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Morning Briefing for pub, restaurant and food wervice operators

Mon 16th Dec 2019 - Propel Monday News Briefing

Story of the Day:

BabaBoom breaks £650,000 fund-raise mark, Keith Bird latest industry investor: Fledgling kebab restaurant concept BabaBoom has broken through the £650,000 mark in its fund-raise on crowdfunding platform Seedrs – 162% of its original £400,000 target. The two-strong London-based concept, which is led by Eve Bugler, embarked on the fund-raise last month in a bid to become the UK’s “leading quality kebab operator with 20 sites by 2025”. The company is offering 11.54% equity in return for investment, giving the company a pre-money valuation of more than £3m. So far, 254 investors have pledged £650,032. Propel understands a big ticket in the business came in at the end of last week. At the same time, the company has “two excellent central London sites” on its radar and is “looking forward to closing out a deal on one of them in the coming weeks”. Recent new investors include Keith Bird, founder of Natural Kitchen and former chief operating officer of Gourmet Burger Kitchen. The concept has been backed by several leading entrepreneurs including Gumtree founder Mike Pennington and Entrepreneur First founder Matt Clifford, alongside industry veterans such as ex-Nando’s chief executive David Niven and the founders of Las Iguanas, Wahaca, Be At One and Flat Iron. The company said it is raising money to open its third restaurant in central London. Bugler told Propel: “We are really pleased with how customers, industry investors and angels have got behind BabaBoom and helped us smash our target. It’s obviously not the textbook time to raise funds – against a tough backdrop of Brexit, the election, Christmas and some high-profile brands struggling – but together as a team we’ve smashed our target. The best moment of the campaign for me was when I learned one of our managers had invested £1,000. She has been part of the BabaBoom team since day one – starting as a kitchen assistant and working her way up. She and the rest of the team are going to deliver the BabaBoom growth plan so to see her confidence in it is amazing. It’s also a reminder of how important the hospitality industry is in driving social mobility. It’s an industry I’m really proud to be part of – fun, supportive and impactful. At BabaBoom our mission is to ‘create opportunities and adventures powered by kebabs’. With this money under our belts we can do just that. We’ve got two excellent central London sites on our radar and look forward to closing out a deal on one of them in the coming weeks. The round will remain open until 28 December.”

Industry News:

Propel Premium subscribers to receive Alan Yau video as latest in exclusive series from Multi Club Conference: Propel Premium subscribers will receive their latest video on Monday (16 December) featuring speakers at the final Multi Club Conference of 2019. The videos feature a spectrum of company leaders sharing insights into their strategies and plans, while industry experts look at some of the key trends shaping the sector. The latest video features Wagamama and Hakkasan founder Alan Yau talking to Propel managing director Paul Charity about his career in restaurants, current and future trends, and gaps in the market. The video will be sent at 5pm. Meanwhile, Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and receive regular columns from Propel insights editor Mark Wingett. They also receive access to our database of multi-site companies, which has grown to 1,500 businesses. An annual premium subscription costs £345 plus VAT for operators and £445 plus VAT for suppliers – plus £50 each for additional team members. Email

Government must ‘now deliver’ on sector support promises: Boris Johnson’s new majority Conservative government must deliver on its promises of support for sector businesses, UKHospitality has said. Chief executive Kate Nicholls said: “A majority means we begin to draw a line under the uncertainty we have felt during the past few years. The priority for this government will be to secure the best Brexit possible and the sooner it does that the sooner it needs to fulfil its election promises to business. We want to see the promised reduction in business rates delivered at the earliest opportunity. The new government must also support business in delivering employment and an increase in skills and opportunities across the board.” British Beer & Pub Association chief executive Emma McClarkin said: “The Conservative manifesto included a commitment to review alcohol duty. We look forward to working with the new government to ensure it delivers on much-needed support for our sector, including recognising the 228,000 people who have signed the Long Live The Local petition to cut beer duty.”

