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Morning Briefing for pub, restaurant and food wervice operators

Mon 10th Feb 2020 - Propel Monday News Briefing

Story of the Day:

Pizza East and Chicken Shop operator in advanced talks with landlords as losses increase to £13.4m: Quentin Restaurants, the Soho House joint venture, is in advanced talks with landlords to exit, sublet or convert a number of sites as it consolidates the portfolio to concentrate on its more profitable outlets. The company operates the Pizza East, Chicken Shop and Dirty Burger chains, as well as Cafe Monico and Farmshop Bicester, which are standalone sites. The company revealed its plans in Quentin Restaurants’ latest accounts, which revealed losses increased to £13.4m for the year ending 30 December 2018, compared with £4.9m the previous year. The group continues to be financed by borrowings from its parent company, with almost £13.1m owed at 30 December 2018. As the group is currently loss making and has net liabilities, it has obtained a letter of financial support from its parent company. Turnover in the period was down 12% to £23.4m, compared with £26.5m the year before. The company said this primarily was due to the closure of two Chicken Shop sites and one Dirty Burger site in 2017, as well as challenging trading conditions across the casual dining sector. Adjusted Ebitda was a loss of £814,000 compared with a loss of £385,000 the previous year – the company cited rising labour and property costs alongside “investment to support future growth” for the loss. Quentin Restaurants closed one site during the period – a Chicken Shop outlet in Ealing. That left the group with 14 sites – three Pizza East, six Chicken Shop and three Dirty Burger, along with the Farmshop Bicester and Cafe Monico outlets. Given the challenging trading conditions in some areas of the casual dining market, the group recognised a non-cash impairment charge of £6.2m against the carrying value of its restaurant assets and further non-cash onerous lease charges of £3.7m in the period. The group also closed its Chicken Shop site in Barcelona, Spain, which it operated under a joint venture investment. Its share of operating loss for the business amounted to £180,000. In their report accompanying the accounts, the directors stated: “The group has also seen challenging performances at some sites owing principally to wider sector difficulties in certain locations. The group is undertaking an ongoing strategic review of these sites in order to maximise the profitability of the portfolio. Accordingly, plans are well progressed to consolidate the group's portfolio and focus on the more profitable sites. The group has commenced talks with landlords regarding additional lease exits, sub-lets, or conversions, which are at an advanced stage. The directors have also put in place plans to improve revenues while reducing the group's cost base to drive profitability across the portfolio.”

Industry News:

