading since the Brexit vote – in Aberdeen, Exeter, Cheltenham, Richmond, Tunbridge Wells and Ludgate Hill, near St Paul’s Cathedral.

Five Guys to open second Edinburgh site, takes final Leeds shopping centre unit alongside Limeyard: Better burger brand Five Guys is to open its second site in Edinburgh, this time in the city centre, and has also taken one of the last remaining units in the White Rose shopping centre in Leeds alongside Cote’s all-day American dining brand Limeyard. Five Guys, which operates a restaurant in Fort Kinnaird retail park, will open its new site in Fredrick Street. Callum Mortimer, director in the retail team at CBRE, which advised Five Guys, told the Edinburgh Evening News: “Having also concluded deals with Five Guys in Aberdeen and Dundee city centre recently, we were delighted to help secure such a prominent location.” Meanwhile, the expanded leisure line-up at Leeds’ White Rose Shopping Centre is now complete after Five Guys and Limeyard agreed deals for the final units. The 65,000 square foot extension, due to fully launch in the autumn, will feature six restaurants and an 11-screen IMAX Cineworld multiplex. Five Guys has signed for a 3,800 square foot site, while Limeyard will open its first site in the north, and third in total, at a 3,100 square foot unit that has an additional 700 square foot mezzanine. The White Rose extension will also feature Wagamama, The Restaurant Group-owned Tex-Mex brand Chiquito, TGI Friday’s and Pizza Hut. JLL acted for Land Securities, while Central Retail acted for Five Guys. Limeyard represented itself.

Team behind award-winning Cardiff pub to open second city site: The team behind The Landsdowne pub in Cardiff is set to open a second site in the city. The Grange will open in Penarth Road, Grangetown, on Friday (10 March), in time for Wales’ Six Nations rugby union clash with Ireland. The pub will offer five, regularly changing guest ales with an emphasis on good food and beer. Manager Dai Dearden told Wales Online: “We have kept the old features and they have been fully refurbished so the pub layout is the same as before but everything inside looks new. I think Grangetown has been missing good local pubs. There’s nothing else down here where people can take their families and feel part of the community.” The Landsdowne in Canton was CAMRA Pub of the Year in 2014 and 2015.

Michelin-starred chef Elizabeth Allen to open debut restaurant: Michelin-starred chef Elizabeth Allen will open her debut restaurant in the autumn. Shibui will be the first project from her new company Kaizen House and aims to unite Allen’s love of “fire, subtle details and bold flavours” with intentions of “elevating everyday dishes with interesting ingredient pairings”. Shibui is an old Japanese word meaning “beauty in simplicity”, and Allen’s menu will focus on “casual fine dining meets sophisticated barbecue”, with European and Asian influences. The Kaizen House website states: “The values behind the company are simple – to create, excite, indulge, educate and improve. Kaizen House is a London company with a focus on building great restaurants for diners, encompassing Japanese philosophy, warm hospitality and with ideas underpinned from the talents of Elizabeth Allen and her team.” Allen won her Michelin star for Hackney restaurant Pidgin, moving on to operate Shibui as a pop-up at Marylebone food and events space Carousel, featuring dishes such as buttermilk ramen chicken with miso and caviar.

Pan-Asian food hall Bang Bang Oriental to launch in north London: A huge new Asian food hall, which will feature restaurants, 33 kiosks and shops with room for 450 diners in total, is set to launch in north London. Bang Bang Oriental will open this summer in Edgware Road close to Colindale tube station with a focus on pan-Asian food, Hot Dinners reports. The stands and restaurants will offer food from China, Korea, Japan, India and Vietnam, plus cuisine from less well-represented countries such as Malaysia, Singapore and Taiwan. Bang Bang Oriental will also feature a Chinese massage parlour, herbal medicine shop, and nail and beauty boutiques on a mezzanine floor, plus a 300-cover dim sum restaurant called the Golden Dragon. There will also be a number of community spaces available for locals to hire free of charge.

CPL Online launches data protection e-learning course: CPL Online, which provides licensed retail and hospitality training across the UK, has launched an e-learning course covering data protection. The course has been developed as part of CPL Online’s “next generation” format and covers all types of data, from staff records to CCTV footage. The company said the relevance of the Data Protection Act had grown significantly, with the need for data processing increasing daily. It added that a UK government survey in 2015 revealed 90% of large organisations and 74% of SMEs reported a security breach. The course focuses on driving user engagement by incorporating mobile learning, language translation, gamification, and videos and animation. Companies can monitor staff training progress, which includes suspicious activity and real-time reporting and insights. The course has been accredited by the CPD Standards Office, enabling those on the course to request a certificate of attendance, which is then recorded in CPD requirements. CPL Online account director Andrew Rannard said: “In the space of 45 minutes, the Data Protection course covers all key areas by taking learners step-by-step in accessible bite-sized modules. It’s a simple way to learn how to comply with the law, manage personal data and safeguard operations effectively.”

Aluna owner to launch Thai bar and restaurant concept in Birmingham city centre: Nishil Nathwani, who owns Aluna bar and restaurant at The Mailbox in Birmingham, is to launch new bar and restaurant concept Siamais in the city centre. The venue will open in Brindleyplace at the end of this month at a site formerly occupied by Thai Edge, which was one of the first restaurants to move into the canal-side development 16 years ago. Nathwani’s parents Harish and Nancy founded Thai Edge, opening sister restaurants in Cardiff, Bristol and Leeds. However, they are now retiring. The Cardiff restaurant closed because of redevelopment of the St David’s Centre, while the Thai Edge in Bristol was recently converted into an Aluna bar. Thai Edge Leeds has been bought by a third party, which now has sole rights to the name. Siamais will offer a 60-seat bar and high-class, 100-cover Thai restaurant, employing 25 to 30 staff. Nathwani told the Birmingham Post: “I’ve chosen the name Siamais to reflect the nature of Siamese twins – two different people sharing one body. The bar and restaurant will have separate entrances and be divided by a curtain. I grew up with Thai Edge and it’s great cuisine. I want Siamais to be the best of both, with new and authentic chefs in the kitchen and front-of-house staff we’ve trained at Aluna. These days, if people are going out they want somewhere special – and I want to be the best.” Nathwani hopes to develop the Siamais concept in cities such as Manchester and Liverpool.

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