Candidate of the week: COREcruitment has highlighted a candidate who is seeking a managing director’s role. They have extensive experience in growing and reorganising businesses across Asia, the Middle East and the UK and a broad skillset, including brand development, refinancing and acquisitions. They are looking for a base salary upwards of £200,000 plus a long-term package. To find out more, email COREcruitment also has a checker that helps businesses track salaries for various senior positions, which can be accessed here

Company News:

Byron trials virtual delivery brand Cheese Louise: Byron, the better burger brand led by Simon Wilkinson, has launched a trial of virtual delivery brand Cheese Louise, Propel has learned. Available through Deliveroo out of three Byron sites, in Chelsea and Clapham, Cheese Louise is based around macaroni and cheese with various toppings. The new offer includes mac ‘n’ cheese at £7.95, and a cheeseburger mac, vegan truffle mac and smoked barbecue beef brisket mac, all priced at £8.95. Talking to Propel earlier this year, Wilkinson said the long-term plan for Three Hills Capital-backed Byron would be to use it as a platform to introduce further concepts to the business. Last month the company, which underwent a company voluntary arrangement last year, unveiled its new look featuring a reimagined design and menu and first brunch offer, at its High Street Kensington site. Wilkinson said his short-term outlook was all about getting the business “fit for purpose”. He told Propel: “Short-term success for Byron is surviving, if I’m brutally honest, but I’m confident the foundations we have put in will work – and we’re seeing some green shoots. It’s about getting a platform that’s sustainable for us to be able to grow the business. The chairman and investors share my vision of how a casual dining business needs to evolve in the long term. We want to use Byron as a platform, get that working well, and then incubate a couple of other brands within the company. Our strapline will go from ‘proper hamburgers’ to ‘proper food’ so potentially we’ll create a proper food company.” At the same time, Propel understands Adrian Saunders, who has been the company’s property director since August 2017, has stepped down. Saunders was previously head of acquisitions at Wagamama.

Little leaves MOD Pizza and returns to Hawthorn Leisure: Ed Little has stepped down as head of acquisitions at MOD Pizza UK after a year with the Sir Charles Dunstone-backed brand to rejoin pub operator Hawthorn Leisure, Propel has learned. Little joined ten-strong MOD at the start of 2019 after four and a half years as property director at Hawthorn. Propel understands Marc Sherman, MOD’s previous head of acquisitions and briefly head of acquisitions at Boparan Restaurant Group, is again working with MOD on a consultancy basis. MOD Pizza was founded in Seattle in 2008, opening its first international restaurant in Leeds in 2016. In May it secured a $160m equity financing that will aid ambitions to reach 1,000 locations in the next five years. There are currently about 440 MOD sites worldwide. Hawthorn Leisure chief executive Mark Davies told Propel last week the company was looking to step up expansion of its managed pub estate in 2020 given the division is generating a return on investment of more than 30%. The company bought north west-based Bravo Inns, the 44-strong managed operator, at the start of this month, taking its managed portfolio to 98 sites.

Hydes makes managed estate disposals after ‘deeply disappointing’ performances hit profit and Ebitda: North west brewer and retailer Hydes has made disposals within its managed estate after reporting a decline in profit and Ebitda following some “deeply disappointing” performances within the division. The company reported turnover increased 1.1% to £31.4m for the year ending 31 March 2019, compared with £31.0m the previous year. Managed house turnover, excluding those pubs transferred in the year from tenancies, increased £1m to £29.1m. Like-for-likes in the division were down 1.1% but sales in its wet-led pubs were up 4.2%, with double-digit growth in five sites. Three pubs were transferred from the tenanted to the managed estate during the year. Like-for-like tenanted profit was down 2.6%. Operating profit before exceptional costs fell 29% to £1.9m, compared with £2.7m the year before. Ebitda was down to £4m from £4.8m the previous year. Pre-tax profit dropped to £833,000, compared with £2.7m the year before. In their report accompanying the accounts, the directors stated: “The financial year saw a significant decline in operating profit before exceptional items and a reduction in Ebitda. This was as a result of some deeply disappointing performances within the managed house estate and large cost increases. Notwithstanding tireless efforts to turn around the results, four of our managed houses were seriously underperforming and consequently decisions were taken in March to sell The Goshawk for £1.3m, to transfer The Red Lion to a tenancy, and vacate The Hare & Hounds on expiry of the lease in September. The remaining underperforming site was one we acquired early in the year and which commenced trading in May as a cocktail bar under the name of Camarena. While we had great expectations the reality has been somewhat different but we have recently streamlined the menu to give customers more of what they want and made operational changes with a view to providing a greater hospitality experience. The casual dining market has become somewhat saturated and many mid-tier restaurants have failed in the past year so it is, perhaps, not surprising business has been tough in our pub dining sites.” The company owns more than 50 pubs in the north west of England and North Wales. Hydes’ defined benefit pension scheme liability decreased from £4.2m to £1.9m. The company plans to make annual contributions of £500,000 plus any payments relating to scheme expenses for the next five years. The company’s bank facilities, comprising a bank overdraft of £1m, a five-year amortising loan of £5m, and a revolving credit facility of £13.25m, is due for repayment by September 2020.