Younger UK shoppers reducing grocery spend as they embrace food to go: Younger UK adults are embracing food to go presenting a challenge for supermarkets, according to new research. Four out of every five shoppers in the UK have eaten a meal that wasn’t prepared at home in the past month, with one in ten believing their spending on household food has reduced as a direct result. The research, by shopper behaviour company Shoppercentric, showed millennials and Generation Z shoppers are at the heart of the food to go trend and are doing so more often than they were two years ago. A total of 44% of 25 to 34-year-olds said they have had food delivered to their home or office in the past month by companies such as Deliveroo, UberEats or Domino’s Pizza. This compares with 33% of 35 to 44 year-olds and 25% of 45 to 54-year-olds. The trend is growing with almost one-fifth (19%) saying they were having food delivered “way more” than two years ago and one-quarter (25%) a “little more” than two years ago. When asked if they had bought food to eat on the go from a coffee shop or sandwich shop, three fifths (60%) of 18 to 24-year-olds and 58% of 25 to 34-year-olds had. This compared with less than one-third (31%) of 55 to 64-year-olds and 27% of over-65s. Shoppercentric managing director Jamie Rayner said: “Widening choice, easy accessibility and pricing to cater for all tastes and budgets means many shoppers relying on food to go believe their spending in those outlets will increase. Cash-rich millennials and Generation Z are at the heart of this trend. They are the age groups most likely to have eaten food when out or that was prepared away from home. They are doing this more often.”
US restaurants see best sales growth in four years amid mild winter weather: US restaurants saw like-for-like sales rise 2.3% in January – the highest figure for four years – thanks to a mild winter, according to Black Box Intelligence’s Restaurant Industry Snapshot, which is based on weekly sales from more than 47,000 restaurants that represent $75bn in annual revenue. Like-for-like visits continued to fall, down 0.7% in January, which was the best performance for the industry since August 2018 and only the fifth month in the past four years there had been less than a 1% decline. For the first time in the past 12 months all industry segments achieved positive like-for-like sales growth in January. The best-performing segments based on sales growth were upscale casual, fine dining and casual dining. The only two segments with like-for-like sales growth lower than 1% in January were quick service and fast casual. Victor Fernandez, vice-president of insights and knowledge at TDn2K, said: “January’s impressive sales growth is not an accurate representation of the strength of the industry. Winter has been mild and headlines from different parts of the country mention historically warm temperatures for January. This seems to be the factor most responsible for the boost in restaurant sales during the month.”
Fourth launches food waste report: Hospitality software provider Fourth has launched a report in partnership with sustainability platform Footprint that analyses how specific jobs in the industry can reduce food waste. With food waste estimated to cost the foodservice sector £3.2bn a year and the average outlet more than £10,000, Fourth is calling on operators to help it tackle the issue. The 64-page guide outlines why every foodservice worker should care about food waste and what actions they can take to tackle it. The insights were produced following interviews with operators such as Pret A Manger, Greene King and Nando’s as well as organisations such as WRAP, Leanpath and Winnow. The report also contains a comprehensive action plan. Fourth communications director Catherine Marshall said: “There’s no quick fix to cut food waste – tackling it requires a concerted effort across the industry. What’s clear is we could all do more, from boardroom to kitchen, to tackle this complex issue. Meaningful change requires collaboration across the industry and sharing best practice and insights.”
Hotel and coffee shop customers want ‘dedicated remote working areas’: More than four-fifths (86%) of hotel and coffee shop customers want dedicated areas so they can work remotely, according to new research. Almost half (48%) of respondents to the survey by guest experience management expert HGEM said they would buy drinks and snacks while working remotely, although three-fifths (60%) would prefer a “grazing option” rather than a traditional menu. More than four-fifths (84%) of respondents would be more inclined to work remotely from hotels if the food and drink offering was improved. The research, which surveyed 600 UK diners, also indicated hotels need to be more open-minded in their approach to service, including allowing guests to order-in food deliveries and eat it in the hotel’s restaurant. Guests would also like more personalised services such as tablets in their room to pre-order food, personalised menus or options linked to a guest’s hobbies. HGEM unveiled the research at an industry forum on the future of service in hotels held in partnership with EP Business in Hospitality.
Drinks industry ‘considerably’ lagging behind other sectors on sustainability, new report reveals: A new report has highlighted how the drinks industry is lagging behind other industries when it comes to sustainable strategies and practices. C&C Group, the branded cider, beer, wine and soft drinks producer, has joined forces with sustainability platform Footprint to create the first Drinks Industry Sustainability Index. The report analyses the extent to which the drinks industry is adopting sustainable strategies and practices for packaging, waste, water, emissions, energy, social impact and raw materials. The study found the industry currently scores an average of just 4.8 out of ten for the categories outlined. Footprint’s analysis and evaluation highlighted the drinks industry score lags “considerably” behind other sectors in which it also publishes sustainability indices reports. The report showed only 50% of glass containers are currently recycled, with bars, restaurants and pubs accounting for 200,000 tonnes of glass going to landfill each year. It identified a number of practices that can help the industry reduce its carbon footprint. This includes around the areas of supply chains, packaging, waste and water usage. C&C Group operations director Pat Morrissey said: “When we embarked on this project our objectives were clear – to build an accurate picture of sustainability in the sector and to offer insights that would enable businesses to make more informed decisions. I believe this inaugural report represents a solid start towards achieving our ambitious environmental targets, by offering a comprehensive and concise analysis of our current position and setting out a practical roadmap to help guide our industry in tackling the environmental challenges we face.”
Job of the week: COREcruitment’s executive search team is supporting a global hospitality brand as it looks to appoint a chief operating officer. Based in London and supporting operations in the US, Asia and Europe, this position would be ideal for an established executive-level operator. The business operates “dining concepts with a reputation for style and excellent food” and is looking for an individual with international experience and in-depth, high-end dining knowledge from restaurants or hotels. The salary is in the region of £200,000 to £250,000 a year with the addition of a yearly bonus and long-term incentive plan. For more details, email your CV or profile to

