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Morning Briefing for pub, restaurant and food wervice operators

Mon 6th Dec 2021 - Propel Monday News Briefing

Story of the Day:

Rise in distressed hospitality venues predicted in new year, but not at levels previously feared: Christie & Co has warned of an “uptick” in distressed properties in the hospitality industry in the new year, but not at the kind of levels previously expected. Stephen Owens, who is managing director of pubs and restaurants, believes the first three months of 2022 will prove to be crucial for operators in the sector as several factors come to a head. “With government support being withdrawn, a trading recovery with limited debt availability and higher costs of capital, we may see an uptick in distress as we go forward,” Owens told the recent Propel Multi-Club Conference. “Last year, we predicted distress to hit us at the end of this year, which hasn’t materialised. We’ve seen a bit creep into the market, and if we see any more it will probably be in the first quarter of next year. We probably need to keep an eye on how the rent moratorium plays out, the impact in distress and whether banks might start being a bit more aggressive. Banks have been very supportive, which has kept distress at bay, and the predicted wave of distress this year hasn’t materialised. Whether that happens in the volumes we think, I don’t know. My own personal view is we will see distress, but perhaps not at the levels many thought we would.” Owens also expects to see more hospitality venues being subject to company voluntary arrangements in the new year as lenders survey the post-Christmas trading landscape. He said: “The rent moratorium ends in March next year, so it will be interesting to see how that plays out. But equally, the banks and shareholders will be looking at how businesses will recover, what Christmas trading is like and what trading might be like in the early part of next year.” A lack of available stock has also been an issue, according to Owens – a situation he doesn’t see changing any time soon. He added: “We’ve seen a race to premiumisation, and because of that, the right kind of freehold assets have seen strong demand, with multiples ahead of pre-pandemic levels in some cases. There’s appetite out there to do deals, but with limited stock it’s probably driving values and multiples. We’ve buyers out there keen to buy, but for various reasons that stock hasn’t come to the market. We’ve seen lenders be patient and the government be broadly supportive, and this has seen values hold up relatively well. What none of us know is how much of the changes we’ve seen to date are structural and how many are temporary, and that will inform and articulate how the recovery looks going forwards. Seeing multiples ahead of pre-pandemic levels for quality assets feels slightly counter-intuitive because nobody knows what the recovery is going to look like. The imbalance between demand and supply is driving multiples, and I can only see that changing if there’s a lot more supply on the market. The leader for that would be large scale distress, and I don’t see that happening.”
 

Industry News:

Sponsored message – Jollibee gives away 10,000 chicken burgers: Filipino chicken chain Jollibee is giving free chicken burgers to the first 10,000 JolliApp users who enter the code “FREEBURGER”. Already successful on TikTok, the brand’s campaign centres around a secret code that’s been “accidentally” leaked to the media. The JolliApp, launched earlier this year with Pepper HQ, allows customers to order and pay before arriving at the store and collect points on every order. Jollibee currently operates eight sites in the UK – London, Leeds, Leicester, Cardiff, Reading, Newcastle and Liverpool. For more information on claiming the offer, click here. If you have a sponsored story you would like to see featured in this newsletter position, email paul.charity@propelinfo.com

Propel Premium Advent Video Calendar – Laura Morris, Bharti Radix and Judy Joo to feature: Propel has launched its Premium Advent Video Calendar, giving subscribers access to a great video each day in December from our autumn conference series. Each day in December in the run-up to Christmas, Premium subscribers will be sent a video featuring some of the sector’s leading operators, who will share insights, advice and expertise. The next video – which will be sent at 9am today (Monday 6 December), is a panel session – ‘How to start a business from scratch’ – with Ann Elliott talking to Laura Morris, co-founder of Yard & Coop, Bharti Radix, founder of Bloomsyard and Judy Joo, Korean-American executive chef, restaurateur, TV chef, and founder of Seoul Bird. Premium subscribers received the fifth edition of The New Openings Database, which is produced in association with StarStock, on Friday (3 December). The database showed the details of 366 newly announced site openings and upcoming launches. Premium subscribers also receive access to two other databases. The latest Propel Multi-Site Database, which is produced in association with Virgate, and the Turnover & Profits Blue Book, which is produced in association with Mapal Group. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, regular video content and regular exclusive columns from Propel group editor Mark Wingett. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. To subscribe, email jo.charity@propelinfo.com

Ireland closes its nightclubs again: Strict new limits on Ireland’s hospitality sector and home visits have been announced by the country’s prime minister. From 7 December until 9 January, nightclubs will close and restaurants and bars will only be allowed to run table service – with a maximum of six people per booking. Indoor events such as concerts must operate at 50% capacity, while people should only have visitors from a maximum of three other households in their home. The hospitality restrictions include having one metre between tables, no multiple table bookings and people wearing masks when not seated. Ireland’s covid unemployment payment scheme will temporarily return to help people who lose their jobs in the entertainment sector because of the new rules. Nightclubs were only able to reopen in October after more than 18 months shut. The country has been reporting near-record case numbers since early November, despite 91% of eligible people over 12 now fully vaccinated. However, the death rate is much lower than in previous waves.

