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Thu 13th Jul 2017 - Propel Thursday News Briefing

Story of the Day:

Sector like-for-likes bounce back with 0.6% growth in June, pubs outperform restaurants: Managed pub and restaurant groups were back in growth in June with collective like-for-like sales up 0.6% compared with the same month last year, according to the latest Coffer Peach Tracker. It comes after a 0.4% decline in May. “Fears of consumers cutting back on spending so far appear premature, at least when it comes to going to the pub or restaurant,” said Peter Martin, vice-president of CGA Peach, the business insight consultancy that produces the tracker, in partnership with Coffer Group and RSM. The Coffer Peach figures, collected from 36 companies across the country, showed pub and bar groups saw collective like-for-likes sales up 1.1% on June 2016, with casual dining restaurant chains marginally down 0.2%. “The good weather in June will have helped pubs rather than restaurants, but a positive return across the market, even if modest, is good news,” added Martin. “We essentially have a flat market, which considering the uncertainty in the wider economy and the increasing cost pressures that the out-of-home market is experiencing, will be welcomed by operators.” Overall, London had the best of the trading, with like-for-likes up 1.2%, against a 0.4% rise outside of the M25. London pubs had a particularly good month with like-for-likes up 2.4%. Martin added: “We know from our CGA business confidence survey that in the light of spiralling raw material costs, especially food, more than 80% of pub and restaurant operators have already pushed through at least some price increases on food and drink this year. Although that hasn’t boosted sales in any significant way, neither has it depressed them or significantly deterred customers, it seems.” Total sales growth in June among the tracker cohort was 3.7%, reflecting the continuing if more subdued effect of new openings over the year. The underlying annual sales trend shows sector like-for-likes running at 1.4% ahead for the 12 months to the end of June. Trevor Watson, executive director, valuations of Coffer Corporate Leisure, said: "Undoubtedly the favourable weather will have improved wet-led trade in particular. The impact of terrorist attacks on London wet-led venues appears to have been relatively modest compared with previous incidents. Davis Coffer Lyons is experiencing high levels of activity with large numbers of both buyers and sellers for all forms of licensed property at present with a perceived change in market sentiment approaching." Paul Newman, head of leisure and hospitality at RSM, added: “The pub sector has benefited from June’s spectacular hot spell, particularly those operators with river-based pubs and large gardens. Despite the additional cost pressures and general economic uncertainty, the resilience of this month’s results with a return to positive like-for-like sales is encouraging. Operators who offer the consumer an affordable experience will continue to thrive and prosper in the current environment."

Industry News:

Haysmacintyre and Propel benchmarking survey launches: The fourth annual haysmacintyre UK Hospitality Index benchmarking survey for multi-site pub, restaurant and foodservice operators in association with Propel has launched. The foremost financial benchmarking study for pubs, restaurants and bars – covering trading, staffing, capital and funding, and property – the survey report will deliver quality financial data and benchmarking intelligence to help hospitality businesses understand their sector better and improve operations. If you would like to complete the survey and receive the final report, please click here. The survey closes on Wednesday, 26 July. Information provided will be reproduced anonymously within this year’s haysmacintyre UK Hospitality Index report, which will be published in September. Data and comments will not be attributed to respondents.

Social Media for Profit masterclass opens for bookings: Propel has partnered with WE ARE Spectacular founder and group chief executive Mark McCulloch to launch the Social Media for Profit masterclass. This social media “boot camp” will give attendees the knowledge to go toe-to-toe with their marketing department, team and social media agency while helping them add value to their social media strategy. The half-day event takes place on Thursday, 14 September at One Moorgate Place in London and will give delegates insights into how to build their sales and brand using social media. McCulloch will explain how the social media game has changed as well as providing an in-depth introduction to the different channels, their purpose and the new social media landscape. The event will also include sessions on each of the main social media channels such as Facebook, Twitter and Instagram and how they should be used to drive sales as well as target potential customers with the right message. The boot camp will also include a session on how to tackle a social media disaster, from tiny blips to a national crisis. Tickets are £345 + VAT for operators, £445 + VAT for suppliers and £295 + VAT for Propel Premium subscribers. To book a place, email or call 01444 817691.

