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Wed 12th Dec 2018 - Propel Wednesday News Briefing

Story of the Day:

Deliveroo launches food market, PizzaExpress using site in Hong Kong to test pasta concept: Deliveroo has opened its first food market, in Hong Kong, and plans to expand the concept globally if it proves successful. Deliveroo Food Market will serve as a kitchen for delivering online orders as well as a consumer-facing storefront, where customers can choose from 15 dining concepts. Deliveroo general manager Brian Lo told CNBC: “We find there is an opportunity to bring our offline to online model to our customers. Hong Kong has some of the most expensive rental prices so the pressure on restaurant operators is high and this model works very well for them.” Deliveroo Food Market is an extension of the company’s “Editions” programme – kitchens that host more than 100 restaurants to prepare food in a shared kitchen space. Lo said its restaurant partners in the Hong Kong neighbourhood of Wanchai generate margins that are high for the food and beverage industry, ranging between 10% and 15%. Deliveroo hopes its food market will not only allow restaurant groups to expand their delivery sections with lower costs but also double as innovation centres. The Hong Kong food market houses five restaurant groups offering 15 concepts between them. Meanwhile, PizzaExpress will use part of its kitchen at the food market to test out a pasta concept. Liam Collette, managing director of international, said: “The Pasta Project, as a virtual brand, gives us the opportunity to be more adventurous and try riskier things. Restaurants are not going to be eliminated by delivery and we’re going to continue to expand, but it is a key part of the dining scene so we need to lead into that.” Deliveroo grew 116% globally in 2017 and operates across 13 markets. It will add a second food market in Singapore next year.

Industry News:

Propel launches Leadership Summit, open for bookings: Propel is launching the Leadership Summit, which will see a select group of the sector’s most experienced bosses share their expertise on leadership. The full-day event, in partnership with Elliotts, will take place on Tuesday, 12 February at One Moorgate Place and is open for bookings. Speakers will include Will Stratton-Morris, chief executive of Caffe Nero, who will talk about building high-performance teams. Alasdair Murdoch, chief executive of Burger King, will speak about the role of leadership in business turnarounds. Elliotts chief executive Ann Elliott will talk to Des Gunewardena, chief executive of D&D London, about the lessons of leadership he has picked up in his career in the sector. Duncan Garrood, chief executive of Ten Entertainment, will give his views on leadership and the customer experience, while Jo Fleet, managing director of Flat Iron, will talk about empowering people and trust and getting the team to “buy in” through clear communication and vision. Mark Jones, chief executive of Carluccio’s, will explain how the company is building the quality and skillsets of its general managers to lead the business out of decline. Simon Townsend, chief executive of Ei Group, will give his views on the challenges of leadership during a period of immense change and Zoe Bowley, managing director of PizzaExpress, will give her top ten tips on leadership. Meanwhile, Loungers founder Alex Reilley will talk about the adaptations involved in growing a business from one site to more than 100, celebrating success and the art of succession, while Ann Elliott will give her views on the power of mentoring to grow talent in organisations. Propel managing director Paul Charity said: “With the industry facing such challenging times, effective leadership has never been more important. This is an unmissable opportunity to learn from high-profile leaders in our sector.” Prices are £295 plus VAT for Premium members, £345 plus VAT for operators and £445 plus VAT for suppliers. To book, email

UK’s foodservice and hospitality sectors ‘wasting one million tonnes of food per year’: The UK’s hospitality and foodservice sectors are wasting one million tonnes of food per year, according to a new report by food safety company STS. The report said more than one-quarter (26%) of food waste in the UK is spread between manufacturing, hospitality and foodservice, with the amount wasted by the hospitality and foodservice sectors continuing to rise. The STS expert panel, which included Lisa Cobb, head of health, food and fire safety at SSP Group, and Wagamama risk and compliance director Tracey Colbert, said food wastage had reached unacceptable levels and actions could and should be taken to reduce it. The Avoiding Food Waste study came up with four key tips to help cut food waste. It said working with action groups such as Fareshare and WRAP helped to achieve a “consistent and positive approach” to avoiding food waste across the supply chain and the foodservice and hospitality industries. It also said getting staff involved and raising the visibility of food waste reduction initiatives was “a must” by offering staff opportunities to take part in volunteer schemes. The study also recommended operators liaise with their food suppliers to change packaging sizes, while working with local enforcement agencies ensured an operator’s approach didn’t compromise food safety.