Hospitality has ‘turned a corner’, says London landlord: West End landlord Shaftesbury's restaurant director Julia Wilkinson believes hospitality has “turned a corner” following a clutch of openings in the past year. The company’s recently released accounts revealed that Shaftesbury signed for more than 60 sites in the capital in the year from 1 October 2020, including 29 new hospitality operators offering 18 different cuisines. Among its new arrivals are Istanbul-inspired Zahter in Carnaby; Israeli gelato concept Anita’s on Upper St Martin’s Lane; Japanese robata concept Yatay in Chinatown; jazz bar Nightjar in Kingly Court and a first permanent location for Carousel in Fitzrovia. Wilkinson said: “The hospitality sector has demonstrated its creativity and energy as it emerges from the pandemic, with new F&B and leisure concepts launching and more established operators diversifying across our villages. As tough as it has been, the sector has turned a corner, which is wonderful to see.” This follows Shaftesbury last week reporting a rebound in occupier demand, with footfall increasing and trading recovering.

Job of the Day: COREcruitment is working with a trendy hospitality client looking for a partnerships sales manager to sell and manage all key relationships with media buying and planning agencies, as well as PR agencies. The ideal candidate will be someone who has five-plus years’ experience in a similar agency content solutions role and has great knowledge of digital media campaigns and digital content. The role is based in London and is paying up to £50,000 as a base salary, plus commission. For more information on this role and to apply, please contact Lara@corecruitment.com
 

Company News:

Collins – we are confident we can increase openings capacity to 30-32 sites a year: Nick Collins, chief executive of Loungers, has said that the Lounge and Cosy Club operator was now confident it could add a fifth build team and increase its openings capacity to 30-32 sites a year. To underpin its expansion, the 188-strong business has evolved its property function, with Tom Trenchard promoted to director of property and build, and a head of development and head of construction (Mark Suggitt, ex-The Restaurant Group) roles put in place. Collins said: “What we are trying to achieve here is to future proof the organisational structure as we continue to grow. It also allows me to have more time in our sites. It also gives us the capacity to have a fifth build team should we want to. Four build teams allow us to open 25 sites a year, but we are now confident we could add a fifth build team and increase that capacity to 30-32 sites a year. We haven’t taken the decision to do that yet. I also hope we will be able to more efficiently manage our capex. I think there is more we can do from a labour perspective and a process point of view.” Collins said that the group’s openings pipeline is in “excellent shape” and the business was delighted with its new openings, which continue to “increase the average level of unit Ebitda in the business”. The business has also begun price competition analysis around 14 sites to monitor competitiveness and the actions of competitors. Collins said this was more aimed at next year, when the rise in VAT will push businesses into raising prices, and is an exercise the business will be carrying out quarterly going forward.

RedCat acquires Pie & Pint Inns: RedCat Pub Company, the investment vehicle from ex-Greene King chief executive Rooney Anand, has acquired Essex-based pub operator Pie & Pint Inns, Propel has learned. Founded by Gary Downham in 2011, Pie & Pint Inns operates The Castle in Great Leighs, The Hare in Roxwell, and The Cherry Tree in Stambridge. In 2019, the company launched Regional Town and Country – its lodge-style rooms at The Cherry Tree. At the same time, Propel understands that RedCat has separately acquired The Bull Inn at Barton Mills, near Mildenhall, in an off-market deal. The Bull is an award-winning boutique country inn with 15 bedrooms. Everard Cole acted on The Bull Inn deal. Last week, Anand told The Times that 92-strong RedCat had 12 more sites being scrutinised by lawyers and expects to sign most of them by Christmas. “We can be super-flexible,” he said. “We can sell the whole thing lock stock and barrel or we can sell its constituent parts separately.” He added: “Prices have probably got a little firmer for the vendor than they were six months ago, but let’s see how things pan out over Christmas. During the notoriously lean months of January, February and March, I would hope there would be a few more assets we can persuade owners to part with.” He cited the example of the Coaching Inn Group, a collection of 18 market towns inns that he acquired in August for an estimated £60m and retained the incumbent management. In September, Anand snapped up seven pubs from Dominion Hospitality and has since handed four of the properties to Coaching Inn Group management, which has itself secured three more sites. Anand said: “That’ll be 25 by Christmas, then we can push on to 30 and possibly beyond to 40 or 50, and Coaching Inn Group can eventually be sold with RedCat, or somebody might come along and we might sell it separately.”

