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Morning Briefing for pub, restaurant and food wervice operators

Tue 25th Feb 2020 - Propel Tuesday News Briefing

Story of the Day:

Casual Dining Group to trial new pub format – The Mulberry: Casual Dining Group (CDG), the Bella Italia, Café Rouge and Las Iguanas operator, is to trial a new pub format called The Mulberry, Propel has learned. The James Spragg-led company will launch the trial at the Café Rouge site in the Belgrade Plaza development in Upper Well Street, Coventry, which closed at the weekend. It is unclear whether the move will lead to further openings or conversions under the new concept but Propel understands CDG has trademarked The Mulberry name. The Mulberry is described as: “Your local place to eat, drink and meet – all day from breakfast through to last orders. Not just a pub, it’s the heart of your neighbourhood. Comfort and nostalgic dishes are on the menu for breakfast, lunch and dinner and our bar offers a mix of draught and packaged beer, affordable wine, a stylish list of spirits and great coffee.” CDG currently runs pubs at Heathrow airport – The Darwin in Terminal 3 and The George in Terminal 5 – plus The Shipyard at Jersey airport under its Ale & Coffee House concept. A CDG spokesman told Propel: “We can confirm we are changing one site, in Coventry, to an all-day eating and drinking concept called The Mulberry, which we feel will suit the neighbouring demographics. We successfully run similar concepts in airports with our Ale & Coffeehouse brand and this fits into that style of offer.” Last week Propel revealed CDG was adding three sites to its Las Iguanas estate, including two Café Rouge conversions. The 57-strong Latin American restaurant chain, which launched in Bristol almost 30 years ago, will replace Café Rouge sites in Brindley Place in Birmingham and Kingsway, London. The brand will also launch a site in Princes Quay shopping centre in Hull this year.

Industry News:

Delivery Conference open for bookings: Propel has launched The Delivery Conference, which is open for bookings. The ground-breaking event, which takes place at Painters Hall in Little Trinity Lane, London, on Tuesday, 21 April, will cover all aspects of this fast-growing sector, offering expertise, ideas and insights. NPD Group foodservice director Dominic Allport will talk about the delivery market’s growth, key developing trends and where the sector goes from here. KAM Media managing director Katy Moses will reveal consumer perceptions of the market and how they use and interact with delivery operators. Robin Himmels, of Eatclever, will explain how the company has become one of the leading virtual delivery brand operators in Europe and how he sees this part of the market developing. Alasdair Murdoch, chief executive of Burger King UK, will talk to Mark Wingett about early adoption of delivery during his time at Gourmet Burger Kitchen, challenges and opportunities, and how delivery is working for Burger King. Just Eat UK head of strategic accounts Amy Heather, who leads the company’s relationships with QSR, casual dining and mid-market operators, will discuss major trends Just Eat is seeing, key things it has learned, and how it is using data and insights to help operators improve the delivery experience. AlixPartners US director Eric Dzwonczyk and UK counterpart Steve Braude will talk about the US delivery market and how it differs with our own. Susan Martindale, group HR director at Mitchells & Butlers, will look at building a delivery strategy for pubs, the company’s use of virtual brands and a possible move into dark kitchens. Richard Morris, chief executive of Tortilla, will reveal how delivery has forced an evolution of his business for the better. Wagamama’s Andre Johnstone will reveal how the brand has incorporated delivery and click and collect into its model and how it strikes a balance between in-store and digital sales. Deliveroo director of national accounts Matt Ring will talk to Propel insights editor Mark Wingett about how the business continues to innovate, its use of data to create virtual brands and the challenges it faces to stay ahead. Meanwhile, a panel featuring Macro Foods founder Kirsty-Lee Griffiths, Crosstown Doughnuts’ JP Then, Yard Sale Pizza founder Johnnie Tate, and Bababoom founder Eve Bugler will discuss launching, operating and growing in a delivery-focused world. Propel managing director Paul Charity said: “Given delivery is one of the fastest-growing channels in the sector – and as its importance continues to rise – we are delighted to present this ground-breaking conference, which will allow operators to make the most of the opportunity delivery offers.” Tickets to the event cost £295 for Propel Premium members, £345 for operators and £395 for suppliers. Email