CMA refers Tesco’s £3.7bn acquisition of Booker for in-depth investigation: The proposed £3.7bn acquisition by Tesco of wholesaler Booker is being referred for an in-depth, phase 2 investigation by the Competition and Markets Authority (CMA). The CMA opened its phase 1 investigation into the merger in May and at the end of June, the companies requested a “fast track” referral to the next stage of the investigation. The CMA stated: “The CMA believes in more than 350 local areas where there is currently an overlap between Tesco shops and Booker-supplied ‘symbol’ stores, shoppers could face worse terms when buying their groceries. There are concerns, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco. Other concerns were raised and considered in the CMA’s Phase 1 investigation but the CMA has not found it necessary to conclude on all of these concerns given the ‘fast track’ referral. The investigation will now pass to a new set of decision makers – an inquiry group chosen from the CMA’s independent panel members. This group will assess whether the deal could reduce competition by conducting further research and analysis as well as seeking views and evidence from all those potentially affected by the merger. The statutory timetable for the in-depth Phase 2 investigation is 24 weeks, which means the final report will be published before Christmas – following an earlier provisional findings report. The CMA’s referral decision will be published shortly on the case page along with all other information relating to the investigation.”

Savills – investment in UK hotel market hit £2bn in first half of 2017: Investment into the UK hotel market reached £2bn in the first half of 2017 according to Savills. The firm predicted levels would reach £5.1bn for the full year, up 28% on total 2016 volumes of £4bn. Savills noted the hotel investment market in the first half of the year was driven by London and individual sales as overseas investors continued to demonstrate considerable appetite for the sector. The capital remained the largest market, accounting for 55% of transactions by value (£1.1bn). Individual sales accounted for 92% of transactions by value (£1.834bn) but a number of high profile portfolios are expected to come to the market in the second half of the year. Overseas investors have been particularly active with an appetite for big-ticket lots, accounting for £1.2bn in the first half of the year in comparison with the £822m transacted by domestic investors. Martin Rogers, head of UK hotel transactions at Savills, said: “The UK hotel market has had a strong start to the year as the sector remains resilient to the headwinds of the past six months. The favourable exchange rate has attracted overseas buyers that are looking for stable, long-term income. The anticipation of a softer Brexit will provide further comfort, encouraging development and relieving pressure on staffing.” The firm highlighted key deals for the first half of the year included the sale of the South Place Hotel in London, the Holiday Inn in Manchester city centre and the ongoing sales by Lone Star from its Project Solstice portfolio. Larger single asset deals have driven the market in the first half of the year, and as such average price per key in the UK has risen from £119,317 to £147,077 over the past 12 months.

Serviced operators embracing growth as they dare to be different: Serviced operators are moving away from the original extended-stay concept by embracing short-stay guests and adding a variety of facilities to their offer, according to a new report. As the branded serviced apartment sector becomes increasingly crowded, operators are daring to be different, said global hotel consultancy HVS. While most established hotel groups now have an extended-stay product, with some expanding through franchising, the majority of operators manage, own or lease properties. Other more distribution-focused groups have increased their portfolio of managed properties. HVS London senior associate and report author Nicole Perreten said: “The sector is steadily finding its place in the investors’ community with a development pipeline that’s larger than ever and increasingly includes secondary and tertiary markets. As a result brands are having to fight for attention by being creative with the addition of facilities such as communal space or dining areas, often at the expense of kitchens in the rooms. This can also mean that space is used more efficiently, improving profit margins.” Having surveyed the concepts and plans of 17 key serviced apartment providers, the report revealed there are 10,000 units currently in the pipeline across Europe, of which 37% will open by the end of 2017. The majority of pipeline openings are in the UK (41%), with Germany accounting for 32%. In the UK, London remains the top spot, with Manchester and Edinburgh also popular, along with Dublin in Ireland. Perreten added: “Our survey of operators confirms this product can be operated very efficiently with high gross operating profit margins as a result of low staffing levels and few additional services. However more hotel type services may become popular in the future as the sector continues to grow.” 