Company News:

Various Eateries appoints Yishay Malkov as new managing director: Various Eateries, the Coppa Cub and Strada operator, has appointed Yishay Malkov, one of the key driving forces behind the development and expansion of the Ivy Collection, as its new managing director, Propel has learned. Malkov, a former restaurant director of Gordon Ramsay at Claridge’s and general manager at Roka Restaurants, joined the Richard Caring-backed Ivy Collection in May 2014 and as its executive operations director played a key part in growing the business into a national presence. He left the business in the summer of 2018 after growing the business to more than 25 sites. Last month, Propel revealed Andy Bassadone, the co-founder of Strada and Cote, had invested in the business and at the same time become Various Eateries’ new non-executive chairman. He joined up with Hugh Osmond, who acquired the then 43-strong Strada for £37m in 2014, at his Various Eateries vehicle, which oversees the three remaining Strada and the six-strong Coppa Club concept. Last October, Sue Walter stepped down as chief executive of Various Eateries, after a year and a half, to join Maggie & Rose, the family members club, as its global chief executive. Last month, the company closed its Strada site at More London. It is thought the site is closed for a refurbishment and it will reopen under a refreshed Strada format. Last September, Various Eateries disposed of its Coppa Club St Paul’s site to better burger brand Five Guys as the business looks to realign its portfolio to support its targeted expansion plans. Five Guys is set to be its new neighbour at More London, after acquiring the Dim T site at the scheme for circa £2m, at the start of this year.

West Berkshire Brewery set for further fund-raise to support rapid growth, full-year turnover almost doubles: West Berkshire Brewery, the David Bruce-chaired group, is set to embark on another round of fund-raising to support its rapid growth. The company is set to raise the funds to help cover working capital but Propel understands it is also considering raising more money for development capital. West Berkshire Brewery is working with advisors as it explores options to secure the additional finance. Managing director Tom Lucas told Propel: “We are building a fantastic business and, in terms of the raise, we have lots of options and we’re in no rush. This is basically a working capital requirement and has been on the horizon for some time. We have delivered a massive infrastructure project in the shape of our brewery plant, which has enabled us to double our revenues in this financial period. Now it’s about accelerating that ongoing growth and we need to fund that journey. It’s about getting our beers into more hands in more markets and hitting that magical £8m revenue mark.” The proposed fund-raise was disclosed in West Berkshire Brewery’s latest accounts, which showed turnover was up 88% to £6.2m for the year ending 31 March 2019, compared with £3.3m the year before. Adjusted operating Ebitda stood at a loss of £651,000 after the company incurred exceptional costs of circa £800,000. These included rectifying issues with water supply to the brewery and the pan-European carbon dioxide shortage, which both severely hit production. Pre-tax losses increased to £3.3m, compared with £2.3m the previous year. In his report accompanying the accounts, Bruce said: “Since the start of the new financial year in April and despite some initial setbacks, the core business is growing and the investments we have made in infrastructure and personnel continue to bear fruit. This has resulted in organic sales growth of 30% in beer volumes and our strategy to diversify revenue streams and reduce manufacturing costs, which has helped increase our gross profit margin to 62% from 38%. This, in turn, means we continue to make inroads into our overhead base and are well in sight of break-even and positive Ebitda, which we anticipate will come when turnover hits £8m with continued sales growth projected thereafter.” West Berkshire Brewery raised £1.8m in July 2019 to grow its brewing and pub operations. The company operates three pubs under its own vehicle – The Depot in Holloway, The Grapes in Oxford, and the Taproom & Kitchen at its brewery development – plus two London pubs, the Old Suffolk Punch in Hammersmith and The Oxford Tavern in Kentish Town under its Downing Pubs joint venture, Maverick Pubs.