New report highlights ‘huge’ economic contribution of beer and pub industry in Scotland: The beer and pub industry’s “huge” economic contribution to communities across Scotland has been highlighted in a new report. The report for the Scottish Beer & Pub Association (SBPA) by Oxford Economics, which has been published ahead of the Scottish government setting out its draft budget on Wednesday (12 December), showed overall beer and pub activity in Scotland sustains 66,830 jobs and makes a £1.66bn contribution to the economy. It also revealed the increased level of investment by the industry in Scotland, with £176m provided in capital investment, and the £780m tax contribution by the sector. The largest economic benefits are in Glasgow and the Lothians, with more than 24,000 people employed in the sector across Scotland’s two biggest cities. The findings also underlined the importance of the sector to young people, with more than two-fifths (42.6%) of those directly employed under 25 years of age. SBPA chief executive Brigid Simmonds said: “This report shows the huge economic contribution of beer and pubs to local communities across Scotland. To continue to grow the sector, however, we desperately need further support from government, particularly for Scotland’s pubs in the form of business rate relief. As this report shows, the beer and pub industry in Scotland pays close to £1bn in tax every year but recent cost increases have significantly reduced the profitability of many pubs. This was recognised by the UK government for pubs in England, with Philip Hammond providing a relief for all pubs rated fewer than £51,000 in his budget in October. A similar relief for pubs in Scotland would allow the sector to continue to invest and provide jobs.”

UKHospitality – London Food Strategy recognises importance of sector: UKHospitality has said the London Food Strategy recognises the importance of the sector and reiterated its desire to support mayor Sadiq Khan’s vision for food. UKHospitality chief executive Kate Nicholls said: “Hospitality plays an integral role in the mayor’s plans for promoting healthier attitudes towards food. Eating out is a fun recreational activity that is vital to the well-being of Londoners as well as being beneficial to the economy. The mayor recognises the importance of the food and drink sector in London, particularly the fantastic employment and skills development on offer. This includes supporting smaller businesses’ access to apprenticeship levy funding. He has also reiterated his support for enhancing London’s status as a world-leading food destination and support for tourism and hospitality. We look forward to working with the mayor to ensure any new measures are practicable and don’t have unintended consequences on vital hospitality businesses. UKHospitality will continue to engage with the mayor and the London Food Board to ensure the city’s hospitality sector is at the heart of plans to promote good food.”

One in three pints served over Christmas won’t be ‘up to scratch’: One in three pints served during the Christmas trading period won’t be up to scratch, according to new research by beer quality and insights expert Vianet. Its draught insight report showed that of the 13,000 barrels of beer sold on the “Mad Friday” before Christmas last year, 4,000 were poured through unclean lines or at the wrong temperature. Vianet managing director Steven Alton said: “In the pub trade we have got to get to grips with consistently serving great-quality beer and understand the impact this has on individual outlets and larger pub estates when we don’t. If we are serving one in three customers over Christmas with a poor pint, we are letting them down. Christmas is an opportunity to retain loyal customers and grow your customer base by gaining new ones.” The insight was gathered between October 2017 and September 2018. Apart from the Fifa World Cup match between Sweden and England, the highest earning session for British pubs was Friday, 22 December closely followed by Christmas Eve.

Company News:

Young’s chief financial officer steps down: London pub retailer Young’s has announced chief financial officer Steve Robinson has resigned and left the business to pursue other interests. The company said it expects to appoint an interim chief financial officer in the new year while the board searches for a permanent successor. Robinson joined Young’s in June 2009 and became head of finance in September 2013. He joined the board in September 2016 when he succeeded Peter Whitehead as chief financial officer. Young’s chairman Stephen Goodyear said: "On behalf of the board I would like to thank Steve for his contribution to Young’s during the past nine-and-a-half years, especially in the role of chief financial officer since September 2016. We wish him well for the future.”

Abokado moves outside central London heartland for 24th store, first site to trade at weekends: Healthy eating chain Abokado, which is backed by Kings Park Capital, has moved outside its central London heartland to open a store in Hammersmith. The site is the brand’s first to trade at weekends and to offer its new look, developed with London design agency Mystery, which focuses on providing a “comfortable, calm and elevated feel”. Abokado said the move demonstrated its ability to “attract a different customer mix”, while investment to stretch the daypart beyond lunch into the morning and evening had led to two-fifths (40%) of customer visits now being outside lunchtime, driven principally by breakfast and coffee sales. The company said its customer base had also broadened considerably thanks to the success of ranges such as poke salads and yakisoba noodles, with its core range of sushi now representing only one-fifth (20%) of total sales. Operations director Kara Alderin said: “Our arrival in Hammersmith marks an exciting time for the business, stepping into a new territory outside our Zone 1 heartland. We’re delighted to be trading ahead of expectations, with a fresh brand feel and trading space designed for all dayparts.” Chief executive Mark Lilley and wife Lindsay launched Abokado in 2004. In October, the company reported record profits for the year ending 31 March 2018. Profits increased 24% to £726,000, while site Ebitda increased to £1.7m.