London hotel market reports strong growth in June despite London Bridge terror attack: The London hotel market saw strong growth in June despite the London Bridge terror attack, according to new data. STR’s preliminary report for the month showed average daily rate grew 5.5% to £162.51 compared with the previous year while revpar increased 5.1% to £136.72. Supply rose 3.6% while demand was up 3.2%. Occupancy fell 0.4% to 84.1%. STR analysts said the capital experienced only moderate declines in occupancy for following the 3 June terrorist attack at London Bridge and a week later, the market returned to performance growth. They added they believed the average daily rate growth towards the end of the month was down to a calendar shift in the Eid Mubarak holiday from July in 2016 to June this year, as the city typically welcomes a high volume of visitors from the Middle East during that time.

Final Lions match boosts beer volumes by 15% on the day: New data from beer quality and insight experts Vianet and MatchPint revealed pubs opening their doors early to show Saturday’s (8 July) nail-biting conclusion to the British and Irish Lions Test series enjoyed a significant uplift in beer sales. Data powered by Vianet’s iDraught beer quality and waste system gives a detailed analysis of volume and consumption during key trading occasions and sporting events broadcast live in pubs. For this summer’s Lions test series, Vianet has partnered with MatchPint to examine consumer interest and the impact of the matches on pubs’ beer sales. The final Lions Test versus the All Blacks kicked off at 8.35am with many sports pubs promoting the fact they were opening early for customers to enjoy the match. Beer volumes in sports venues saw a 58% uplift during match time compared with the previous weekend, with customer dwell time extended in venues after the game. Across the whole day, the average sports pub poured 467 pints – a 15% increase compared with the previous Saturday, according to Vianet’s data. Mark Fewster, product manager at Vianet, said: “Our insight over the past three weeks proves pubs opening early to show the Lions matches certainly benefited from a significant uplift in beer sales.”

Company News:

GC Mallen reports ‘blistering’ trade with two London sites in 23% growth: Multi-site pub operator GC Mallen, led by Garry Mallen, has told Propel current trade is “blistering” with two of its London pubs in double-digit growth this year. Mallen, who recently acquired his 12th site, in Sydenham, also said he had lined up his next pub. He added: “Trade is blistering at the moment, particularly at the London sites. Two of the pubs are doing extremely well and sales in the past month are up 23% on last year. The hot weather has helped but we have seen good growth from January onwards.” GC Mallen is investing £450,000 refurbishing The Greyhound in Sydenham having acquired the freehold for £800,000. Work is set to start on the site, based in Kirkdale, in August or September, which will include adding a conservatory and a kitchen on the first floor. There will also be two private dining rooms. Mallen said he was currently tweaking the offer at The Guinea pub in Tunbridge Wells, Kent, which was “not quite” meeting expectations. He acquired the site from brewer and retailer Greene King earlier this year. 

Darwin & Wallace to open fifth site this month, only pub at Battersea Power Station development: Bar group Darwin & Wallace, which is backed by Imbiba, will open No 29 Power Station West on Friday, 28 July. It is set to be the only pub joining a selection of all-independent traders in the Battersea Power Station’s “Circus West Village”. The location will offer an all-day drinking and dining experience with a food menu featuring locally sourced ingredients and dishes to suit all occasions. Situated between the Power Station and Battersea Park, No 29 Power Station West will have a stripped back utilitarian feel that rings true to the areas industrial heritage and reference the style of the period. With inspiration drawn from both local and worldwide influences, more than 100 pieces of hand-picked and crafted furniture, tiles and artwork will fill the bar including a bespoke Crittall shopfront that claims the space and handcrafted Bert & May tiles that run throughout the downstairs River Bar. No 29 Power Station West will serve more than 30 wines, 20 craft, draught and bottled beers, homemade soft drinks and a hand-picked collection of seasonal long and short serves including the Watermelon Sour and Passionfruit Caipirinha. Mel Marriott, Darwin & Wallace managing director, said: “We feel privileged and very excited to open our fifth pub in one of London’s most iconic locations. Together with our one of a kind collaborators, we are building a place of integrity, a place with a sense of home. With references to its industrial past and its iconic location and views over the river and the arches, No 29 Power Station West will be the perfect backdrop for eating and drinking.”