Financial regulator opens investigation into KPMG’s audit of Revolution: The Financial Reporting Council has launched an investigation into KPMG over its auditing of Revolution Bars Group, reports The Sunday Times. KPMG audited the group, which operates 76 premium bars under the Revolution and Revolución de Cuba brands, until 2017. KPMG is under scrutiny after it emerged the cost of items such as menus were capitalised. Supplier rebates also weren’t listed correctly, resulting in an overstatement of income, the newspaper said. KPMG was replaced by PwC after it carried out an investigation. All parties declined to comment. 

Brunning & Price reports full-year turnover passes £80m: Brunning & Price, the gastro-pub brand owned by The Restaurant Group, has reported turnover increased to £80.5m for the year ending 30 December 2018 compared with £72.5m the previous year. Pre-tax profit before exceptional items was up to £13.8m, compared with £10.1m the year before. During the period the company opened six pubs, with all of them “performing well”. In their report accompanying the accounts, the directors stated: “Our business is well positioned in the market with a compelling, differentiated food-led offer that consistently outperforms the pub restaurant sector. Strong operational execution, along with locally sourced produce, has attracted a loyal and increasing customer base that rates the offering highly. The business delivers consistently good and growing returns, with recent openings consistently delivering Ebitda returns in excess of 20% (on an assumed leasehold cost base). Our estate is largely freehold asset-backed with a book value in excess of £75m and requires – relative to fast-changing casual dining formats – relatively modest levels of ongoing maintenance capital spend. We see opportunities to increase like-for-like sales through optimising our menu-pricing architecture and developing better offerings for previously considered non-core occasions such as breakfast and afternoon tea. We will continue to look for ways we can maximise the use of technology, building on the success we’ve had in driving bookings.” The group operates more than 70 sites across the UK. The Restaurant Group bought Brunning & Price for £32m in 2007.

Investment trust bets £83m on Just Eat bidding war: Investment trust Boussard & Gavaudan Holding has wagered £83m the battle to acquire Just Eat will turn into an all-out bidding war. The fund manager has invested heavily in Just Eat derivatives since Prosus gatecrashed a planned takeover by, The Sunday Telegraph reports. Boussard & Gavaudan has joined six aggressive hedge funds that have taken positions worth more than £370m in total in recent weeks, the newspaper said. Prosus and have lodged rival bids for Just Eat. Analysts expect an outcome over Christmas with a deadline of 27 December for shareholders to decide which deal to go with. If neither side backs down, the final round would go to sealed bids in an auction triggered by The Takeover Panel. Just Eat’s board rejected Prosus’ revised 740p-per-share offer last week, continuing to recommend a merger with to shareholders.