Neapolitan pizza brand Proove starts opening larger sites as it aims to show attractiveness of model to potential investors: Neapolitan pizza brand Proove has started opening bigger sites to show it can maintain the quality of its food at speed as it looks to make itself attractive to potential investors. Co-founder Deepak Jaiswal told Propel the company was keen to expand in Yorkshire, the north west and the Midlands. Proove has just opened its third site, and largest to date, at the Centertainment leisure park in Sheffield having taken on a former Prezzo unit. Jaiswal founded Proove with Rob Engledow in 2015, opening its first restaurant in Sheffield and another in West Didsbury in March 2017. The company also operates two dark kitchens with Deliveroo – in Leeds and Salford – and a mobile business, which is “going strong”. Jaiswal said: “Our model works well for a high-volume site without compromising quality, authenticity or service. Naturally, if we want to be attractive to a potential investor we need to show we can maintain this. Centertainment is a much bigger site than our others and we’ve been able to serve 180 to 200 covers an hour while maintaining the quality of our product, which is made on-site every day to order. We are working with Centertainment to drive footfall to the park as our model relies on high traffic.” Regarding expansion, Jaiswal said: “We have used the mobile business to build the brand. It gives us a way into the community, then draws people into the restaurants. The Leeds location has opened a new market for us and Manchester has the potential for another two or three sites. We’re also looking at Liverpool, Chester and Nottingham among other locations but want to be realistic in terms of our company size and infrastructure so the number of openings per year will reflect that. One of the biggest challenges we have is staffing – it’s all well and good opening sites but you need the right people to run them. High service standards and product knowledge are a priority so we’re keen to nurture and train new team members as they are our main ambassadors. The other way we will explore growth, particularly if we want to go international, is through franchising but I don’t feel we’re ready to go down that route yet.” He added: “One of the things we are trying to do is be transparent. An example of this transparency is fair pricing for all customers, rather than the need for guests to acquire discount codes or hunt for vouchers. I want our brand to continue to stand for quality, authenticity and value.”

Manchester-based bar brand Liquid Art Group launches £250,000 crowdfunding campaign to open 12 sites in three years: Manchester-based bar brand Liquid Art Group has launched a £250,000 fund-raise on crowdfunding platform Crowdcube to open 12 sites in three years. Liquid Art Group founders Oliver Calveley and James Fennell are offering 6.75% equity in return for investment, which gives the company a pre-money valuation of £3.4m. The group operates three venues in Manchester – The Drawing Room, The Shack and The Cellar – and has developed its own craft gin, Calveley’s. The company said it had seen 144% turnover growth between FY2017 and 2018, with £128,000 Ebitda for 2017/18. The pitch states: “Research shows cocktail connoisseurs are on the rise. A survey conducted last year found 77% of drinkers are happy to pay more for a premium cocktail. With our themed bars, cocktails, craft beer and our own brand of gin, it is a market we understand well. Well established in highly desirable locations across Manchester, we are now looking to expand our brand across the UK. Sticking to our proven model, we have successfully carved our own niche in Manchester’s thriving cocktail and craft beer scene. This phase of investment will enable the Liquid Art Group to open 12 more sites. Following our successful formula, these venues will be intimate, full of atmosphere and with location at their core. In addition to growing our chain of cocktail bars, we also plan to expand our craft gin brand. The first offering from the Calveley’s gin range is an infusion of thyme and orange, with a London dry gin to follow.”

Everards acquires Northamptonshire canal-side pub: Leicestershire brewer and retailer Everards has acquired award-winning canal-side pub The Admiral Nelson in Braunston, Northamptonshire. The building dates to 1730, before the Grand Union Canal was even created, while the pub was nominated as one of the top ten waterside pubs in the UK by the Guardian. The Admiral Nelson features a lounge and bar, games room, 30-cover dining room and beer garden seating 100 people. Previous owners, Mark and Pam David and Liam Evans, are looking to retire from the industry. Everards managing director Stephen Gould said: “We are delighted to bring The Admiral Nelson into the Everards family. We have more than 175 pubs across the East Midlands and this will join our other six pubs in Northamptonshire. All Everards pubs are run as independent, tenanted businesses and we are already seeking a business owner for this well-located, historic pub.” Joshua Sullivan, business agent at Christie & Co, which handled the sale, added: “The Admiral Nelson is a strategic acquisition for the company given the fact it is easily accessible from the main brewery due to strong transport links. The level of interest we saw for this asset demonstrates the strength in the current market place for destination venues.” 

