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Morning Briefing for pub, restaurant and food wervice operators

Fri 16th Jun 2023 - Update: Whitbread pub sale latest, Amber Taverns expansion, Fuller's fills vacancies with over-50s
The Times ­– Whitbread restricting sale of 250 sites to fellow operators, M&B considered frontrunner: Whitbread is restricting the auction of 250 of its pubs to established pub operators, with Mitchells & Butlers (M&B) being tipped as the frontrunner in the estimated £600m process. The Beefeater and Brewers Fayre operator, which is being advised by Goldman Sachs, the investment bank, is understood to be running a tight process to avoid the uncertainty of a long, drawn-out disposal, reports The Times. While it has not commented, the Premier Inn operator is understood to have approached pub companies including Greene King, Heineken, Marston’s and Punch in what one City source described as “testing the water”. Whitbread is believed to have earmarked about 250 out of its 440 pubs for possible disposal, the majority located next door to a Premier Inn. Many of the sites identified are either marginal or loss-making, while its full-year results in April included impairment losses against 13 standalone restaurants. M&B, which last month Propel tipped as a suitor along with Greene King, reportedly has the advantage of having completed deals with Whitbread twice before. In 2008, it exchanged 21 of its hotels for 44 Whitbread pubs in a straight asset swap involving no cash. Both sides valued their assets at around £78m. Two years earlier, the All Bar One operator completed the acquisition of 239 pubs from Whitbread in a £497m deal. The quality of M&B’s existing estate and excellence of the refurbishment programme rolled out across its estate in recent years have won plaudits for Phil Urban, the chief executive who has led the transformation process. The company, created in 2003 through a demerger from the old Bass brewing empire, has about 650 venues under brands including Miller & Carter and Ember Inns. Analysts cited Urban’s ability to convert Beefeaters to Miller & Carter and Brewers Fayre to Harvester as a big advantage, enabling him to replace “lacklustre” Whitbread brands with successful M&B ones. Stonegate Group, Britain’s biggest pub company, would normally have been expected to look at the Whitbread package but instead is itself in selling mode. Stonegate, which is backed by TDR Capital, the private equity firm, is looking at the possibility of selling between 700 and 800 pubs from its 4,492-strong estate as it considers ways of cutting its £3bn debt. It is understood to have hired Eastdil Secured to advise on options, although sources close to the situation insisted that no decisions had yet been taken. Whitbread was founded as a brewery in 1742 by Samuel Whitbread but it sold its beer business in 1999. The group has about 850 hotels in the UK, Germany and the Middle East. Its UK estate comprises almost 84,000 rooms. At its results in April, customer volumes at its branded restaurants, which are focused at the value end of the market, remained below pre-pandemic levels. Overall food and beverage sales were 40% ahead year-on-year but 4% behind pre-covid levels, with increased spend per head outweighed by a decline in customer volumes. None of the potential suitors would comment or could be reached. Shares in Whitbread closed unchanged at £34.

Latest Who’s Who of UK Food and Beverage released today: The latest Who’s Who of UK Food and Beverage will feature 40 updated entries and 13 new companies when it is released to Premium subscribers today (Friday, 16 June), at midday. This month’s edition includes 693 companies and more than 180,000 words of content. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Premium subscribers also receive access to four other databases: the Propel Multi-Site Database, produced in association with Virgate; the New Openings Database; the Propel Turnover & Profits Blue Book; and the UK Food and Beverage Franchisor Database. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email to upgrade your subscription. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett. In this week’s Premium Opinion, which will be sent to subscribers today at 5pm, Propel editorial consultant Katherine Doggrell looks at why the hotel industry must take notes from the pub sector to rediscover its hospitality roots. Entrepreneur Matthew Kirby, who founded and sold Chozen Noodle, discusses his current investment in a Detroit-based restaurant franchise – including receiving backing from the US government. Stephen Nolan, chief executive of hospitality and foodservice technology provider Nutritics, talks about why this week’s acquisition of the Snowfox Group shows the size of the prize for operators who embrace sustainability.