Stonegate launches female leadership mentoring programme: Stonegate Pub Company has launched a female mentoring programme to increase representation of women in leadership roles. When looking at the male and female split in job roles, Stonegate found areas in its business with apparent barriers to progression, with common issues including lack of self-confidence and belief. Stonegate has now partnered 31 high-performing females with men and women in senior roles across the business. Mentors and mentees will meet regularly to share experiences and discuss opportunities. The agenda for each session will be set by the mentee, with clear actions and goals agreed by the end. The partnership will conclude once the mentee’s needs have been met, with a full review assessing the values and benefits before being incorporated into Stonegate’s Albert’s career development programme. Stonegate managing director Helen Charlesworth, who will be a mentor in the scheme, said: “As one of three women on Stonegate’s executive board I’m delighted to be part of the Female Mentoring Scheme, which will enable women to feel more empowered within the business. I have been given help and support throughout my career and believe it’s important to give back and leave a legacy.”

Inn-Credible Pub Co reopens pub where Gunpowder Plot was hatched for seventh site: Midlands-based Inn-Credible Pub Co has opened its seventh site. The company, founded by Daniel and Lauren Wiles, has taken on The Olde Coach House in the Northamptonshire village of Ashby St Ledgers. The pub in Main Street was where the Gunpowder Plot was formed, reports the Northampton Chronicle & Echo. Inn-Credible Pub Co’s website states: “The Olde Coach House is a family friendly pub and restaurant serving a wide selection of drinks and quality, home-cooked meals. We have recently had a major refurbishment.” The Olde Coach House was built in an old gatehouse on the Catesby estate where Robert Catesby, Guy Fawkes and others came up with the plan to blow up the Houses of Parliament in 1605.

Team behind Burger & Lobster launches Mediterranean-style tavern in Chelsea: George Bukhov-Weinstein and Ilya Demichev, who are behind Burger & Lobster and Goodmans, have launched Mediterranean concept Wild Tavern in Chelsea. The 3,600 square foot neighbourhood restaurant has opened at 2 Elystan Street, which was formerly occupied by Japanese restaurant Kiru. The concept features cuisine from the coastal areas of Italy, Spain and France cooked on a charcoal grill. The tavern-style space features a central fireplace, open kitchen and dedicated wine room. Bukhov said: “We love Chelsea and we’re excited to become part of its community. It’s a great property full of natural light.” Burger & Lobster operates nine sites in London and seven overseas. The company also operates three Goodman restaurants, two Zelman Meats and Beast restaurant in the capital. The team closed its Smack Lobster Roll site in Soho’s Dean Street, turning the concept into a delivery-only brand. The Elystan Street deal was secured by agent Shelley Sandzer on behalf of the landlord. 

Britvic slashes new finance chief’s pension pot: Soft drinks maker Britvic has slashed pension contributions for chief financial officer Joanne Wilson, who joined from Tesco in September, The Sunday Telegraph reports. Wilson will receive contributions equivalent to 7.5% of her £395,000 salary compared with 23% for predecessor Matthew Dunn in an effort to bring executive retirement benefits in line with the rest of the workforce. She will receive a cash contribution of £19,442 as compensation in lieu of payments she would have received at Tesco. Listed companies have come under mounting pressure to overhaul remuneration packages amid shareholder outcry over a growing gulf between executives and employees.

Black Country Ales strengthens estate as it reopens Stourbridge pub: Dudley-based brewer Black Country Ales has strengthened its portfolio after reopening a pub in Stourbridge. The company has relaunched the Seven Stars following a significant refurbishment, having acquired the site in September. The Seven Stars, which is run by Paul Hicks and Liz Oakley, features 15 hand-pumps serving Black Country Ales’ own beer. There is also a variety of guest ales alongside pub snacks. Graham Manwaring, head of pubs for Black Country Ales, told the Express & Star: “We are delighted to have a chance to open The Seven Stars, which has been an iconic pub in Stourbridge for more than 100 years.” Black Country Ales has more than 30 pubs throughout the West Midlands and Shropshire.