Inn Collection Group buys 26th site, seventh in Yorkshire: Inn Collection Group has completed on a seventh Yorkshire site as part of its strategic expansion in the county. The group has acquired Knaresborough’s historic The Dower House and Spa in an undisclosed deal, taking its total estate count to 26. The 38-bedroom, grade-II listed building features a spa and swimming pool along with several bars, lounges and function areas. It will continue trading under The Inn Collection Group’s ‘Eat, Drink, Sleep and Explore’ award-winning brand. A refurbishment programme is scheduled for 2022, during which a sympathetic restoration and remodelling of the building will be carried out to enhance its environment, improve accessibility and align the site with The Inn Collection Group’s quality, food-driven pubs with rooms offer. The Inn Collection Group’s managing director Sean Donkin said: “We are excited to be growing our foothold in Yorkshire with the addition of The Dower House and Spa. It is a tremendous site, steeped in character and history in a stunning destination location. It’s a great time for us to be joining the community in Knaresborough as we emerge from lockdown restrictions. We’re looking forward to investing in the team and site and realising Dower House’s full potential, while preserving the heritage and charm it holds.”

Thunderbird Fried Chicken lines up Wimbledon opening: Thunderbird Fried Chicken, the wings and fried chicken concept backed by TriSpan, is to further add to its presence in London with another opening next year in Wimbledon. Propel has learned that the Paul Gilchrist-led brand will open on the former Creams British Luxury site in The Broadway next March. As previously reported by Propel, the business is also set to open on the former Good Morning Vietnam site in St John’s Hill, near Clapham Junction station, a month earlier. Propel revealed last month that the brand is to build on its fledgling partnership with Parkdean Resorts with the opening of three further sites in the first half of next year. In June, the brand opened a franchise site with Parkdean at its Camber Sands resort. A month later, Thunderbird opened its second site with Parkdean at its Trecco Bay Holiday Park in Porthcawl, south Wales. The fried chicken concept is now lined up to open at Parkdean’s sites at Vauxhall in Great Yarmouth, Ruda in Devon and Southview in Skegness. Thunderbird currently operates restaurants at Earl’s Court, Charing Cross, Westfield Stratford and The O2, and delivery kitchens at Battersea and Shoreditch.

Gordon Ramsay Restaurants appoints Simon Ward-Nicholson as new operations director: Gordon Ramsay Restaurants has appointed Simon Ward-Nicholson, formerly of SSP and Ole & Steen, as its new operations director, Propel has learned. Ward-Nicholson was most recently managing director of hospitality group Unlocked Brands, and prior to that, he was managing director of Danish baker Ole & Steen. Before that, he spent four years at travel concessions company SSP, with stints as concept development director and operations director, and he has also been operations director at BaxterStorey and Corney & Barrow Bars. Propel recently revealed that Gordon Ramsay Restaurants had appointed Angela Lovell as its new HR director, while last month, Ramsay confirmed he will open a site in Liverpool under his Bread Street Kitchen concept. As Propel revealed in October, the chef, who is accelerating the roll-out of his Bread Street Kitchen, Street Pizza and Street Burger concepts, secured the former Jamie’s Italian in Liverpool’s Paradise Street, Liverpool ONE, for an opening. Ramsay currently operates three Bread Street Kitchen & Bar sites in London, plus a Bread Street Cafe in Ealing. He also recently opened a Bread Street Kitchen in Edinburgh, on Drake & Morgan’s former The Refinery site in St Andrews Square. The chef is also understood to be the lead bidder to take space on the upper floor of 22 Bishopsgate in the City. Meanwhile, Propel understands Ramsay is eyeing a further site in London for his Street Burger concept. The chef is understood to have applied to take the ex-By Chloe site at One Tower Bridge.

