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Morning Briefing for pub, restaurant and food wervice operators

Thu 6th Feb 2020 - Propel Thursday News Briefing

Story of the Day:

Pret to have 14 Veggie Prets open by the summer: Pret A Manger aims to complete the conversion of former EAT sites to its fledgling Veggie Pret concept in the next few months, Propel has learned. It’s understood the JAB Holdings-owned chain’s portfolio will feature 14 Veggie Pret sites halfway through this year, including eight EAT conversions. The company, which completed the acquisition of the 84-strong EAT brand last summer in a deal valued at almost £60m, has so far converted three ex-EAT sites to Veggie Pret – in Broadway, Canary Wharf and Fenchurch Street. It has also lined up conversions in St Mary Axe, Cardinal Place and King William Street. Before acquiring EAT, Pret had opened Veggie Pret sites in London’s Broadwick Street, Exmouth Market, Great Eastern Street and in Deansgate, Manchester. Now the company has fully evaluated the EAT estate, it won’t convert as many sites to Veggie Pret as initially expected. Pret is also converting a number of EAT sites to its core brand. In August, Pret appointed agent Brasier Freeth to market 16 EAT sites – 13 in London plus units in Manchester, Liverpool and Glasgow. Speaking at Propel’s Operations Director Conference last year, Pret chief executive Pano Christou said the average age of a Pret customer was 39 but, when it came to Veggie Pret, that figure fell to between 20 and 29. He also disclosed lunch is the core Pret brand’s biggest daypart (40%), followed by breakfast (26%). Unsurprisingly sandwiches make up more than one-quarter (29%) of the group’s product mix, followed by prepared drinks (19%) and hot food (14%).

Industry News:

Propel Premium members to receive three videos next week, sign up and save money: Propel Premium subscribers are to receive three videos of speakers from the People and Training Conference next week. The first, being sent on Tuesday (11 February), will feature Kevin Charity, founder and chief executive of Coaching Inn Group, who talks about creating a people culture, training, staff incentives and encouraging well-being to improve staff retention. On Wednesday (12 February), subscribers will be sent a video in which Charlotte Kemp, head of people and culture at Mission Mars, sets out how the company is striving to place team engagement at the centre of its culture. On Thursday (13 February), the video will feature Jo Fleet, managing director of Flat Iron, who talks about the company’s approach to giving its staff a fair deal. The videos will be sent each day at 4pm. 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 regular columns from insights editor Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,500 businesses. Meanwhile, subscribers to the new-look Propel Premium Club will be able to choose to use a pair of free tickets to one of the following conferences – The Delivery Conference (Tuesday, 21 April), The Finance and Investment Conference (Thursday, 14 May), The Casual Dining Summit (Monday, 12 October) or The New Concept Conference (Monday, 19 October). The normal cost of two tickets to these events is £490 plus VAT for operators and £690 plus VAT for suppliers. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email

Number of independent coffee shops in London surges 700% since 2010: The number of “quality independent” coffee shops in London has rocketed 700% since 2010, according to figures from Allegra, from about 50 in 2010 to more than 400. Chains such as Starbucks and Costa also saw a 57% rise in store numbers in the capital during the period, with 2,195 franchises currently open. The term “quality independents” includes rising brands such as Caravan, which has six outlets in the capital, and Redemption Roasters, which has nine. The study found Londoners’ favourite out-of-home coffee is a latte (51.4%), followed by cappuccino (35%) and flat white (25%). One-fifth (20%) of Londoners are also likely to ask for an oat milk coffee, according to the report, compared with only 9% nationwide. Allegra chief executive Jeffrey Young, who is also founder of the London Coffee Festival, which will take place again in April, told the Evening Standard: “Londoners are looking for a more polished but still informal experience. The days of the grungy coffee shop are gone.”