Mildreds to go fully vegan for Veganuary: Vegetarian restaurant group Mildreds is to go fully vegan for the first time, for Veganuary 2020. Mildreds’ signature halloumi burger will be removed from the menu with fully vegan dishes such as bahn mi and pumpkin mac ‘n’ cheese added. The drinks menu will also be fully vegan, including an expanded range of plant-based milk for coffee, while the weekend brunch will use scrambled tofu instead of eggs. In total, there will be seven vegan starters, eight mains and five desserts on the menu. Development chef Sarah Wasserman said: “We moved to all-vegan dessert and cocktail menus in 2019, with great success. Veganuary is a great opportunity for us to showcase the great vegan food we have on our menu all year round.” Mildreds was founded by Diane Thomas and Jane Muir in Soho in 1988 and is credited with “reinventing vegetarian food”. The other Mildreds restaurants are in Camden, King’s Cross and Dalston. The company appointed Luke Bishop, formerly of Polpo, as managing director in July. 

Former Galvin chef launches bijou restaurant in Paddington: Former Galvin chef Christos Siomadis has launched a 12-seater restaurant in Paddington. Siomadis, who has also worked at Skylon and The George Club in Mayfair, has opened The Hyde in the Roseate House London boutique hotel in Westbourne Terrace. His modern European menu includes scallop ceviche with avocado sorbet; halibut with black ravioli and tiger prawn mousse; and cold chocolate fondant with green matcha “snow”, Hot Dinners reports.

Great Northern Group to convert Trent Bridge bar to new concept: Nottingham-based independent bar company Great Northern Group is to convert its Southbank Bar at Trent Bridge to a new concept. The venue, which opened in 1998, will close on New Year’s Day for a refurbishment, while its sister site in the city centre will remain open. Managing director Dave Willans said: “Southbank has been here for 21 years. It’s a spiritual home to many and we’ve shown thousands of matches on our screens. We feel it’s time to change direction altogether so it will turn into a bar and kitchen that’s closer to Copper and Refinery in its ideas with a superb terrace and an innovative but simple menu.” Great Northern Group recently restructured with a view to further growth. The company now consists of 11 pubs and bars, including four venues under its flagship Copper brand. Willans said: “We aren’t going to expand for the sake of it but we’re interested in the right venues. We want to do our own thing in our own way and are in the fortunate position of not answering to investors. We’re agile enough to take advantage of opportunities as they arise.”

Interactive baking experience launches in Birmingham’s Custard Factory along with third site for board game cafe concept: Interactive experience The Great Birmingham Bake Off is one of three entertainment venues to have launched in Birmingham’s Custard Factory. The concept is the brainchild of the team behind The Big London Bake and is housed in a marquee in Floodgate street featuring 12 bake stations and a team of professional bakers offering hints and tips. Meanwhile, board games cafe concept Chance & Counters has opened a venue at the Custard Factory for its third site. Steve Cownie, Luke Neal and Richard Scarsbrook launched the concept in Bristol in 2016, adding a Cardiff site two years later. The new 3,500 square foot cafe bar, the brand’s largest site so far, offers access to 500 board games as well as food and drink. The other newcomer to the development is “social sports bar” The Floodgate, which has been launched by Stephen O’Reilly, Mike Gregory and Chris Ross. The venue features pit-pat table golf, baseball cages and even curling, alongside cocktails. Previously a converted warehouse, The Floodgate Spans 10,000 square feet and has an upstairs events area. James Craig, founder of Oval Real Estate, which owns the Custard Factory and almost 100 other buildings and sites in Digbeth, said: “We are really proud of the eclectic and rich leisure offer we’re building across Digbeth. With so much to see and do, the area is fast becoming a destination in its own right.”

Japanese street food restaurant to open in Hackney: A Japanese street food restaurant is opening in Hackney, east London. Ihsan Tuncay will launch Mio Yatai on Tuesday (17 December) in Broadway Market. The restaurant will offer 46 covers, including counter dining. Tuncay’s menu will offer six sections – starters; salads; usuzukuri, tartar and tataki; josper; ramen, soba and udon; and desserts. Dishes will include caramelised wagyu rib-eye with Japanese wild mushroom, and duck and fried rice sushi. The drinks list will feature Japanese beer and craft vodka, single-malt Japanese whisky yamazaki, and sake. 