Amber Taverns announces trio of openings as part of plans to add up to 16 pubs a year to portfolio: Amber Taverns, the wet-led, freehold community pub operator, has announced a trio of new openings as part of plans to add up to 16 pubs a year to its portfolio. The company operates 165 pubs throughout the north east, north west and Midlands in England, Wales and Scotland. Amber Taverns focuses on the hybrid “operator-managed” business model that is a cross between a managed pub and a tenancy. The expansion commenced with The Leopard in Chester opening this week. A former Bonmarche store site in Foregate Street in the city centre, the site has undergone a £900,000 investment, which includes a roof terrace. The Water House will open in Durham next week, following a £500,000 investment of the former JD Wetherspoon pub in North Road, The third new pub is due to open in Irvine, Ayrshire. Established as a popular sports bar formerly known as the R&A Sports, the pub is undergoing a £500,000 refurbishment as a contemporary community pub, building on the work of the previous independent owners, and will reopen as The Northern Way at the end of this month. In addition to continued organic investment in the existing estate, Amber Taverns “has an encouraging pipeline with a variety of good new site opportunities”. It is looking to add circa14-16 new pubs to its growing portfolio a year. The company said it has consistently achieved historic high returns of more than 20% on new freehold acquisitions and has lots of target towns within its existing geography to continue to expand its geographic footprint “with well invested pubs at the heart of their communities with broad appeal across the UK”. Chief executive James Baer said: “These three new pub openings demonstrate our continued conviction in the Amber model of a well-designed, contemporary pub with broad demographic appeal, which offers a good quality customer experience in a vibrant and comfortable setting at reasonable prices. Interestingly, the three freehold properties derive from different sources – one former retail site, a private operator and a large national chain – all of which demonstrate our ability to identify opportunities and carry out good quality refurbishments, which enable us to keep growing the business, underpinning the enduring appeal of a high quality, local community pub thriving at the heart of the communities they serve.”

Fuller’s looking to the over-50s to fill post-Brexit vacancies in pubs: Fuller’s has filled 500 vacancies over the past 12 months using a scheme that brings the over-50s back into the workplace. The company said its attempts to secure help from the government in resolving the post-Brexit labour shortage had proved fruitless, forcing it to change tack on recruitment. Chief executive Simon Emeny told The Times: “One thing I’ve learnt very quickly is that the government isn’t going to do anything to help the industry deal with Brexit or the labour shortages. We’ve had to find our own solutions. This has meant changing to a new job platform, paying people extra benefits and adding to their training.” One change it made was to start using Rest Less, an organisation that finds employment for the over-50s. “A year ago we had about 500 vacancies across the company but now it’s just a handful,” said Emeny. He added that a lot more 16 to 18-year-olds were also seeking work in pubs. “A year ago, coming out of covid, people didn’t want to work because they wanted to catch up on the lost time when they couldn’t go out,” he said. “But today 20% of our colleagues are 18 or under.”

Firm due to manage DRS in Scotland ‘on brink of collapse’: The firm that was due to manage Scotland’s controversial deposit return scheme (DRS) appears to be on the brink of collapse. Staff have been sent home from Circularity Scotland and the board said it is unable to confirm whether the workers will be paid for the month or even if they will be able to return to the office. The board said it recognises that this is an “extremely difficult time” for the staff, with bosses “working tirelessly” to find a solution. Scotland’s DRS was due to start in August but was pushed back to March 2024 after Humza Yousaf was installed as first minister. It has since been delayed to at least October 2025 after the UK government ruled it could only go ahead without glass bottles included. Announcing the delay at Holyrood last week, Lorna Slater, the minister for green skills, circular economy and biodiversity, said the Scottish government had been left with “no other option”. In a statement, Circularity Scotland said: “The board has been working to manage the impact of the Scottish government’s announcement and find a way for the business to continue to operate. While this work is ongoing, we instructed staff to go home. The unfortunate reality is that, at this point, we are not able to confirm whether our staff will be paid for this month or whether they will be able to return to the office. The board recognises that this is an extremely difficult time for our people and is working tirelessly to find a solution. We have remained in communication with our staff throughout and will provide updates to them at the earliest possible time.” With similar schemes in the rest of the UK not due to come into effect until 2025, the Scottish government sought an exemption from the Internal Market Act – which regulates trade in the different parts of the UK following Brexit. Westminster granted a limited exemption, but stipulated glass could not be part of it. Environmental campaigners called on Yousaf to “hold his nerve” and soldier on with the scheme with cans and plastic bottles. Yousaf wrote to prime minister Rishi Sunak, calling for glass to be included. The request was knocked back to ensure “simplicity and interoperability”. Slater previously admitted the industry has “invested hundreds of millions of pounds” towards the scheme. The Scottish Greens co-leader said she was committed to a DRS and has pledged to work with the UK government and others to “play the hand we have been dealt” for a cleaner environment, less waste and to meet climate targets.

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