Anstey replaces Bishop as managing director of Mildreds: Sam Anstey, formerly operations director of the Joffe family-led Laurel Canyon Ventures, has joined vegetarian restaurant group Mildreds as its new managing director, Propel has learned. Anstey stepped down from Laurel Canyon Ventures, which is behind the Chooks, Chez Bob, Bob’s Café and Monkeynuts concepts, at the end of last year after four years with the business. Anstey previously worked with the Joffes at Giraffe, starting in 2002 and was part of the original management team that took it from three to 65 restaurants. He left the business after its acquisition by Tesco, departing as its franchise and marketing director. He replaces Luke Bishop, formerly of Polpo, as managing director of Mildreds. Bishop joined Mildreds last spring. He left Polpo in the summer of 2017 following six years with the business, including the last two as managing director. Mildreds was founded by Diane Thomas and Jane Muir in Greek Street, Soho, in 1988 and is credited with “reinventing vegetarian food”. It has four sites across the capital. Last year, Encore Capital acquired a majority stake in the business with plans to expand it further in London. Shirin Gandhi, a partner at Encore, became a director of the business. Encore, which specialises in providing £1m to £10m in equity finance to established companies looking to grow, led a £2m investment in Detox Kitchen in 2016.

Franchisees demand £2m from Domino’s Pizza: Domino’s Pizza has been thrown into fresh dispute with its franchisees after an investigation found the shop owners had been made to pay for a spate of fraudulent transactions on its websites. Domino’s is understood to have been the victim of organised crime dating to 2018, when about £2m of illicit transactions were made online. The cost of these transactions, which were rejected by banks, was pushed on to franchisees. Now the takeaway owners, who buy food and services from Domino’s, are demanding the company pays back the money, reports The Sunday Times. It is the latest development in a long-running dispute between the parent company and its franchisees, some of whom have hit back by refusing to open more sites. Together they have formed the Domino’s Franchisee Association (DFA), in the hope of negotiating better franchise terms. They say their share of profits has fallen from 61% to 50% over four years because of higher food costs, business rates and pay. The increased cost of “charge backs” emerged last year. The DFA hired accountancy firm KPMG to carry out an independent audit of the Domino’s advertising fund, which pays for marketing campaigns, and the e-commerce fund. Both are maintained by shop owners. The audit uncovered a high number of fraudulent transactions that had been pushed into the e-commerce fund. It is understood the franchisees do not believe they should pay for £2m-worth of these. The dispute comes as Domino’s continues to hunt for a new chairman to replace Stephen Hemsley, who was ousted last year. Ian Bull, who was promoted from senior independent director to interim chairman, is seen as a likely permanent candidate. Meanwhile, the search for a chief executive to replace David Wild has been postponed while the hunt for a chairman continues.
Primeur team to open north London bakery and restaurant for fifth site: Jeremie Cometto and David Gingell are to launch a bakery and restaurant in north London for their fifth site. The duo plan to open Big Jolene Bakery – known as Big Jo – in Hornsey Road. The space, which was a former refrigeration and air-conditioning shop, is being transformed ahead of an opening in three months’ time. Cometto and Gingell are behind London restaurants Primeur, Westerns Laundry and Jolene as well as Fitzroy in Cornwall. Big Jo will be a bigger production bakery than Jolene, complete with indoor grain silos, flour mills, pizza, bread and pastry ovens, reports Hot Dinners. There will be a shop and 60-cover restaurant serving baked goods and pizza. Cometto and Gingell opened Primeur in Stoke Newington, followed by Westerns Laundry in Lower Holloway. They launched Jolene in Newington Green in September 2018 before heading to Fowey to open Fitzroy last year.