Joe & The Juice plans to double in size: Juice bar chain Joe & The Juice is planning to double in size in the next few years, including opening 20 new UK sites next year. The Observer reports that the company plans to add to the 54 sites already open here, making Britain the biggest market for the brand worldwide. The company, which is rumoured to be plotting a stock market listing, permanently closed 10 outlets due to the pandemic but has been able to secure many new sites as rents have fallen and rivals downscaled. However, chief executive Thomas Nørøxe said the group has been forced to get creative to attract and retain staff post-Brexit and pandemic. “We need 15 new people every week – and we are not really getting them now,” he said. Five of its London outlets are being temporarily closed because of staff shortages, while expansion in the north is also being held back by the time taken to hire and train youngsters. The company is offering perks including international travel, yoga nights, and competitions where staff can win prizes for cocktail-waiter-style tricks. Also on the cards for the UK is a clearer career path towards higher earnings, with business training and regular bonuses for hitting company targets. “Probably in the past, we were reliant on a lot of Europeans working hard and having fun times in London, but now everything is shifting,” Nørøxe said. Nørøxe added that Joe & the Juice was partly protected in the pandemic by its focus on affluent neighbourhoods in the UK – such as Richmond, Chiswick and Chelsea in London – and those outlets continue to enjoy trade well ahead of pre-pandemic levels, up by a fifth on 2019. Before the Omicron variant appeared, sales were also back to 2019 levels in London commuter centres such as Cannon Street and Canary Wharf. Since July, the company’s UK business has rebounded, exceeding 2019 sales levels for the year to date by September. Its delivery service now accounts for 20% of UK sales, having only started just before the pandemic. A subscription service is being tested and is likely to be on the way next year.

Megan’s lines up three openings for early 2022, including Welwyn Garden City: London-based cafe and deli concept Megan’s has lined up three openings for early 2022, including an opening in Welwyn Garden City. The Sarah Hills-led business, which recently opened its 14th site, in Dulwich Village, will also open at the former Laura Ashley site in Kingston and then at the ex-Prezzo site in Marlow’s High Street. It is thought to be looking at the former Prezzo in Welwyn Garden City too. Earlier this autumn, the company said it plans to expand to 22 sites by the end of next year. It is thought to be looking to open a site in Lordship Lane, East Dulwich, and has further openings planned in Chelsea, Richmond and Weybridge.

Zerodegrees reports sales up 26% on 2019 levels, targets 20-strong estate in next five years: Restaurant and microbrewery group Zerodegrees has reported sales in 2021 are 26% up on 2019 as it prepares for an aggressive roll-out plan from next year. The four-strong business – led by Leigh Nicolson, former managing director of Brighton Pier Group’s Eclectic Bars division, and Nick Desai – is targeting a 20-strong estate in the next five years. Nicolson told Propel that Zerodegrees was looking to target affluent university cities and provincial towns as it looks to add two to three sites a year to the group. He said: “We invest £1.5m in brewing equipment per site, so the buildings we are looking for tend to be quite big to accommodate that – at around 15,000 square feet. We’re also looking at opening ‘satellite’ sites – where the beer sold has been brewed at one of our other locations nearby, which gives us scope to look at properties of 3,000 to 5,000 square feet.” Nicolson said the business has completed refurbishment programmes at all its existing venues to launch its “Tank Lounges”, its cocktail and experiential leisure experience where guests are able to play several competitive socialising games. He added: “Our ‘sharing is caring’ campaign has taken off to huge success with the launch of our metre-long pizzas and Bavarian style two-pint frozen steins, with the focus on group experiences and casual dining. Our winter drinks and food menu has also been designed with sharing in mind, and also allows our customers to not have to leave their seats so they can enjoy more of their visit with their friends.” Zerodegrees operates sites in Blackheath, Bristol, Cardiff and Reading.

Flat Iron celebrates tenth anniversary by opening tenth restaurant: Flat Iron, the Piper-backed affordable steak concept, will celebrate its tenth anniversary by opening its tenth restaurant in the spring. Situated opposite The Young Vic in The Cut in Waterloo, the new opening marks ten years since the original Flat Iron launched as a pop-up above a pub in Shoreditch. The restaurant, set over three shop fronts, will also include a large terrace for alfresco dining at the front. Flat Iron founder Charlie Carroll said: “It seems like yesterday and a lifetime ago that I was in that tiny pub kitchen in Shoreditch slicing the very first steak for the very first Flat Iron guest. I am excited and proud that almost a decade later, the dream has come so far, and we are now opening our tenth restaurant. We still love to find historic and characterful buildings and to work with passionate craftspeople, enhancing what is there already and giving spaces a new lease of life.” Flat Iron opened its ninth restaurant, a 90-cover venue at the former Gourmet Burger site in Clink Street, near Borough Market, in September. Propel understands the company is targeting another couple of openings in London by next summer.