Engaging customers ‘boosts voucher redemption and marketing responses’: Restaurant and bar operators with an engaged customer base achieve a voucher redemption rate of more than 15% compared with the market average of 10%, according to a study by Impact Data. The company’s analysis of marketing campaigns found strong customer engagement also led to a higher email opening rate – more than 20% compared with the average 15%. The top three communications to entice customers back to a venue were birthday messages – consumer spend increased 37% on birthday occasions – followed by a welcome message and a guest recovery message issued automatically when a customer hadn’t visited for a month. Mark Tunstall, UK operations director at Impact Data, said: “Personalising the content your customers receive ensures relevancy and increases engagement. Birthday messages are an easy win for operators looking to increase open rates and drive footfall but are just the tip of the iceberg. Operators can personalise their content in a far more sophisticated way by pulling customer data from the multiple streams available, such as Wi-Fi and booking platforms, which allows bars and restaurants to target specific sections of their customer base with promotions or campaigns.”

Scottish deposit return scheme ‘must work for businesses’: The Scottish Beer & Pub Association (SBPA) has urged the Scottish government to deliver a deposit return scheme (DRS) for bottles and cans that works for businesses as well as the environment. The finalised regulations have yet to be published but, as currently proposed, the scheme will see hospitality businesses receive less compensation for every container returned, compared with retail businesses. The DRS would cover glass and plastic bottles, and aluminium and steel drinks cans sold from any outlet in Scotland. Raising concerns in a letter to cabinet secretary for environment, climate change and land reform Roseanna Cunningham, the SBPA said such a system would fail to properly reflect the full cost of operating a DRS system for hospitality businesses and see them “unfairly penalised”. The SPBA said allowing an adequate run-up before the system came into force would be key, with the proposed start date – 1 April 2021 – presenting “significant logistical challenges” that were “unlikely to be met in the short time-frame”. SBPA chief executive Emma McClarkin said: “We must make a concerted effort to reduce waste and improve the circular economy and the SBPA backs the government’s ambition for a world-leading deposit return scheme. However, to make the desired environmental change it has to be workable for consumers and businesses. Some serious challenges remain and inflexibility in the regulations currently proposed risk the system’s success.”

Best Bar None reveals national winners: Best Bar None, the Home Office-supported community safety programme operated by pubs and bars, has revealed the winners of this year’s Best Bar None Awards. Sheffield won best overall scheme, Bolton was named most innovative and Cumbria scooped best new scheme. In addition, London Cocktail Club’s Goodge Street site won the inaugural central scheme award. The awards ceremony was hosted by Best Bar None chairman Lord Smith of Hindhead. He said: “Best Bar None has continued to go from strength to strength in the past year, with several new schemes and a number of new initiatives.”

Company News:

Turnover across Urban Pubs and Bars and Salt Yard Group set to break £30m this financial year, agrees new £5m banking facility: Turnover across the wider Urban Pubs and Bars and Salt Yard Group businesses is set to break £30m in the current financial year, Propel has learned. Co-owner Nick Pring said both businesses continued to see “good like-for-like growth”. Meanwhile, the group has agreed a new banking facility with Barclays, increasing funds from £2.6m to £5m as it looks to continue expansion. Pring said: “We have very little debt in the business because it has been funded out of cash flow. The bank facility will help as we look to grow Bat & Ball. They are big venues so cost quite a bit of money. Juno Rooms has also been a big success so we would like to do a few more things in the City. We also want to do more Salt Yards – the last of the four has now been refurbished to put our stamp on it and we’ve invested about £400,000 in total.” Pring spoke on the back of the Urban Pubs and Bars business reporting turnover increased to £17.4m for the year ending 28 April 2019, compared with £16.8m the previous year. Pre-tax profit remained steady, at £1.3m. Like-for-like sales and Ebitda were “strong”, with both in double-digit growth during the period. These accounts don’t include Salt Yard Group or Urban Pubs and Bars Two – its joint venture with Ei Group. The Urban Pubs and Bars business operates 19 sites after adding Bar Kick in Shoreditch to its portfolio last month.