Cairn Group expects results to ‘significantly enhance’ after 2020 as series of investment projects near completion: Newcastle-based hotel and bar operator Cairn Group has said it expects “significantly enhanced” results after 2020 as a series of investment projects in the estate near completion. The group said trading continued to be challenging, with pressures on key costs that couldn’t always be “passed on to the customer”. Cairn Group provided the update as accounts for the year ending 30 April 2019 showed turnover increased 3% to £96.5m, compared with £93.9m the previous year. Ebitda was down 15% to £13.7m, compared with £16.1m the year before as a result of the refurbishment programme and initial relaunch period. During the year the company invested £20.7m on new and existing sites, up from £13.4m the previous year. Pre-tax profit increased to £2.8m, compared with £1.1m the year before. As previously reported, the company secured an extended loan facility totalling £201m during the year to provide acquisition and refurbishment funds. The company said it continued to look for properties that fitted into its portfolio. Cairn Group has just been named preferred operator of a 150-bedroom hotel being built in Swansea at a development that will include a 3,500-capacity indoor arena. In their report accompanying the accounts, the directors stated: “Looking to the year ending 30 April 2020 and beyond, the investment in some of our flagship assets is now almost complete. The directors don’t expect to report any significant increases in group turnover or Ebitda in 2020 due to the timescale of these refurbishments but do expect results to be significantly enhanced in future years. Other trading has continued to be challenging due to uncertainty in the macro-economic environment.”
Porthleven-based chef Jude Kereama to open third Cornish site: Porthleven-based chef Jude Kereama is to open a third site in Cornwall. Kereama, who operates Porthleven harbourside restaurants Kota and Kota Kai, is extending the “Kota Collective” to include Kuki. The restaurant will open in April at The Valley, a luxury hamlet offering five-star holiday cottages in Carnon Downs, near Truro. Kuki will specialise in small plates at lunchtime, particularly local seafood and shellfish with an Asian twist. At dinner it will have a similar style to Kota – “fine dining without the fuss”. There will also be a Kuki wine shop. Kereama, who is half Maori, half Chinese Malay, said kuki means “cook” or “chef” in Maori. He told Cornwall Live: “I wholeheartedly believe in The Valley. It’s in a fabulous area and the idea of foraging there is really exciting.”
West Yorkshire-based Kashmiri restaurant opens third site, fourth to follow: West Yorkshire-based Kashmiri restaurant Lala's has opened its third site, with a fourth to follow. Owner Junior Rashid has transformed the former The Farmers pub in Pudsey into his latest venue. The property in Bradford Road has undergone a major eight-month refurbishment. Rashid told the Telegraph & Argus: “I really took a liking to the place. It’s a landmark building and it's bang in the middle of Leeds and Bradford, so we’ve got the best of both worlds.” Lala's is also set for further expansion, with a site “coming soon” to Bradford, according to its website. The company also operates outlets in Huddersfield and Wakefield.
King’s Lynn-based pub operator doubles up: Michael Baldwin, who owns The Bank House in King’s Lynn, has taken on a second pub in the Norfolk town. Baldwin has teamed up with Laurie Betts and Mike Wilson to take on the Goldings, which will reopen at the end of the month as Wenns Chop & Ale House following a major refurbishment. Baldwin, who has worked in hospitality for 24 years, told the Eastern Daily Press: “Market Place has undergone a large transformation in the past few years and we look forward to being part of its continuing growth. King’s Lynn needs more quality establishments. The more competition there is, the more people will come into the town.”
Hull-based Shoot The Bull opens fifth site, in York: Hull-based bar and restaurant company Shoot The Bull has opened its fifth site, in York. The company has expanded outside its home city after launching the venue in the former Wagyu Bar & Grill site in Low Petergate. The property has reopened as The Old House, which offers 100 covers and includes a courtyard at the rear and a private dining room on the first floor. Director Mark Rodgers previously said Shoot The Bull, which operates three other venues in Hull, also plans to open sites in Leeds and Manchester. Wagyu Bar & Grill closed the site just before Christmas – nine months after its launch – along with its other site, in Harrogate.
Provincial Hotels and Inns puts two Lancaster pubs on market: Provincial Hotels and Inns, owned by hospitality management company Onecall, has put two former Mitchells of Lancaster sites on the market. The company is selling Lancaster pubs The Yorkshire Taps, which is valued at £325,000, and the Ring O’ Bells, which is valued at £425,000. Provincial Hotels and Inns told the Lancaster Guardian the businesses no longer formed part of its growth strategy and would be sold as going concerns. The Yorkshire House was rebranded as The Yorkshire Taps three years ago following the formation of Provincial Hotels and Inns when it acquired 11 sites from Mitchells of Lancaster. Provincial Hotels and Inns’ other sites include The Blue Anchor in Bolton-le-Sands and The Country Lodge & Brasserie in Carnforth.