Hospitality SMEs optimistic about 2020 prospects amid strong last quarter: Small and medium-sized enterprises (SMEs) in the hospitality sector are optimistic about their prospects for 2020 following a strong performance in the last quarter, according to new research. The inaugural Barclaycard SME Barometer showed hospitality SMEs saw a 1.7% increase in revenue from the previous quarter and a 4.0% boost year-on-year. They expect revenue to rise 1.6% this quarter compared with the last quarter and 3.8% during the next 12 months. Almost one-quarter (23%) of hospitality SMEs said they were optimistic about the state of the UK economy, with more than one-quarter (28%) optimistic about the sector. Almost two-fifths (38%) said they were optimistic about their own business. A total of 38% said their sales pipeline was strong, while the same percentage said their current cash flow was strong. The hospitality sector reported the lowest planned investment in the next year of any sector, with little more than one-fifth (22%) of industry SMEs saying they were planning high investment in 2020. Their top two priorities for investment were “new equipment” and “adding staff”. The barometer highlighted the affect of red tape on the sector. Two-thirds (67%) of hospitality and leisure SMEs said the impact of legislation on their business had been neutral, with only 6% saying legislation has had a positive impact. The report, launched by Barclaycard in partnership with YouGov, combines research data with billions of merchant transactions processed by Barclaycard to provide an in-depth look at UK SME economy prospects. Barclaycard Payments chief executive Rob Cameron said: “Small and medium businesses are the engine of the UK economy and a vital indicator of economic well-being. It’s crucial we understand their performance and overall confidence so we can target support at the areas where it will have the most impact – driving further economic growth.”

Government appoints Fiona Dickie as new PCA: The government has appointed Fiona Dickie as the new Pubs Code Adjudicator (PCA). Dickie, who is currently deputy PCA, will begin her four-year term in May when Paul Newby’s tenure comes to an end. She said: “I intend to be a strong champion for the rights and protections Parliament has given to tied tenants through the Pubs Code. The regulated pub companies know I will be clear and frank with them about my expectations when it comes to code compliance. As adjudicator, I intend to use my position to ensure they deliver on their statutory obligations and to make sure code rights are understood by tied tenants and that accessing them is straightforward.” Priorities for Dickie will include working with the Department for Business, Energy & Industrial Strategy on the delivery of its statutory review of the Pubs Code; ongoing efforts to raise and maintain Pubs Code awareness among tied pub tenants and the wider industry; and embedding into pub-owning businesses’ policies and processes the PCA’s expectations of how Market Rent Only proposals must be prepared. The regulatory work of the PCA and the office continues, including the current statutory investigation into the stocking policies of Heineken-owned Star Pubs & Bars.

Almost half of consumers willing to pay more for better-quality drink as premiumisation continues to rise: Almost half (47%) of consumers are willing to pay more for a better-quality drink, according to a new report from CGA. The Premiumisation: Change, Challenge And Opportunity report reveals a surge in high-end drinks sales in 2019, including 21% growth in super-premium spirits. The study, which surveyed circa 5,000 consumers, stated the out-of-home drinks market was becoming increasingly polarised between super-premium niche brands and big mainstream names. It said premiumisation also continued to “reshape the beer category”, with 848,000 more people drinking world lager in 2019 than in 2016. The report uses CGA’s new Match consumer segmentation service to pinpoint the consumers who are driving super premiumisation. They include people in the “business class-seekers” segment, who spend an average of £251 a month on eating and drinking out. Mark Jackson, senior client manager at CGA, said: “Premiumisation continues to disrupt the on-trade but it’s a complex and fast-changing story and we’ve seen the market diverge substantially during the past year, with examples of growth in both super-premium and mainstream categories. Where the market goes from here remains to be seen but it’s clear an understanding of the nuances in consumers’ attitudes to factors such as quality, range and price is more crucial than ever in 2020. Consumers are increasingly fickle and experience-driven and have developed high expectations of out-of-home eating and drinking. Understanding the drivers, dynamics and habits of their behaviour has never been more important when it comes to capitalising on premiumisation.” The full report is available from CGA as a free download.