Drake & Morgan to open 22nd site in October: Drake & Morgan will open its 22nd venue, The Allegory, in Principal Place on the Shoreditch borders on Monday, 16 October. It will be located on the ground floor of Brookfield’s 600,000 square foot mixed-use office, residential and retail space in Bishopsgate, which is already home to internet retailer Amazon’s new headquarters. The 6,337 square foot space includes a large bar and separate dining area providing a total of 145 covers, with an alfresco terrace seating an additional 86. Industrial foundations are complemented by carefully curated touches including eye-catching street art, geometric flooring and feature light fixtures, echoing Drake & Morgan’s unique style. Managing director Jillian MacLean said: “Principal Place, on the edge of Shoreditch, is an exciting new scheme in the heart of London’s tech community. The City of London is Drake & Morgan’s heartland and Principal Place, with its public piazza and buzzing location, is a landmark development and we are looking forward to The Allegory being a central part of it.” As previously announced, Drake & Morgan will open two more bars and restaurants before the end of year in the Square Mile’s new Cannon Green building and in St Peter’s Square in Manchester.

North London-based Caribbean restaurant Jerkmaica to open third site this month, in Finsbury Park: North London-based Caribbean restaurant Jerkmaica will open its third site this month, in Finsbury Park. Founder Gary Bailey, who is a second generation West Indian, launched the venture after he provided Caribbean catering for his own wedding and spent subsequent years finessing family recipes in his own kitchen. Having opened sites in Crouch End and Chapel Market in Angel, Bailey is now adding the Stroud Green Road restaurant to his portfolio. Aside from jerk chicken, Jerkmaica is known for its traditional roti – a flatbread served with a combination of goat, chickpea chana and seasoned rice as well as other varieties of marinated fillings. Sides include Chow Chow salad and sweet potato fries while drinks feature rum and cocktails. Jerkmaica has also created a range of its own hot chilli and barbecue table sauces. Jerkmaica was originally founded in 2004. Its first iteration was a sit-in restaurant in London’s Crouch End. Bailey recast it as a fast food eating proposition after gauging customer feedback, and subsequently rebranded and launched the Chapel Market site earlier this year, which offers both takeaway and seating. He opened the 30-cover Crouch End outlet in May, which includes a Wagamama-style bench seating area and canteen-style format. Bailey said: “London’s culinary scene has really evolved over the years, and there’s a real appetite for fast, rustic street food with brave punchy flavours. We want to set a new benchmark and popularise the cuisine so that people gain knowledge and appreciation of the beauty of this type of food and it becomes widely enjoyed.”

M&B signs up to apprenticeship standard scheme: Mitchells & Butlers (M&B) has for the first time signed up an apprentice on to the new Hospitality Team Member apprenticeship standard as part of its drive to create 5,000 apprenticeships in the next three years. M&B currently has 1,594 apprentices on programme and 402 achievers to date. Paul Capper, M&B vocational learning manager, said: “It’s essential we can see the value we are driving through our apprentice scheme and the new apprenticeship standards give us an opportunity to have more transparency about the true return on investment it creates. The standards focus on developing knowledge, skills and behaviour and therefore this will only drive greater quality standards within the team and across the wider apprentice network.”

Remarkable Pubs boss goes back to the floor: Elton Mouna, managing director of London-based Remarkable Pubs, is to work one shift per month in all 14 pubs in the estate. He said: “In my hospitality career I have run three pubs and I never want to forget the focus and sheer hard work required to run a great pub. I do not want to become detached from the teams that run our pubs and I aim to connect with our customers so I can get a real understanding of what they want when they visit a Remarkable pub.” He will start at the Shaftesbury Tavern on Tuesday (18 July). 