East Lothian-based restaurateur set to open third site: East Lothian-based restaurateur Franco Cucchi is set to open his third site, in Haddington. Cucchi is planning to turn the former offices of the procurator fiscal in Court Street into family-style Italian restaurant Meucci. He has been granted a new alcohol licence by East Lothian Council’s licensing board for the premises. Cucchi, who also runs the Cucina Amore and North Berwick Diner and Fry restaurants in North Berwick, is aiming to have his new venture open by Easter, reports the East Lothian Courier.
Leicester-based operator takes on second site: Leicester-based operator MVR Exchange has taken on its second site. Owner Marc Van Rooyen will relaunch The Exchange Bar, which ceased trading in the city's Cultural Quarter in October. Van Rooyen said the bar would undergo a “light refresh” while continuing to create the “unique ambience and friendly atmosphere it was known for”. The revamped Exchange will offer an American-style brunch menu alongside traditional soup and toasties at lunchtime. Van Rooyen, who also owns neighbouring cocktail bar Manhattan 34, told The Business Desk: “We are excited to welcome new and old customers to The Exchange Bar. We’re already planning an extensive and varied programme of events.”
Bachus converts Belfast pizzeria to sports bar: Northern Ireland-based hospitality group Bachus has converted its Belfast pizzeria, Tutti Frutti, to a sports bar. The company has invested £100,000 into Franklins, which forms part of the company’s Linen House hospitality complex in Franklin Street. The sports bar features a 6.5-metre screen – thought to the biggest indoor screen in Belfast – among 11 in the bar. The venue spans two floors with a dedicated games area complete with pool tables, beer pong, foosball and dartboards. Franklins general manager Conor Quinn told the Irish News: “Franklins’ mega screen will offer sports fans an unprecedented viewing experience. We’ve aimed to create a sports venue that will appeal to a diverse crowd.” Franklins sits alongside Rita’s, Sweet Afton and The Perch rooftop bar in the complex. Bachus’ portfolio also includes Filthy McNasty’s, Liquor XXX, The Points and An Sibin.
Bristol-based cafe operator to double up: Bristol-based cafe operator Shona Graham is to double up in the city. Graham will bring her Emmeline concept to Spike Island gallery. She said the cafe would have the “same concept and soul” as the original Emmeline in Cheltenham Road but “on a bigger scale”. The menu will include salad boxes and grilled sandwiches alongside coffee, smoothies and pastries. Graham told Bristol24/7: “I am excited to collaborate with the team at Spike to create a community-based destination delivering wholesome and exciting food and drinks.”
Oxford-based social enterprise to open two pubs: Oxford-based social enterprise Tap Social is to open two pubs. The organisation will launch The Market Tap in the city’s Covered Market this summer. The former Hedges Butchers premises is being transformed to serve locally brewed craft beer. Tap Social will also take over management of the square outside the unit and turn it into an events space. It is hoped other Covered Market traders – particularly food and drink businesses – will open later to complement and benefit from the new bar and entertainment. Currently the market closes daily at 5.30pm, reports the Oxford Mail. Tap Social has also taken over The White House pub in Abingdon Road and expects to reopen it in the summer following a refurbishment. Tap Social was established in 2016 to create training and employment opportunities, particularly for ex-offenders. It runs a pub on the Curtis industrial estate in the nearby village of Botley.

Kent business Macknade to open food and drink hub at Ashford scheme this month: Kent business Macknade will launch a food and drink hub in Ashford, Kent, this month. The company will open the 5,123 square foot venue at the Elwick Place development in the town centre. Building on its Faversham food hall, Macknade’s new outlet will offer an all-day dining experience, a bar and a delicatessen focusing on meat and cheese. A mix of individual and communal tables will be placed centrally among the service counters. A spokeswoman told Kent Live: “In our Faversham site it’s about 70% food shop and 30% restaurant. In Ashford we’re completely flipping that. What we’ve done is create spaces where you can grab a coffee, shop and eat.” Macknade joins Travelodge and cinema operator Picturehouse at the scheme. 

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