Gino D’Acampo expands debut My Coffee & Deli Bar site, looks to roll out new online ordering service across restaurant portfolio: Chef Gino D’Acampo has expanded his debut My Coffee & Deli Bar site due to demand while he is looking to roll out its new online ordering service – Gino2Go – across his restaurant portfolio. D’Acampo launched the concept eight weeks ago on the lower ground floor of his My Pizza & Prosecco Bar in Manchester, which is located in fashion retailer Next. He has now acquired further floor space within the store to add 25 covers. D’Acampo has also introduced Gino2Go, which enables guests to pre-order their lunch and collect it to avoid queues. D’Acampo said: “Italian fast-casual dining is a popular concept in Italy and has been well received in London. I had no doubt it would prove popular in Manchester. People’s lifestyles have changed – they’re looking for great-quality hot food that can be enjoyed on the move or in an easy, relaxed environment. My Coffee & Deli Bar delivers exactly that, morning, noon and night. It is early days for Gino2Go but the initial response has been great and we’re looking forward to rolling it out across our wider restaurants. If you want to be successful in this industry you’ve got to be agile, you’ve got to listen to what people want and embrace new advancements in technology, it’s not just about delivering great food.” My Coffee & Deli Bar is D’Acampo’s third venue in Manchester sitting alongside his original restaurant at the Corn Exchange and his My Pizza & Prosecco Bar, which is on the first floor of Next. D’Acampo made his move into restaurants when he teamed up with friend and business partner Steven Walker, founder of Manchester-based restaurant group Individual Restaurants. They plan to open more restaurants in 2019 to build on venues in Harrogate, Hull, Leeds, Liverpool, Manchester and London.

Other Side Fried to launch kiosk format for fifth site: Chicken burger concept Other Side Fried is launching a kiosk format for its fifth site. The company will open the venue in Cranbourn Street, just outside Leicester Square tube station, on Friday, 21 December. The kiosk will act as a takeaway-only venue with the menu consisting of burgers, wraps and sides including a honey butter burger (fried chicken, smoked honey butter, bacon, pickles and lettuce), and a fried chicken wrap with smoked cheese sauce. Other Side Fried began operating from the back of a converted British ambulance, which it still operates at Kerb Camden, going on to open permanent sites at Pop Brixton, Dirty South in Lewisham and Peckham Levels.

Tim Barrett – TRG’s valuation is ‘compelling’: Numis Securities leisure analyst Tim Barrett has argued The Restaurant Group’s valuation is “compelling”. Issuing a ‘Buy’ note on the shares with a target price of 225p, Barrett said: “The Restaurant Group’s share price has fallen 43% on an ex-rights basis since the acquisition of Wagamama was announced in October. This is a reduction in value of £300m, equivalent to a de-rating of 3.2 times Ebitda. On our analysis, the share price is discounting a 0.4 times multiple to the 381 leisure outlets, which make outlet-level Ebitda of £60m. We view Wagamama as one of the best-quality assets in UK casual dining by virtue of its consistently strong like-for-like sales growth (9.6% four-year average, 12.2% in past 11 weeks), leading net promoter score and consistent roll-out (circa 6% per annum unit growth). The Restaurant Group has paid a full price for the business at 13 times 2018A Ebitda, although the multiple compresses quickly given the expected 20% four-year compound annual growth rate we model (8.9 times by FY20). Excluding US startup losses and pre-opening costs would bring the multiple down by one times Ebitda as well. The Restaurant Group recently confirmed its own like-for-like sales had returned to growth in the second half and were +1.4% in the 14 weeks following the end of the World Cup (weeks 28 to 42). This was expected given the anniversary of a sharp price reset in 2017 and will need to accelerate further given the ongoing cost pressures across the sector (National Living Wage +4.9% from April 2019). The valuation is compelling. Following the recent pullback, The Restaurant Group now trades on an FY19 EV/Ebitda of 6.1 times and price-to-earnings ratio of 9.7 times. The free cash flow yield pre-growth capex is 12% and at the new (lower) payout ratio of 50% the implied dividend yield is 5.1%.”