ETM Group opens brewpub, distillery and urban farm in Shoreditch: Tom and Ed Martin, of ETM Group, have opened the Long Arm Pub & Brewery in east London’s Worship Street. The pub and brewery is unique to the UK market, the Martins said, free from packaging and boasting an on-site micro-brewery and micro-distillery alongside an urban farm. The Long Arm beers are served fresh from tank to glass, cutting out the keg, cask and bottling process. Additive and chemical-free, Long Arm’s unfiltered, unpasteurised “Tank Fresh” brews are dispensed from six 1,000-litre tanks. The regularly rotating six-strong range will always include a lager, pale ale, IPA, stout and a low-strength brew as well as a guest beer. Working with The Craft Distilling Business, Long Arm also distils its own small batch gin from a 50-litre copper and steel still. Fresh food complements the beer offering, with a menu featuring craft burgers along with bar snacks such as fish tacos, chilli salt squid, croquettes and Mexican sopes – a thick tortilla topped with meat and vegetables. The 85-cover, 2,500 square foot interior is industrial yet contemporary, with exposed concrete and brickwork, parquet flooring and Victorian tiling. Ed Martin said: “Our Long Arm Brewery in Ealing has been producing exceptional beers and our latest opening will combine my passion for brewing with my love of hospitality.”

Shake Shack to debut in Hong Kong: Shake Shack will open its first restaurant in Hong Kong next year, according to chief executive Randy Garutti. Maxim Caterers will be the licensee of the location. The company plans to open a total of 14 Shake Shacks in Hong Kong and Macau before 2027 to provide an eventual launching point into mainland China. Shake Shack expects about 90% to 95% of its US menu to be the same in China.

DHP Family leads way on Drinkaware initiative for young people: Live music venue operator DHP Family has been leading the way on the introduction of Drinkaware Crew to help young people stay safe and reduce the harm that can result from a drunken night out. DHP Family worked with Drinkaware on a pilot at its Rock City venue in Nottingham and has since expanded it to its Thekla site in Bristol. The scheme works best in late-night venues with a capacity of more than 700. An alcohol vulnerability awareness e-learning scheme aimed at smaller venues has also been developed by Drinkaware to train bar staff. DHP will be rolling out the e-learning to all its venues, which covers how to spot alcohol-related vulnerability and harassment and offers practical advice for staff. Employed by the venue, Drinkaware Crew attends training endorsed by the British Institute of Innkeeping. Working in pairs, the crew wear branded uniforms to ensure they are easily spotted by vulnerable people seeking help that can include reuniting friends, helping people to taxis or providing comfort to customers in distress. DHP Family head of compliance Julie Tippins said: “The project has been a really valuable exercise so far, it has not only helped our customers to remain safe but it has also freed up managers and security staff to keep the venue operation running effectively when they would have been otherwise tied up.” Drinkaware chief executive Elaine Hindal added: “Drinkaware is committed to finding new and innovative ways to reduce the harms caused by alcohol and to help keep people safe on a night out.”

Neville and Giggs unveil revised plans for £200m Manchester mixed-use scheme: Revised plans for the £200m Manchester city centre development by the St Michael’s Partnership, fronted by former Manchester United stars Gary Neville and Ryan Giggs, have been unveiled. The new proposal spares the historic Abercromby pub in Bootle Street, which dates to the Peterloo Massacre in 1819 and was the inspiration of the television series Life on Mars. It was previously set to be demolished to make way for the controversial scheme but the St Michael’s Partnership has changed its plans for the transformation of the 1.5-acre Jackson’s Row site in the city centre. As well as keeping the pub, the scheme retains the former Bootle Street police station frontage and reduces the height of one of the towers by two metres. The scheme will transform the site into a mixed-use development comprising a five-star brand hotel, apartments, a Grade A office building and ground-floor and rooftop retail and leisure units. Neville told The Business Desk: “It was important that we got it right and while we believed in the original scheme we have taken the opportunity to reflect on how we deliver the best possible proposal that balances generating the maximum economic benefits for the city and job creation, and our architectural ambition, with heritage and conservation.” Subject to planning approval by the city council, work is expected to start next spring or summer.