Leon to enter delivery kitchen market with Deliveroo: Natural fast food brand Leon is to become the latest sector operator to make a move into delivery kitchens, Propel has learned. It is understood the John Vincent-led business is to open sites at Deliveroo Editions in Reading and Cambridge this year. The company stated: “This will be a special ‘satellite’ location, without a typical restaurant front, dedicated to producing perfect Leon food every time.” Leon works with Deliveroo and UberEats to offer delivery options from more than half its 61-strong UK estate. During the past 18 months it has been looking to further raise awareness of the Leon brand by opening units at service stations and launching into the retail sector. In October the company launched its first range of groceries via a tie-up with Sainsbury’s. It struck an exclusive deal with the supermarket chain to stock 16 products in more than 600 stores. Earlier this week Propel revealed Leon would open a further central London site after securing the former Prezzo unit in New Oxford Street. It also has openings lined up for this quarter in Skelton Lake services near Leeds and Southbank Place in central London.

Gerard converts d’Arry’s in Cambridge, Innventure full-year turnover up 14.5%: Innventure, the gastro-pub operator led by former Mitchells & Butlers executive Chris Gerard, has converted its d’Arry’s restaurant in Cambridge to new concept Stolen. The King Street venue is now headed by Gerard’s son Charlie, who has returned after stints with Thai Leisure Group and a Naples-owned restaurant business. The Stolen website states: “Charlie’s idea is to ‘steal’ the best food and ingredients from around the world and unite them in an all-day menu of stretched sourdough, grill and salad. Customers can take the repurposing further by creating their own grill, sauce and salad options. Menus from hundreds of other restaurants provide wallpaper.” The Liquor Loft continues to run in its current guise above the restaurant. Innventure, which operates seven sites, has also reported turnover increased 14.5% to £7.2m for the year ending 29 June 2019, compared with £6.3m the previous year. Pre-tax profit was up to £285,000 from £167,000 the year before. During the period the company acquired The Old Cannon in Bury St Edmunds, which features a micro-brewery and was owned by former Greene King finance director Michael Shallow and wife Judith. The company’s sister business – Innventure Vacation Services – has added a second site. In his report accompanying the accounts, Gerrard said: “Further investment in new sites remains opportunistic for the moment. The leisure property market is cooling, the availability of highly rented leasehold sites are now plentiful but the cost base of fresh food restaurants remains challenging. The acquisition of our seventh site provides the company with an artisan beer supply. The purchase of this site with manufacturing and production facilities brings the company new challenges and a steep learning curve.”

Greene King reports 58% rise in low and no-alcohol sales across managed estate in January: Brewer and retailer Greene King has reported a 58% year-on-year rise in low and no-alcohol sales across its managed estate in January. Heineken 0.0% and Peroni Libera accounted for more than 50% of all sales in the category, with Greene King’s own low-alcohol version of Old Speckled Hen in the mix of popular Dry January options, the company said. Chief commercial officer Phil Thomas added: “Consumers are calling for not only more choice in the low and no category but for drinks that don’t compromise on flavour. We will launch Freixenet Prosecco 0.0% in our managed pubs in the spring. There’s a huge opportunity for product innovation and further expansion within the category. We’re confident the trend is set to continue.”

Blue Sky Leisure sells restaurant business to two former bosses: Holiday park and hospitality business Blue Sky Leisure has sold its American-themed restaurant business Zaks to two of its former bosses for an undisclosed sum. Zaks, which has three venues in Norwich, has been acquired by Neighbourhood Dining. The business is headed by Chris Carr and Ian Hacon, who jointly ran Zaks for a number of years while it was under Blue Sky ownership. A Blue Sky Leisure spokesman said: “Zaks is a Norfolk institution and it has been a privilege to work so closely with the Zaks brand and team for the past two decades. However, the time has come to pass on the reins. Ian and Chris have the energy, experience and enthusiasm required to ensure the brand continues to delight the diners of Norwich and Norfolk. We wish them and the team every success.” Hacon, who was chief executive of Blue Sky between 2005 and 2014, added: “Zaks is about bringing people together. I believe there’s a strong need for a community-focused local brand in this sector, which is dominated by national brands.” Zaks began in 1976 when musician and entrepreneur Harvey Platt started serving foil-wrapped burgers from a van in Castle Meadow, Norwich. Blue Sky Leisure acquired the business in 1998. Spire acted for Neighbourhood Dining.