Report identifies barriers to career growth for women in hospitality: Women in the hospitality sector face seven significant barriers to success, according to a new study. These include a “boys’ club mentality”, the prevalence of stereotypes and a lack of meaningful action from employers, the report states. The research also outlines seven critical areas in need of support to boost the number of women in senior positions including tackling unintended bias, an emphasis on coaching and mentorship schemes, and promotion of “softer” leadership skills. The study also highlights a lack of female leadership in the UK’s third-largest sector, lack of diversity in many workplaces, a relative shortage of women holding senior positions, and a limited number of women feeding the promotional pipeline. The UKHospitality-sponsored report, entitled How To Unlock Potential And Create A Talented Pipeline Of Senior Women Leaders, was written by Jackie Moody-McNamara, of Brilliant Women, and John Higgins, research fellow at  consultancy GameShift. Moody-McNamara said: “We need sector bodies and key influencers to recognise accelerated improvements are required so everyone can benefit – companies, employees, investors and customers. Our people want us to ensure hospitality is fair and equitable for everyone and they’re ready to step up and grab it.” UKHospitality chief executive Kate Nicholls added: “Despite some good work, there are clearly barriers to progression in the sector. We need to acknowledge there’s an issue here and we need to act on it now. This report is a fantastic resource for ensuring better female representation at senior levels. UKHospitality will use it as the basis for our work championing diversity among our membership and across the whole hospitality sector.” The free report is available on the UKHospitality  website. Meanwhile, UKHospitality and the British Beer & Pub Association have welcomed a government consultation on relaxing licensing hours to mark the 75th anniversary of VJ Day. The proposed order would extend licensed opening hours from 11pm on Saturday, 15 August until 1am the following morning.

Europe’s hotel industry reports growth in all key performance metrics for January: Europe’s hotel industry has reported a good start to 2020, with year-on-year growth in all three key performance metrics in January, according to the latest data from STR. The overall European market saw revpar rise 1.8% year-on-year to €59.18 (£49.59), while average daily rate increased 0.5% to €101.14 and occupancy went up 1.4% to 58.5%. Data for the month focused on Budapest and Paris. In Hungary’s capital, revpar rocketed 28.4% year-on-year to HUF15,735.94 (£38.99), while average daily rate increased 18.1% to HUF26,672.01 and occupancy rose 8.7% to 59.0%. The absolute average daily rate and revpar levels were the highest for any January in STR’s Budapest database. Performance was underpinned by 11.5% demand growth. In Paris, revpar rose 15.7% year-on-year to €146.48, average daily rate increased 6.4% to €206.98, and occupancy was up 8.7% to 70.8%. The absolute occupancy level was the highest for any January in STR’s Paris database, while average daily rate was the highest for a January since 2013. STR’s hotel performance sample comprises 68,000 hotels and 9.1 million rooms around the globe.

Company News:

Arc Inspirations makes key appointments as it gears for further growth: Arc Inspirations, the Leeds-based operator of a number of fast-growing brands, has made two key appointments as it gears up for its next stage of growth. Laura Lewis has been hired as head of marketing, while Tim Knockton has been appointed financial director. Lewis has extensive marketing knowledge gained from 12 years at leading retailers such as Tesco and Morrisons. Her time at Morrisons spanned a variety of marketing roles, most recently supporting store openings and customer acquisition and retention. At Arc Inspirations she will promote and strengthen the group’s bar brands and customer experience. Knockton has more than 20 years’ experience in the food industry and professional services. Most recently he was financial director for brand and customer experience company Communisis and before that was head of commercial finance at KP Snacks. He replaces Andy Whelan, who is leaving to pursue other opportunities. Arc Inspirations chief executive Martin Wolstencroft said: “I am delighted to welcome these new members to our expanding and passionate team at an exciting time. Their appointments will be instrumental in driving forward our business as we take the momentum from an exceptional year in 2019 and look to selectively target expansion in new locations.” The company’s financial results for its most recent year showed turnover increased 16.7%, from £23.3m to £27.2m, with like-for-like sales up 1.1%. Founded in 1999, Arc operates 17 north of England venues mainly under its Banyan Bar & Kitchen, BOX and Manahatta brands.