Tom Kitchin launches pub with rooms on Scotland’s east coast for fifth site: Kitchin Group, led by Michelin-starred chef Tom Kitchin, has launched a pub with rooms, The Bonnie Badger, in the village of Gullane on Scotland’s east coast for its fifth site. The venue, near Muirfield golf course, dates to 1836 and was previously The Golf Inn. The property has undergone a full refurbishment to feature a 60-cover dining room, bar and 12 bedrooms. The decor – by Burns Design and Kitchin’s wife and business partner Michaela – blends Scandinavian and Scottish influences, while the kitchen only uses seasonal produce from local suppliers, with the menu following Kitchin’s “from nature to plate” ethos. Kitchin said: “Michaela and I have dreamt of having a pub with rooms for years and we’ve always been particularly fond of the East Lothian area, having spent time here at weekends with the kids. When this opportunity came up it just felt it was meant to be. We have always loved the feel of the old hotel and we want to ensure we keep the heart of the building while enhancing the offering.” Kitchin Group also operates four restaurants in Edinburgh having launched Southside Scran in the city last month.

Bristol-based cafe operator opens third site, at Colston Hall: Liz Haughton, who operates cafes at the Folk House and Spike Island in Bristol, which both champion local produce, has opened a third site, at the redeveloped Colston Hall. The music venue will fully relaunch in 2020 but Haughton has opened Bowl Of Plenty in the foyer. Iconic Colston Hall gig posters dominate one wall, with all food advertised on blackboards. Bowl Of Plenty offers pizza, toasties, soup, sandwiches, homemade cakes and daily specials, Bristol Live reports.

Premier Inn to operate 400-bedroom, 28-storey hotel at Canary Wharf, brand’s tallest and one of largest in London: Whitbread-owned Premier Inn is to operate a 400-bedroom hotel at London’s Canary Wharf. The 28-storey hotel will be the tallest Premier Inn and largest in London outside its airports. The company has taken a 30-year lease of the hotel and restaurant within Rockwell Property’s 30-storey mixed-use scheme next to Westferry DLR station. The development will also include a Whitbread-branded restaurant on the ground floor alongside shops, homes and community space in a landscaped public area. Rockwell Property was granted planning permission for the site, which has been derelict for more than a decade, by the London Borough of Tower Hamlets in October. Premier Inn acquisitions manager Louise Woodruff told Insider Media: “Aside from our hotels at Gatwick and Heathrow airports, this 400-bedroom hotel will be the largest Premier Inn in London, which reflects the strong demand we’re experiencing in east London and especially around Canary Wharf.” Construction is due to begin in summer 2019.

North west-based bar and restaurant concept opens third site: North west-based bar and restaurant concept Retreat has opened its third site, in Bromley Cross, near Bolton. The company has opened the venue in a former village hall in Darwen Road, reports the Bolton News. The building dates to 1888 but two years ago it was announced it would close along with Birtenshaw Methodist Church next door. The 143-year-old church was demolished in August to make way for the restaurant’s car park despite local interest groups campaigning against it. Retreat’s other branches are in Heaton and Adlington.

Nottingham-based brewer turns pub into micro-brewery and bar for second site: The Angel Micro-brewery owner Ben Rose has turned a Nottingham pub that dates to the 1800s into a micro-brewery and taproom for his second site. The Golden Fleece in Mansfield Road has some of the city’s deepest caves running three storeys beneath the grade II-listed building, which Rose will use to brew beer and host live music nights. Rose, who also founded Alley Cafe in the city, which has since closed, will operate the venue for family-owned development company Carlton Street Trading, which purchased the empty pub. Carlton Street Trading director Sam Burt told Insider Media: “The Golden Fleece is a historic pub that’s in a really good location. It would have been a shame to leave the pub empty so we bought it and started marketing it soon afterwards – we had five offers to take over the pub in just two days, showcasing what a great venue it is. The pub is three storeys high and goes three storeys below. Historically, caves were created for brewing and storing beer and ale due to their consistently cool temperature all year round. An idea of how deep the caves run can be seen through a glass panel over the old barrel drop cut into the floor.” The Angel is a freehouse pub and micro-brewery in Nottingham’s historic Lace Market area.

North Wales-based brewer launches debut bar, in Colwyn Bay: North Wales-based Great Orme Brewery has opened its debut bar, in Colwyn Bay. Sheldon’s has opened at a former stationery shop of the same name in Penrhyn Road. Great Orme Brewery founders Lorna and Jon Hughes have launched the project with another couple, Julian and Kate Roberts. Julian Roberts told North Wales Live: “We are very confident if we create something really nice it will draw people in from Colwyn Bay and the surrounding area, which is good for the whole town.”

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