Hop hits £1.5m milestone as crowdfunding campaign closes: London-based Vietnamese street food concept Hop has passed its stretch target of £1.5m in its latest crowdfunding campaign. The company was set to close the fund-raise on Crowdcube at midnight on Wednesday (5 February). The five-strong business made the campaign public at the start of the year after raising £750,000 from a private fund-raise before Christmas. At the time of going to press, the campaign had raised £1.538m from 728 investors. The highest single investment so far was £260,000. Paul Hopper-led Hop was offering 7.60% equity in return for investment, giving the business a pre-money valuation of £9.1m. Ex-Pret A Manger and EAT managing director Andrew Walker and former fund manager and Patisserie Valerie shareholder Angus Forbes are among those to invest in Hop during the latest campaign. Hop said any additional capital raised would be put towards opening two sites in 2020. The company reported sales of circa £3.8m in 2018 and served an average of 12,000 customers per week. Hop said it was in negotiations with a leading concessions operator about opening sites in UK transport hubs and in early-stage discussions with a dark kitchens operator to expand delivery. A site in Paternoster Square is also thought to be on the radar. To date, the business has raised almost £4m of equity capital from high-net-worth individuals.  

Ole & Steen secures site near Oxford Circus: Danish baker Ole & Steen will strengthen its central London presence next month with an opening near Oxford Circus, Propel has learned. The Jason Cotta-led brand, which made its UK debut in December 2016 in St James’ Market, London, will open a site on the corner of Eastcastle Street and Great Titchfield Street. Ole & Steen operates ten sites in the capital and one in Oxford. Last autumn the company retained RAB Retail to secure London sites for the brand during the next three years. It is seeking A1-use sites of between 1,500 and 3,000 square feet in busy retail locations in London and strong commuter towns. Prominent corner locations are preferred. Ole & Steen has 99 stores trading in Denmark under the Lagkagehuset brand. In the past year it has also entered the US market, opening three stores in New York.

D&D London launches app: Restaurant operator D&D London has launched an app. Users can store their favourite restaurants to simplify repeat bookings and receive notification of events. The app also fast-tracks users into Club D&D, which offers further perks and consists of three tiers. App users will automatically join Club Orange before being upgraded to Silver and Gold via repeat bookings. Des Gunewardena and David Loewi founded D&D London in 2006. The company operates 43 restaurants and bars globally and a hotel in London. It has further sites lined up in Birmingham and Bristol, while it will also make its east London debut, in Stratford.

Sit & Sip plans Horsham opening for third site: Fledgling boutique bar and bottle shop Sit & Sip is set to open its third site, in Horsham, West Sussex. Propel has learned the concept, which is led by James Mattingley, has applied to open in the Piries Place development. Sit & Sip specialises in craft beer from local brewers and spirits created by small family businesses alongside meat and cheese tasting boards, many sourced locally. The concept launched in West Sussex two years ago, in Chichester, with a second site opening in Wokingham, Berkshire, last year.

Lucky Penny to deliver food and drink offering at regenerated Wirral town hall: Liverpool-based hospitality consultancy Lucky Penny has been chosen to deliver a new food and drink experience at the redevelopment of Hoylake Town Hall in Wirral. The multimillion-pound redesign of the historic building will include a cinema and 18 creative studio and retail spaces for artists and craft workers following a grant from the government’s Coastal Community Fund. Lucky Penny, which was founded by Steven Burgess and Josh Moore, will operate three offerings at the scheme – a restaurant, bar and cafe bistro in the central courtyard. Burgess said: “Hoylake has so much potential and we’re determined to deliver something that will lift the high street. This is more than a commercial project – it is a community-driven scheme with purpose and passion. We have great ideas for each outlet – offering something different but with food the leader. The ambition for the restaurant is to be innovative and exciting with a healthy dose of surprise to make it an experiential destination. The atrium cafe will appeal to all generations at different times of day, while the bar will have a cool, quirky, independent pub vibe.” The building’s owner, Hylgar Properties, and community interest company Hoylake Village Life are developing the £3.64m project. David Burke, of Hylgar Properties, said: “We want to bring a really exciting venue under one roof with a different food and drink offering to complement the cinema.” The project is set to open by the end of 2020. Lucky Penny launched Love Lane Brewery in 2017 and opened bar restaurant Abditory in Queen Avenue, Liverpool, in October last year.