Gail’s lines up Windsor and Guildford openings: Gail’s Bakery, which is backed by sector investor Luke Johnson, has further strengthened its pipeline with openings planned in Windsor and Guildford, Propel has learned. The company is taking over Jung’s bakery in Peascod Street, Windsor, with a planned opening towards the end of March, which would mark Gail’s 60th site. Meanwhile co-founder and chief executive Tom Molnar said the group was also working on a site in Guildford, which he hoped to open in May. Gail’s is also looking to continue expansion in London, with a further site in Southwark, currently under negotiation. Last week Gail’s opened its first site of 2020 – in Southfields, south west London, while an outlet in The Cut, near Waterloo, will launch on Thursday (27 February). Molnar said: “We are looking to open ten to 12 sites a year but we have to get the right properties. One or two of those will be outside the M25. I’m targeting one opening a month for the remainder of the year, if we can.” Gail’s was founded in Hampstead in 2005 and is run by Molnar and managing director Marta Pogroszewska.

Tasty launches virtual delivery brand for Wildwood: Tasty, the AIM-listed operator of the Wildwood and Dim T brands, has launched virtual delivery brand Out The Box, Propel has learned. The virtual brand is understood to be available through Deliveroo out of a select number of the group’s Wildwood restaurants, including in Liverpool and Worcester, and focuses on Italian food, burgers and pizza. At the start of the year, the company announced the sale of its Dim T site in More London for a cash consideration of £2m. The venue is currently being fitted out as a further central London flagship site for better burger brand Five Guys.

Chik’n founders ‘100% ready’ for more sites as they prepare to convert Chick ‘n’ Sours in Islington: David Wolanski, co-founder of fried chicken concept Chik’n, has told Propel the company is “100% ready” to open more sites this year having completed the concept’s “reinvigoration”. A third Chik’n site will open in Upper Street in Islington, north London, after being converted from sister concept Chick ‘n’ Sours. The restaurant will close on Sunday (1 March) before reopening as Chik’n in April. Wolanski said when the site was acquired in 2017 it was meant to be for Chik’n but, because he and co-founder Carl Clarke were unhappy with the concept at the time, they decided to launch it as Chick ‘n’ Sours instead. “Having Chik’n here was always the plan so we set the kitchen up in a way that we could carry out an easy conversion,” said Wolanski. “Upper Street is an area that lends itself to the fast casual and grab-and-go markets so we think Chik’n will thrive in this location.” Last year Chik’n, which is backed by Freston Ventures and Active Partners, opened its second site, in Wardour Street, Soho. Wolanski and Clarke described the “2.0 version” of Chik’n as a “chance to reinvigorate the concept” after it almost failed. The concept was launched more than two years ago in Baker Street. Chik’n appointed Jon Green, formerly of Prezzo, as managing director in December. Wolanski added: “We have now got the model how we want it and look forward to continuing our journey with Jon’s support. It’s exciting and we are 100% ready to do more. We are looking at more Chik’n sites this year.” Asked about potential expansion plans for Chik’n and whether the concept could work outside London, Green said: “While many of our customers travel into London for their Chik’n fix, there are still many customers in London we are focused on reaching. We will continue to listen to our customers to help develop not only our property plan but also to deliver the best possible experience.”

Peter Borg-Neal – accolades overshadowed by Home Office threat: Oakman Inns and Restaurants chief executive Peter Borg-Neal has said the company’s latest award wins have been overshadowed by the looming threat from the Home Office and its proposed points-based immigration system. The company has picked up two further accolades in the past week – it was ranked in the top 30 of the Sunday Times 100 Best Companies To Work For for a fifth year and won the sustainable operator category at the Casual Dining Awards. Borg-Neal has pleaded with home secretary Priti Patel to reconsider her opinion of staff in the hospitality industry. He said: “These are highly skilled people with a high degree of responsibility. If they didn’t shoulder that responsibility, there would be no need for a Food Standards Agency or guidelines and instructions on allergens management. There would be no MasterChef or Sommelier Of The Year. There would be no incentive to work in the industry or see it as an aspirational career path – all because Priti Patel has this rather strange view of the people who serve her whenever she goes out. It was a very emotional night as I saw the results and recognition my company’s team, every one of them, received in public. It is a huge honour and privilege to work with them all and they are the reasons this company, which is little more than 12 years old, has grown and developed. We don’t stop trying, we don’t stop caring and we’ll never stop trying to please.”