Coyote Ugly operator fined after staff slip while dancing on bar: Swansea Audio, which operates five Coyote Ugly sites in the UK, has been fined £66,000 after two staff were seriously injured after slipping while dancing on a wet bar. The Coyote Ugly Saloon in Cardiff was investigated over its health and safety record regarding separate incidents in 2017. Brittany Askew, 23, suffered a fractured spine and Karina Sparks, 25, was left with cuts after she landed on a wine glass, Cardiff magistrates’ court was told. The women were employed as “coyotes”, serving drinks and dancing on the bar. Manager Christopher Young told health and safety investigators coyotes were supposed to wear rubber-soled cowboy boots but the rule wasn’t officially documented. Swansea Audio admitted three charges under the Health And Safety At Work Act 1974 and failing to make proper risk assessment. Oliver Powell, defending, said the company had now brought in health and safety consultants. The original Coyote Ugly bar, founded by Liliana Lovell in New York, inspired the 2000 film of the same name. Coyote Ugly now operates in 26 locations in seven countries. Coyote Ugly’s other UK bars are in Birmingham Liverpool, Manchester and Swansea.

Whitbread secures fourth Dublin site for Premier Inn: Whitbread is to continue its Premier Inn expansion in Ireland after securing its fourth site in Dublin city centre. The site in Gloucester Street will be redeveloped into a 108-bedroom hotel. Kevin Murray, head of acquisitions for Premier Inn in Ireland, said: “We are investing strategically to secure the top locations Premier Inn is known for and seeking new freehold and leasehold opportunities across the city as we work towards our target of 2,500 Premier Inn Dublin bedrooms.” Having signalled its intent to expand into the Irish market in 2018, Whitbread has secured 635 Premier Inn rooms in Dublin city centre in four locations. The developments, which are a mixture of freehold and leasehold acquisitions, are planned to open from early 2021. Premier Inn has also secured its first location in Cork as part of the Morrisons Quay regeneration scheme, which is due to open in 2023. After growing in Dublin and Cork, Whitbread sees potential for Premier Inns in other Irish cities including Galway, Limerick and Killarney. Premier Inn is also expanding rapidly in Germany, with three hotels open and more than 8,000 bedrooms in its secured pipeline. In the UK and Ireland, Whitbread sees potential for 110,000 Premier Inn rooms.

Bottles & Battles founders open second site for Italian wine bar concept, in Chelsea: Franco Mancini and Daniele Marano, founders of wine merchant Bottles & Battles in Mercato Metropolitano in Borough, have launched a second site for their Italian wine bar concept Bottles. The pair, who have teamed up with pop-up restaurant Sood for the venture, have opened the venue in Chelsea. The venue in Draycott Avenue adds to the debut Bottles site in Spitalfields Market, which opened in July 2018. The concept focuses on regional Italian wine made by independent producers and small farms alongside Italian small plates. The Chelsea site also offers fresh juice, light lunches and an aperitivo menu influenced by “classic Italian tipples”. The glass-fronted, 50-cover wine bar features a timber wine wall, with guests able to buy their favourite bottles; a copper-topped bar; and seating set alongside a cheese and meat display. The white and blue-tiled dining area is set beneath a central skylight, while the downstairs dining room hosts private dinners and Italian supper clubs.

Providence Hospitality to take on management of North Wales hotel following sale: Providence Hospitality is to take on the management of a North Wales hotel after it was sold to a private international investor. The Celtic Royal Hotel in Caernarfon has been sold to an investor advised by South African private equity fund Fairtree Hospitality. Colliers International brokered the deal on behalf of private owners Markus and Sinead Donsbach. The Celtic Royal Hotel offers 112 en-suite bedrooms, the 100-cover Draco Restaurant and a 320-capacity ballroom. It also features a leisure club with heated swimming pool, the Summit Bar Bistro, Castle Room and Caernarfon Room, which together provide 100 more covers. Providence Hospitality has secured contracts to manage all properties owned by Fairtree and its clients in addition to its presence in South Africa. Providence Hospitality director Joe Bester told Insider Media: “The signing of Celtic Royal Hotel forms a major part of Providence’s accelerated growth strategy within the UK. We are determined to develop quality business and leisure circuits for our loyal guests in key provincial locations around Britain through our affiliations with Fairtree and our partners.” 

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