North Star Roasters opens first retail site: After primarily operating as a wholesale business for the past four years, supplying around 100 independent coffee shops and restaurants across the UK, North Star Coffee Roasters has opened its first retail location at Leeds Dock. The new location features a coffee shop and general store that provides an advanced offering of specialty grade, ethically sourced coffee, freshly roasted at an on-site roastery. There is a dedicated filter brew station with a regularly rotating menu of single origin coffees that are paired with a selection of freshly baked breakfast goods from Noisette Bakehouse; founded by Sarah Lemanski and her sister Hannah Mather. The general store will showcase food and drink producers from across the world. Next door to the on-site roastery, is North Star’s purpose-built Coffee Academy, which is certified to deliver accredited Specialty Coffee Association courses. North Star co-founder Holly Bowman said: “We are excited to open our first retail space at Leeds Dock right next door to the roastery and can’t wait to share all that goes on at North Star with our customers.” 

Hong Kong-style bubble waffles and cocktails concept to launch in London this month: Hong Kong-style bubble waffles and cocktails concept Bufle is to launch in London this month. Danhong Xie, who is originally from Hong Kong, is opening a site in Rupert Street, Soho, on Tuesday (18 July). Bubble waffles on offer will include Oreo Delight – a waffle filled with cookies and cream gelato and topped with Oreo chocolate cookies; and Funky Cereal Club, which is a waffle filled with bubble gum flavoured gelato, and topped with rainbow cereal and fresh strawberry. Diners can also create their own bubble waffle and these can be paired with cocktails and hard shakes, reports Hot Dinners. 

Hollywood Bowl and Chiquito sign for sites at new £100m Liverpool Shopping Park: Hollywood Bowl Group, the UK’s largest tenpin bowling operator, and The Restaurant Group’s Tex-Mex brand Chiquito have signed for sites at the new £100m Liverpool Shopping Park. Hollywood Bowl will open a 24-lane bowling alley next summer while the 156-seater Chiquito restaurant will occupy a unit at the entrance, next to sister brand Frankie & Benny’s, which agreed a deal earlier this year. Liverpool Shopping Park, which is being developed by The Derwent Group, will total 727,000 square feet once complete in October and include 1,500 parking spaces. The Derwent Group chief executive David Lyons told The Business Desk: “Liverpool Shopping Park will be one of the UK’s biggest shopping schemes once complete. We’re in final negotiations with a number of other retail and leisure operators and expect to announce additional lettings imminently.” McMullen Wilson, Petch & Co and CSP Curson Sowerby are the acting retail and leisure agents.

Papa John’s and Pizza Hut reveal cage-free policies for egg supplies: Papa John’s and Pizza Hut have revealed cage-free policies for their egg supply chains in the UK. Papa John’s has produced a timeline to eliminate cages from its egg supply in the UK by the end of 2019 while Pizza Hut has announced cage-free policies for its restaurants in the UK and Ireland. The pizza companies’ commitments follow similar policies from food companies in various industries, including Asda, Lidl, Aldi, Tesco, Morrisons and Iceland. The NFU has previously said retailers who are stopping the sale of caged-eggs must give their egg suppliers “more clarity on timelines” and tell producers which system will replace the current one. The UK is one of the EU’s highest consumers of eggs. About 40% of UK’s laying hens are still reared in cages, reports Farming UK.

East Yorkshire-based craft brewer plans to double capacity: East Yorkshire-based craft brewer Great Newsome is planning to double capacity with the launch of major investment plans. The company wants to convert a 5,381 square foot former farm building into a brewery, including a brewhouse, cold store and raw material storage. It operates from a fourth-generation family farm at South Frodingham in Holderness. It said that the extension would allow an additional 14,500 pints of beer per week, or 200 casks of beer, to be made, and the potential to add value to an additional 57 tonnes of home-grown malting barley per year, which is turned into malt at Muntons, Flamborough. The brewery has applied to East Riding of Yorkshire Council for change of use for the buildings. Director Matthew Hodgson told The Business Desk: “By remaining true to our roots and acknowledging our strengths, we have retained and grown our share in an increasingly crowded market, which is now become dominated by brands taking inspiration from alternative culture.”