Roasting Plant Coffee to open second UK site, in The Strand next week: US coffee shop concept Roasting Plant Coffee is to open its second UK site, next week. The company will open the outlet in The Strand on Monday, 2 March – adding to its other London site, which launched in Borough 14 months ago. The immersive concept allows customers to watch their coffee’s journey from green bean to cup. Founded by former Starbucks executive Mike Cassell, the Willy Wonka-style Javabot is a fully automated machine that passes raw coffee beans through clear pneumatic tubes at precise temperatures before producing exact portions ready for brewing. Roasting Plant Coffee operates five sites in the US, including New York and San Francisco.

Eggleston secures former Jamie’s Italian in York for Tomahawk Steakhouse: North east-based multi-site operator Howard Eggleston is to open a site for his Tomahawk Steakhouse brand in York. Eggleston has secured the former Jamie’s Italian off St Helen’s Square. It will be Tomahawk Steakhouse’s largest site to date and will include a cocktail bar, champagne and seafood bar as well as the main restaurant. The building is being refurbished ahead of the opening in April, reports York Mix. Tomahawk Steakhouse operates six sites in North Yorkshire and the north east. It will open in Beverley next month while outlets are also planned in Harrogate and Wilmslow, Cheshire. Eggleston owns and runs a number of other ventures across the north east, including The North Terrace in Newcastle and two Boat Club sites, in Newcastle and Durham. He used to run a pan-Asian concept in Yarm called the Lotus Lounge, which was converted into a Tomahawk Steakhouse.

KFC trials doughnut and fried chicken sandwich: KFC has started testing a doughnut and fried chicken sandwich in the US. The menu item features a piece of fried chicken served between two glazed doughnuts for $5.99 (£4.60). The meal is one of two pastry and chicken combinations the chain is testing out. The other is a fried chicken and doughnut basket meal, which includes chicken on the bone or chicken tenders paired with one doughnut for $5.49, although it can be upgraded to include two doughnuts for $1 more. The trial is taking place at select restaurants in the cities of Norfolk and Richmond in Virginia and in Pittsburgh in Pennsylvania, Delish reports. Meanwhile, KFC has launched an 80-piece popcorn chicken bucket for £5.99 across its larger restaurants in the UK following a trial in Scotland in November.

PizzaExpress opens new-look Trafalgar Square site: PizzaExpress has relaunched its site in London’s Trafalgar Square featuring its new FutureExpress branding. The 350-cover restaurant features new exteriors and signage, new partitioned areas to cater for a broader range of dayparts and occasions, and new staff uniforms. The opening saw customers served by cast members from hit West End musical Waitress, which aptly includes the song Opening Up. PizzaExpress managing director Zoe Bowley said: “What better way to mark the occasion than by teaming up with the talented cast of our neighbouring West End hit show.” Earlier this month PizzaExpress appointed Christian Haas to the newly created role of retail and product director. Haas, who spent 14 years at Waitrose, has also joined the Hony Capital-owned chain’s UK and Ireland leadership team. At the time, Haas said: “I look forward to working with the talented teams within the business to maximise PizzaExpress’ potential in line with its FutureExpress strategy.”

Long-awaited JD Wetherspoon pub in Leeds nears opening despite contractor fears: The long-awaited opening of JD Wetherspoon pub the Charles Henry Roe in Leeds has been hit by a further delay. The pub in Cross Gates was due to launch on Tuesday, 24 March but has been set back to Tuesday, 7 April. However, there were fears the venue would remain shut for a lot longer following weeks of uncertainty after the contractors went into administration, Leeds Live reports. JD Wetherspoon faced a long battle with Leeds City Council in its discussions to open the Cross Gates pub at a former doctors’ surgery in Austhorpe Road. The company won an appeal in 2018 after councillors failed to come to a decision over whether to approve the proposal. A government-appointed inspector later approved the plan and ordered the council to pay the company’s costs for the “wasted expense” of an appeal process. The Charles Henry Roe is named after a renowned coachbuilder whose carriageworks, founded at Cross Gates in 1920, made more than 18,000 buses until its closure in 2011.