SSP to introduce new brands at Dublin airport after winning ten-year contract: SSP Group, the UK-based transport hub foodservice specialist, is to introduce new restaurant brands at Dublin airport after securing a new ten-year contract. The deal will see SSP trade 24 units at the airport and, once the investment programme has been completed, is expected to contribute between €40m and €50m (£33m and £42m) of revenue per annum by 2023. The units will be rebranded to incorporate a mix of international and Irish brands, partnerships with local suppliers and new concepts. Among the new additions will be Dublin-based healthy food delivery company Camile Thai, Galway-based Handsome Burger, coffee shop concept 3fe, Dublin’s first micro-roastery Cloud Picker Coffee Roasters, Offbeat Donut Co and artisan bakery Bretzel. About 200 people will transfer to SSP from existing units, adding to the team of more than 300 colleagues already employed by SSP at the airport. Richard Lewis, chief executive of SSP UK & Ireland, said: “We are confident our bespoke line-up will meet the diverse needs of all our customers, providing a true Irish experience to the international traveller as well as those looking to enjoy a taste of home.” Vincent Harrison, managing director of Dublin airport added; “We want to ensure our customers have a quality dining experience at Dublin airport, with a sense of connectedness to Ireland using fresh and local quality produce.”

Former Rosa’s employee to launch northern Thai concept: Former Rosa’s Thai employee Natalie Tangsakul is to launch a “perma pop-up” of her northern Thai concept, Talad, in Chelsea, south west London, in mid-March. Talad will open in Lots Road for six months with an opportunity to take the site permanently. Tangsakul, who hails from Chiangrai in the northernmost tip of Thailand, said the menu would draw on “flavours, textures and memories of an idyllic childhood”. She said guests could expect seasonally changing plates designed to “wow and tingle the palate” while unleashing the power of “this little-known pocket of Thailand’s great culinary prowess”. The menu will include fresh clams with basil chilli jam, and chicken and wild ginger masala. After the first month, Talad will open at weekends serving Asian-inspired pastries and breakfast.

Douglas Jack – Domino’s has considerable potential if it can sort franchisee dispute after ‘good’ fourth quarter: Peel Hunt leisure analyst Douglas Jack has said Domino’s Pizza has considerable UK potential if it can “sort its franchisee dispute after a good fourth quarter”. Issuing a ‘Buy’ note on the shares with a target price of 340p, Jack said: “UK like-for-like sales rose 3.9% in the fourth quarter (versus a 4.5% comparable). Including the dilution from store splits, like-for-like sales were up 2.6%, of which order volume was up 0.3%, price was up 2.6%, product mix added 2.1%, with items per order down 2.4%. In the quarter, UK system sales rose 4.6%, with online sales up 8.3%. Republic of Ireland system sales rose 2.6%, with like-for-like sales down 1.0%. The combined 4.4% increase in UK and Ireland system sales was helped by 32 new stores (28 in the UK; four in Ireland), with 30 franchisees opening stores during the full year. Three sites have opened in early 2020E. UK and Ireland Ebit rose slightly in 2019E, based on being within the market range of £102.1m to £104.1m versus £101.0m in 2018. As a result, we are holding our full-year adjusted profit before tax forecast, which excludes the discontinuing overseas operations. We believe consensus needs to rise by circa £11m to reflect this reclassification. International lost £20m including onerous leases and before German losses. Whereas the UK was in line, international pre-onerous leases and after German losses should be slightly worse than consensus (£11m) but should be excluded from adjusted profit before tax as a discontinuing item. The process of recruiting an interim chief financial officer is at an advanced stage and the processes of recruiting a new chairman and selling the overseas territories is progressing. In relation to this, the company has made a non-cash £20m to £40m impairment charge for the international businesses. In our view, the £20m impairment charge on the London corporate stores should shift the strategy back towards franchised expansion. If Domino’s can grow profit and like-for-like sales despite ‘normal working practices continuing to be impacted by the franchisee dispute’, the potential could be considerable if the company returns to its previous co-operative UK and Ireland-focused model. Given the potential of this dominant franchised model, we view the rating as not strenuous but the onus is on the company to capture the upside.” 