Douglas Jack – JD Wetherspoon ‘faces tougher prospects’ in 2018: Peel Hunt leisure analyst Douglas Jack has argued JD Wetherspoon faces tougher prospects in 2018 despite a better than expected trading update. He said: “Full-year trading is slightly ahead, with total sales up 1.9% (we forecast 1.7%) and margins up circa 80 basis points (we forecast 55 basis points). We are upgrading 2017E forecasts by 4%, but expect profits to fall in 2018E and 2019E due to higher operating costs, weaker consumer conditions and an increasing cost of debt. In our view, the shares are over-valued, and would take profits. Investment in breakfast trading, kitchens, beer gardens and accommodation are paying off, assisted by the disposal programme (38 pubs were sold or closed in 2017E). Margins increased by circa 80 basis points in 2017E, but fell by circa 20 basis points in the fourth quarter by our estimates, despite like-for-like sales rising by 5.3%. Full-year margins were driven by stronger like-for-like sales, growth in accommodation, lower utility costs and less taxation in the first half, freehold reversions and tail-end pub disposals. Like-for-like sales need to grow by 3% to 4% to maintain profits. It is likely this scenario, which equates to a 25 basis points margin reduction, will have to be achieved against a backdrop of falling consumer disposable income. This may limit Wetherspoon’s ability to pass costs through to its price-sensitive customers. Our 2018E forecasts assume that like-for-like sales rise by 3.0% and margins fall by 40 basis points. During the last consumer recession, Wetherspoon underperformed its freehold peers with like-for-like profits falling for five consecutive years (from being -6.6% in 2008). Our 2019E forecast assumes profit before tax falls again due to a rise in the cost of debt, from 31 July 2018. Wetherspoon has a 54% freehold estate versus an 88% average for its freehold peers (Fuller’s, Greene King, Marston’s and Mitchells & Butlers). Despite this, a worse like-for-like sales track record during the last recession, a similar like-for-like sales (2.9% versus the peer’s 2.6% per annum average) and worse margin (-27 basis points versus -13 basis points per annum average) track record since 2007, Wetherspoon trades on the same EV/Ebitda (9.1 times) as the average of its freehold peers. Given the valuation and consumer outlook, we recommend taking profit.” 

Coca-Cola to radically increase amount of recycled plastic in bottles: Coca-Cola is to radically increase the amount of recycled plastic in its bottles amid pressure from environmentalists and new figures that show more than a million plastic bottles are bought globally every minute. The brand is to increase its target for recycled plastic in its bottles and its support for recycling. Coca-Cola’s UK and Europe arm currently has a target to increase the amount of recycled plastic or recycled polyethylene terephthalate in its bottles to 40% by 2020. It has already performed a U-turn over bottle deposit schemes following pressure from Greenpeace. In evidence to MPs before the UK election was called, the company said it now supported a deposit scheme. It had previously said it was opposed to such an idea. Figures obtained by the Guardian this month revealed across the globe one million plastic bottles are bought by consumers every minute – roughly 20,000 a second. The number will jump another 20% by 2021, with annual sales rising to more than half a trillion a year, creating an environmental crisis some campaigners predict will be as serious as climate change. More than 480 billion plastic drinking bottles were sold across the world in 2016, up from about 300 billion a decade ago. By 2021 this will increase to 583.3 billion, according to the most up-to-date estimates from Euromonitor International’s global packaging trends report.

Southport bar Peaky Blinders to start expansion with sister site: Southport bar Peaky Blinders is to start expansion by opening a sister site in the Merseyside town. The debut bar, inspired by the television drama of the same name, launched in Lord Street in November 2015. The owners are now set to open another pub in Cambridge Road, Churchtown, in the “coming months”, the Southport Visiter reports. Peaky Blinders offers real ales and an extensive range of bottled beers from around the globe alongside locally sourced wine.

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