Cornish Bakery reports like-for-likes up 30% on 2019 levels, unveils rebrand as it targets younger customers: Growing independent chain The Cornish Bakery has reported like-for-like sales are currently running 30% above 2019 levels as it unveiled a radical rebrand. Led by founder Steve Grocutt, the strategic rebranding will drive a cultural step-change for the company while targeting a younger breed of customer. The rebrand will see all elements of Cornish Bakery’s estate transformed, and at least seven new bakeries and three refurbishments will open under the new styling throughout 2022. A new website and reformed social media and digital platforms went live last week. Grocutt, who previously revealed plans to grow the company’s number of stores from its current 48 to 100, said: “Across the pandemic we have all worked harder than ever, fuelling our hunger for determined growth. That growth will never come from us doing the same-old, same-old, no matter how successful we’ve been. Bakery is the new coffee shop, and our carefully crafted, disruption-driven brand evolution will surprise many as it’s a major departure from our previous, multi-award-winning brand strategy. However, this powerful internal and external ‘reset’ will pioneer our high-end proposition, activating a younger demographic in targeted geographies, all-the-while achieving our journey towards 100-plus branches.”

Revolution Bars Group removes martini passionfruit garnishes to boost net zero bid: Revolution Bars Group, the operator of 67 bars trading mainly under the Revolution and Revolucion de Cuba brands, will from this month remove all passionfruit garnishes from its martinis, Propel has learned. The move, an industry first, will save more than 500,000 passionfruit per year and is part of the company’s ongoing commitment to becoming a net zero business by 2030. The group sells 1.2 million martinis a year across 67 venues, using an average of 36 tons of passionfruit, which are imported from South America. The garnish, which tends to be discarded by most customers, will now be replaced by rice paper promoting a sustainable message – reducing the group’s carbon footprint by more than 100 tons of carbon dioxide. Any financial savings will be invested in sustainability projects across the business, such as creating a totally carbon neutral cocktail menu. Revolution Bars Group is the first bar group in the UK to target becoming net zero by 2030 and has already introduced recycling zones behind bars, a roll-out of LED lighting and reduced vehicle drops. A founding member of the Zero Carbon Forum, the group also has a “zero hero” team member at every site whose responsibility is to reduce out-of-hours energy consumption – which it has cut by 19% since 2017. Last month, Pitcher, in his Propel Opinion column, urged fellow hospitality operators to join him in setting tougher sustainability targets for the industry.

Guy Hands injects £38m into Hand Picked Hotels: Entrepreneur Guy Hands injected £38m into a hotel chain run by his wife Julia after losing £19m last year. Sales of Hand Picked Hotels, which operates country houses and spa hotels in the UK and the Channel Islands, fell 60% to £22.6m over the year to 26 November 2020 due to the blockade of covid. The new financial statements show that a £38m investment by Hands, the founder of investment firm Terra Firma, was used to pay off £30m in bank debt, and the rest to “support the group’s working capital.” Former lawyer Julia Hands began operations in 2001 after purchasing 16 hotels from Sir Richard Branson’s Virgin Group. After purchasing three hotels in September, it currently has 21 sites, while demand has been high since covid restrictions were lifted.

Zia Lucia to open sixth site this week: London-based pizzeria Zia Lucia will open its sixth site, in Balham, on Thursday (9 December). Founders Claudio Vescovo and Gianluca D’Angelo originally intended to launch the site, in Balham High Road in August, but it is now ready to open. Zia Lucia first opened in Holloway Road, Islington, in 2016, and has since added sites in Aldgate East, Hammersmith, Wembley and, most recently, Wandsworth. All pizzas at Zia Lucia Balham will be priced from £7 to £13 and will feature four types of pizza dough plus a range of toppings – from fiery nduja, spicy spianata salami and truffle sauce to burrata, gorgonzola and roasted pepperoni – as well as seasonal specials and vegan pizzas. The drinks offering will include Birra Cabriole, Italian-style cocktails and wine and prosecco. Delivery will also be available.

Stockton-based Persian kitchen concept launches £75,000 crowdfunding campaign to expand offering: Modern Persian Kitchen, a takeaway and delivery service focused on Persian cuisine, has launched a £75,000 crowdfunding campaign to help expand its offering. The company, which currently cooks and delivers Persian dishes from its base in Stockton, recently launched a range of pantry goods and gift hampers. It is now looking to branch out into events and catering, recipe kits, live cook-alongs, cookery classes, supper clubs, cookbooks and wholesale to independents. The company is offering 5.9% equity on the investment and has reported revenue growth of 452% from its first to second year of trade. The campaign, which is running on Seedrs, has already attracted £57,000 from more than 50 investors, bringing it to 75% of its target with 27 days left. The pitch stated: “Since launching in 2019, we’ve been on a mission to champion Persian food and culture within the UK. Building a network of owners is our way of bringing you into our family and along for the journey as we strive towards becoming the nation’s go-to brand for Persian food.”

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