Game Over to open fourth UK site, in Liverpool: Escape room operator Game Over is to open its fourth UK site, in Liverpool. The venue will launch later this month in Kempston Street in the Fabric District. The site will comprise four themed areas – Maniac, Pirates Of The Caribbean, Espionage and Money Heist. Director Samir Patel told Insider Media “We believe our attraction is unique by putting gamers in a role that makes them feel they’re on the set of a blockbuster movie – there’s no second-hand furniture or padlock puzzles here. The goal of the game is to solve a number of riddles and find hidden objects and clues so players can solve the mystery and escape from the room on time with help at hand for anyone struggling to get out.” Game Over operates sites across the world including three other UK sites – in Derby, Edinburgh and Falkirk.

Pronto appointed managing director of home-exchange website: Celia Pronto, who stepped down as chief customer officer of Casual Dining Group (CDG) last week after four years with the business, has been appointed managing director of home-exchange website Love Home Swap. Pronto, who recently became non-executive director of Moto Hospitality, joined CDG in 2016 as its first chief digital officer and led a number of landmark projects. Earlier this year Propel revealed Sarah Pope had joined the circa 290-strong company as chief information officer.

Restaurant guide publisher enters liquidation with buyer sought for assets: A publisher that produces annual restaurant guides for 26 regions in the UK has entered liquidation with a buyer being sought for the business and/or its assets. Bristol-based Food & Drink Guides was “unable to manage its cash flow”, according to Mazars partner Tim Ball, who was appointed liquidator on 30 January. All 20-plus staff were made redundant in December. Ball said: “Regrettably, the company was unable to manage its cash flow or meet liabilities to suppliers. The company struggled to adapt to the digital media landscape and competition from the likes of TripAdvisor but retained a strong brand with wide distribution of more than half a million copies across the UK annually. I am hopeful of finding a buyer for the business and/or its assets.” The guides were distributed free in retail parks, hotels, tourist information centres and Waitrose stores.

Padella to open second site, in Shoreditch this month: Padella is to open a second site, in Shoreditch this month. Propel revealed in June that Tim Siadatan and Jordan Frieda, who are also behind Italian restaurant Trullo in Highbury, north London, had lined up a unit in the Workspace building in Phipp Street for a second site for their pasta restaurant concept. It has now been confirmed the restaurant will launch on Thursday, 13 February. Siadatan and Frieda launched Padella in Borough Market three years ago at the site of former cafe De Gustibus. All pasta is made on-site shortly before being served. Padella has built a reputation for good value and generating queues around the block. Regarding the second site a spokesman said: “Padella will continue to serve simple and affordable pasta dishes and will move its bakery to the site.”

MGM Muthu Hotels continues Scottish expansion: MGM Muthu Hotels, part of the MG Muthu Group from India, has continued expansion of its portfolio in Scotland by acquiring Erskine Bridge Hotel & Spa for an undisclosed sum from Cosmopolitan Hotels. The 177-bedroom, purpose-built hotel in Erskine, on Scotland’s west coast, also offers a 200-cover restaurant, a bar, a self-contained spa including pool and gym, and a 500-capacity function room. Christie & Co director Stuart Drysdale, who brokered the off-market deal, said: “MGM Muthu Hotels is expanding its portfolio in Scotland and this purchase allows the company to secure a large hotel with easy access to Glasgow airport and a starting point for overseas visitors exploring the west coast of Scotland.” MGM Muthu entered the Scottish market when it acquired five hotels in two separate deals in May 2017.

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