Ei Publican Partnerships launches drinks promotion following Cheer Up January success: Ei Publican Partnerships, the leased and tenanted division of Ei Group, has launched a drinks promotion that encourages new customers to visit its pubs. Following its Cheer Up January initiative, which saw the company team up with a number of brewers and drinks, Ei Group has now launched its Leap Year campaign. Cheer Up January resulted in more than 18,000 free drinks being redeemed by customers during the campaign period (2 to 19 January) – a 116% increase from last year. The number of pubs participating this year also increased – to 1,260 – up 15% on 2019. The Leap Year campaign will run until Saturday, 14 March and features an extended range of drinks. They include draught and bottled beer, Guinness, cider, Gordon’s gin, non-alcoholic beer and soft drinks. Brewing partners include Heineken, Budweiser, Diageo and Molson Coors. Ei Group head of marketing Aimee Corbett said: “It was fantastic to see the Cheer Up January campaign build momentum and drive a greater number of customers into our pubs during what is traditionally a challenging month for the trade, delivering tangible benefits to publicans. The feedback from our publicans was overwhelmingly positive, with 90% keen to engage in the initiative again next year.”   

Loungers to open second Cosy Club in Birmingham, next month: Cafe bar brand Loungers is to open a second Birmingham site for its Cosy Club brand, next month. The 6,000 square foot venue will open above Stonegate Pub Company’s Slug and Lettuce venue at mixed-use canal-side development Brindleyplace on Tuesday, 24 March. The venue has been empty since January 2019, when the owners of The Smoke Haus closed it to focus efforts on their restaurants in South Wales. Stacey Muir, marketing and events executive at Brindleyplace, told The Business Desk: “We are delighted to welcome Cosy Club to Brindleyplace and further expand our great range of bars and restaurants. We look forward to experiencing Cosy Club’s exciting venue.” Loungers opened its first Cosy Club in Birmingham in Bennetts Hill in May 2015.

Five Guys opens Bath site: Better burger brand Five Guys has opened its latest site, in Bath. The company, which opened its 100th UK site late last year at the former Coppa Club in London’s St Paul’s, has launched at Saw Close at a site formerly targeted by BrewDog. The Scottish brewer and retailer withdrew its plans despite an eight-month search to find a suitable spot for a bar in the city, while the venue was also set to be taken by Five Guys’ rival Byron until the latter hit financial difficulties in 2018. In January, Propel revealed Five Guys had strengthened its 2020 openings pipeline by securing sites in Brighton and Chiswick. The company already has openings lined up in Fulham Broadway, Swindon Designer Outlet, and London’s Baker Street and London Bridge for this year. 

Freehold portfolio of Butlin’s staff accommodation in Bognor acquired for £11.2m: A freehold portfolio of Butlin’s staff accommodation in Bognor Regis, West Sussex, has been acquired by Knight Frank Investment Management for £11.2m. The portfolio consists of seven buildings and is wholly let for an unexpired term of 23.56 years to Butlin’s Skyline, which also manages the properties. Occupying a one-acre site, the accommodation provides 151 bedrooms across a mix of single, twin and double rooms together with communal areas and management accommodation, offering staff accommodation for workers at the nearby Butlin’s Bognor Regis resort. The freehold portfolio generates a total passing rent of £605,360 per annum and is subject to five-yearly Retail Price Index plus 2%-linked rent reviews. Knight Frank surveyor Hector Ahern said: “This portfolio provides staff accommodation critical to the successful operation of the Butlin’s holiday resort while also offering long-term index-linked rental income from a secure tenant. There was also a strong underwrite based on long-term redevelopment opportunities.” Knight Frank advised Knight Frank Investment Management on the acquisition, while Allsop advised the vendor.

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